Magnis Energy Technologies Annual Report 2021

← All annual reports

FY2021 Annual Report · Magnis Energy Technologies

Loading PDF…

Suite 9.03, Level 9, 88 Phillip Street

Sydney NSW 2000 Australia

Tel

+61 2 8397 9888

info@magnis.com.au

www.magnis.com.au

2021
ANNUAL REPORT

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

NEW YORK • TOWNSVILLE • TANZANIA

01Contents

01
02
03
04
05
06
07
08
09
10
11
12
13
14
15

Contents

Chairman’s Statement

Review of Operations

Corporate Governance
and Sustainability Report

Annual Financial Report

Directors’ Report

Auditors’ Independence Declaration

Statement of Profit and Loss

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Directors’ Declaration

Independent Auditor’s Report

Additional Shareholder Information

CORPORATE DIRECTORY

ABN 26 115 111 763

Board
F Poullas
[Executive Chairman]

Distinguished Professor
M S Whittingham
(Non-Executive Director)

P Tsegas
(Non-Executive Director)

M Dajani
[Non-Executive Director]

Dr R M Petty
[Non-Executive Director]

Z Pavri
[Non-Executive Director]

M Siva
[Non-Executive Director]

Chief Financial Officer
J Behrens

General Counsel &
Company Secretary
J R Rockett

Registered Office
Suite 9.03
Level 9
Aurora Place
88 Phillip Street
Sydney NSW 2000 Australia
Tel +61 2 8397 9888

Tanzania Office
House No 19, Plot No. 890 Yacht Club
Road
Masaki, Dar es Salaam, Tanzania
Tel +255 739 500 023

Internet Address
www.magnis.com.au

Email Address
info@magnis.com.au

Share Register
Link Market Services Limited
Tower 4, 727 Collins Street
Melbourne VIC 3000 Australia
Tel 1300 554 474
Fax +61 3 9287 0303

Auditors
Hall Chadwick Melbourne Audit
Level 14, 44 Collins Street
Melbourne VIC 3000
Tel +61 3 9820 6400

Bankers
National Australia Bank Ltd
Level 15, 680 George Street
Sydney NSW 2000 Australia
Tel +61 2 9237 9290

STOCK EXCHANGE LISTING/ASX
Magnis Energy Technologies Ltd shares
(code MNS) are listed on the Australian
Securities Exchange.

ANNUAL REPORT 2020 - MAGNIS ENERGY TECHNOLOGIES
ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

02Chairman’s Statement

Dear Shareholders,

While the last 12 months has presented its fair share of
challenges, I can happily speak for everyone at Magnis in
saying that we are building towards something special.

The Lithium-ion battery industry is going from strength to
strength and there’s no denying that the long-term future
of the industry looks bright. We are uniquely positioned to
be involved in one of the largest Lithium-ion battery plants
in the world’s largest economy with near term revenues.

The iM3NY lithium-ion battery plant has taken some major
steps towards production in the last 6 months. The project
is fully funded for gigawatt hour production with semi-
automated production expected this year. The plant has
an annual capacity of 1.8GWh with production to begin
next year.

The team consists of highly experienced individuals within
the Lithium-ion battery industry. With President Biden’s
recently approved Infrastructure Plan where approximately
US$18 Billion is set aside for Lithium-ion battery cell
manufacturers, it feels like our plant will become fully
automated just at the right time producing Lithium-ion
batteries made in the United States for the United States.

An Australian Lithium-ion Battery Plant is something that
our country needs and that the board and management
team are working hard to deliver with our partners. There
has been considerable interest from potential funders,
customers and partners in fast tracking production.

We continue to make progress with the Nachu graphite
project and we believe we are closing in on large western
offtake agreements to support the funding of the project.
We have been involved in a number of projects assisting
the local community over the last decade and the benefits
of the project are immense.

In closing, I acknowledge the hard work and commitment
of my fellow Board members, senior management and our
entire team of employees both locally and overseas along
with the ongoing support of our shareholders.

Frank Poullas
EXECUTIVE CHAIRMAN

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

03Review of Operations

SIGNIFICANT MILESTONES
ACHIEVED

Over the last year, the team at Magnis have been putting
together the many building blocks required to achieve
our vision of being a key global player in the Lithium-ion
value chain of electric vehicles and clean energy storage.
We continue to be excited by the progress being made in
Lithium-Ion Battery (LIB) Manufacturing plant operated by
Imperium3 New York Inc. (iM3NY) where we hold a majority
shareholding. iM3NY has made great developments across
building out the plant, attaining regulatory permits as
well as securing binding offtakes as it moves towards
1.8GWh production starting 2022. Magnis also owns 33%
in Imperium3 Townsville (iM3TSV), with a goal of building
locally manufactured battery cells in Australia, leveraging
off the global expertise and partnerships from the US.

Technology is a critical component in the electrification
supply chain. Magnis has a minority shareholding in
US based, battery technology firm Charge CCCV (C4V).
C4V is a front-runner in cutting edge Lithium-ion battery
technology based in New York. C4V has been developing
a cobalt and nickel free battery since 2012 and has major
patents granted in the USA and other major countries
globally around their high quality, long lasting and
environmentally friendly cathode chemistries. C4V has also
made major investments in R&D, end user product testing,
supply chain qualification and technology validation for
end use applications.

Finally, our high quality Nachu graphite project remains
shovel ready as we continue to hold discussions with both
financing and various potential strategic offtake partners as
the demand for anode materials such as graphite continues
to gather momentum.

LITHIUM-ION BATTERY MANUFACTURING

Magnis’ strategic investments into LIB manufacturing and
battery technology is by no small part being led by the
presence of Distinguished Professor Stanley Whittingham
on the Magnis Board of Directors. On 9 October 2019,
the Royal Swedish Academy of Sciences announced
its joint award of the 2019 Nobel Prize in Chemistry to
Distinguished Professor Whittingham for his pioneering
contribution to the development of the lithium-ion battery.

the credit arm of Riverstone Holdings LLC, a US Asset
Management firm with over $43 billion in assets provided
US$50 million of this total funding package via a four-
year senior secured term loan. Riverstone is a significant
player in middle market energy space globally and is
committed to deploying capital in sustainable and ethical
energy projects that encourage decarbonisation of the
planet and accelerate the movement towards net zero
emissions. Magnis and iM3NY will be a crucial component
in the energy transition supply chain and fundamental for
increasing the global production of EV’s as well as fostering
greater use of renewable energy production through
development of energy storage systems.

Through its investments in iM3NY, Magnis remains
committed to its goal of becoming a leading player in
the supply chain for storage of renewable energy and
electrification of transportation.

Stamp of Approval and Binding Offtakes

Achieving funding from a large institutional energy focused
investment firm such as Riverstone Credit Partners requires
a significant amount of due diligence on everything from
technology and people involved to the capital structure
of the various entities involved in the transaction. iM3NY’s
binding offtakes commencing in 2022 from both energy
storage electric mobility provided significant comfort for
Riverstone Credit Partners.

iM3NY Current and Future Capacity Plans

iM3NY’s funding has enabled the plant to acquire
additional equipment which can be integrated into the
existing production line and allow both the existing cell
design as well as new cell designs to be manufactured.
These enhancements will not only enable greater cell
manufacturing volumes but also further expand and
diversify the company’s customer base.

iM3NY has aggressive future plans to scale up to 32GWh
of annual production by 2030 as the Lithium-ion battery
market is set to grow exponentially around the world in
the coming years. The US is likely to experience significant
growth as it tries to close the gap on Lithium-ion battery
global leader China. To fund these growth plans, iM3NY is
currently investigating several capital raising opportunities.

BATTERY TECHNOLOGY

Funding Partners for iM3NY

The New York battery plant is fully funded to begin
commercial production of 1.8GWh. This will make it
one of the largest players in the US Lithium-ion battery
cell manufacturing market. Riverstone Credit Partners,

The decarbonization megatrend has propelled the global
need to electrify mobility and significantly increase the
use of renewable energy, where energy storage through
lithium-ion batteries is crucial. However there remains
several barriers to widespread battery adoption such as

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Review of Operations

speed of charging, safety, energy density, cost and battery
lifespan. Therefore, technological innovation in the lithium-
ion battery space is of paramount importance and Magnis’
battery technology partner and investee company C4V has
significant intellectual property here.

C4V’s patented cathode technology Biomineralisation
Lithium Mixed Metal Phosphate (BM-LMP) does not use
expensive and environmentally unfriendly raw materials
such as nickel or cobalt. Furthermore, it uses a mineral that
is highly fire-resistant thus enhancing the overall safety,
further extending cycle life, and enabling high-speed
charge capabilities. The mineral also traps any free fluoride

ions available, providing another layer of safety within
the cell. These two characteristics of the mineral make it
a highly effective ingredient of our cathode material. The
development of these batteries will add 15-20% nominal
cell voltage to the popular LFP chemistry with significantly
higher energy density and a higher cycle life.

Green Batteries

Batteries to be produced at iM3NY utilising C4V’s
technology has been independently verified by world
renowned agency Abt Associates. The New York State
Energy Research and Development Authority (NYSERDA)
funded a special report from Abt Associates that suggests

C4V’s Cathode Technology BM-LMP vs Others

Cathode Material

Voltage (V)

Capacity (Ah/kg)

Cell Energy (Wh/kg)

LFP

NMC

NCA

BM-LMP

3.3

3.7

3.6

3.9

150

155

180

160

130

258

250

230

Table 1: C4V’s Cathode Technology BM-LMP vs major available commercialised battery chemistries

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

The team at C4V have conducted multiple tests using
independently verified cycling results using an optimised
commercial size cell using BM-LMP technology which have
produced very promising results. Specifically, they have
achieved a cycling life retention rate of over 75% after 2,513
cycles with a 30- minute charge and 30-minute discharge.

The optimised cell is within 99% energy density of a
regular energy cell, which means minimal energy density
loss for an FC cell. Such high-power density without any
Cobalt and Nickel for a non-LFP cell makes C4V a leading
company in the market as they demonstrate cutting edge
battery technologies.

such batteries contain at least 87% less dirty energy per
kilowatt hour versus comparable batteries.

The report stated that the manufacturing process and
underlying technology reduces its use of toxic materials
compared to similar lithium-ion batteries. For example,
comparable batteries use nearly double the amount of
copper used in a C4V battery. This is significant since copper
refining is often a primary driver of particulate emissions in
battery manufacturing. This substantial differential is also
explained in part by the fact that iM3NY’s manufacturing
facilities are based in up-state New York.

New York is third-largest producer of hydroelectricity in
the US.

Fast Charging Results

One of the major barriers to large scale EV adoption is
the time it takes to fully charge a battery. Battery cells
optimised for fast charging (FC) are required to maximise
charging energy efficiency whilst maintaining battery life
and most importantly, safety. Magnis’ technology partner,
C4V, is at the forefront of this technology development and
has been working with end users including commercial
EV manufacturers, to develop a future proof design for FC
batteries, with a focus on low cost and sustainable supply
chain. Several European OEM’s have expressed interest in
the technology with initial discussions being undertaken
in recent weeks, with confidentiality agreements having
been executed.

Figure 1: Optimized FC cell cycling data at 2C-2C rates with 30 min charge and 30 min discharge of the cell

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Review of Operations

ANODE MATERIALS

High-Quality, Low-Cost Graphite

Graphite is the largest raw material by volume in most
lithium-ion batteries and makes up most of slurry to form
the anode of a battery. It is where oxidation takes place of
lithium metal that is formed in the charging of the battery.

The freed electrons from oxidation flow out of the battery
to discharge the stored energy.

The Nachu graphite project is estimated to produce around
240ktpa Flake Graphite Concentrate with an average of
98.3% Total Graphitic Carbon (TGC) over an initial reserve-
backed 15-year mine life.

There are currently few mines able to produce such high
purity graphite flake whilst maintaining a large flake size
distribution along with high recoveries. Magnis process
optimisation programs continue to refine the ability to
produce graphite products without the use of chemical
or thermal purification. The milling and flotation steps are
mechanical processes that are significantly lower cost than
currently used chemical and thermal purification such as
hydrofluoric acid cleaning processes that typically cost over
US$1,000/t and are environmentally harmful. Our process
only requires spheronisation and coating to achieve high
quality battery grade anode material.

Estimated Quantity

Size

Purity

Key Markets

Super Jumbo Flake

22,000 tonnes p.a.

Jumbo Flake

Battery Feedstock

77,000 tonnes p.a.

141,000 tonnes p.a.

+500 microns, +35 mesh

300-500 microns, +50/-35 mesh

Sub 300 microns, -50 mesh

97.5% TGC

97.0% TGC

99.5% TGC

Aerospace, composites & niche
markets

Expandable graphite,
composites & electronics

Spherical graphite for use in
Li-ion battery anodes

Current Pricing

US$4,000-6,000/t CFR**

US$2,500-3,000/t CFR**

+US$1,900-2,100/t FOB**

**Current pricing based on industry sources and end user discussions

Table 2: Composition and Quality of Nachu Graphite Flake Sizes

Although battery feedstock makes up around 59% of the
total reserves, the remaining 41% of reserves are jumbo and
super jumbo size flakes that are used for premium, higher
margin niche markets, like Aerospace.

In the past few years, Magnis has rigorously tested the
graphite qualities from Nachu and development cell testing
of an anode blend containing spherical coated material
derived from Nachu graphite has demonstrated excellent
battery performance showcasing 1000 cycles and still
retaining around 90% capacity. These resources include
additional downstream technical expertise and industry
leading battery test facilities to allow for cells and battery
fabrication development utilising Nachu anode material.

Magnis continues to undertake various activities relating to
advancing the Nachu project to development including:

Finalising the drilling and developing new water bores
within the Nachu Special Mining Lease (SML) area;

Progressing the establishment of the resettlement
village including approval of Town Planning and
Cadastral Survey Drawings, receipt of Building Permit
from Ruangwa District Council for the development of
59 houses, and commencement of land clearing; and

The Local Content Plan and Corporate Social
Responsibility Agreement were approved by the Mining
Commission and Local District Council (respectively).

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

CORPORATE STRUCTURE

IMPERIUM3 NEW YORK

Magnis Energy Technologies’ corporate structure is across
three main verticals. Lithium-ion Battery Manufacturing,
Lithium-ion Battery Technology and Anode materials via its
Nachu Graphite Project. From an ownership perspective,
the Company has a strategic majority shareholding of
approximately 60% in iM3NY. The Company also has a
minority shareholding of approximately 10% in C4V. Finally,
Magnis Energy Technologies owns 100% of the Nachu
Graphite project in Tanzania.

Imperium3 New York, Incorporated (iM3NY) is a company
established in the USA that owns large scale lithium-ion
battery plant assets located in Endicott, New York. The
iM3NY plant continues to purchase equipment and
machinery to build out operations such as slurry making to
coating to cell assembly and formation.

During the year, state-of-the-art machinery was purchased
from lithium-ion cell manufacturer A123 Systems to
reduce overall capex requirements whilst bringing forward
production. The new equipment includes formation
lines, slurry making, coating, stacking machines,
solvent recovery and refining. The machinery will form
part of a full assembly line enabling the company to
further advance its technology while also expanding its
production capabilities.

The equipment will function as its own production line and
allow for further cell development as well as the capacity
to create samples and prototypes for existing and
prospective customers.

On the 4th of June 2021, iM3NY produced its first full
sized prismatic cells using commercial grade components
and is on track for customer sampling in Q4 2021. Cell
manufacturing volumes will increase once the plant
moves to semi-automated production in 2H21 and then
full-scale production with fully optimised and automated
lines in 1H22.

Figure 2: Full Sized Lithium-ion Battery Prismatic Cell produced
by iM3NY

(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)(cid:26)(cid:24)
(cid:23)(cid:22)(cid:21)(cid:20)(cid:19)(cid:20)(cid:23)

(cid:20)(cid:22)(cid:21)(cid:20)(cid:19)(cid:20)(cid:23)

(cid:23)(cid:22)(cid:21)(cid:20)(cid:19)(cid:20)(cid:20)

(cid:29)(cid:18)(cid:17)(cid:16)(cid:18)(cid:15)
(cid:28)(cid:14)(cid:13)(cid:12)(cid:11)(cid:10)(cid:10)

(cid:9)(cid:11)(cid:8)(cid:7)(cid:21)(cid:6)(cid:16)(cid:5)(cid:13)(cid:8)(cid:18)(cid:5)(cid:11)(cid:4)
(cid:28)(cid:14)(cid:13)(cid:12)(cid:11)(cid:10)(cid:10)

(cid:3)(cid:16)(cid:15)(cid:15)(cid:2)(cid:21)(cid:6)(cid:16)(cid:5)(cid:13)(cid:8)(cid:18)(cid:5)(cid:11)(cid:4)
(cid:28)(cid:14)(cid:13)(cid:12)(cid:11)(cid:10)(cid:10)

Figure 3: Timeline of various production stages

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Review of Operations

Figure 4: Tank Farm location and Building 48 represent the Lithium-ion Battery Manufacturing site

Figure 6: Stamper machine located in iM3NY Plant

Figure 5: NY LIB Plant Phase 1 build out underway

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

IM3 TOWNSVILLE (IM3TSV)

SITE

Magnis owns approximately one third of greenfield lithium-
ion battery manufacturing project Imperium3 Townsville
Pty Limited (iM3TSV). A Queensland Government funded
feasibility study for an 18GWh lithium-ion battery cell
manufacturing facility in Townsville, Queensland
was completed and approved in August 2020. The
project also received a $3.1 million grant from the
Queensland Government.

The feasibility study was undertaken to develop a detailed
engineering plan for the project and to establish financial
viability to support subsequent investment decision and
project funding. A significant outcome of the study was to
phase the project over 3 stages of 6GWh each, for a total
nominal capacity of 18GWh. This not only reduces the
upfront capital expenditure to a more manageable A$1.12B
for the first stage, but also allows for project expansion
to occur in line with developments in technology and
the market. At full production, potential revenues of over
US$3.5 Billion annually.

The site is part of Lansdown Station approximately 40km
south of the Townsville CBD with a total property area of
357 hectares (Figures 1 and 2). It offers flat terrain and is
predominantly vacant land with limited natural vegetation.

Situated on the western side of the Flinders Highway,
bounded to the north by Ghost Gum Road and south by
Bidwilli Road, forming part of a new ‘green’ industrial with
a total area of approximately 2,070 hectares which has
now been rezoned. Environmental assessments of the
site including flora and fauna, stormwater, hydrology and
flooding, geotechnical and cultural heritage found no
major impediments to develop the plant at this site
(subject to development consent). Major infrastructure
and utilities such as roads, electricity and gas are already
in close proximity.

Figure 7: Site Location

Figure 8 and 9: Artist impression of iM3TSV site

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Review of Operations

NACHU GRAPHITE PROJECT

The Nachu Graphite Project is located near Ruangwa, in the
south-east of Tanzania and approximately 220km to the
Tanzanian port of Mtwara.

The Nachu Graphite Project is shovel ready with a Special
Mining Licence (SML) SML 550/2015 on the project granted
by the Ministry of Energy and Minerals (MEM) of Tanzania in
September 2015. The SML was granted to Uranex Tanzania
Limited (UTZ), a wholly-owned subsidiary of Magnis.

Special Export Zone (SEZ) legislation was introduced in
Tanzania in 2006. The legislation provides incentives
for companies to create value addition and advance
employment and development of the country.

SEZ licences are issued by the Minister of Industry and Trade
with key benefits including the exemption from payment
of corporate tax for up to 10 years, the exemption of taxes
and duties for machinery, equipment and construction
materials for the development of SEZ infrastructure and
the exemption from payment of withholding tax on rent,
dividends and interest for 10 years.

To date, the majority of existing SEZ licence owners come
from the Agriculture Processing, Assembly and Engineering
and Textile and Apparel sectors.

Magnis was provided approval by the Export Processing
Zones Authority (EPZA) in March 2017 to operate within a
SEZ in Tanzania which will allow the Company to apply the
advanced technologies it has been developing to produce
value enhanced graphite products. The approval to operate
a SEZ was updated on the 26th May 2021.

The SEZ under the jurisdiction of the Department of
Industry, Trade and Investment, governs the operation
of the graphite processing plant and is not subject to the
changes in the mining legislation announced late in 2017.

Following the introduction of new mining sector legislation
in Tanzania during the second half of 2017, Magnis has
continued to progress discussions with the Government of
Tanzania (GOT) regarding the development of the mining
and processing projects. The GOT has expressed its desire
to see the implementation of large projects that will add
significant value to the country’s economy
and development.

Those discussions led to Magnis submitting a proposal
outlining that the entire Nachu processing plant will
operate under Magnis Technologies Tanzania Limited
(MTT), a wholly-owned subsidiary of Magnis, in the SEZ
licence area, with the products from the SEZ continuing
to be advanced graphite products that can be made using
Magnis’ proprietary technology.

Figure 10. -Nachu Graphite Project Site layout

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

MTT will initially produce refined Jumbo and Super Jumbo
Flake products and spheroidal graphite products for the
LIB market. UTZ will operate under the laws and
regulations applicable to the country’s mining industry
under the Ministry of Minerals (previously Ministry of
Energy and Minerals).

The key change under the amended agreement is that MTT
will now purchase graphite ore directly from UTZ, which
is the holder of the SML for Nachu. This differs from the
previous arrangement whereby, it was agreed that MTT
would buy graphite concentrate from UTZ. The sale price
of graphite ore from Nachu, as per the proposal to the GOT,
will be based on an agreed formula for the value of the ore
at the gate with consideration to international benchmark
pricing to ensure transparency.

At a project level, UTZ will control the mining or quarry
operations, water supply system and tailings dam
operation, and will deliver ore to the MTT processing plant.
UTZ will also operate in accordance with the legislation
changes made in 2017 regarding GOT participation.

The SEZ is sited over the original SML plant infrastructure
location allowing for continued best case economics for
ore transportation. Magnis continues to reassess the

previous BFS with revised pricing and obtain separate
Capex and Opex costs for both MTT and UTZ. Engineering,
Procurement and Construction costs are currently being
sourced, together with the all-important project funding
opportunities. The Process plant and facilities in the SEZ
would require the majority of the Capital expenditure for
the project.

The SEZ area covers 206 hectares and has been excised
from the original Nachu SML. A map showing the SEZ
licence area is shown in the figure below.

Within the past year the Company has been in discussion
with various groups regarding graphite product offtake. On
the basis of these discussions and some internal studies,
the Company has reviewed the level of production that
may be optimal in order to get the project operating in the
near future. Preliminary engineering studies and mining
schedules, which would form the basis of a smaller scale
production were recently completed. Magnis will await
the outcome of the offtake discussions before making a
decision on how to proceed. At the Nachu site, a range
of activities have continued such as land clearing
and water bore development along with our social
assistance programs.

The impacts of the amended SEZ on MTT and UTZ is set out in the table below.

Uranex Tanzania Limited

Magnis Technologies Tanzania Limited

Government Jurisdiction:
Ministry of Minerals

Government Jurisdiction:
Ministry of Industry, Trade and Investment

Scope of Operations:
• Ownership of mining licence
• Establish mining quarry to deliver ore to SEZ and
includes operation of mining pits and waste stockpiles
• Contract mining operations

Scope of Operations:
• Ownership of processing plant in SEZ
• Ownership of utilities including power plant located
within the SEZ
• Ownership of warehouse and port storage facilities
• Graphite rock crushing, grinding and flotation circuit
operations for concentrate production
• Operation of purification operations for high purity
graphite production
• Processing of high purity graphite to make value added
products for applications that include lithium ion battery
• Marketing and export of products

Incentives:
• Tax and duty breaks
• Full ownership by Magnis
• International arbitration
• No restriction of retaining earnings outside of Tanzania

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Review of Operations

CAPITAL MARKETS

DIRECTOR MOVEMENTS

Magnis made four significant board appointments during
the year to help bolster its skills and capabilities as the
company enters a significant growth phase. The Directors
collectively bring experience across capital markets, ESGs
and sustainability, corporate governance and investor
relations.

Name

Role

Date Joined

Mona E. Dajani

Dr. Richard Petty

Zarmeen Pavri

Mugunthan Siva

Independent
Non-Executive Director

29th March 2021

Table 3: Recent board appointments

On 8 February 2021, the Company announced that it
received firm commitments from institutional, professional
and sophisticated investors to raise $34 million via a
placement of 121,428,572 ordinary shares at 28 cents per
Share. The Company noted that strong investor appetite for
clean energy technologies was evident through the strong
demand for the raise.

Each share will have a free attaching unlisted option with a
strike price at 50 cents and a 2-year expiry date.

On 3rd August 2021, Magnis announced that it had
executed an agreement to secure A$20m in convertible
note funding from US based institutions, The Lind Partners
and SBC Global Investment Fund. Under the terms of the
agreement, Magnis shares are to be issued at a purchase
price based on a single daily volume weighted average
price (VWAP) selected by the investor over the prior ten
days at a 7.5% discount.

The agreement provides an option for an additional
subscription amount of 20 million shares (10 million per
investor), exercisable at A$0.40 and expiring in 3 years,
subject to shareholder approval.

The majority of the funds raised were used to increase
Magnis’ stake in iM3NY and provide gigawatt scale funding
to advance the New York Battery plant as it moves close
to production. Magnis maintains its majority stake in what
will be one of the largest lithium-ion battery plants in the
United States.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

04Corporate Governance

and Sustainability

CORPORATE GOVERNANCE

Our approach to corporate governance is more than
merely one of compliance but rather on striving for
best industry practice and building excellent corporate
governance principles. We believe this is essential for the
Company’s long-term sustainability of its business and
general performance and will assist in the protection of
the interests of all stakeholders of the Company. Refer to
the Magnis website for the 2021 Corporate Governance
Statement in its full from.

The Board has a clear understanding that it is responsible
for the Company’s corporate governance and recognises
the importance of this in establishing accountabilities,
monitoring and managing risks, guiding and regulating
activities and optimising the Company’s overall
performance. The Board also recognises the need for
continuous improvement and to regularly review its system
of corporate governance.

(i)

Audit and Risk Committee (replacing the previous
Audit Committee);

(ii) Nominations and Remuneration Committee

(replacing the previous Remuneration Committee);
and

(iii) Health, Safety and Sustainability Committee

(replacing the previous Sustainability Committee)

Part of the corporate governance review was the approval
by the Board of the following Board and Committee
Charters and Code:

(i) Board Charter;
(ii) Audit and Risk Committee Charter;
(iii) Nominations and Remuneration Committee Charter;
(iv) Health, Safety and Sustainability Charter; and
(v) Code of Conduct

Finally, as an integral part of the corporate governance
review was the Board approval of the Company’s Anti-
Bribery & Corruption Policy and Whistleblower Policy.

As part of the corporate governance review, the Board
established three new Board Committees, comprising
the following:

Subsequently, the Board separately approved the
Company’s Continuous Disclosure Policy on 5 August 2020
and the Diversity Policy on 10 September 2020.

Copies of the abovenamed code, charters and policy documents are accessible via the Company’s website: www.magnis.com.au

Figure 1. Board Structure and Committees

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Corporate Governance and Sustainability

SUSTAINABILITY

OUR APPROACH

Magnis acknowledges the importance of sustainability in
all aspects of its business. This is the Company’s inaugural
environmental, social, governance (ESG) and sustainability
segment of this annual report, however, it is not coming
from a standing start. Foundation ESG practices have been
in place for some time, with sustainability now sitting at the
very heart of Magnis and its group of companies’ (iM3NY,
iM3TSV, C4V, Uranex and Magnis Technologies Tanzania)
strategic thinking. With the successful progression of
several Magnis projects, we are committed to transparency
as part of best practice corporate governance and
disclosure for all our stakeholders, shareholders and the
communities in which we work in.

Enhanced environmental, social and governance
performance, together with sustainability principles being
embedded into Magnis’ core business, correlates with
meeting the expectations of our stakeholders. Further,
development with sustainability and stewardship borne
in mind ensures that we can have positive impact on our
local communities.

The company’s vision is to be a
key global player in the lithium-
ion battery value chain of electric
vehicles and clean energy storage.

Creating a socially and environmentally responsible
business to derive shareholder value is a continuous
journey for any corporation. Magnis accepts that more than
just financial outcomes are being demanded of it.

Both shareholders and broader stakeholders also want to
see the impact that Magnis is making on the economy,
the environment and to society. We believe that profit and
sustainable conduct are not mutually exclusive. Moreover,
the Company believes that sustainable conduct is a
delivery driver of value to stakeholders in the long-term. It
is intended that this section of the report, and those that
follow, will assist in that communication.

Within our battery and materials value chain, we are
committed to environmental accountability, human rights,
good corporate governance as well as financial and social
accountability. Our objective is for all our group companies
to work on minimising environmental impacts, promoting
circular economy and aiming for reducing CO2 emissions.

The need for urgent and more intensive actions against
climate change is broadly recognised. In support of this
agenda, we are proud that Magnis is able to play in the
responsible and just battery value chain, being one of the
major near-term drivers to realise the 1.5°C Paris Agreement
goal in the transport and power sectors. We also recognise
that although batteries are required to help tackle climate
change, this cannot be achieved without a fundamental
change in the way materials are sourced and how the
technology is produced and used.

Not only do we believe that we have a major role to play in
the battery technology, manufacturing and materials space
but we also have the tremendous potential to be able to
create new jobs and significant economic value, increase
energy access, and drive a responsible and fair value chain.

We are pursuing the most promising battery technologies
and our cobalt and nickel free battery technology
developed by investee company and technology partner
C4V, positions Magnis at the forefront of battery technology
whilst utilising cheaper and cleaner materials.

We aim to be at the forefront of
battery technology development.

Magnis is striving to meet customer and community
expectations, to ensure the health and safety of our
workforce and the community, provide development
opportunities for our people, protect the environment, and
aim to support and harness technology innovation that can
unlock future opportunities to enable the transition to a
low carbon economy.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

SOCIAL RESPONSIBILITY

PEOPLE, HEALTH AND SAFETY

All of Magnis’ entities and investee companies are
committed to corporate responsibility. This supports us
in ensuring long-term return on invested capital and the
opportunity to create new jobs and support livelihoods
in the local communities we operate in. For example, the
iM3NY operations will be creating approximately 150 new
jobs in Endicott, New York at the battery manufacturing
plant. There are also future job creation opportunities being
planned for our Townsville and Tanzania projects.

Social responsibility is also viewed as one of our core
values at Magnis. We embrace responsibility for the impact
that our decision-making and operations have on the
economy, society and the environment. The Magnis group
of companies is committed to complying with the laws,
regulations and guidelines that govern our operations in
the multiple jurisdictions we operate in across Australia,
United States and Tanzania.

We respect human rights in accordance with the UN
Universal Declaration of Human Rights and the Guiding
Principles on Business and Human Rights as well as the ILO
Declaration on Fundamental Principles and Rights at Work.
Further, we ensure that we engage in dialogue with
stakeholders or their representatives and local communities
that are or may be affected by our operations across
the Globe.

Magnis has a fundamental philosophy that safety, health
and providing an equal work environment to all its
employees, regardless of their background and position is
the premise we work off. We strive to prevent discrimination
in our recruitment process and employment relationships
and aim at building a diverse working community.

Our focus is on maintaining safe
working environments through
strong, safety-first leadership
and culture

The Sustainability, Health and Safety committee,
we monitor safety performance indicators to better
understand whether processes and behaviours are effective
in minimising safety incidents and serious harm. We also
monitor and track any serious consequence-based injury, or
major incidents that are capable of causing or have caused
serious or fatal harm under various measures. All incidents,
injuries and near misses must be reported in accordance
with incident management procedures to ensure
appropriate action can be taken to prevent reoccurrence
and ensure a safe and healthy work environment.

Health & Workplace Safety

Safety incidents

Loss-time injury frequency rate (LTIFR)

Table 1. Health and Safety Scorecard.

DIVERSITY

30th June 2021

30th June 2020

Zero

The Magnis group places great importance on our
people and remains committed to promoting an inclusive
workplace by applying policies and practices designed to
improve both gender equality and diversity within
our organisation. Having a diverse workplace brings
a range of benefits to our business, such as improved
business decision making, wider range of skills, fosters
innovation and ultimately better outcomes for our
customers and shareholders.

Our Progress towards Improving Diversity

Improving diversity requires cultural change driven by
the leadership and commitment of the board and senior
management. At Magnis, we have made a commitment to
gender diversity at the board level and have two female
Board directors that provide Magnis with additional skills,
depth and diversity of thought to help grow the business
and enhance our strong leadership and governance.

Our Progress towards Improving Diversity

Female Participation

Board level

Table 2. Gender Diversity Scorecard

30th June 2021

30th June 2020

29%

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Corporate Governance and Sustainability

> Lindi Regional Commissioner’s Office,

> Ruangwa District Council,

> Ward and Village Offices

• OSHA Southern Zone Office (Mtwara),

•

Ruvuma and Southern Coast Basin Water
Office (Mtwara),

Tanzania Ports Authority (Mtwara),

Tanzania Electric Supply Company and;

Local institutions such as schools and dispensaries

Community members which are those located in the
footprint of the project or close proximity to the project
area which were directly or indirectly impacted by the
project activities involved significant consultations.

Meetings were held with the community village leaders of
some of those affected i.e. Chunyu, Mihewe and Namikulo
and Mtambarale. Open Public meetings were also held for
the same villages.

The meetings were attended by men, women, elders,
and youths and together were able to provide their
significant concerns and comments on the then proposed
Nachu village project with focus on the advantages and
disadvantages of moving to the expected area.

Also, consultations were made on land acquisition for
resettlement sites, site locations and types of houses.

ENGAGEMENT WITH LOCAL
COMMUNITIES – NACHU
GRAPHITE PROJECT

A key part of our sustainability approach is based on
proactively maintaining our social license to operate
through greater interaction and positive impacts on
the community.

To achieve this aim, we continue to partner with a number
of organisations in line with our commitment to operate
in a sustainable manner and to gain the confidence of the
communities in which we operate.

There have been four key areas where Magnis has
contributed and engaged with local communities in
Tanzania in relation to our Nachu Graphite Project:

•

Community Consultation: Engagement with local
communities and neighbours surrounding our site

Financial literacy and Education: Magnis Energy
Technologies Tanzania Ltd has ensured that
financial literacy education has been rolled out to
various communities

Product materials community support: whereby we
have donated building materials and supplies
for the construction of various community clinics
and schools

Community Donation and Support Programs:
Magnis Energy Technologies Tanzania Ltd has provided
various donations to support numerous charity and
program campaigns during the year.

We provide a summary of Magnis’ work engaging with the
community below. The details represent work done over
several years that continue to support till present day
and beyond.

COMMUNITY CONSULTATIONS

We have conducted numerous consultations including:

•

Local and Central Government Authorities consultation
as listed below:

> National Environmental Management Council

Ministry of Land, Housing and Human Settlement
Development,

> Ministry of Minerals,

Figure 2. Community consultations conducted by the company.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

FINANCIAL LITERACY TRAINING

It was important to recognise that any resettlement
compensation also required a social and moral obligation
to provide extensive financial literacy to those affected.
A financial literacy program was provided which covered
education about the banking system and its advantages,
basic financial literacy, the need to use money wisely and
common money scams of which recipient of funds should
be aware of.

COMMUNITY DONATIONS AND SUPPORT PROGRAMS

Over the many years, we have continued to support the
host communities and various stakeholders through
various donations and sponsorships. Our CSR Corporate
Policy was developed to reflect relevance to mining
operations as per the Tanzanian Mineral Act.

Some examples of our community donations through
supplies and building materials include iron sheets that
were donated for roofing five classrooms of the Ruangwa
secondary school.

We developed a program for a central library
as part of our corporate social responsibility and
dispatched four containers of books and furniture on
land that was cleared by us in Ruangwa town. During this
time, the company visited 99 schools within the district,
83 primary schools and 16 secondary schools. The aim of
the visit was to understand what the main problems each
school was facing.

We also got a better understanding of where the schools
are located, distance from the library, and challenges
of transport to and from the library that each school
would face.

Figure 3. School visits and donations.

The major challenge identified was the scarcity of books
and teaching materials. We generated a map of the district
highlighting where each school is in relation to Ruangwa
and the roads by which they need to travel to get to
Ruangwa.

Figure 4. Primary school books and maps distribution

ALIGNMENT WITH THE UN SUSTAINABLE DEVELOPMENT
GOALS (SDG)

The context in which businesses now operate has been
transformed by climate change, nature loss, social unrest
around inclusion and working conditions, COVID-19 and
changing expectations of the role of corporations. Further,
the global pandemic has exacerbated underlying and
longstanding failures regarding equality and access to
economic opportunities. To continue to thrive, companies
need to build their resilience and enhance their licence
to operate, through greater commitment to long-term,
sustainable value creation that embraces the wider
demands of people and planet.

Addressing global sustainability challenges require joint
efforts from business and government. Launched by the
United Nations in 2015, the Sustainable Development Goals
(SDG) summarises the world’s most important challenges
in 17 goals with 169 associated targets. The goals call for
worldwide action to end poverty and promote dignity and
opportunity for all, within a sustainability framework.

These SDG constitute the world’s joint plan of action
to eradicate poverty, fight inequality and stop climate
change by 2030. Magnis acknowledges the need for
collaboration towards solving the challenges currently
facing the world and recognises the SDG as a means of
maximising the collective impact. The SDG are a blueprint
for the betterment of society and Magnis is using these
SDG to connect our business strategy with global
sustainability priorities with specific emphasis on the
following page:

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Corporate Governance and Sustainability

5 GENDER

EQUALITY

5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of
decision making in political, economic and public life
5.C Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality
and the empowerment of all women and girls at all levels

7 AFFORDABLE AND

CLEAN ENERGY

7.2 Accelerate the green energy transition. Magnis will support and enable through its group of
companies and partnerships to build a highly cost-efficient and environmentally friendly large scale
battery cell manufacturing factory
7.3 Reduce energy consumption and increase energy recovery across the value chain

8 DECENT WORK AND

ECONOMIC GROWTH

8.1 Creating green jobs and economic growth
8.8 Securing labour rights and a secure work environment through partnerships with suppliers with high
ethical standards

9 INDUSTRY, INNOVATION

AND INFRASTRUCTURE

9.5 Promote innovation through partnership for R&D with C4V to develop more sustainable battery
chemistries

12 RESPONSIBLE

CONSUMPTION
AND PRODUCTION

12.2 & 12.4 Using more sustainable materials/ battery chemistries, including our breakthrough BM-LMP
technology developed and patented by investee battery technology company C4V
12.6 Encourage business partners to integrate sustainability information and strive for increased
traceability for battery materials

13 CLIMATE

ACTION

13.2 Reduce energy consumption and increase energy recovery across the value chain
13.2 Aim to achieve by 2030, Cell manufacturing based on renewable energy and minimizing carbon
footprint in the battery value chain

Figure 5. Magnis’ Alignment to the UN’s Sustainable Development Goals.

For the current annual reporting period 2020 to 2021, we participated in many programs to support the various communities.

MIHEWE AND MATAMBARALE
SOUTH MEDICAL CLINICS

Construction materials were donated
to the Mihewe and Matambarale
South medical clinics for renovation
of classrooms of Matambarale Primary
School. We supervised construction of
clinics and renovation of classrooms.

Figure 6. Renovated classrooms at
Matambarale Primary School.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

05Annual Financial Report

YEAR ENDED 30 JUNE 2021

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

06Directors’ Report

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
as the ‘consolidated entity’) consisting of Magnis Energy Technologies Ltd (referred to hereafter as the ‘Company’ or ‘Parent
Entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2021.

DIRECTORS

The following persons were Directors of Magnis Energy Technologies Ltd during the whole of the financial year and up to
the date of this report, unless otherwise stated:

Mr. Frank Poullas
(Executive Chairman)

Appointed Director 10 September 2010, Appointed
Chairman 29 August 2014.

Mr Poullas has spent over two decades working in the
technology, investment banking and engineering sectors.
During the last 15 years, Mr Poullas has been involved with
assisting several public entities with funding and strategic
direction which has resulted in increased shareholder value.

Mr Poullas is currently a director of several companies and
continues to consult with public companies involved or
looking at entering the lithium-ion battery material sector.

Current and former directorships of other listed
companies in last three years:

None

Special responsibilities

Mr Poullas is a member of the Health, Safety and
Sustainability Committee.

Distinguished Professor M. Stanley Whittingham
(Non-Executive Director)

Appointed Director 4 November 2016.

Professor M. Stanley Whittingham has nearly five decades
of experience in the lithium-ion battery industry and is best
known for being a pioneer in the development of lithium-
ion batteries which has earned him the prestigious award
of the 2019 Nobel Prize in Chemistry. During his illustrious
career Professor Whittingham has headed large projects for
the US Department of Energy, Exxon, and Schlumberger.

He has 16 US patents and has been involved in writing over
340 pieces of scientific and engineering literature. Currently,
he is a SUNY Distinguished Professor of Chemistry and
Materials Science and Engineering at Binghamton
University which is part of the State University of New York.

Professor Whittingham is also Director of the NorthEast
Center for Chemical Energy Storage (NECCES). Professor
Whittingham holds a BA. Chemistry; a DPhil. Chemistry and
an MA from Oxford University, England.

Current and former directorships of other listed
companies in last three years:

None

Special responsibilities

Member of the Health, Safety and Sustainability Committee.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

Ms. Mona E. Dajani
(Non-Executive Director)

Dr. Richard Petty
(Non-Executive Director)

Appointed Director 29 March 2021.

Ms. Dajani has over 20 years of practise experience as a
dual qualified lawyer in the U.S. and England and as a
licensed professional engineer. She serves as a lead lawyer
in complex acquisitions, dispositions, financing, and
project development transactions involving energy and
infrastructure facilities in the United States and around the
world. She is co-leader of Pillsbury Winthrop Shaw Pittman’s
Energy and Infrastructure Projects Team and leads the
Renewable Energy practice.

Current and former directorships of other listed
companies in last three years:

None.

Dr. Petty has been an adviser on significant projects and
investments in Asia. He has served on the faculty of several
business schools and remains active in academia as an
academic board chair and visiting professor. Dr. Petty is a
former member of the B20 and served on the B20 Finance
and Infrastructure taskforce, a former Board Member of
International Federation of Accountants, a former Chairman
of the Australian Chamber of Commerce Hong Kong &
Macau, and former Chairman of CPA Australia. Dr. Petty
has been author or co-author of many academic and
professional works and has been awarded as a researcher,
an editor of academic works, and as an educator. He has
served on the editorial boards of several academic journals.

Special responsibilities

Member of the Nominations and Remuneration Committee
and the Audit and Risk Committee.

Dr. Petty is senior adviser to several investment firms and
has served on the boards of other companies, both publicly
listed and privately held. Dr. Petty holds several degrees
including a PhD and is a Fellow of Chartered Accountants
Australia and New Zealand, CPA Australia, and the
Australian Institute of Company Directors.

Current and former directorships of other listed
companies in last three years:

333D Limited (ASX: T3D);
Ambition Group Limited (ASX: AMB).

Special responsibilities

Chair of the Audit and Risk Committee.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

Ms. Zarmeen Pavri
(Non-Executive Director)

Mr. Peter Tsegas
(Non-Executive Director)

Appointed Director 29 March 2021

Appointed Director 16 June 2015.

Mr Tsegas has over 20 years of experience in Tanzania
where he’s been a resident for the past 15 years. He has
worked to engage both the private and government
sectors on several projects and was Managing Director
of Tancoal Energy Ltd which he successfully took from
an exploration company to a JV with the Tanzanian
government, and then into production.

Current and former directorships of other listed
companies in the last three years

Adavale Resources Limited (Resigned 17 June 2020).

Special responsibilities

Member of the Health, Safety and Sustainability Committee.

Ms. Pavri has over 25 years’ experience within the financial
services sector, specifically in funds management focused
on impact investing, ESG and venture capital. She has
a wide range of experience both locally and overseas
and has a multidimensional background across strategy
development, investment, risk and compliance governance,
sustainability, commercialisation, and organisational
transformation. Ms. Pavri is a Non-Executive Director of
Uniting Ethical Investors Ltd, Chair of the Apostle Ethical
and Impact Advisory board, and sits on various advisory
committee panels. She is a Partner at SDGx Ventures, an
Impact VC investment management and advisory group
and further holds the position as the Oceania Regional
Senior Advisor at The Global Impact Investing Network
(GIIN). She is a qualified Australian Chartered Accountant
and has a Bachelor of Commerce (sub major Law) degree
from University of Western Sydney.

Current and former directorships of other listed
companies in the last three years

None.

Special responsibilities

Chair of the Health, Safety and Sustainability Committee,
Member of the Audit and Risk Committee and
Remuneration and Nominations Committee.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

Mr. Mugunthan Siva
(Non-Executive Director)

Appointed Director 29 March 2021.

Mr. Siva possesses three decades of experience in the
finance industry both locally and overseas specializing in
funds management. Mr. Siva is the Managing Director, Chief
Investment Officer and co-founder of India Avenue, which
is a business focused on providing advice and delivering
client focused investment solutions to investors seeking
to access India’s strongly growing capital markets. Mr. Siva
was Head of Portfolio Management for ANZ Wealth, where
he was responsible for investment strategy and portfolio
construction. Prior to that he held the role of Investment
Strategist at ING Investment Management Australia
and was Chief Investment Officer for ING Investment
Management India. Mr. Siva has also worked for Westpac,
Macquarie Bank, ING Bank and RetireInvest. Mr. Siva holds
a Bachelor of Commerce from UNSW and a Masters of
Business from UTS.

Current and former directorships of other listed
companies in last three years:

None

Special responsibilities

Chair of the Nominations and Remuneration Committee,
Member of the Audit and Risk Committee and Health,
Safety and Sustainability Committee.

FORMER DIRECTORS DURING 2021 REPORTING PERIOD

Mr. James Dack, Executive Director then Non-Executive
Director, 15 June 2020 to 14 May 2021.

Mr. Troy Grant, Non-Executive Director, 23 June 2020 to
23 February 2021.

GENERAL COUNSEL & COMPANY SECRETARY

Mr. Julian Rockett B ARTS, LLB, GDLP

Appointed 15 April 2021.

Mr. Julian Rockett is both an experienced corporate lawyer
and highly experience listed company secretary.

His background in corporate law includes corporate
compliance, advising several IPOs, RTOs, and other M&A
activities, and capital raising for ASX listed entities. His
diverse ASX listed company secretarial experience for more
than twenty (20) listed companies includes supporting
fin-tech, artificial intelligence, medical technology, logistics,
equity, mining, energy, technology, and commercial
property ASX listed companies.

FORMER COMPANY SECRETARIES AND COUNSEL

Ms. Nawal Silfani - Company Secretary and General Counsel
- 30 November 2020 to 16 April 2021

Mr. Jürgen Behrens - Company Secretary from 10
November 2020 to 30 November 2020 (and remains CFO)

Mr. Frank Giordano - Company Secretary and Legal Counsel
- 17 July 2020 to 10 November 2020.

DIRECTORS’ INTERESTS

As at the date of this report, the interests (directly or indirectly held) of the Directors in the shares and options of the
Company were:

Director

Fully-Paid Ordinary (FPO)
Shares

Mr. Frank Poullas

Dist. Prof. M. Stanley Whittingham

Mr. Peter Tsegas

Ms. Mona E. Dajani

Dr. Richard Petty

Mr. Mugunthan Siva

Ms. Zarmeen Pavri *

16,600,000

770,000

700,000

* Since the period, Ms. Zarmeen Pavri acquired an indirect 82,253 FPOs.

Unlisted Options
over
FPO Shares

1,000,000

Performance
Rights

2,500,000

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES IN STATE OF AFFAIRS

The Group business interests in USA, Australia, and Tanzania. Magnis advances its multi-strategy business plan in the
battery space through developing:

•

as a strategic partner, to support the development of two (2) proposed lithium-ion battery (LIB) manufacturing plants
in the USA and Australia; and

the mining and processing of high purity natural flake graphite from the Group’s wholly owned Nachu Graphite
Project (NGP).

As at reporting period, the primary changes in the state of affairs of the Company were as follows:

•

The Company’s subsidiary Imperium3 New York, Incorporated (iM3NY) battery plant annual capacity increased to
1.8GWh.

iM3NY produced its first full-sized lithium-ion battery cells using commercial grade components.

Estimated minimum binding offtake sales of US$655m for iM3NY by customers in the energy storage and
transportation space.

US based energy and power focused asset management firm, Riverstone Credit Partners LP provided US$50m funding
investment in iM3NY to scale up production.

The Company’s battery technology partner Charge CCCV (C4V) announced successful fast charging results using
optimised commercial cells.

The Company has been in discussion with various groups regarding graphite product offtake from its Tanzanian based
Nachu Graphite Project.

Initial internal studies have been conducted by the company to review the level of production at Nachu that may be
optimal to get the project operating soon.

At the Nachu site, a range of activities have continued such as land clearing and water bore development along with
our social assistance programs.

The Company announced that it received commitments from institutional, professional, and sophisticated investors
to raise $34 million via a placement with most of the funds used to increase its stake in iM3NY to advance the New
York Battery plant as it moves close to production. Company made four significant board appointments to help bolster
its skills and capabilities. The recent appointments bring additional experience across capital markets, ESGs and
sustainability, corporate governance, and investor relations.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

REVIEW OF OPERATIONS

LITHIUM-ION BATTERY MANUFACTURING

Imperium3 New York, Incorporated (iM3NY) lithium-ion battery plant continues to build out towards commercial
production. The firm purchased equipment and machinery to build out operations such as slurry making to coating to cell
assembly and formation. The new equipment includes formation lines, slurry making, coating, stacking machines, solvent
recovery and refining. The machinery will form part of a full assembly line enabling the company to further advance its
technology while also expanding its production capabilities.

Furthermore, iM3NY received US$50 million of funding via a four-year senior secured term loan from Riverstone Credit
Partners, the credit arm of Riverstone Holdings LLC, a US Asset Management firm with over $43 billion in assets provided.
Riverstone is a significant player in middle market energy space globally and the funding will enable the plant to
scale up to an annual capacity of 1.8GWh. This will make it one of the largest players in the US lithium-ion battery cell
manufacturing market. iM3NY’s estimated minimum binding offtake of US$655m commencing in 2022 from both energy
storage and electric mobility players provided significant comfort for Riverstone Credit Partners.

BATTERY TECHNOLOGY

Magnis’ battery technology partner, Charge CCCV (C4V) announced successful fast charging battery results at an optimised
commercial level. Cyclical results from an optimised commercial size cell using BMLMP technology produced cycling life
retention of over 75% after 2513 cycles with a 30-minute charge and 30-minute discharge.

NACHU GRAPHITE PROJECT UPDATE

Company has been in discussion with various groups regarding graphite product offtake. Preliminary engineering studies
and mining schedules have been conducted by the company to review the level of production that may be optimal to get
the project operating soon. At the Nachu site, activities to support development continued, including land clearing and
water bore development and its social assistance programs.

CORPORATE DEVELOPMENT

Magnis made significant board appointments listed in the table below during the year to help bolster its skills and
capabilities as the company enters a significant growth phase. The Directors collectively bring experience across capital
markets, ESGs and sustainability, corporate governance, and investor relations.

Name

Mona E. Dajani

Dr. Richard Petty

Zarmeen Pavri

Mugunthan Siva

CAPITAL RAISINGS

Role

Independent Non-Executive Director

Date Joined

29th March 2021

The Company announced that it received commitments from institutional, professional, and sophisticated investors to
raise $34 million via a placement of 121,428,572 ordinary shares at 28 cents per share. The Company noted that strong
investor appetite for clean energy technologies was evident through the overwhelming demand for the raise. Most of the
funds raised were used to increase or retain Magnis’ stake in iM3NY for providing gigawatt scale funding to advance the
New York battery plant to move closer to production. Magnis maintains its majority stake in what will be one of the largest
lithium-ion battery plants in the United States.

FUTURE OUTLOOK AND STRATEGY

Magnis’ vision is to be a key global player in the lithium-ion battery value chain of electric vehicles and clean energy
storage. The Company envisions the following corporate developments to take place in the new financial year

•

New York lithium-ion battery plant, Imperium3 New York (iM3NY) to be in place and at commercial production levels
with fully optimised and automated lines to start meeting orders.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

•

IM3NY seeks to raise further capital via a potential listing or arranging private capital to increase capacity to 10GWh
Scale under Phase-2.

• Continue to announce positive results in our technology partner C4V’s extra fast charging program

•

Secure offtakes and finalise funding for the Company’s Nachu Graphite project in Tanzania.

NO SIGNIFICANT ANTICIPATED DEVELOPMENTS EXCEPT AS DISCLOSED

The Directors are not aware of any developments, other than the on-going challenges posed by the COVID-19 global
pandemic, that pose a significant effect on the operations of the Group that are not disclosed in this report or in previous
reports. The Company is not involved in or aware of any pending litigation. Other than as disclosed above and elsewhere in
this report, there have been no further subsequent events.

DIVIDENDS

No dividends have been paid during the year or declared during the year (2020: $NIL). The Directors do anticipate the
declaration or payment of a dividend in the next financial year.

CORPORATE INFORMATION

Magnis Energy Technologies Ltd is limited by shares and incorporated and domiciled in Australia. The shares are listed on
the Australian Securities Exchange (“ASX”) under the ASX code MNS. Unlisted options issued to Directors beneficially via
the Company’s employee option trust schemes would be (if issued), be included in the option aggregate. No shares or
interests have been issued during and after the end of the financial year from the exercise of options:

Entity

Magnis Energy
Technologies Ltd.

EMPLOYEES

Number of shares
issued

Class of shares

Total amount paid
for shares

Amount unpaid
on shares

N/A

$nil

Magnis Energy Technologies Ltd had 5 employees as at 30 June 2021 (2020: 6 employees).

Category of employee

All Employees and Board

Senior Executives

Board

Total

Gender

Male

Uranex Tanzania Limited had 11 full time employees as at 30 June 2021. (2020: 10 employees)

Category of employee

All Employees

Total

Male

Gender

Female

CORPORATE

Director Movements during the year

Directors

Ms. Mona E. Dajani

Dr. Richard Petty

Mr. Mugunthan Siva

Ms. Zarmeen Pavri

Appointment Date

Directors

29 March 2021

Mr. Troy Grant, AO

Mr. James Dack

Departure Date

23 February 2021

14 May 2021

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

CAPITAL FUNDS

On 4 September 2020, Magnis announced the placement of 45,000,000 fully paid ordinary (FPO) shares at $0.17 per share
to professional, sophisticated, and institutional investors to raise A$7.65 Million before fees and enabled the Negma
Subscription Agreement to be discontinued. The funds were raised for working capital, capitalise on growth opportunities
in the battery technology sector, support the Nachu Graphite Project and Townsville battery project. On 11 September
2020, 42,058,577 FPO shares were issued under the Company’s LR 7.1 issue capacity.

CAPITAL FUNDS - ANNUAL GENERAL MEETING

From the 4 September 2020 placement, 2,941,176 FPO shares were issued to a participating director on 30 December 2020
after shareholders at the 2020 AGM approved this LR 10.1 issue. In total 44,999,753 shares were issued in this capital raise,
being 247 shares short of 45,000,000 due the application of the round-down formula.

At 2020 AGM, LR 10.1 approvals were obtained for 20,000,000 shares issued to the Magnis Energy Technologies Ltd
Employee Share Trust (“MEST”) as Trustee on behalf of (now former) Director Mr. Dack as a long-term incentive.

Vesting primarily required two (2) consecutive years of service. Shareholders will have an opportunity to cancel the
unvested shares at the 2021 AGM, under s256B and 256C of the Corporations Act.

Also, at the 2020 AGM 12,500,000 performance rights were approved and later issued to the (then) five (5) directors,
12,500,000 Performance Rights. 7,500,000 Performance Rights remain because 5,000,000 lapsed during the reporting
period. The Performance Rights and holders are shown in the table below.

Frank Poullas - Executive Chairman

M. Stanley Whittingham - Non-Executive Director

Peter Tsegas - Non-Executive Director

2,500,000 Performance rights

These unlisted Performance Rights consist of five (5) tranches. Every tranche of 500,000 Performance Rights per Director
which are subject to service conditions and market capitalisation milestones. On achieving the pre-conditions, each
relevant tranche of unlisted performance rights held will convert into fully paid ordinary shares on a one-to-one basis.

Tranche 1

Tranche 2

Tranche 3

Tranche 4

Tranche 5

Market capitalisation reaches $AUD 0.5 Billion

Market capitalisation reaches $AUD 1.0 Billion.

Market capitalisation reaches $AUD 1.5 Billion.

Market capitalisation reaches $AUD 2.0 Billion.

Market capitalisation reaches $AUD 2.5 Billion.

FEBRUARY 2021 CAPITAL RAISE

On 8 February 2021, the Company announced that it raised $34 Million before fees via a placement of 121,428,572 shares
at an issue price of $0.28 per share to institutional, professional, and sophisticated investors. Each share carried a free
attaching unlisted option with a strike price at $0.50, and a two-year expiry period from their issue date. (“February 2021
Placement”).

On 12 February 2021 the first tranche of shares of 108,309,719 fully paid shares available under its 15% Listing Rule 3.1
issue capacity.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

GENERAL MEETING

The second tranche of 13,118,853 fully paid shares and 121,428,572 unlisted options were issued on 24 May 2021,
following shareholder approval to issue the shares for the purposes of LR 7.4, at the General Meeting on 10 May 2021.

SECURITIES AS AT 30 JUNE 2021

The Company had the following securities on issue as at 30 June 2021:

851,434,546 ordinary shares.

3,750,000 unlisted options are held in the Magnis Option Share Trust, with varying expiry dates ranging from 31
October 2022 to 28 October 2023. The options have exercise prices that vary between $0.50 and $0.75.

121,428,572 unlisted options have a strike price of $0.50 and are due to expire on 26 May 2023.

7,500,000 unlisted performance rights are held in the Magnis Executive Rights Trust.

EXERCISE OF LISTED OPTIONS

No listed options exist, and none were exercised.

EXERCISE OF UNLISTED OPTIONS

No unlisted options were exercised during the period.

OPERATING RESULTS FOR THE YEAR

The Group incurred an operating loss after tax of $16,268,618 (2020: loss of $7,378,601). Refer to Note 1 of the financial
statements for accounting policies used. Summarised segment operating results are as follows:

Lithium-ion battery investments

Graphite exploration and development

Intersegment elimination

Income and losses before tax

Income
$

20,370

599,217

619,587

2021

Results
$

(6,330,209)

(9,938,409)

(16,268,618)

Exploration costs for the year amounted to $1,007,597 (2020: $1,013,034), with the Group having commenced several pre-
development stages such as land clearing and road works along with relocations.

The Group has continued to increase its strategic investments in the businesses of lithium-ion battery technology
manufacturing in the USA via a global consortium Imperium3 New York Inc (‘iM3NY’), and smaller investments on the
planned Townsville counterpart (‘iM3TV’) and the Nachu Graphite Project.

SUBSEQUENT EQUITY EVENT: CONVERTIBLE NOTES

On 3 August 2021, Magnis announced it secured a total of $20,000,000 ($21,000,000 in Face Value) from two US-based
institutions The Lind Partners and SBC Global Investment Fund, via Convertible Notes (the Facility) primarily to support
plans to fast-track Gigawatt scale production at the lithium-ion battery plant in Endicott, New York. Shares issued under the
Facility are done so under the terms and conditions of the Facility. Further funds are for general working capital, including
to advance the Nachu Graphite Project and support the Townsville Battery Plant.

On 3 August 2021 Magnis issued 14,000,000 fully paid ordinary shares under terms of Facility and 5,000,000 Shares to
Evolution Capital Advisors Pty Ltd to remunerate the advisers that supported the transaction in-lieu of cash. The initial
14,000,000 shares to convertible note holders must be repaid or otherwise off-set at the conclusion of the agreements on
the same terms of each Facility drawdown.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

On 6 August 2021, and 9 August 2021, Magnis Energy Technologies Ltd issued, when combined, 21,000,000 fully paid
ordinary shares under terms of Facility and on 13 August 2021 a further 38,000,000 fully shares. Details of the terms
and conditions of the Facility are contained in the Company’s announcement dated 3 August 2021. The share prices for
drawdowns that determine the reduction of the outstanding Face Value are contained in their relevant Appendix 2As.

As at the present date $6,250,000 is outstanding on the original Face Value. This figure excludes repayment of the cash
equivalent of the advanced 14,000,000 shares back to the Company, effectively reducing this figure accordingly.
As at the date of these financials the number of fully paid ordinary shares are 929,434,546.

REVIEW OF FINANCIAL POSITION

LIQUIDITY AND CAPITAL RESOURCES

The Group statement of cash flows shows an increase in cash and cash equivalents for the year ended 30 June 2021 of
$72,548,800 (2020: decrease of $1,110,896).

During the year, the Group raised $41,649,958 (2020: $5,000,000) before costs via share placements and $Nil proceeds from
options exercised (2020: $Nil).

At year end the Group had liquid funds of $72,894,945 (2020: $719,615) available for future operational and investment
use and borrowings of $65,175,758 (2020: $Nil). As this comparison incorporates iM3NY, as is required under the
Accounting Standards on account of our approximate 60% direct and indirect ownership of iM3NY, for readability purposes
shareholders may note the Group held $3,575,086 in cash excluding the iM3NY, at the end of 30 June 2021. For a breakup
of liquidity, refer to Note 6 and borrowing Note 14(c).

SHARES AND OPTIONS ISSUED DURING PERIOD

During the year ended 30 June 2021, the Company raised equity from:

> $41,649,995 raised before fees from a share placement of 166,428,325 FPO shares.

> 121,428,572 unlisted options of which had a strike price of $0.50 and 2 year expiration period.

> 750,000 unlisted options of which half had strike prices of $0.50 and $0.75 respectively and 3 year expiration period.

CAPITAL EXPENDITURE

Capital expenditure by the Group on plant and equipment during the year was $11,963,145 (2020: $2,176).

GROUP PERFORMANCE

Annual Net Income

2021

2020

Consolidated loss
after tax ($)

Shareholder Returns

Share price at
financial year end ($)

Basic loss per share (cents)

Diluted loss
per share (cents)

16,268,618

7,378,601

2021

0.26

1.91

2020

0.08

1.11

2019

5,549,553

2018

5,417,885

2017

9,756,434

2019

0.19

0.92

2018

0.38

0.97

2017

0.515

2.09

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

RISK MANAGEMENT

The Board is responsible for ensuring that risks are identified on a timely basis and that the Group’s activities manage the
risks identified by the Board.

The Group believes that it is crucial for all Board members to be a part of this process.

The newly recomposed Board an Audit & Risk Committee reviews major risks to the business aside from its audit
responsibilities,

Management and staff operate under numerous risk related policies in their day-to-day operations;

The Board strategically reviews operational activities and conveys to management as well as shareholders its objectives
and reports on progress against said objectives.

The Board approves operating and capital budgets and at its meetings and monitors actual expenditure to budget.

The Board reviews sovereign, operating and environmental risks with management and from time-to-time external
consultants provide reports on its practices.

The Board assesses political and sovereign risks relating to its international assets by monitoring local media and
politics. Group representatives liaise with all relevant levels of Government to maintain awareness as to matters
that may affect the Company. In Mr. Tsegas, the Company also has a resident Board member to assist in monitoring
sovereign risks for its Tanzanian assets, and our US based directors Ms Dajani and Dr Whittingham both New York
resident directors who share a keen sense of local, State, and national political sensitivities.

In addition, the other Committees have specific responsibilities for making recommendations for adoption. Numerous
risks are associated with the Company’s businesses. Evaluations, pre-development, technological advancements, capital
requirements, and growing competition makes the Company’s activities risky concerning its battery manufacturing
investments.

Likewise, the realisation of producing commercial off-takes from its Nachu Graphite Project will be very capital intensive.
The degree of success depends on numerous factors. These include sovereign risks, relevant commodity prices, the
quality and scale of realisable resources, and commercial partnerships with multi-year off-take agreements to fund
these operations. The strategic identification of potential mineralisation targets and management oversight will require
exploration and mining programmes involving careful supervision and work from a broad range of skilled specialists.

To balance these considerable risks, the Board hopes Magnis will provide substantial rewards for investors that compensate
for the level of risk inherent to projects of this nature - particularly for a company with a modest (though growing) market
size. Magnis provides two (2) separate though complementary opportunities for success in this space. That Magnis is from
both a resource and technological position centred on battery space, benefits from tailwinds of political, technical, and
economic changes. These appear to lean toward a rapid shift in public and institutional behaviour by commercial and
government entities along with the public. These economic forces are increasingly embracing electrical power together
with other renewable energy strategies.

There is an international consensus to reduce global carbon emissions. Not surprisingly, this has coincided with an
increased level of “green” investment interest and technological achievements that support a paradigm shift from the
dominant reliance on fossil fuels last century. The Board considers Magnis well-positioned to capitalise on the broader
macro-economic changes.

Furthermore. the Group continues to access funds through the capital markets to fund its business needs and strategic
goals and intends to do so until it is self-sustaining through revenue. The capital markets are subject to prevailing
economic conditions, and the Directors are attuned to importance of raising funds for future needs as circumstances
permit, and as anti-dilutionary as practical.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

The Company is strategically managing the challenges posed by the on-going COVID-19 global pandemic in accordance
with local regulatory and legal guidelines for safe working practices across the various locations where the Company has

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

a presence. We have taken several measures to monitor and mitigate the effects of COVID-19, such as safety and health
measures for our people (such as social distancing and working from home). At this stage, the impact on our business and
results has not been significant and based on our experience to date we expect this to remain the case.

We will continue to follow the various government policies and advice and, in parallel, we will do our utmost to continue
our operations in the best and safest way possible without jeopardising the health of our people.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group’s exploration activities in Tanzania are subject to environmental regulations and guidelines in the licenced
areas. Failure to meet environmental conditions attaching to the group’s mineral tenements could lead to forfeiture of the
tenements. No environmental breaches have occurred or have been notified by any government agencies during the year
ended 30 June 2021.

The New York lithium-ion battery plant scheduled for operation in 2022 financial year is also subject to Environmental
and Planning Regulations from various government authorities are being strictly adhered to by iM3NY and its consortium
members including Magnis. The Townsville Project (iM3TSV) remains at a preliminary stage.

DIRECTORS MEETINGS

The number of Directors meetings held (including meetings of committees of Directors) and the number of meetings
attended by each of the Directors of the Company during the financial year are illustrated in the table below. Although
formalised meetings for the committees were not held during the year due to various director changes, discussions on risk,
people, health and safety and sustainability were considered during the Board meetings.

Directors Meeting

Audit & Risk
Committee

Nominations &
Remuneration
Committee

Health, Safety
& Sustainability
Committee

Number of meetings
attended:

F. Poullas

M.S. Whittingham

P. Tsegas

M. Siva

Z. Pavri

R. Petty

M.E. Dajani

J. Dack ^

T. Grant ^

1/*

Notes
A Number of meetings attended.
B Number of meetings held during the year whilst the director held office.
* Not a member of the relevant committee as at the end of the period, but /*or 1/* indicates they were members earlier in the reporting period.
^

J Dack resigned on 14/05/2021 and T Grant resigned on 23/02/2021

Audit & Risk Committee - R. Petty (Chair), M. Siva, Z. Pavri and M.E. Dajani.
Nominations & Remuneration Committee - M. Siva (Chair), M.E. Dajani, R. Petty, and Z Pavri.
Health, Safety & Sustainability Committee - Z. Pavri (Chair), F. Poullas, M.S. Whittingham, P. Tsegas, M. Siva and R. Petty.
The current Board reconstituted each Committee after implementing revised Committee Charters on 16 June 2021.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

REMUNERATION REPORT (AUDITED)

This report outlines the remuneration arrangements in place for Directors and executives.

REMUNERATION POLICY

The Board recognises that the performance of the Group depends upon the quality of its Directors and executives.
To achieve its operating and financial activities the Group must attract, motivate, and retain highly skilled Directors and
executives. The Group’s policy for determining the nature and number of emoluments of Board members and executives of
the Company is assessed annually at the end of each calendar year and are set by reference to market peers.

The Remuneration and Nominations Committee submits its recommendation to the Board for its consideration. All
remuneration paid to Directors and executives is valued at the cost to the Group and expensed.

The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time,
commitment and responsibilities based on recommendations from the Remuneration and Nomination Committee.

The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market
practice, duties, consulting with relevant professionals and accountability.

The current maximum aggregate of Non-Executive Directors fees payable is $650,000; having been approved by
shareholders at the Company’s Annual General Meeting held on 17 November 2017 and this represented the first increase
to the maximum aggregate amount in 9 years.

Presently, Non-Executive Directors receive annual fees of $65,000 and the Executive Chairman receives $120,000. An
additional $5,000 per annum is paid to Directors who Chair Committees, except for the Audit and Risk Committee, where
the Chair receives an additional $15,000 per annum. Superannuation is payable as required under each Director’s service
agreement and Superannuation Act (Cth).

DIRECTOR AND OTHER EXECUTIVES DETAILS

Listed in the Directors’ Report are persons who acted as a director of the Company during or since the end of the financial
year. For the purposes of this report, Key Management Personnel (KMP) of the Group are those persons having authority
and responsibility for planning directing and controlling the major activities of the Company and the Group, directly or
indirectly, including any Director (whether executive or otherwise) of the Company, and senior or key management. In
addition to the Directors, the following were KMP during the financial year:

Mr. Rodney Chittenden - Project Director (from 1 September 2020)

Mr. Julian Rockett - Company Secretary and Legal Counsel (from 15 April 2021)

Mr. Jürgen Behrens - Chief Financial Officer (from 1 April 2020)

PERFORMANCE BASED REMUNERATION

The Group currently has no performance-based remuneration component built into KMP remuneration packages. Bonuses
may be payable at the Board’s discretion following the annual performance review.

COMPANY PERFORMANCE, SHAREHOLDER WEALTH AND DIRECTORS AND EXECUTIVES REMUNERATION

In accordance with the remuneration policy noted above, the Group includes the following principles in its remuneration
framework:

Competitive rewards are set to attract high calibre executives

Executive rewards are linked to shareholder value.

For executives, the Group’s policy is to position total employment costs within a peer group. The mix of fixed and variable
components of employment costs is derived from data assessing market rate labour costs by position.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

There are no financial measures that are included in the assessment, but the Remuneration and Nominations Committee
considers the growth in market capitalisation an important parameter.

For non-financial measures, a range of factors are considered including market position, relationship with a range of
stakeholders, risk management, leadership, and team contribution.

SHARE OPTION PLAN

Magnis Energy Technologies Ltd operates an ownership-based scheme for Directors and Employees of the consolidated
entity. In accordance with the provisions of the Plan, listed fully paid ordinary shares and unlisted options are held on
behalf of Plan Participants by the Trustee of the Magnis Option Share Trust.

During the year ended 30 June 2021, 750,000 unlisted options (2020: 8,100,000) on varying terms and conditions were
allotted to the Trust under the share scheme.

SHARE PLAN: MEST

Magnis Energy Technologies Ltd operates an ownership-based scheme for Directors and Employees of the consolidated
entity. In accordance with the provisions of the Plan, listed fully paid ordinary shares are held on behalf of Plan Participants
by the Trustee of the Magnis Employee Share Trust (“MEST”).

During the year ended 30 June 2021, 20,000,000 fully paid ordinary (FPO) shares (2020: Nil) were allotted to the MEST, to be
held on behalf of Plan Participants pursuant to their employment agreement.

The rights to the 20,000,000 shares held by the Trustee of MEST on behalf of Plan Participants, have not vested pursuant to
the respective terms of their grant, triggered by a Plan Participant resigning.

RIGHTS PLAN: MERT

Magnis Energy Technologies Ltd operates an ownership-based scheme for Directors and Employees of the consolidated
entity. In accordance with the provisions of the Plan, unlisted Performance Rights are held on behalf of Plan Participants by
the Trustee of the Magnis Executive Rights Trust (“MERT”).

During the year ended 30 June 2021, 12,500,000 unlisted Performance Rights (2020: Nil) were allotted to the Trust under
the rights scheme. The unlisted Performance Rights are divided into five tranches and conversion of each tranche is
dependent on satisfaction of performance milestones and service conditions applicable to each tranche, including the
relevant person being a director at the time the respective performance milestone tranche is satisfied.

SERVICE AGREEMENTS

Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Remuneration agreements are set out below:

Frank Poullas - Executive Chairman

No agreement expiry date;

Remuneration is $120,000 from 1 July 2020 (2020: $120,000) per annum plus statutory superannuation guarantee;

Consulting fees of $1,000 per business day that is applicable if invoiced from Strong Solutions Pty Ltd, a related party to
Mr. Poullas;

The agreement and the employment created by it and may be terminated by either Magnis Energy Technologies Ltd or
Mr. Poullas by giving the other party 1 months’ notice.

Mr. Rodney Chittenden - Project Director

No agreement expiry date;

Remuneration is $125,000 from 1 September 2020 (2020: $Nil) per annum plus statutory superannuation guarantee;

The agreement and the employment created by it may be terminated by either Magnis Energy Technologies Ltd or Mr.
Chittenden by giving the other party 1 months’ notice; and

The agreement is subject to annual review.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

Mr. Julian Rockett – Company Secretary and Legal Counsel

No agreement expiry date;

Remuneration is $200,000 + GST pro rata, being $132,000 from 15 April 2021 (2020: $N/A) plus GST;

The agreement and the employment created by it may be terminated by either Magnis Energy Technologies Ltd or Mr.
Rockett by giving the other party 1 months’ notice; and

The agreement is subject to annual review.

Mr. Jürgen Behrens - Chief Financial Officer

No agreement expiry date;

Remuneration is $140,000 from 1 July 2020 (2020: $N/A) per annum plus statutory superannuation;

The agreement and the employment created by it may be terminated by either Magnis Energy Technologies Ltd or Mr.
Behrens by giving the other party 1 months’ notice; and

The agreement is subject to annual review.

OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL (KMP)

A total of $624,359 was paid in consultancy fees to related parties of the KMP and Non-Executive Directors during the
financial year (2020: $231,537). The consultancy and services are provided under normal commercial terms and are
disclosed in detail under Note 24 and Note 25.

Table 1: Remuneration for the year ended 30 June 2020

Non Executive Directors

Salary & Fees
$

Cash Bonuses
$

Termination
Benefits
$

Post
Employment
Benefits
$

Share Based
Payments
Options#
$

Total
$

Professor M S Whittingham

P Tsegas

M.E. Dajani
(Appointed 29 Mar. 2021)

M Siva
(Appointed 29 Mar. 2021)

Z Pavri (Appointed 29 Mar. 2021)

Dr. R Petty
(Appointed 29 Mar. 2021)

Mr. T Grant
(Resigned 23 Feb. 2021)

Key management personnel

F Poullas *

R Chittenden
(Appointed 1 Sep. 2020)

J Rockett *
(Appointed 15 April 2021)

J Behrens
(Appointed 1 April 2020)

Dr. F Houllis
(Terminated 21 Aug. 2020)

87,500

105,000

17,000

38,167

150,000

104,167

24,200

125,000

73,772

J Dack (Resigned 17 May 2021)

263,786

1,039,592

* Fees paid to related entities.
^ Includes superannuation and movements in employee entitlements.
# Share based payments consist of unlisted share options issued.

50,000

1,615

14,250

9,896

22,475

93,000

2,728

143,000

25,060

77,639

87,500

105,000

17,000

18,615

17,000

88,167

164,250

114,063

24,200

147,475

169,500

288,846

1,260,261

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

Table 2: Remuneration for the year ended 30 June 2020

Non Executive Directors

Salary & Fees
$

Sign-On
Bonuses $

Termination
Benefits

Post
Employment
Benefits ^
$

SBP Options #
$

Total
$

Professor M S Whittingham

P Tsegas

W L Smith (Resigned 1-Jan-2020)

J Jooste-Jacobs
(Retired 31-May-2020) *

L Hosking
(Resigned 21-Feb-2020)

S DeGamia
(Appointed 1-Jan-2020,
Resigned 25-Feb-2020)

70,000

35,000

31,963

70,000

56,494

10,000

T Grant (Appointed 23-Jun-2020)

Key management personnel

F Poullas *

M Vogts (Resigned 31-Jan-2020)

Dr. F Houllis
(Terminated 21-Aug-2020)

90,000

156,335

275,000

J Dack (Appointed 15-Jun-2020)

794,792

380,000

* Fees paid to related entities.
^ Includes superannuation and movements in employee entitlements.
# Share Based Payments (SBP) consist of unlisted share options issued.

3,037

6,650

950

8,550

14,615

26,125

100

247

70,100

35,100

35,000

76,750

56,594

10,950

98,650

171,197

301,125

380,000

59,927

747

1,235,466

COMPENSATION SHARES AND OPTIONS GRANTED AND VESTED

During the financial year, the following share-based payments were awarded, vested, exercised, or lapsed:

Table 1: Options Awarded

Grant Date and
Vesting Date

28-Oct-20

Expiry Date

28-Oct-23

Grant Date
Fair Value
$

0.004500

0.011400

Number

375,000

750,000

WEIGHTED AVERAGE FAIR VALUE OF OPTIONS GRANTED

Original Exercise
Price of Option
$

Fair Value Expense
under AASB 2
$

0.75

0.50

1,688

4,275

5,963

0.00795

Table 2: Options Exercised

Grant Date and
Vesting Date

N/A

Expiry Date

Grant Date Fair
Value
$

Number

Original Exercise
Price of Option
$

Fair Value Expense
under AASB 2
$

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

Table 3: Options Lapsed

Grant Date and
Vesting Date

26-Nov-19

22-Jun-18

31-Oct-19

Expiry Date

31-Aug-20

23-Oct-20

2-Dec-20

1-Feb-21

30-Apr-21

Grant Date Fair
Value
$

0.000100

0.031000

0.000200

Number

1,000,000

250,000

1,500,000

250,000

4,000,000

7,000,000

Original Exercise
Price of Option
$

Fair Value Expense
under AASB 2
$

0.70

0.40

100

7,750

46,500

7,750

800

62,900

COMPENSATION SHARES AND RIGHTS GRANTED AND VESTED

During the financial year, the following rights-based payments were awarded, vested, exercised, or lapsed:

Table 4: Performance Rights Awarded

Grant Date and
Vesting Date

Expiry Date

Grant Date Fair
Value
$

18-Dec-20

n\a

0.005340

Number

12,500,000

Table 5: Performance Rights Exercised

WEIGHTED AVERAGE FAIR VALUE OF OPTIONS GRANTED

Original Exercise
Price of Option
$

Fair Value Expense
under AASB 2
$

0.00

66,750

0.00534

Grant Date and
Vesting Date

n/a

Expiry Date

Grant Date Fair
Value
$

Number

Original Exercise
Price of Option
$

Fair Value Expense
under AASB 2
$

Table 6: Performance Rights Lapsed

Grant Date and
Vesting Date

Expiry Date

Grant Date Fair
Value
$

18-Dec-20

n\a

0.005340

Number

5,000,000

Original Exercise
Price of Option
$

Fair Value Expense
under AASB 2
$

0.00

26,700

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

ADDITIONAL DISCLOSURES RELATING TO KEY MANAGEMENT PERSONNEL SHAREHOLDING

The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:

Granted

Additions

(Disposals)

Ordinary shares

F Poullas

P Tsegas

Professor M.S. Whittingham
M E Dajani (Appointed 29 Mar. 2021) ≈
M Siva (Appointed 29 Mar. 2021) ≈
Z Pavri (Appointed 29 Mar. 2021) ≈
Dr. R Petty (Appointed 29 Mar. 2021) ≈
R Chittenden (Appointed 1 Sep. 2020) ≈
J Rockett (Appointed 15 April 2021) ≈
J Behrens (Appointed 1 April 2020) ≈

Hon T Grant (Resigned 23 Feb. 2021) *

J Dack (Resigned 17 May 2021) *

Year Start
Balance

15,983,926

770,000

700,000

860,334

3,500,000

Dr. F Houllis (Terminated 21 Aug. 2020) *

637,945

22,452,205

≈ Opening balance as at appointment date
* Closing balance as at resignation\termination date

Option holding

Options over ordinary shares

F Poullas

P Tsegas

Professor M.S. Whittingham
M E Dajani (Appointed 29 Mar. 2021) ≈
M Siva (Appointed 29 Mar. 2021) ≈
Z Pavri (Appointed 29 Mar. 2021) ≈
Dr. R Petty (Appointed 29 Mar. 2021) ≈

J Behrens

Year Start
Balance

1,000,000

J Jooste-Jacobs (Resigned 31 May 2020) *

1,000,000

Dr. F Houllis (Terminated 21 Aug. 2020) *

1,500,000

750,000

5,500,000

750,000

^ all options vest immediately and are convertible at anytime
≈ Opening balance as at appointment date
* Closing balance as at resignation\termination date

616,074

2,941,176

(2,941,176)

(637,945)

Year End
Balance

16,600,000

770,000

700,000

860,334

3,500,000

3,557,250

(3,579,121)

22,430,334

Year End
Balance^
1,000,000

1,000,000

750,000

(1,000,000)

(1,500,000)

(2,500,000)

3,750,000

The number options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is
set out below:

Granted

Additions /
(Disposals)

(Exercised) /
(Lapsed)

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

RIGHTS HOLDING

The number of rights over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set
out below:

Ordinary Shares

F Poullas

P Tsegas

Professor M.S. Whittingham
M E Dajani (Appointed 29 Mar. 2021) ≈
M Siva (Appointed 29 Mar. 2021) ≈
Z Pavri (Appointed 29 Mar. 2021) ≈
Dr. R Petty (Appointed 29 Mar. 2021) ≈

Hon T Grant (Resigned 23 Feb. 2021) *

J Dack (Resigned 17 May 2021) *

Year Start
Balance

Granted

2,500,000

12,500,000

^ all rights vest immediately and are convertible at anytime
≈ Opening balance as at appointment date
* Closing balance as at resignation\termination date

Additions /
(Disposals)

Lapsed

Year End
Balance^
2,500,000

2,500,000

(2,500,000)

(5,000,000)

7,500,000

OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES

During or since the financial year, no Director of the Company has received or become entitled to receive a benefit, other
than a benefit included in the aggregate amount of emoluments received or due and receivable by the Directors shown in
the consolidated accounts, by reason of a contract entered into by the Company or an entity that the Company controlled
or a body corporate that was related to the Company when the contract was made or when the Director received, or
became entitled to receive, the benefit with:

> a Director, or

> a firm of which a Director is a member, or
>

an entity in which a Director has substantial financial interest except the usual professional fees for their services paid
by the Company to:

Identity of Related Party

Nature of Relationship

Type of
Transaction

Terms &
Conditions of
Transaction

Strong Solutions Pty Ltd

Mr. Frank Poullas is a related party of
Strong Solutions Pty Ltd and a director of
Magnis Energy Technologies Ltd

Consulting
fees and IT
Services

Peter Tsegas

Mr. Peter Tsegas is a Director of Magnis
Energy Technologies Ltd

Consulting
fees

Distinguished Professor
M.S. Whittingham

Distinguished Professor M.S. Whittingham
is a Director of Magnis Energy
Technologies Ltd

Consulting
fees

Mr. Troy Grant
(Resigned 23 Feb. 2021)

Mr. Troy Grant was a Director of Magnis
Energy Technologies Ltd

Consulting
fees

Normal
commercial
terms

Aggregate Amount

2021
$

2020
$

208,000
92,970

124,000
57,770

273,389

35,018

14,749

50,000

624,359

231,537

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

2020 REMUNERATION REPORT

The Remuneration Report received positive shareholder support from members greater than the 75% ‘first strike’ threshold
at the last Annual General Meeting.

This concludes the remuneration report, which has been audited.

SHARES UNDER OPTION

Details of unissued shares under option as at 30 June 2021 in Magnis Energy Technologies Ltd are:

Number of ordinary shares

Class of shares

Exercise price of option

Expiry date of option

3,000,000

375,000

121,428,572

125.178,572

Ordinary

WEIGHTED AVERAGE

0.70

0.50

0.75

0.50

0.51

Oct-2022

Oct-2023

May-2023

WEIGHTED AVERAGE REMAINING LIFE OF OPTIONS: 1.8904 years

The holders of these options do not have the right, by virtue of the option, to participate in any share issue or interest issue
of the Company or of any other body corporate or registered scheme. No voting rights are attached to the options.

During the 2021 financial year, there were Nil (2020: Nil) shares issued because of exercising of options.

PERFORMANCE RIGHTS

Details of performance rights as at 30 June 2021 in Magnis Energy Technologies Ltd are:

Number of ordinary shares

Class of shares

Exercise price of option

Expiry date of option

7,500,000

7.500.000

Ordinary

WEIGHTED AVERAGE

0.00

n\a

WEIGHTED AVERAGE REMAINING LIFE OF RIGHTS: 9.4221 years

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company has agreed to indemnify all the directors and executive officers for any breach of laws by the Company
for which they may be held personally liable, except where there is a lack of good faith. The agreement provides for the
Company to pay liabilities or legal expenses to the extent permitted by law.

During or since the financial year, the Company has paid premiums insuring all the Directors of Magnis Energy
Technologies Ltd against costs incurred in defending proceedings for conduct other than:

(a) a wilful breach of duty

(b) a contravention of sections 182 or 183 of the Corporations Act, 2001

as permitted by section 199B of the Corporations Act, 2001. The Company’s insurance contracts, prohibit the public
disclosure of their terms and conditions, including the cost of the premiums.

INDEMNIFICATION AND INSURANCE OF AUDITOR

To the extent permitted by law, the Company has not agreed to indemnify its auditors, Hall Chadwick Melbourne Audit, as
part of the terms of its audit engagement agreement against claims by third parties arising from the audit. No payment has
been made to indemnify Hall Chadwick Melbourne Audit during or since the year ended 30 June 2021.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Directors’ Report

PROCEEDINGS ON BEHALF OF THE COMPANY

No person or entity has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company, or to intervene in any proceedings to which the Company is party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.

SUBSEQUENT EVENTS

Subsequent events since the end of the year are outlined in Note 21 ‘Subsequent events’ to the Financial Statements.

ROUNDING OF AMOUNTS

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial / Directors’ Reports)
Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the Directors’
Report and the Financial Statements are rounded off to the nearest dollar, unless otherwise indicated.

NON-AUDIT SERVICES

Details of the amounts paid or payable to the auditor excluding GST\Taxes for non-audit services provided during the
financial year by the auditor are outlined below:

Hall Chadwick Melbourne Audit:
Sydney, Australia

> Taxation services: $40,677

> Corporate services: $17,864

Sciarabba Walker & Company, LLP:
New York, USA

Shephard Consulting Limited:
Dar es Salaam, Tanzania

> Taxation services: $Nil

> Taxation services: $104,299

> Corporate services: $Nil

The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor’s behalf ), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.

The Directors are of the opinion that the services as disclosed in Note 22 to the financial statements do not compromise
the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and

none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing, or auditing the auditor’s own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.

AUDITOR INDEPENDENCE

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act, 2001 is set out
on page 20.

Signed in accordance with a resolution of the Directors, pursuant to section 298(2)(a) of the Corporations Act, 2001.

On behalf of the directors

Frank Poullas

EXECUTIVE CHAIRMAN

Sydney, 30 September 2021

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

07Auditor’s Independence Declaration

MELBOURNE AUDIT

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

08Statement of Profit or Loss

& Other Comprehensive Income

YEAR ENDED 30 JUNE 2021

Consolidated

Notes

2021
$

2020
$

Income

Interest received

Foreign exchange gain

Profit on sale of fixed assets

Other revenue

R&D Grant

Government Grants and Assistance

Total income

Expenditure

Administration expenses

Depreciation expense

Directors’ fees

Employee benefits expense

Legal and consulting expenses

Share based payment to employees

Share based payment to non-employees

Share of net loss of associate accounted for using the equity method

28(a)

174,359

12,782

242,755

69,191

120,500

619,587

130,363

20,978

493,311

19,843

116,385

71,000

851,880

11,476,242

3,732,983

213,397

436,006

2,224,277

1,484,673

5,963

40,050

179,615

490,639

1,517,875

1,294,788

747

800

Exploration and evaluation expenses

Total expenditure

(Loss) before income tax expense

Income tax expense

Net (loss) for the year

Net profit / (loss) for the year attributable to:
Owners of Magnis Energy Technologies Ltd

Non-controlling Interest

Net (loss) for the year

Other comprehensive income/(loss)
Items that will not be subsequently reclassified to profit or (loss)

Change in fair value of financial assets at FVOCI

Items that may be reclassified subsequently to profit or (loss)

Gain / (loss) on foreign currency translation

Other comprehensive income / (loss) for the year, net of tax

Total comprehensive income / (loss) for the year, net of tax

Total comprehensive earnings / (loss) for the year attributable to:
Owners of parent entity

Non-controlling Interest

Total comprehensive income / (loss) for the year, net of tax

1,007,597

1,013,034

16,888,205

8,230,481

(16,268,618)

(7,378,601)

(16,268,618)

(7,378,601)

(11,345,122)

(6,983,513)

(4,923,496)

(395,088)

(16,268,618)

(7,378,601)

7,600,580

(2,524,523)

1,281,161

876,522

8,881,741

(1,648,001)

(7,386,877)

(9,026,602)

(7,330,352)

(9,024,783)

(56,525)

(1,819)

(7,386,877)

(9,026,602)

Basic loss per share (cents per share)

Diluted loss per share (cents per share)

1.91

1.11

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying Notes.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

09Statement of Financial Position

YEAR ENDED 30 JUNE 2021

Current assets

Cash and cash equivalents

Trade and other receivables

Loan receivables

Total current assets

Non current assets

Financial assets at FVOCI

Right-of-use-assets

Development assets

Plant & equipment iM3NY

Plant & equipment

Total non current assets

Total assets

Current liabilities

Trade and other payables

Lease Liability

Provisions

Total current liabilities

Non current liabilities

Lease Liability

Borrowings

Provisions

Total non current liabilities

Total liabilities

Net assets

Equity

Contributed equity

Reserves

Accumulated Profits/(Losses)

Parent Interest - Capital and Reserves

Issued Capital - Non-controlling Interest

Accumulated Profits/(Losses) - Non-controlling Interest

Non controlling interests

Total equity

Consolidated

2021
$

Notes

6, 18(b)

72,894,945

786,648

19,351,818

2020
$

719,615

527,143

280,941

93,033,411

1,527,699

12(a)

12(b)

14(a)

14(b)

14(a)

14(c)

14(b)

15,096,142

7,495,562

266,305

476,363

4,982,338

5,577,131

23,290,573

11,971,650

14,839

16,091

43,650,197

25,536,797

136,683,608

27,064,496

3,672,965

1,794,608

214,076

48,345

197,950

112,290

3,935,386

2,104,848

73,230

292,700

65,175,758

65,248,988

43,323

336,023

69,184,374

2,440,871

67,499,234

24,623,625

15(a)

179,841,178

128,625,905

12,386,330

3,521,476

(138,095,014)

(112,938,231)

54,132,494

19,209,150

18,290,236

(4,923,496)

5,809,563

(395,088)

13,366,740

5,414,475

67,499,234

24,623,625

The above Statement of Financial Position should be read in conjunction with the accompanying Notes.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

10Statement of Changes in Equity

YEAR ENDED 30 JUNE 2021

YEAR ENDED
30 JUNE 2021

Notes

Issued
Capital
$

FVOCI
Reserve
$

Share
Based
Payment
Reserves
$

Foreign
Currency
Translation
Reserve
$

Accumulated
(losses)
$

Non
controlling
Interests
$

Total
Equity
$

128,625,905

(2,524,523)

63,200

5,982,799

(113,333,319)

5,809,563

24,623,625

At 1 July 2020

Loss for the
previous period

Loss for the period

Other comprehensive income/
(loss)

Total comprehensive income/
(loss) for the year

Transactions with owners:

Contributions of equity, net of
transaction costs

Contributions of equity, net of
transaction costs iM3NY

Share based payments

28(a)

Forfeiture of share-based
payments

Non-Controlled interest

Reclassification
from reserve

At 30 June 2021

Loss for the previous period

Loss for the period

Other comprehensive income/
(loss)

Total comprehensive income/
(loss) for the year

Transactions with owners:

Contributions of equity, net of
transaction costs

Contributions of equity, net of
transaction costs iM3NY

Share based payments

28(a)

Forfeiture of share-based
payments

Non-Controlled interest

Reclassification
from reserve

At 30 June 2020

7,600,580

39,106,954

12,108,319

46,013

(62,900)

(202,830)

(13,213,843)

13,416,673)

(11,345,122)

(4,923,496)

(16,268,618)

1,281,161

8,881,741

1,281,161

(11,547,952)

(18,137,339)

(20,803,550)

100

12,480,673

51,587,627

12,108,319

46,013

(62,800)

(18,137,339)

18,137,339

179,841,178

5,076,057

46,313

7,263,960

(143,018,510)

18,290,236

67,499,234

YEAR ENDED
30 JUNE 2020

Notes

Issued
Capital
$

FVOCI
Reserve
$

At 1 July 2019

124,177,419

Share
Based
Payment
Reserves
$

Foreign
Currency
Translation
Reserve
$

Accumulated
(losses)
$

Non
controlling
Interests
$

Total
Equity
$

1,290,644

5,106,277

(106,552,635)

24,021,705

(2,524,523)

1,548

(1,228,992)

4,448,486

(631,075)

(6,983,513)

(395,088)

(7,378,601)

876,522

(1,648,001)

876,522

(6,983,513)

(1,026,163)

(9,657,677)

5,809,563

10,258,049

1,228,992

(1,026,163)

1,026,163

1,548

128,625,905

(2,524,523)

63,200

5,982,799

(113,333,319)

5,809,563

24,623,625

The above Statement of Changes in Equity should be read in conjunction with the accompanying Notes.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

11Statement of Cash Flows

YEAR ENDED 30 JUNE 2021

Cash flows from operating activities

Payments to suppliers and employees

Payment of exploration expenditure

Payment for development assets

Interest and other costs of finance paid

Interest received

Government Grants and Assistance

R&D grant

Consolidated

Notes

2021
$

2020
$

(12,095,418)

(4,402,358)

(1,013,435)

(1,009,582)

119,279

(8,998)

(1,922,725)

172,098

120,500

6,698

71,000

69,191

116,385

Net cash used in operating activities

18(a)

(14,550,510)

(5,226,855)

Cash flows from investing activities

Acquisition of plant & equipment

Acquisition of interest in associate

Acquisition of interest in financial asset

Proceeds from sale of property, plant, and equipment

Payment of loan to related parties

Net cash flows used in investing activities

Cash flows from financing activities

Proceeds from issues/sale of ordinary shares and options

Repayment of lease liabilities

Capital raising expenses

Proceeds from borrowings

Repayment of borrowings

Transaction costs related to loans and borrowings

(11,963,145)

(2,176)

(30,809,961)

(856,222)

(11,867)

(27,222)

242,755

493,311

902,432

156,351

(41,639,786)

(235,958)

85,353,763

4,376,833

(44,504)

(1,991,491)

19,588

66,949,028

4,793,910

(26,366,114)

Net cash flows from financing activities

128,739,096

4,351,917

Net increase/(decrease) in cash and cash equivalents

Net foreign exchange differences

Add opening cash and cash equivalents – iM3NY

Add opening cash and cash equivalents

Closing cash and cash equivalents

72,548,800

(1,110,896)

(373,470)

(5,336)

253,417

6,030

466,198

1,829,817

18(b)

72,894,945

719,615

The above Statement of Cash Flows should be read in conjunction with the accompanying Notes.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

12Notes to the Financial Statements

YEAR ENDED 30 JUNE 2021

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial report are set out below. The financial report
covers the consolidated group of Magnis Energy Technologies Ltd and controlled entities described on Note 27 (“the
Group”). Magnis Energy Technologies Ltd is a company, limited by shares, incorporated in Australia whose shares are
publicly traded on the Australian Securities Exchange (“ASX”).

The following is a summary of the material accounting policies adopted by the consolidated Group in the preparation of
the financial report. The accounting policies have been consistently applied to all years presented, unless otherwise stated.

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 profit orientated entities.

[i] Statement of Compliance

These financial statements also comply with International Financial Reporting Standards [“IFRS”] as issued by the
International Accounting Standards Board [“IASB”]

[ii] Historical cost convention

The financial report has been prepared on an accrual basis under the historical cost convention, as modified by the
revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of
accounting has been applied.

[iii] Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 2.

The financial report is prepared in Australian dollars.

GOING CONCERN

The Group has a multi strategy business of developing lithium-ion battery technology manufacturing in the USA and
Australia combined with pre-mine development of its Nachu Graphite project in Tanzania.

For the year ended 30 June 2021, the Group reported a net loss of $16,268,618 (2020: $7,378,601) and net operating
cash outflows of $14,550,510 (2020: $5,226,855). The operating cash outflows have been funded by cash inflows from
equity raisings of $85,353,763 (2020: $4,376,833) during the year. As at 30 June 2021 the Group had net current assets of
$89,098,025 (2020: net current liabilities of: $577,149) including cash reserves of $72,894,945 (2020: $719,615).

After year end, Magnis announced that it had secured $20,000,000 in funding from two US-based institutions, The Lind
Partners and SBC Global Investment Fund, via a Convertible Note (“Facility”), that will be used to assist the Company with
its aggressive growth plans to fast-track Gigawatt scale production at the iM3NY lithium-ion battery plant located in
Endicott, New York. Shares issued under the facility will be in accordance with the terms and conditions of the agreement.

Total funds raised will also be used to strengthen the balance sheet and for general working capital, advance early works
with the Company’s 100% owned Nachu Graphite Project in Tanzania, along with any support required towards the
Townsville Battery Plant.

As such, the financial statements have been prepared on a going concern basis which contemplates the continuity of
normal business activities, further share placements and the realisation of assets and settlement of liabilities in the ordinary
course of business.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

If the assumptions underpinning the basis of preparation do not occur as anticipated, there is material uncertainty that
may cast significant doubt over whether the Group will continue to operate as a going concern. If the Group is unable to
continue as a going concern it may be required to realise its assets and extinguish its liabilities other than in the normal
course of business and at amounts different to those stated in the financial statements.

No adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying
amounts or the classification of liabilities that might be necessary should the Group not continue as a going concern.

The financial statements were authorised for issue by the directors on 30 September 2021.

NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

(i) New and amended standards adopted by the Group

The accounting policies adopted are consistent with those of the previous financial year and the Group has adopted not
new or amended Australian Accounting Standards and AASB Interpretations as of 1 July 2020.

Exploration and evaluation costs

Exploration and evaluation expenditure is expensed directly to profit or loss when incurred. Accounting policies for the
Group’s development assets are outlined in Note 11 ‘Development Assets’.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either in the
principal market, or, in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs, and minimising the use of
unobservable inputs.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge
and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an
analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison,
where applicable, with external sources of data.

Goods and services tax (GST) and/or value added tax (VAT)

Revenues, expenses, and assets are recognised net of the amount of GST/VAT except:

where the GST/VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST/VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as
applicable; and

receivables and payables are stated with the amount of GST/VAT included.

The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST/VAT 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.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

Commitments and contingencies are disclosed net of the amount of GST/VAT recoverable from, or payable to, the
taxation authority.

Withholding tax and other indirect taxes are incurred on amounts of VAT recoverable from, or payable to, the
taxation authority.

FOREIGN CURRENCY TRANSLATION

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.

Transactions 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 re-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 profit or loss.

Financial statements of foreign operations

The financial results and position of foreign operations whose functional currency is not Australian dollars, the Group’s
presentation currency, are translated as follows:

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date

income and expenses are translated at average exchange rates for each month during the period.

Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency
translation reserve in other comprehensive income. These differences are recognised in the statement of comprehensive
income in the period in which the operation is disposed.

EMPLOYEE BENEFITS

Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date.
These benefits include wages and salaries, annual leave, and long service leave when it is probable that settlement will
be required.

Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled
within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are
expected to be paid when the liability is settled including related on-costs, such as workers compensation and payroll tax.

REVENUE RECOGNITION

Interest revenue is recognised as interest accrues using the effective interest method.

CONTRIBUTED EQUITY

Ordinary shares are classified as equity. Any transaction costs arising on the issue of ordinary shares are recognised directly
in equity as a reduction of the share proceeds received.

RESTATEMENT OF COMPARATIVES

When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS

The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue, and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events, that
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. The estimate, judgements and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities (refer to the respective Notes) within the next financial
year are discussed below.

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 products
and services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates.
Other than as addressed in specific Notes, 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 as a result of the Coronavirus
(COVID-19) pandemic.

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees and directors by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value of share options is determined by an external
valuer using a binomial option pricing model that uses the assumptions detailed in Note 28(g).

Indirect tax receivables and liabilities

The Group is subject to indirect taxes in Australia and the jurisdiction where it has foreign operations. Significant
judgement is required in determining the amounts recorded as receivables for recovery of such taxes and payables for
payment of such taxes. The Group is subject to an audit by a tax authority in a jurisdiction in which it operates.

The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be
due. The Group has adequately recorded receivables and payables for the amounts it believes will ultimately be payable.
Where the final outcome of any matters is different from amounts recorded, such differences will impact the indirect tax
receivables or provision in the period in which such determination is made.

Fair value estimates of financial instruments

The Group is required to classify all assets and liabilities, measured at fair value, using a three-level hierarchy, based on the
lowest level of input that is significant to the entire fair value measurement, being:

Level 1:

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date;

Level 2:

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly; and

Level 3: Unobservable inputs for the asset or liability.

Considerable judgement is required to determine what is significant to fair value and therefore which category the asset
or liability is placed in can be subjective. The fair value of assets and liabilities classified as Level 3 is determined by the use
of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant
adjustments based on unobservable inputs.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

3. SEGMENT INFORMATION

a) Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive
management team in assessing performance and in determining the allocation of resources. During the financial year, the
Group continued its participation in global consortia, including ownership, to operate lithium-ion battery Gigafactories
in Australia and the USA. As a member of this consortia, Magnis’ role will be to provide anode materials and associated
technologies to assist in the production process. This activity is supplemented by the involvement in the development
and ultimate mining of natural flake graphite for use in various industries, including in particular batteries for storing
electrical energy.

b) Identification of reportable segments

Due to the infancy of its interests in the lithium-ion battery sector, the Group has determined its reportable segments for
the financial year ended 30 June 2021 as follows:

lithium-ion battery investments

> graphite exploration and development

Identification of reportable segments

2021
Segment financial
information

Lithium-ion Battery
Investment
USA
$

Lithium-ion Battery
Investment
Australia
$

Graphite Exploration
& Development
Tanzania
$

Consolidated
$

Segment revenue

Segment loss before tax

Segment current assets

Segment non-current assets

Segment liabilities

(6,330,209)

88,092,175

34,271,239

(68,471,980)

20,370

55,591

599,217

(9,938,409)

4,885,645

9,378,958

(712,394)

619,587

(16,268,618)

93,033,411

43,650,197

(69,184,374)

2020
Segment financial
information

Lithium-ion Battery
Investment
USA
$

Lithium-ion Battery
Investment
Australia
$

Graphite Exploration
& Development
Tanzania
$

Consolidated
$

Segment revenue

Segment loss before tax

Segment current assets

Segment non-current assets

Segment liabilities

Accounting policies

149,468

191,217

7,495,562

18,252

131,473

684,160

(7,378,601)

1,205,009

18,041,235

(2,440,871)

851,880

(7,378,601)

1,527,699

25,687,797

(2,440,871)

The Group applies AASB 8 Operating Segments and determines its operating segments to be based on its geographical
location and also by operational type. Lithium-ion battery investment refers to the Group’s ownership in planned
Gigafactories via the Global Consortiums: Imperium3 Pty Ltd and Imperium3 New York Inc. Graphite exploration and
development currently refers to the pre-development operation of the Nachu Graphite Project in Tanzania. The financial
performance of these segments is reported to the Board on a periodical basis. The accounting standards adopted in
preparing internal reports to the Board are consistent with those adopted in preparing this annual
report. Operating segments are subject to risks and returns that are different to those of segments operating in other
economic environments.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

Inter-segment transactions

To avoid asymmetrical allocation within segments which management believe would be inconsistent policy, if items
of revenue and expense are not allocated to operating segments then any associated assets and liabilities are also not
allocated to segments.

Segment assets and liabilities

Segment assets include all assets used by a segment and consist primarily of cash and cash equivalents. Development
assets, plant and equipment, and trade and other receivables. While most of these assets can be directly attributable to
individual segments, the carrying amounts of certain assets used jointly by segments are not allocated. Segment liabilities
consist primarily of trade and other creditors and employee benefits. Segment assets and liabilities do not include deferred
income taxes.

4. DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES

No dividends were paid or declared since the start of the financial year.

No recommendation for payment of dividends has been made.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

5. INCOME TAX

Current income tax

Current income tax credit/(expense)

Tax losses not recognised as not probable

(Under)/over provision in prior year

Deferred income tax

Consolidated

2021
$

2020
$

4,851,325

2,234,220

(3,789,971)

(1,747,078)

1,061,354

487,142

Relating to origination and reversal of temporary differences

(1,061,354)

(487,142)

Tax losses brought to account to offset net deferred tax liability

Income tax credit/(expense) reported in the Statement of Comprehensive Income

a) Statement of Changes in Equity

Deferred income tax related to items charged or credited directly to equity

Share issue costs

Deferred tax offset

Income tax benefit reported in Equity

b) Tax Reconciliation

516,517

(516,517)

50,318

(50,318)

A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group’s

applicable income tax rate is as follows:

Accounting (loss) before tax

At the Group’s statutory 30% tax rate (2020: 30%)

Share based payment expense

Movement in temporary differences

Share of net P&L of associate accounted for using equity method

Exploration and evaluation expense write off

Non-assessable R&D offset income

Deductible option issue costs

Other adjustments

Tax losses not brought to account

Loss recoupment

Income tax (expense) reported in the Statement of Comprehensive Income

(16,268,618)

(7,378,601)

4,880,585

2,213,580

(12,015)

(120,240)

(534,589)

(380,565)

(110,063)

(118,376)

20,757

244,090

(1,767,972)

34,915

115,136

2,627

(3,789,971)

(1,747,077)

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

The benefit of these losses and temporary differences will only be obtained if:

a) the Group derives future assessable income of a nature and an amount sufficient to enable the benefit from the

deductions for the loss to be realised;

b) the Group continues to comply with the condition of deductibility imposed by law; and

c) no changes in tax legislation adversely affect the Group in realising the benefit from the deduction for the loss.

At the reporting date, the Group has estimated tax losses of (refer below) available to offset against future taxable income
subject to continuing to meet relevant statutory tests.

To the extent that it does not offset a deferred tax liability, a deferred tax asset has not been recognised for these losses
because it is not probable that future taxable income will be available to use against such losses.

Group tax losses - 30 June 2021

Transferred tax losses

Tax losses in foreign companies

Total tax losses - 30 June 2021

ACCOUNTING POLICIES

21,111,995

26,706,090

62,413,482

110,231,267

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by the changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.Deferred income tax is provided on all temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all temporary differences, except:

where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss; or

when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary difference, and the carry-forward of unused tax assets and unused tax losses can be used, except:

where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition
of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and

when the deductible temporary differences is associated with investments in subsidiaries, associates or interests in
joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary
difference will reverse in the foreseeable future and taxable profit will be available against which the temporary
differences can be applied.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates [and tax laws] that have been enacted or substantively
enacted at the reporting date. Income taxes relating to items recognised directly in equity are recognised in equity and not
in the statement of financial position.

Tax consolidated group

The Company and its wholly owned Australian subsidiaries have elected to form a tax consolidated group from 1 July 2015,
with Magnis Energy Technologies Ltd being the head entity within that group. These entities are taxed as a single entity.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

6. CURRENT ASSETS - CASH AND CASH EQUIVALENTS

Cash on hand

Cash at bank

Cash at bank – iM3NY

ACCOUNTING POLICIES

Consolidated

2021
$

2,651

3,572,435

69,319,859

2020
$

5,094

714,521

72,894,945

719,615

For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call
with financial institutions, other short-term highly liquid investments that are readily convertible to known amounts of
cash and which are subject to insignificant risk of change in value, and bank overdrafts.

7. TRADE AND OTHER RECEIVABLES

Accrued interest

Goods and services tax recoverable

Prepayments and other receivables

Less: allowance for expected credit loss

Security deposit

Consolidated

2021
$

240

239,341

396,090

150,977

786,648

2020
$

910

26,158

399,061

(49,963)

150,977

527,143

ACCOUNTING POLICIES

Other receivables are recognised and measured at amortised cost, less any allowance for expected credit losses.

Allowance for expected credit losses

The consolidated entity has recognised a loss of $Nil (2020: $49,963) in the profit or loss, in respect of the expected credit
losses related to trade and other receivables for the year ended 30 June 2021

Movements in the allowance for expected credit losses are as follows:

Opening balance

Additional provisions recognised

Receivables written off during the year as uncollectable

Unused amounts reversed

Closing balance

Consolidated

2021
$

49,963

2020
$

107,214

49,963

(49,963)

(107,214)

49,963

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

8. LOAN RECEIVABLES
Movements in the allowance for expected credit losses are as follows:

Accrued interest

Short-term loan between Charge CCCV LLC & iM3NY Inc.

Less: allowance for expected credit loss

Short-term loan - Imperium3 Townsville

Capitalised Loan Costs - iM3NY: Other Costs Inc.

Amortisation of Capitalised Loan Costs - iM3NY Inc.

Consolidated

2021
$

20,370

14,524

2020
$

167,720

1,517,754

(1,517,754)

35,221

113,221

20,266,960

(985,257)

19,351,818

280,941

ACCOUNTING POLICIES

Short-term loan between Charge CCCV LLC & iM3NY Inc and Allowance for expected credit losses

Loan receivables are recognised and measured at amortised cost, less any allowance for expected credit losses. On 22 April
2021 and 10 June 2021, Charge CCCV, LLC (C4V) paid off its loan in full to the Company under the Amendment Agreement
(Agreement), that both parties entered into on 6 August 2020. The remaining amount due relates to an iM3NY receivable
that’s due from C4V.

The consolidated entity has recognised a loss of $Nil (2020: $1,517,754) in profit or loss in respect of the expected credit
losses related to trade and other receivables for the year ended 30 June 2021.

Capitalised Loan Costs and Allowance for Amortisation of Capitalised Loan Costs - iM3NY Inc

These are capitalised expenses incurred in securing loan finance for iM3NY Inc. and includes such items as legal fees,
agency fees, engineering fees, costs to obtain finance, new equity issuance and other costs that will be amortised in
accordance to their respective nature.

The consolidated entity has recognised of $985,257 (2020: $Nil) in profit or loss in respect of amortisation of capitalised
loan costs related to securing loan finance for iM3NY Inc for the year ended 30 June 2021.

9. FINANCIAL ASSET at FVOCI

Equity investment in Charge CCCV LLC

Consolidated

2021
$

2020
$

15,096,142

7,495,562

15,096,142

7,495,562

On 29 March 2018, Magnis announced a strategic investment to acquire a 10% interest in leading US based, lithium-ion
battery technology group, Charge CCCV LLC (‘C4V’) and secured an exclusive agreement over selective patents, which will
assist in driving the Company’s growth in the lithium-ion battery sector.

Magnis has appointed one representative to the Board of Directors of C4V and has also secured a first right of refusal for
any future capital raising initiatives that C4V undertake. Further to the agreement, Magnis also has an exclusive agreement
for 5 years over selected C4V patents, which will expand the Company’s material technologies in the rapidly growing
lithium-ion battery sector.

On 28 April 2021 and as clarified in announcement on 9 Sept 2021, Riverstone Credit Partners received 3.50% stake in C4V
which effectively diluted the Company’s ownership in C4V to 9.65% (2020: 10.00%) as at 30 June 2021.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

ACCOUNTING POLICIES

(i) Classification of financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income comprise:
>

equity securities which are not held for trading, and for which the group has made an irrevocable election at initial
recognition to recognise changes in fair value through OCI rather than profit or loss as these are strategic investments
and the group considered this to be more relevant, and
debt securities where the contractual cash flows are solely principal and interest, and the objective of the group’s
business model is achieved both by collecting contractual cash flows and selling financial assets.

(ii) Equity investments at fair value through other comprehensive income

Equity investments at fair value through other comprehensive income (FVOCI) comprise the following investment:

Unlisted securities - Charge CCCV LLC

Consolidated

2021
$

2020
$

15,096,142

7,495,562

15,096,142

7,495,562

Upon disposal of these equity investments, any balance within the OCI reserve for these equity investments is reclassified
to retained earnings and is not reclassified to profit or loss.

(iii) Debt investments at fair value through other comprehensive income

There are no debt investments at fair value through other comprehensive income (FVOCI) for both years. Information
about the methods and assumptions used in determining fair value is provided in Note 16.

10. RIGHT OF USE ASSET

Right-of-use assets at start of period

Additions

Currency Translation

Depreciation expense

Carrying value of Right-of-use assets

11. DEVELOPMENT ASSETS

Development assets

Consolidated

2021
$

476,363

2020
$

614,808

(8,026)

(202,032)

266,305

(138,445)

476,363

Consolidated

2021
$

2020
$

4,982,338

5,577,131

4,982,338

5,577,131

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

ACCOUNTING POLICIES

Development assets are stated at cost less accumulated depreciation and impairment losses. Cost represents the
accumulation of all the compensation and resettlement expenditure incurred by, or on behalf of, the entity in relation to
areas of interest in which construction or development has commenced. Compensation and resettlement expenditures are
capitalised as development assets.

Development costs in which the Group has an interest are amortised over the life of the area of interest to which the
costs relate to on a units of production basis over the estimated proven and probable ore reserves and proportion of
other measured and indicated mineral resources where there is a high degree of confidence that they can be extracted
economically. Changes in the life of the area of interest and/or ore reserves, and other mineral resources are accounted for
prospectively.

Impairment

At each reporting date, the Group reviews the carrying values of its development assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the
higher of the asset’s fair value less costs to sell or value in use, is compared to the asset’s carrying value. Any excess of the
asset’s carrying value over its recoverable amount is expensed to profit or loss.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.

As at 30 June 2021, no impairment to the carrying value of the development assets has been deemed necessary.

Movements in development assets

Movements in development assets during the financial year, are set out as follows:

Opening balance

Development costs capitalised during the year

Currency translation difference

Closing balance

Consolidated

2021
$

2020
$

5,577,131

5,466,492

(594,793)

110,639

4,982,338

5,577,131

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

12. (a) PLANT AND EQUIPMENT iM3NY

Plant and Equipment - iM3NY

ACCOUNTING POLICIES

Consolidated

2021
$

2020
$

23,290,573

11,971,650

iM3NY P&E assets are stated at cost less accumulated depreciation and impairment losses. Costs represent the
accumulation of all the plant and equipment and expenditure incurred by, or on behalf of, the entity in relation to the
establishment and preparation of the production plant. iM3NY P&E costs in which the Group has an interest are amortised
over the projected life of the production plant.

Impairment

In October 2019, the Group had an independent valuation undertaken by global engineering, architecture and
consultancy company Ramboll Energy to confirm the iM3NY plant and equipment US$71,340,620 valuation.

On 19 April 2021 when the Company announced that its majority owned subsidiary Imperium3 New York Inc. (iM3NY),
had received funding to fast-track production at its lithium-ion battery plant in Endicott, NY, Riverstone Credit Partners, L.P.
confirmed through its due diligence that iM3NY has US$230 Million of manufacturing assets in place.

As at 30 June 2021, no impairment to the carrying value of the iM3NY P&E assets has been deemed necessary.

Movements in iM3NY P&E assets

Movements in iM3NY P&E assets during the financial year, are set out as follows:

Opening balance

iM3NY P&E costs capitalised during the year

Currency translation difference

Closing balance

Consolidated

2021
$

2020
$

11,971,650

11,953,079

11,971,650

(634,156)

23, 290,573

11,971,650

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

12. (b) PLANT AND EQUIPMENT

Plant and Equipment

ACCOUNTING POLICIES

Consolidated

2021
$

2020
$

14,839

16,091

Each class of plant and equipment is carried at cost, less, where applicable, any accumulated depreciation and
impairment losses.

The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and
an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to profit or loss during the financial period in which they are incurred.

Depreciation

Depreciation is provided on plant and equipment, motor vehicles, office equipment, furniture, and fittings, and is
calculated on a straight-line basis, commencing from the time the asset is first used, so as to write off the net costs of each
asset over its expected useful life.

The following useful lives are used in the calculation of depreciation:

> Plant & equipment 2 to 5 years

> Vehicles 2 to 5 years

> Office equipment, furniture & fittings 2 to 20 years

The residual value and useful life of assets are reviewed, and adjusted if appropriate, at each reporting date. Gains and
losses on disposal(s), if any, are determined by comparing the proceeds with the carrying amount. These are included in
profit or loss.

Impairment

At each reporting date, the Group reviews the carrying values of its plant & equipment assets to determine whether
there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the
asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value.
Any excess of the asset’s carrying value over its recoverable amount is expensed to profit or loss. Where it is not possible
to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

Reconciliation of carrying amounts at the beginning and end of the year

Plant
and
equipment
$

Office
equipment
$

Software
$

Consolidated

Office
furniture
and
fittings
$

Office
Improve-
ments
$

Motor
vehicles
$

Total
$

1,856

(155)

(643)

9,756

9,412

663

(6,859)

1,058

12,972

411,218

105,227

(410,160)

(92,255)

1,058

12,972

107

2,176

(49)

(377)

19,214

(9,514)

1,856

9,756

435,008

97,144

(433,152)

(87,388)

1,856

9,756

654

(93)

(26)

628

4,386

(368)

16,091

10,066

(3,837)

(11,365)

181

14, 839

15,775

61,055

33,515

626,790

(15,147)

(61,055)

(33,334)

(611,951)

628

181

14,839

637

22,199

11,141

53,298

449

226

2,176

686

(548)

(22,648)

(6,981)

(40,068)

4,386

16,091

16,305

66,649

36,586

651,691

(16,212)

(66,649)

(32,200)

(635,600)

4,386

16,091

Year ended 30 June 2021
Balance at 1 July 2020 net of
accumulated depreciation

Additions

Disposals

Currency translation differences

Depreciation charge for the year

Balance at 30 June 2021 net of
accumulated depreciation

At 30 June 2021
Cost

Accumulated depreciation
and impairment

Net carrying amount

Year ended 30 June 2020
Balance at 1 July 2019 net of
accumulated depreciation

Additions

Disposals

Currency translation differences

Depreciation charge for the year

Balance at 30 June 2020 net of
accumulated depreciation

At 30 June 2020
Cost

Accumulated depreciation
and impairment

Net carrying amount

13. TRADE AND OTHER PAYABLES

Current

Trade payables

Other payables and accruals

ACCOUNTING POLICIES

Consolidated

2021
$

3,445,569

227,6396

2020
$

1,127,120

667,488

3,672,965

1,794,608

Trade and other payables are recognised when the Group becomes obliged to make further payments from the purchase
of goods and services and are measured at amortised cost using the effective interest method, less any impairment losses.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

14. (a) LEASE LIABILITIES

Current

Lease liabilities

Non Current

Lease Liabilities

Consolidated

2021
$

214,076

2020
$

197,950

Consolidated

2021
$

73,230

2020
$

292,700

ACCOUNTING POLICIES

The lease liability is measured at the present value of the fixed and variable lease payments, net of cash lease incentives,
that are not paid at the balance date. Lease payments are apportioned between finance charges and a reduction of the
lease liability using the incremental borrowing rate implicit in the lease where available, or an assumed Group incremental
borrowing rate, to achieve a constant rate of interest on the remaining balance of the liability.

14. (b) PROVISIONS

Current

Provision for annual leave

Non Current

Provision for long service leave (a)

Consolidated

2021
$

48,345

2020
$

112,290

Consolidated

2021
$

2020
$

43,323

Annual Leave and Long Service Leave

An estimate of annual leave is provided after reviewing relevant workplace agreements and industrial awards for
respective employees and determining entitlement at the reporting date. The cost includes an account of direct
employment costs. The significant assumptions applied in the measurement of this provision include devising probabilities
for employees complying with the legislative requirements [years of service] and the computed employment costs
discounted by using RBA bond rates applied for the respective years of service.

ACCOUNTING POLICIES

Provisions are recognised when the Group has a present obligation [legal or constructive] as a result of a past event,
and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of
management’s best estimate of the expenditure required to settle the present obligation at the reporting date. If the effect

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

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. The increase in the provision resulting from the passage of time is recognised in finance costs.

14. (c) BORROWINGS

NON-Current

iM3NY Borrowings

Consolidated

2021
$

65,175,758

2020
$

SECURED LOANS AND BORROWINGS

On 19 April 2021, Magnis announced that its majority owned subsidiary Imperium3 New York Inc. (iM3NY) had received
a mixture of debt and equity funding, which included a US$50 Million senior secured term loan from Riverstone Credit
Partners L.P. (Riverstone) that is to be used to fast-track production at the iM3NY lithium-ion battery manufacturing plant
located in Endicott, New York. Broad terms of the Loan include: Amount: US$50 Million, Term: 4 Years and Interest Rate:
12.5% p.a.

ACCOUNTING POLICIES

Loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Loans and 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 borrowings using the effective
interest method.

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 date.

The component of secured notes that exhibits characteristics of debt is recognised as a liability in the Statement
of Financial Position, net of transaction costs. On issue of secured notes, the fair value of the liability component is
determined using a market rate for an equivalent non-convertible bond and this amount is carried as a liability on the
amortised cost basis until extinguished on conversion or redemption. The increase in the liability due to the passage of
time is recognised as a finance cost. The remainder of the proceeds is allocated to the equity component and is recognised
in shareholders’ equity. The carrying amount of the equity component is not remeasured in subsequent years.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

15. CONTRIBUTED EQUITY

a) Issued capital

Ordinary shares fully paid

Fully paid ordinary shares carry on vote per share and carry a right to dividends.

b) Movements in fully paid shares

At 30 June 2020

Shares restructure - iM3NY

Shares issued

Exercise of unlisted rights and options

Transaction costs

Share issue to MEST

At 30 June 2021

Number
of shares

2021
$

851,434,546

179,841,178

665,006,221

128,625,905

12,108,319

166,428,325

41,649,995

20,000,000

(2,543,041)

851,434,546

179,841,178

During the year the Company raised funds from equity as follows:

$41,649,995 (2020: $5,000,000) from share placements of 166,428,325 (2020: 53,870,225) fully paid ordinary shares.
Transaction costs amounted to $2,543,041 (2020: $551,515).

The February 2021 placement was for consideration of 28 cents and each share carries a free unlisted option
entitlement to 1 ordinary share exercisable within 2 years for 50 cents.

c) Capital management

Management’s prime objective when managing the Group’s capital is to ensure the entity continues as a going concern
as well as ensuring that funds are appropriately expended. The capital structure is intended to provide the lowest cost of
capital available to the Group considering its present phase of operations.

Capital risk management

Over the coming year the group is proposing to undertake an exploration program that requires a significant outlay of
funds. Management monitors this expenditure against the budget approved by the Board. A near term capital raising or
asset sale should ensure the group has a safety margin of funds available to continue with its desired level of operations -
refer Note 1.

In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

16. FAIR VALUE MEASUREMENT
The fair value of financial assets and financial liabilities are the equivalent to the net carrying amount. Fair values are those
amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s
length transaction.

The carrying amounts of cash, trade and other receivables and trade and other payables are assumed to approximate their
fair values due to their short-term nature.

The Group classified the fair value of its other financial instruments according to the following fair value hierarchy based on
the amount of observable inputs used to value the instruments:

The three levels of the fair value hierarchy are:

Level 1 - Values based on unadjusted quoted prices available in active markets for identical assets or liabilities as of the

reporting date.

Level 2 - Values based on inputs, including quoted prices, time value and volatility factors, which can be substantially

observed or corroborated in the marketplace. Prices in Level 2 are either directly or indirectly observable as of
the reporting date.

Level 3 - Values based on prices or valuation techniques that are not based on observable market data.

Financial assets measured at fair value Level in Fair Value hierarchy

Consolidated

2021
$

2020
$

Financial assets at FVOCI

Investment accounted for using the equity method

15,096,142

7,495,562

15,096,142

7,495,562

Financial assets at FVOCI

Financial assets at FVOCI comprise the Group’s investment in private US based, lithium-ion battery technology group,
Charge CCCV LLC (‘C4V’) which is accounted for as a financial asset measured at fair value through other comprehensive
income. The investment is not quoted in an active market and accordingly the fair value of this investment is included
within Level 3 of the hierarchy.

C4V has expertise and patented technology in lithium-ion battery composition and manufacture. C4V has executed
binding agreements to receive royalty income from the exclusive use of both its patented anode chemistry and its cobalt
and nickel free cathode chemistry. C4V also retains the right to receive a once off reservation fee upon the granting of
exclusive use of its patented IP at each of the approved iM3 battery plants.

The royalty income is dependent upon the successful development of three key projects which involves either the mining
and processing of natural flake graphite or the production of lithium-ion batteries.

C4V has a 32.61% (2020: 45.18%) see-through direct and indirect strategic investment in a New York lithium-ion battery
production plant, Imperium3 New York Inc (‘iM3NY’iM3NY’), via iM3NY LLC. iM3NY owns battery plant assets located in a
planned lithium-ion battery manufacturing facility based at the Huron Campus in Endicott, New York.

Valuation Techniques- Level 3

The Group has utilised a combination of the discounted cash flow (DCF) method together with the fair value of C4V’s
strategic investment in iM3NY to calculate the enterprise value of C4V. The DCF involves the projection of a series of
cash flows and to this an appropriate market derived discount rate is applied to establish the present value of the
income stream.

The fair value of C4V’s investment in iM3NY has been determined by first obtaining an independent valuation of the
plant equipment purchased in 2018. The valuation of plant equipment was undertaken in August 2019 by engineering
firm O’Brien & Gere that assessed all the items purchased. At that time the external valuer attributed the status and
condition at a valuation of US$71.34 Million. In October 2019, the Group had an independent valuation undertaken by

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

global engineering, architecture and consultancy company Ramboll Energy which confirmed that the iM3NY plant and
equipment was valued at US$71,340,620.

On 19 April 2021 Magnis announced that the iM3NY project is fully funded to 1.8GWh of annual production. Riverstone
Credit Partners, L.P. confirmed after carrying out its due diligence that iM3NY has US$230 Million (AUD$306.4 Million) of
manufacturing assets in place, of which C4V has a see-through direct and indirect strategic interest via iM3NY LLC that is
equivalent to US$75.0 Million ($99.99 Million).

The Group decides its valuation policies and procedures in line with its business objectives and with reference to the
Group’s assessment of its investment in individual projects. Position papers are prepared to apprise the audit and risk
committee of the valuation techniques adopted. The Group normally reviews the valuation of its financial assets at FVOCI
at least once every six months, in line with the group’s half-yearly reporting requirements. Changes in level 3 fair values are
analysed at the end of each reporting period during this review.

Quantitative information on significant unobservable inputs- Level 3

The following table summarises the quantitative information about the significant unobservable inputs used in the fair
value measurement of the Group’s investment in C4V.

Unobservable inputs

Valuation
Method

Nachu
Graphite Project

Imperium3
Townsville

Imperium3
New York

Project Status

DCF

Preliminary
(Bankable Feasibility Study)

Preliminary
(Feasibility Study)

Timeline to production
the lower the fair value

DCF

2 years post finance

Project life

DCF

Risk adjusted discount rate

DCF

20yrs

20%

2 years
post finance

20yrs

45%

Capital required

DCF

$359.7M (US$270M)

$3Billion

Expected annual volumes

DCF

240,000 tonne p.a.

18GWh

n/a

Relationship of
Unobservable input
to fair value

The more advanced the project
the higher the fair value

The longer the time to production
the lower the fair value

The longer the lifespan the
higher the fair value

The higher the discount rate
the lower the fair value

The higher the capital required
the lower the fair value

The higher the annual volumes
the higher the fair value

Valuation of battery
manufacturing equipment

n/a

$306.4M
(US$230M)

The lower the recoverable
amount of the equipment
the lower the fair value

Project and Investment Risk

The fair value of the Group’s investment in C4V is measured against the enterprise value of C4V which is calculated using
fair value incorporating present value techniques. The present value calculations use cash flows that are estimates rather
than known amounts. There is inherent uncertainty in this valuation technique. In addition, C4V also holds patents, and
their management of those patents, ongoing and active research that results in new patents or their economic success
is uncertain. In addition, claims against these patents and the cost of defending claims is likewise uncertain but does
represent a real risk. As a result, the fair value is exposed to various forms of risk. The fair value as at reporting date is
measured using a number of significant unobservable inputs. Risks specific to these unobservable inputs are detailed
below and have been factored into the individual projects through the risk adjusted discount rate applied.

The Group has performed detailed risk analysis using international frameworks on each of the individual projects during
feasibility study. In performing this analysis, the Group is committed to supporting the Audit and Risk Committee to
develop risk management and mitigation strategies for implement so it can reduce its exposure.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

Project status

The status of the projects has been determined as being preliminary. The projects are also characterised as being
greenfield projects which relates to the lack of existing facility to verify outcomes.

There is a risk that the projects will not be advanced due to the significant capital required to commence construction.
There is also a risk that legislative approvals required to commence construction may be delayed or not granted. Project
status is aligned to the timeline to production. Any slippage in timeline milestone will reduce the fair value.

Detailed implementation plans have been established for each of the individual projects. The implementation plan
identifies areas that are critical to the successful advancement of the projects. Strategies to mitigate and manage risk
associated with project success have been documented in detail for implementation. This includes pre-finance testing
and market development work. Establishment of strategic partnerships with credible industry professionals such as
engineering, procurement and construction contractors, original equipment manufacturers, and financing professionals is
also considered critical in reducing the risk of greenfield operations.

Timeline to production

Scheduling for the projects has not factored significant delays or cost overruns. Factors which could create significant
delays include adverse weather conditions, construction risks particularly in-ground risks, the securing of water supply
for construction and requisite approvals for infrastructure upgrades. There is a risk that such delays or cost overruns will
impact the payback capability of the project and reduce the overall cashflows. An increase to the timeline to production
will result in a lower fair value.

Capital required

The estimated total construction costs of the 18Gwh factory in Townsville is $3Bn. Project development has been phased
into 3 stages of 6GWh to reduce the upfront capital requirement. Stage One construction costs are estimated to be
$1.12Bn. Without a demonstrated ability in capital raising of this quantum, there is a risk that the capital required won’t be
secured or will be significantly delayed.

There is also risk that battery cell offtake agreements will not be secured for each of the three stages or that the price
will be less than estimated. This could impact the project’s ability to repay project finance and result in a lower fair value.
To mitigate these risks, iM3TSV will appoint a financing professional in the capacity of advisor to jointly develop the
Project funding strategy as part of this feasibility study. In the role of financial advisor, the financing professional will
bring extensive experience on seeking funding for large projects in the renewables sector including working alongside
government bodies, to advise projects in North Queensland.

iM3TSV will also implement a testing and market development program involving battery production testing in a
commercial setting at equipment vendor facilities. Generated product will be provided for customer evaluation and
qualification towards procuring offtake contracts. This program will take place prior to securing the construction costs for
Stage One. Securing offtake following confirmation of product specification will assist is securing project funding.

The total construction of the Nachu Graphite Project is estimated to cost AUD$359.7M (US$270M), however a smaller
planned mine would reduce these projections. This is also considered a significant amount of capital which can attract
sovereign risk when developing a graphite mine in Tanzania.

There is a risk that the capital required is not secured or that the funding will be on less favourable terms. The Group has
identified target funding partners with experience in Tanzania, who have in-depth appreciation and understanding of
developing a large-scale resource project in a jurisdiction with high sovereign risk.

Expected annual production

Project development of iM3TSV has been phased into three stages of 6GWh each. The benefit of a staged approach
is to reduce the upfront capital requirement but also to allow for the project expansion to occur in line with market
development. However, there is a risk that capital for the second or third stage may not be secured or that changes in
global competition and technological advancement over construction as well as the first stage may impact the viability of
expansion. There is also a risk that the project will achieve lower battery cell production yields than forecast.

To mitigate these risks an extensive product development and testing program will be undertaken by iM3TSV prior to
securing Stage One funding. Such testing programs once fully implemented can be utilised to train employees prior to
construction and commissioning to ensure an inexperienced workforce does not ramp up staff beyond stage 1.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

The Nachu Graphite Project has been reported as the largest mineral resource of large flake graphite in the world. There is
a risk, at a production rate of 240,000tpa, that supply may outstrip demand resulting in an unsustainable production rate.
The project is also subject to significant sovereign risk arising from changes in legislation, government, environmental
permits, employment, disease, and community relations, all of which could impact the annual production. A reduction
in the expected annual production would reduce the fair value. The Nachu Graphite Project is however capable of being
phased into two stages of production. The staged approach allows the project risks and the Group’s response to be tested
at a reduced scale for a reduction in required capital outlay.

Royalties and reservation fee

C4V has executed binding agreements to receive royalty income from the exclusive use of both its patented anode
chemistry and its cobalt and nickel free cathode chemistry. C4V also retains the right to receive a once off reservation fee
upon the granting of exclusive use of its patented IP at each of the approved iM3 battery plants. The royalty income is
dependent upon the successful development of three key projects which involves either mining and processing of natural
flake graphite or the production of lithium-ion batteries. There is a risk that C4V will not receive the estimated reservation
fee or royalty income if the Group is unsuccessful in securing the required capital to commence construction of the
individual projects.

There is also a risk that the annual royalty income derived from the individual projects will be less than estimated due to
delays in production timelines or reduction in the expected annual production. Any reduction in annual royalty income or
reservation fee income will lower the fair value.

The contracts between C4V and Magnis and iM3 contain commercially sensitive information and as such cannot be
disclosed in the financial report as it would likely be prejudicial to Magnis. The contracted royalty and reservation fees have
been used by the Group in determining the fair value of C4V.

Recoverable amount - C4V’s investment in iM3NY

Realising the recoverable amount of C4V’s investment in iM3NY is dependent on proceeds of sale equalling the estimated
US$230 Million (AUD$306.4 Million) of manufacturing assets in place, of which C4V has a see-through direct and indirect
strategic interest via iM3NY LLC equivalent to US$75.00 Million (AUD$99.99 Million).

There is a risk that there may be significant advancements in state-of-the-art equipment render current equipment
obsolete, or buyers are then increasingly difficult to identify. The valuation of the battery manufacturing equipment does
not factor in the cost of relocating the equipment from iM3NY to the buyer(s). If iM3NY was unsuccessful in assigning these
costs to the buyer, the fair value would be reduced.

Interest rate risk

The main interest rate risk arises from expected long-term borrowings to fund the construction costs. Borrowings obtained
at variable rates give rise to interest rate risk. Borrowings obtained at fixed rates expose the consolidated entity to fair value
risk. There is also a risk that the greenfield status of the project could attract interest rates with embedded risk premiums.

iM3TSV has endeavoured to mitigate these risks by targeting an advantageous mix of achievable funding sources and
‘sticky’ partners to reduce the amount of funding exposed to interest rate risk. This includes sourcing equity partners and
government grants to reduce the quantum of project financing required.

The Group is targeting potential funding partners for the Nachu Graphite Project who have an in-depth knowledge and
experience in Tanzania to reduce the probability of significant risk premiums being added to interest rates. Targeting
funding via engineering, construction, and procurement contractors who have a vested interest in the success of the
project is one strategy that the Group believes will mitigate the risk of attracting finance with substantial risk premium
embedded in the interest rate.

Currency rate risk

The individual projects undertake certain transactions denominated in foreign currency and is exposed to foreign currency
risk through foreign exchange rate fluctuations. A significant portion of the Stage One construction costs for iM3TSV relate
to equipment purchases payable in United States Dollars. Foreign exchange risk arises from future commercial transactions
and recognised financial assets and financial liabilities denominated in a currency that is not the entity’s daily currency.
Adverse foreign currency fluctuation can add significant additional costs to the estimated construction costs of the project.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statement

The Nachu project is exposed to currency fluctuations between the United States Dollar (US$) and the Tanzanian Shillings
(TzS). Where possible, the Group mitigates this risk by executing supply agreements in US$, however local content
requirements limit the extent to which this strategy can be implemented.

In order to protect against exchange rate movements, the Audit and Risk Commmitte may consider entering into simple
forward foreign exchange contracts.

Risk adjusted discount rate

The above risks have been factored into the risk adjusted discount rate. Any favourable mitigation of the risks outlined
above would result in a decrease in the discount rate and an increase in the fair value.

Sensitivity analysis

In accordance with the Group policy of reviewing this risk, the following sensitivity analysis based on an increase or
decrease of the risk adjusted discount rate varies and other variables remain constant, the fair value of the investment
would have been affected as shown:

Description

Unobservable inputs

Sensitivity

Financial asset at FVOCI

Project life

A one-year change would increase/ (decrease) fair value

by $0.045M/ ($0.056M)

Risk adjusted discount rate

5% change would increase/ (decrease) fair value by $2.86M/ ($1.876M)

Expected annual volumes

5% change would increase/ (decrease) fair value by $0.564M/ ($0.564M)

Valuation of battery
manufacturing equipment

5% change would increase/ (decrease) fair value by $3.276M/ ($3.276M)

Investment accounted for using the equity method - Magnis investment in iM3NY via iM3NY LLC

Investment accounted for using the equity method comprises the Group’s investment in its majority owned New York
lithium-ion battery production plant, Imperium3 New York Inc (‘iM3NY’). The investment which is accounted for using
the equity method is measured at cost and the carrying value of the investment is subsequently adjusted for the Group’s
interest in the associates profit or loss. The investment is not quoted in an active market and accordingly the fair value of
this investment is included within Level 3 of the hierarchy.

Valuation Techniques - Level 3

iM3NY owns battery plant assets located in a planned lithium-ion battery manufacturing facility based at the Huron
Campus in Endicott, New York.

As at the end of the reporting period, the Company has a 59.88% (2020: 53.39%) see-through direct and indirect strategic
investment via iM3NY LLC in iM3NY. However, due to iM3NY restructuring their entity and creating iM3NY LLC from post
April 2021 because of the binding Riverstone Credit Partners, L.P. agreement, new investors were introduced as well as an
employee incentive scheme was provisioned as part of the syndicated funding package.

This restructuring has now placed investors who previously held shares directly in iM3NY, to now become investors with
an indirect exposure to iM3NY, through their direct holding in iM3NY LLC. Further, the provisioning for employee incentive
units in iM3NY LLC as well as the introduction of new investor ownership in iM3NY, has caused some dilution as at the
reporting date when determining the see-through direct and indirect ownership exposure of iM3NY LLC investors in
iM3NY, combined with iM3NY shareholder ownership.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

The table below provides the see-through direct and indirect strategic ownership of all iM3NY LLC investors in iM3NY,
combined with iM3NY shareholder ownership as at 30 June 2021:

Magnis (includes 9.65% (2020:10.00%) of C4V

C4V

Primet

C&D

Atlas

iM3NY LLC

Riverstone Group (includes 3.5% (2020: 0%) of C4V)

Prisma Pelican Fund

HSBC Bank

Riverstone, HSBC + Prisma

iM3NY Inc.

Direct and Indirect
Strategic Ownership

2021
%

59.88

32.61

0.53

0.67

0.50

94.19

5.17

0.32

5.81

2020
%

53.39

45.18

0.63

0.80

100.00

Throughout the Report, the use of ‘see-through direct and indirect strategic ownership’ refers to the Company’s economic
interest in iM3Y LLC, which includes it’s direct ownership in C4V, as iM3NY LLC invests directly in iM3NY as per above. The
Group has determined the fair value of its strategic investment in iM3NY by first obtaining a third-party valuation of the
recoverable amount of the battery plant equipment purchased in 2018. The valuation of plant equipment was undertaken
in August 2019 by engineering firm O’Brien & Gere who assessed all the items purchased. At that time the external
valuer attributed the current status and condition at a valuation of US$71.34 Million. In October 2019, the Group had an
independent valuation undertaken by global engineering, architecture and consultancy company Ramboll Energy which
confirmed that the iM3NY plant and equipment was valued at US$71,340,620.

On 19 April 2021 Magnis announced that the iM3NY project is fully funded to 1.8GWh of annual production. Riverstone
Credit Partners, L.P. confirmed after carrying out its due diligence that iM3NY has US$230 Million ($306.4 Million) of
manufacturing assets in place, of which Magnis has a see-through direct and indirect strategic interest equivalent to
US$137.77 Million ($183.55 Million).

17. RESERVES
a) Reserves

Foreign currency translation

Share based payment

FVOCI Reserve

b) Nature and purpose of reserves

i. Foreign currency translation reserve

Consolidated

2021
$

2020
$

7,263,960

5,982,799

46,313

63,200

5,076,057

(2,524,523)

12,386,330

3,521,476

Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation
reserve, as described in Note 1.The reserve is recognised in profit or loss when the net investment is disposed of.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

ii. Share based payment reserve

The share based payment reserve is used to recognise the fair value of paid options issued to Directors, employees, and
contractors.

iii. FVOCI reserve

The FVOCI Reserve is used to recognise any impairment on assets and liabilities using the fair value of measurement,
thereby ensuring fair values are equivalent to their respective net carrying value.

18. STATEMENT OF CASH FLOWS
a) Reconciliation of the net loss after income tax to the net cash flows from operating activities

Operating activities

Net loss

Non cash and non operating items

Depreciation of non current assets

Amortisation of borrowing costs

Share based payments

Share of associates net loss accounted for using the equity method

(Profit)/ Loss on sale of assets

Net foreign currency translation gain (loss)

Accrued interest

Changes in assets and liabilities

(Increase)/decrease in trade and other receivables

(Increase)/decrease in prepayments

(Increase)/decrease in security bonds

(Increase)/decrease in exploration assets

(Increase) in development assets

Increase/(decrease) in trade and other payables

Increase/(decrease) in provisions

Net cash outflow from operating activities

a) Reconciliation of cash and cash equivalents

Cash at bank and in hand

Cash at bank

Consolidated

2021
$

2020
$

(23,431,109)

(7,867,088)

11,365

6,742,327

46,013

(242,755)

7,112,967

40,869

401,547

(54,256)

165,416

(2,146,105)

146,827

1,338,222

(221,719)

127,363

(2,564,767)

(352,636)

451,519

518,635

(14,550,510)

(5,226,855)

72,894,945

719,615

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

19. COMMITMENTS
a) Exploration commitments

The Group has certain commitments to meet minimum expenditure requirements on the mineral exploration assets in
which it has an interest. Note 1 outlines the Group’s future funding options to meet its commitments.

Not later than one year

Consolidated

2021
$

82,460

2020
$

90,015

Exploration expenditure commitments beyond twelve months could not be reliable determined because the annual
commitment was set at the anniversary date for each tenement.

20. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

There are no contingent liabilities or assets at 30 June 2021.

The Group has guarantees for property leases and banking finance facilities of $150,977 (2020: $150,977).

21. EVENTS AFTER REPORTING PERIOD

On 3 August 2021, Magnis announced it secured a total of $20,000,000 ($21,000,000 in Face Value) from two US-based
institutions The Lind Partners and SBC Global Investment Fund, via a Convertible Note (“Facility”) for working capital and to
assist with funding the iM3NY’s plans to fast-track Gigawatt scale production at the lithium-ion battery plant, in New York.
Shares issued under the facility will be in accordance with the terms and conditions of the agreement. Funds were also
used to advance the Nachu Graphite Project, and support the Townsville Battery Plant.

On 3 August 2021 Magnis issued 14,000,000 fully paid ordinary (FPO) shares under terms of Convertible Securities
Agreements to The Lind Partners and SBC Global Investment Fund as well as 5,000,000 Shares to Evolution Capital Advisors
Pty Ltd to remunerate the advisers who supported the successful transaction.

On 6 August 2021, and 9 August 2021, Magnis Energy Technologies Ltd Magnis issued (when combined) 21,000,000 FPO
shares and on 13 August 2021 issued 38,000,000 FPO shares under terms of Convertible Securities Agreements to The Lind
Partners and SBC Global Investment Fund.

On 2 September 2021, Magnis announced KMP appointment of lithium-ion battery expert Dr. Jawahar Nerkar as Director
of Battery Technologies and KMP appointment of experienced Fund Manager Aran Nagendra as Corporate Development
and Investor Relations Manager.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

22. AUDITORS’ REMUNERATION

The auditor of Magnis Energy Technologies Ltd in the current year is Hall Chadwick Melbourne Audit.

Consolidated

2021
$

2020
$

(a) Amounts received or due and receivable by Magnis Group Auditor’s (Australia) for:

An audit or review of the financial report of the entity and any other entity in the consolidated Group

79,973

106,392

Other services in relation of the entity and any other entity in the consolidated

Group

– Taxation services

– Corporate services

48,247

2,948

97,719

131,168

204,111

(b) Amounts received or due and receivable by related practices of Magnis Group Auditor’s (Australia) for:

An audit or review of the financial report of the entity and any other entity

in the consolidated Group

Other services in relation of the entity and any other entity

in the consolidated Group – Taxation services

23. LOSS PER SHARE

(a) Reconciliation of earnings to profit or loss:

Net loss - Loss used in calculating basic loss per share

Consolidated

2021
$

2020
$

16,268,618

7,378,601

Shares
2021

Shares
2020

(b) Weighted average number of ordinary shares outstanding during the year

used in calculating basic loss per share:

Weighted average number of ordinary shares used in calculating basic loss per share

851,434,546

665,006,221

Basic loss per share (cents per share): 1.91 (2020: 1.11)

For the year ended 30 June 2021 and for the comparative period there are no dilutive ordinary shares because conversion
of share options and performance rights would decrease the loss per share and hence be non-dilutive.

Diluted loss per share (cents per share): 1.91 (2020: 1.11)

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

ACCOUNTING POLICIES

Basic EPS is calculated as the profit/ [loss] attributable to equity holders of the Company, excluding any costs of servicing
equity other than ordinary shares, divided by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for any bonus elements in ordinary shares during the year. Diluted EPS adjusts the figures used in
the determination of basic EPS to consider after income tax effect of interest and other financing costs associated with
dilutive ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in
relation to dilutive potential ordinary shares.

24. KEY MANAGEMENT PERSONNEL

(a) Compensation

The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:

Short-term employee benefits

Termination benefits

Post-employment benefits

Share-based payments

Consolidated

2021
$

2020
$

1,039,592

1,174,792

143,000

77,639

59,927

747

1,260,231

1,235,466

(b) Other transactions and balances with key management personnel and their related parties

Transactions with Directors’ related entities.

Identity of
related party

Nature of relationship

Type of
transaction

Strong Solutions
Pty Limited

Mr. Frank Poullas is a related party of Strong
Solutions Pty Limited and Executive Chairman
of Magnis Energy Technologies Ltd

Consulting fees
IT Services

Agregated Amount

Terms &
Conditions of
Transaction

Normal
Commercial
Terms

2021
$

208,000
92,970

2020
$

124,000
57,770

Mr. Peter Tsegas

Mr. Peter Tsegas is a Non-Executive Director

Consulting Fees

Normal

273,389

35,018

of Magnis Energy Technologies Ltd

Prof. M. Stanley
Whittingham

Prof. M. Stanley Whittingham is a Non-Executive Consulting Fees
Director of Magnis Energy Technologies Ltd

Mr. Troy Grant
(Resigned
23 Feb. 2021)

Mr. Troy Grant was a Non-Executive Director
of Director of Magnis Energy Technologies Ltd

Consulting Fees

Commercial
Terms

Normal
Commercial
Terms

14,749

50,000

624,359

231,537

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

transactions with key management personnel.

Assets and liabilities

Trade and other payables

Current liabilities

2021
$

68,100

2020
$

25. RELATED PARTY DISCLOSURES

PARENT ENTITY

Magnis Energy Technologies Ltd is the ultimate Australian parent entity of the consolidated entity.

Its interests in controlled entities are set out in Note 27.

WHOLLY OWNED GROUP TRANSACTIONS

Controlled entities made payments and received funds on behalf of Magnis Energy Technologies Ltd and other controlled
entities by way of inter-company loan accounts with each controlled entity. These loans are unsecured, bear no interest
and are repayable on demand. However, demand for repayment is not expected in the next twelve months.

Transactions and balances between the Company and its controlled entities were eliminated in the preparation and
consolidation of the financial statements of the group.

KEY MANAGEMENT PERSONNEL

Details relating to key management personnel, including remuneration paid, are included in Note 24 and the
Remuneration Report in the Directors’ Report.

TRANSACTIONS WITH RELATED PARTIES

All amounts payable to related parties are unsecured and at no interest cost. The amount outstanding will be settled in
cash. No guarantees have been given or received. No expense has been recognised in the period for bad or doubtful debts
in respect of the amounts owed by related parties.

ENTITY WITH SIGNIFICANT INFLUENCE OVER THE GROUP

MAZZDEL PTY LTD controls 6.64% (2020: 8.53%) of the ordinary shares in Magnis Energy Technologies Ltd.

AL CAPITAL HOLDING PTY LTD controls 0% (2020: 5.58%) of the ordinary shares in Magnis Energy Technologies Ltd.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

26. PARENT ENTITY INFORMATION

Set out below is the supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income

Profit after income tax

Total comprehensive income

Statement of financial position

Total current assets

Total assets

Total current liabilities

Total liabilities

Net Assets

Equity

Issued capital

Equity settled employee benefits reserve

Equity FVOCI reserve

Retained profits

Total equity

Contingent liabilities

Parent

2021
$

2020
$

(8,889,419)

(6,972,873)

(8,889,419)

(6,972,873)

3,926,870

1,047,024

56,352,702

14,789,856

336,867

565,302

707,521

1,142,782

55,787,399

13,647,074

167,732,859

128,625,905

3,883,456

63,200

5,076,057

(2,524,523)

(120,904,972)

(112,517,507)

55,787,399

13,647,074

The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2020.

Capital commitments - Plant and equipment

The parent entity had no capital commitments for plant and equipment at as 30 June 2021 and 30 June 2020.

Remuneration commitments

The parent entity has a remuneration commitment of $83,042 as at 30 June 2021 (2020: $89,247).

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

27. INTERESTS IN CONTROLLED ENTITIES

The consolidated financial statements incorporate the assets, liabilities, and results of the following subsidiaries in
accordance with the accounting policy described in Note 1:

Name

Country of incorporation

Class of shares

Uranex Tanzania Limited

Magnis Technologies [Tanzania] Limited

Uranex Mozambique Limitada

Uranex ESIP Pty Ltd

Imperium3 New York Inc. 2

iM3NY LLC 3

Faru Resources Limited 4

Juhudi Minerals Limited 4

Tanzania

Mozambique

Australia

USA

Tanzania

Ordinary

Common

Ordinary

percentage of voting power is in proportion to ownership (direct and indirect).

Equity Holdings 1

2021
%

2020
%

100

Imperium3 New York Inc. was incorporated for consolidation purposes on 29 June 2020. The remaining 40% (2020: 38%) has been attributed
to non-controlling interests.
iM3NY LLC was incorporated for consolidation purposes on 16 April 2021. The remaining 38% (2020: 0%) has been attributed to non-
controlling interests.
4 Deregistered 20 Jan 2020.

ACCOUNTING POLICIES

Principles of consolidation

The consolidation financial statements are those of the consolidated entity, comprising Magnis Energy Technologies Ltd
[the parent entity], special purpose entities and all entities which Magnis Energy Technologies Ltd controlled from time to
time during the year and at reporting date. Control is achieved when the Group is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through ties power over the investee.

Specifically, the Group controls an investee if and only if the Group has:

> power over the investee [i.e. existing rights that give it the ability to direct the relevant activities of the investee];

> exposure, or rights, to variable returns from its involvement with the investee, and

> the ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:

> the contractual arrangement with the other vote holders of the investee;

> rights arising from other contractual arrangements;

> the Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control
over the subsidiary and ceases when the Group losses control of the subsidiary. Assets, liabilities, income, and expenses
of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from
the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

component of other comprehensive income [OCI] are attributed to the equity holders of the parent of the Group and to
the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the
Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses, and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of
a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it:

> de-recognises the assets [including goodwill] and liabilities of the subsidiary

> de-recognises the carrying amount of any non-controlling interests

> de-recognises the cumulative translation differences recorded in equity

> recognises the fair value of the consideration received

> recognises the fair value of any investment retained

> recognises any surplus or deficit in profit or loss

> reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as

appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

At 29 June 2020 Magnis acquired additional shares in Imperium 3 New York Inc. (iM3NY) to become a majority shareholder.
The direct ownership in iM3NY has been accounted for as an asset acquisition and not a business combination, due to
factors which include the equipment assets had been relocated from a previous owner’s facility and at the time of the
transaction were still in the process of being recommissioned ahead of the commencement of production.

However, from late March 2021 to April 2021, iM3NY undertook a restructuring that created subsidiary iM3NY LLC as a
result of the binding Riverstone Credit Partners, L.P. agreement. As part of the syndicated funding package, new investors
were introduced in iM3NY and iM3NY LLC and existing iM3NY investors were migrated into iM3NY LLC. This restructuring
has now placed investors like Magnis and C4V who previously held shares directly in iM3NY, to now become investors with
an indirect exposure to iM3NY, through their direct holding in iM3NY LLC.

During the financial year, Magnis provided further funding for the iM3NY lithium-ion battery project and increased its total
iM3NY see-through direct and indirect ownership exposure in to 59.88% on 30 June 2021 by undertaking a debt for equity
swap via a cash settlement of $30,616,287.83 of iM3NY borrowings.

Business Combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity
instruments or other assets are acquired.

The consideration transferred for the acquisition of a subsidiary comprises the:

> fair values of the assets transferred

> liabilities incurred to the former owners of the acquired business

> equity interests issued by the group

> fair value of any asset or liability resulting from a contingent consideration arrangement, and

> fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited
exceptions, measured initially at their fair values at the acquisition date.

The group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair
value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

Acquisition-related costs are expensed as incurred.

The excess of the

> consideration transferred,

> amount of any non-controlling interest in the acquired entity, and

> acquisition-date fair value of any previous equity interest in the acquired entity

over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair
value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a
bargain purchase.

Where an acquisition does not meet the definition of a business in AASB 3 Business Combinations, the transaction is
accounted for as an asset acquisition. Acquired assets are measured at their proportionate share of the transaction
consideration, and no goodwill or bargain purchase is recognised.

Subsidiaries are recorded as a component of other revenues in the separate income statement of the parent entity, and
do not impact the recorded cost of the investment. Upon receipt of dividend payments from subsidiaries, the parent will
assess whether any indicators or impairment of the carrying value of the investment in the subsidiary exist.

Where such indicators exist, to the extent that the carrying value of the investment exceeds its recoverable amount, an
impairment loss is recognised.

28. SHARE-BASED PAYMENT PLANS

a) Recognised share-based payment expenses

The expense recognised for employees and contractors received during the year is shown below:

Expense arising from the issue of MOST options (employees)

Expense arising from the issue of MOST options (non-employees)

Expense arising from the issue of MERT rights (employees)

Total expense arising from share-based payment transactions

b) Types of share-based payment plans

OPTION SHARE PLAN: MOST - (EMPLOYEES)

Consolidated

2021
$

5,963

40,050

46,013

2020
$

748

800

1,548

Magnis Energy Technologies Ltd operates an ownership-based scheme for Directors, Key Management Personnel (KMP)
employees and other employees of the consolidated entity. The Magnis Option Share Trust (“MOST”) is designed to
align participants’ interests with those of shareholders by increasing the value of the Company’s shares. In accordance with
the provisions of the Plan, listed fully paid ordinary shares and unlisted options are held on behalf of Plan Participants by
the Trustee of the MOST. Under the MOST, the exercise price of the options is set by the Board on the date of grant. The
life of options to participants granted are for 3 years, but these must be exercised within 3 months of the option holder
ceasing employment with Magnis Energy Technologies Ltd. There are no cash settlement alternatives.

RIGHTS PLAN: MERT - (EMPLOYEES)

Magnis Energy Technologies Ltd operates an ownership-based scheme for Directors and Employees of the consolidated
entity. In accordance with the provisions of the Plan, unlisted performance share rights are held on behalf of Plan

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

Participants by the Trustee of the Magnis Executive Rights Trust (“MERT”). Under MERT, the Executive Rights are
divided into five tranches and conversion of each tranche is dependent on satisfaction of performance milestones and
service conditions applicable to each tranche, including the relevant person being a director at the time the respective
performance milestone tranche is satisfied. Although no specific expiry date exists for each tranche, it has been accepted
under AASB2 that the life of Executive Rights granted to participants are for 10 years, but they will immediately lapse when
the Executive Rights holder ceases employment with Magnis Energy Technologies Ltd. There are no cash
settlement alternatives.

Share-based payment plans for non-employee (Consultant options)

Share options are granted to selected non-employees from time to time in consideration for the services of the consultant
as a share-based incentive (Consultant options). Prior Shareholder approval of the issue of Consultant options is required.
Each Consultant Option is granted for nil consideration for services provided by unrelated parties to the Company, the
terms are subject to the same terms of the Company’s existing unlisted options. No funds are raised from the issue of the
Consultant Options, as they are issued to the consultant in consideration for assistance with the Company’s progress and
success. There are no cash settlement alternatives.

Summaries of options and rights granted under share-based payment

Options granted under share-based payment

The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, MOST
share options issued during the year.

Outstanding at the beginning of the year

Granted during the year

Exercised during the year

Expired\Lapsed during the year

Outstanding at the end of the year

Exercisable at the end of the year

2021
No.

10,000,000

750,000

(7,000,000)

3,750,000

2021
WAEP

0.58

0.63

0.69

2020
No.

15,800,000

12,100,000

(17,900,000)

10,000,000

2020
WAEP

0.71

0.69

0.58

The range of exercise prices for rights and options outstanding at the end of the year was between $0.50 and $0.75 (2020:
$0.40 and $0.70).

Rights granted under share-based payment

The below table shows the number of, and movements in, MERT performance share rights issued during the year.

Outstanding at the beginning of the year

Granted during the year

Exercised during the year

Lapsed during the year

Outstanding at the end of the year

Exercisable at the end of the year

2021
No.

2021
WAEP

2020
No.

2020
WAEP

12,500,000

(5,000,000)

7,500,000

During 2021, there were Nil (2020: Nil) shares issued as a result of converting performance rights.).

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

) Weighted average remaining estimated life

The weighted average remaining estimated life outstanding as at 30 June 2021 is :

> Share options:

1.54 years (2020: 1.46 years)

> Share rights:

9.42 years (2020: Nil years)

f) Weighted average fair value

The weighted average fair value granted during the year to 30 June 2021 is :

> Share options:

$0.00795 (2020: $0.0022)

> Share rights:

$0.00534 (2020: Nil)

g) Option pricing model

Equity-settled transactions

The fair value of the equity-settled share options granted under the share-based payment is estimated as at the date of
grant using a Binomial Model, considering the terms and conditions upon which the options were granted. The following
table lists the inputs to the models used for the year ended 30 June 2021:

Dividend yield (%)

Expected volatility (%)

Risk-free interest rate (%)

Expected life of option (years)

Option exercise price (cents)

Weighted average share price at measurement dates (cents)

Exercise price multiple

Model used

2021

Nil

47 - 54

0.032 – 0.062

2.0 – 3.0

50 - 75

18.5 - 27.5

Binomial

The effects of early exercise have been incorporated into calculations by using an expected life for the option that is
shorter than the estimated life based on historical exercise behaviour, which is not necessarily indicative of exercise
patterns that may occur in the future.

The expected volatility was determined using a historical sample of Company share-prices. The resulting expected
volatility therefore reflects the assumption that the historical volatility is indicative of future trends which may also not
necessarily be the actual outcome.

The option holders were assumed to exercise prior to expiry date when the price is twice that of the exercise price. This
reflects the restrictions to trading of directors and employees outlined in the Company’s share trading policy.

During the financial year, the Magnis Option Share Trust (MOST) scheme acquired and was issued with 750,000 (2020:
8,100,000) options on varying terms and conditions for allotment to Directors and employees.

ACCOUNTING POLICIES

The Group provides benefits to employees [including directors] of, and consultants to, the Group in the form of share-
based payment transactions, whereby services are rendered in exchange for shares or rights over shares [‘equity-settled
transactions’].

The cost of equity-settled transactions is measured by reference to the fair value at the date at which they are granted. The
fair value of options and performance rights with market-based performance criteria is determined by an external valuer

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

using a binomial option pricing model. The fair value of performance plan rights with non-market performance criteria is
determined by reference to the Company’s share price at date of grant.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled, ending in the date on which the recipient becomes fully entitled to the
award [‘vesting date’].

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects the
extent to which the vesting period has expired and the number of awards that, in the opinion of the directors, based on
the best available information at reporting date will ultimately vest.

No adjustment is made for the likelihood of market conditions being met as the effect of these conditions is included
in determination of fair value at grant date. The charge or credit for the period represents the movement in cumulative
expense recognised as at the beginning and end of the period. Where awards vest immediately, the expense is also
recognised in profit or loss.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a
market condition. Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if
the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a
result of the modification, as measured at the date of modification.

Where the terms of an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and
any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the
cancelled award and designated as a replacement award on the date that it is granted, the cancelled and the new award
are treated as if they were a modification of the original award as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings
per share.

29. FINANCIAL INSTRUMENTS
(a) Financial risk management objectives and policies

The Group’s principal financial instruments consist of short-term deposits, receivables, and payables. These activities
expose the Group to a variety of financial risks: market risk, (i.e. interest rate risk and foreign exchange risks), credit risk and
liquidity risk.

The overall objective of the Group’s financial risk management policies is to meet its financial targets whilst protecting
future financial security.

The Board fulfils its corporate governance and oversight responsibilities by monitoring and reviewing the integrity of
financial statements, the effectiveness of internal financial control and the policies on risk oversight and management.
Management is charged with implementing the policies.

The management manages the different types of risks to which the Group is exposed by considering risk and monitoring
levels of exposure to interest risk and by being aware of market forecasts for interest rates.

Liquidity risk is monitored through general business budgets and forecasts. The Board reviews and agrees on policies for
managing these risks.

(b) Market Risk

Foreign currency risk

The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and
recognised financial assets and financial liabilities denominated in a currency that is not the entity’s national currency.
The risk is measured using sensitivity analysis and cash flow forecasting.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Notes to the Financial Statements

The carrying amount of the Group’s foreign currency denominated financial assets and financial liabilities at the reporting
date were as follows:

Consolidated

US dollars

Assets

Liabiiities

2021
$’000

2020
$’000

2021
$’000

4,028,024

3,941,559

203,701

4,028,024

3,941,559

203,701

2020
$’000

249,244

The Group had net assets denominated in foreign currencies of $3,824,324 (assets less liabilities) as at 30 June 2021 (2020:
$3,692,315). Based on this exposure, had the Australian dollar weakened or strengthened by 5% (2020: weakened by 5% /
strengthened by 5%) against these foreign currencies with all other variables held constant, the consolidated entity’s loss
before tax for the year would have been $254,749 lower / $254,749 higher (2020: $276,535 lower / $276,535 higher) and
equity would have been $355,476 higher / $355,476 lower (2020: $276,535 / lower $276,535).

The percentage change is the expected overall volatility of the significant currencies, which is based on management’s
assessment of reasonable possible fluctuations taking into consideration movements over the last 6 months each year and
the spot rate at each reporting date. The actual foreign exchange loss for the year ended 30 June 2021 was $12,782
(2020: $20,978)

Interest rate risk

The Group is exposed to movements in market interest rates on short-term deposits. Management ensures a balance is
maintained between the liquidity of cash assets and the interest rate return. Presently, the Group has no interest-bearing
liabilities. At reporting date, the Group had the following financial assets and liabilities exposed mostly to Australian
variable interest rates and are unhedged

Cash and cash equivalents

Consolidated

2021
$

2020
$

72,894,945

719,615

The weighted average interest rate for the Group at reporting date was 0.047% (2020: 1.78%).

In accordance with the Group policy of reviewing this risk, the following sensitivity analysis based on interest rate exposure
at reporting date where the interest rate movement varies and other variables remain constant, post tax loss and equity
would have been affected as shown. The analysis has been performed on the same basis for both 2021 and 2020.

30 June 2021

Consolidated Entity

Financial asset

Interest Rate Risk -1%

Interest Rate Risk +1%

Carrying
Amount

Net Loss
$

Equity
$

Net Loss
$

Equity
$

Cash and cash equivalents

72,894,945

(728,949)

728,949

30 June 2020

Consolidated Entity

Financial asset

Interest Rate Risk -1%

Interest Rate Risk +1%

Carrying
Amount

Net Loss
$

Equity
$

Net Loss
$

Equity
$

Cash and cash equivalents

719,615

(7,196)

7,196

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

The sensitivity was higher during 2021 than 2020 because of higher cash balances. The analysis assumes the carrying
amounts noted will be maintained over the next financial year.

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount,
net of any provisions for impairment of those assets, as disclosed in the statement of financial position and Notes to the
financial statements. The Group does not hold any collateral. The Group has adopted a simplified lifetime expected loss
allowance in estimating expected credit losses to trade and other receivables.The Group has no significant concentrations
of credit risk. The maximum exposure to credit risk at reporting date is the carrying amount (net of expected credit loss) of
those assets as disclosed in the statement of financial position and Notes to the financial statements.

(d) Liquidity risk

Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet their obligations
to repay their financial liabilities as and when they fall due. The Group’s objective is to maintain a balance between
continuity of funding and flexibility as to its source. The Directors receive cash flow reports periodically and increase the
frequency of review when the safety margin is or is nearly breached. The Board formulates plans to replenish its cash
resources when required and implements cost reduction programmes to reduce cash expenditure. The table below reflects
all contractually fixed pay-offs, repayments, and interest from recognised financial liabilities. For these obligations the
undiscounted cash flows for the respective upcoming financial years are presented. Cash flows for financial assets and
liabilities without fixed timing or amount are based on the conditions existing at 30 June 2021. The remaining contractual
maturities of the Group entity’s financial liabilities consisting of trade and other payables are:

On demand

Less than 1 year

1-5 years

> 5 years

(e) Net Fair Values

Consolidated

2021
$

2020
$

3,672,966

1,794,608

3,672,966

1,794,608

The carrying amounts of financial assets and liabilities as shown in the statement of financial position approximate their
fair value.

30. GOVERNMENT GRANTS AND ASSISTANCE
JobKeeper Payment

This payment is intended to help keep more Australians in jobs and support businesses affected by the significant
economic impact of COVID-19. The JobKeeper Payment was received during the period to 28 March 2021 when the
program ceased. The Company collected $70,500 (2020: $21,000) in JobKeeper payments on behalf of eligible staff, all of
which was used to subsidise wages of working employees.

Cashflow boost

Temporary cash flow boost payments up to $100,000 were made by the ATO to support the cashflow challenges faced by
eligible small and medium businesses during the economic downturn associated with COVID-19 and to improve business
confidence. The company qualified for the scheme which ceased in September 2020 and collected $50,000
(2020: $50,000) in cash flow boost payments during the period.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

13Directors’ Declaration

In accordance with a resolution of the Directors of Magnis Energy Technologies Ltd, I state that:

In the opinion of the Directors:

the financial statements and Notes of the consolidated entity are in accordance with the Corporations Act 2001,
including:

(i)

Giving a true and fair view of its financial position as at 30 June 2021 and performance for the financial year
ended on that date.

(ii) Complying with Accounting Standards (including the Australian Accounting Interpretations) and the

Corporations Regulations 2001.

The financial statements and Notes also comply with International Financial Reporting Standards as disclosed in
Note 1.

There are reasonable grounds to believe that the Company, as noted by Directors in Note 1 – Going concern, will be
able to pay its debts as and when they become due and payable.

This declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2021.

On behalf of the board

F Poullas

EXECUTIVE CHAIRMAN

Sydney, 30 September 2021

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

14Independent Auditor’s Report

MAGNIS ENERGY TECHNOLOGIES LIMITED
AND CONTROLLED ENTITIES
ABN 26 115 111 763

INDEPENDENT AUDITOR’S REPORT TO THE DIRECTORS OF MAGNIS ENERGY TECHNOLOGIES
LIMITED

REPORT ON THE AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS

Report on the Financial Report

Opinion

We have audited the financial report of Magnis Energy Technologies Limited and Controlled Entities (the
Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated
statement of profit and loss and other comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies and other explanatory information, and the
directors’ declaration.

In our opinion the accompanying financial report of Magnis Energy Technologies Limited and Controlled
Entities is in accordance with the Corporations Act 2001, including:

(a)

giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year then ended; and

(b)

complying with Australian Accounting Standards and the Corporations Regulations 2001; and

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110: Code of Ethics for Professional Accountants (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.

Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the company incurred a net loss of
$16,268,618 during the year ended 30 June 2021 and, as of that date; the company had net current assets
of $89,098,025 including cash reserves of $72,894,945. As stated in Note 1 these conditions, along with
other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast sign ificant doubt
about the company’s ability to continue as a going concern and therefore, the company may be unable to
realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in
the financial report. Our opinion is not modified in respect of this matter.

Liability limited by a scheme approved under
Professional Services Legislation.
Hall Chadwick Melbourne Audit
ABN 41 134 806 025 Registered Company Auditors.

Level 14 440 Collins Street Melbourne VIC 3000 T: +61 3 9820 6400
Post: Locked Bag 777 Collins Street West VIC 8007 Australia
www.hallchadwickmelb.com.au E: hcm@hallchadwickmelb.com.au
Hall Chadwick Association - a national group of independent Chartered Accountants and Business Advisory firms.
MELBOURNE SYDNEY BRISBANE ADELAIDE PERTH DARWIN

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

INDEPENDENT AUDITOR’S REPORT TO THE DIRECTORS OF MAGNIS ENERGY TECHNOLOGIES
LIMITED

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 for the year ended 30 June 2021. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.

Key Audit Matter

How Our Audit Addressed the Key Audit Matter

Investment in Charge CCV LLC

Our procedures included, amongst others:

Refer to Note 9 ‘Financial Assets at FVOCI

At 30 June 2021, the Consolidated Entity had an
investment in Charge CCCV LLC “C4V” an entity external
to the Group and recorded at a value of $ 15,096,041. The
Group’s accounting policy in respect of this investment is
outlined in Note 10.

This is a key audit matter because of the judgements and
estimates along with the disclosure considerations that are
required in relation to management’s assessment of the
fair value to ensure that these are in accordance with
AASB 13 Fair Value, AASB 9 Financial Instruments and
AASB 7 Financial Instruments: Disclosures.

 Obtaining and evaluating management’s assessment
and assumptions made in relation to the investment in
C4V to ensure the classification of the asset continues
to be appropriate.

 Evaluating management’s financial model to support
the fair value of C4V, including the challenging of key
assumptions as reported in Note 16 as well as
checking the mathematical accuracy of the model and
underlying calculations.

 Gaining an understanding of quantum of funds
required to ensure Nachu, iM3NY and iM3TSV
progress to development and into production to
produce the royalty cash flows to C4V.

 Evaluating the accuracy and completeness of the
disclosures in accordance with AASB 9, AASB 13 and
AASB 7.

Liability limited by a scheme approved under
Professional Services Legislation.
Hall Chadwick Melbourne Audit
ABN 41 134 806 025 Registered Company Auditors.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Independent Auditor’s Report

INDEPENDENT AUDITOR’S REPORT TO THE DIRECTORS OF MAGNIS ENERGY TECHNOLOGIES
LIMITED

Key Audit Matter

How Our Audit Addressed the Key Audit Matter

Property, Plant and Equipment
Refer to Note 12 ‘Property, Plant and Equipment’

The group has $23,290,573 of property, plant and
equipment at 30 June 2021. Included in the carrying value
is equipment held by a subsidiary amounting
to
$23,290,573. We focused on this matter as a key audit
matter as equipment is the most significant asset of the
group.

Our procedures included amongst others:

 Assessed the Group’s analysis for indicators of
impairment, including the views of management’s
valuation specialists. This included consideration of
whether any movements in the valuation drivers
indicated potential impairment by comparing them to
historical results in addition to economic and industry
forecasts.

 We assessed the adequacy of group's disclosures in
relation to the carrying value of property, plant &
equipment.

 Communicated with the group auditor to assess if their
work performed in respect of the fixed assets is
reasonable.

Key Audit Matter

How Our Audit Addressed the Key Audit Matter

Development Asset
Refer to Note 11 ‘Development Asset

The Group has $4,982,338 recorded as development
asset as at 30 June 2021. The Group’s accounting policy
in respect of exploration and evaluation assets is outlined
in Note 11.

judgements are applied

This is a key audit matter because the carrying value of
the assets are material to the financial statements and
significant
in determining
whether an indicator of impairment exists in relation to
in
capitalised exploration and expenditure assets
accordance with Australian Accounting Standard AASB
6 Exploration for and Evaluation of Mineral Resources.

Our procedures included, amongst others:



In assessing whether an indicator of impairment exists
in relation to the Group’s exploration assets in
accordance with AASB 6 – Exploration for and
Evaluation of Mineral Resources, we:

o examined the minutes of the Group’s board
the Group’s

from

meetings and updates
exploration partners;

o obtained management’s position on

the
assessment of impairment at the end of the year
and evaluated it for reasonability;

reviewed the tenements profile and ensured any
that have been surrendered were expensed as
required;

o discussed with management of the Group’s
further

to undertake

ability and
intention
exploration activities;

 Communicated with the group auditors and obtained

explanations and supporting document.

Liability limited by a scheme approved under
Professional Services Legislation.
Hall Chadwick Melbourne Audit
ABN 41 134 806 025 Registered Company Auditors.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

INDEPENDENT AUDITOR’S REPORT TO THE DIRECTORS OF MAGNIS ENERGY TECHNOLOGIES

LIMITED

Key Audit Matter

How Our Audit Addressed the Key Audit Matter

Borrowings
Refer to Note 14(c) ‘Non Current - Borrowings’

The Group has $65,175,758 of current borrowings as at
30 June 2021.

This is considered to be a key area of audit focus due to
its materiality to the financial report.

Our procedures included, amongst others:

 A review of the loan documentation including the terms
of the secured loans and evaluated the accounting
treatment adopted by management in accounting for
the borrowings.

 Communicated with the Group Auditors to confirm if

their test of details has identified any issues.

 We assessed the adequacy of the Group’s disclosures

in respect of borrowings.

Key Audit Matter

How Our Audit Addressed the Key Audit Matter

Stock Options
Refer to Note 15 ‘Contributed equity’

During the year Magnis raised share capital through
investors in two tranches.

Our procedures included, amongst others:

 We have obtained valuation report of the options and

obtained the views of the management.



108,309,719 ordinary shares in February 2021
and

13,118,853 ordinary shares in May 2021.

Each of these 121,428,572 ordinary shares have options
attached to them.

The independent Remuneration and Strategies
Committee have assessed the value of these options to
be $3,837,143.

This is a key audit matter because of the judgements
and estimates along with the disclosure considerations
that are required.

 Obtained a copy of an independent review of report
issued by the Remuneration Strategies Committee which
included the assessment of compliance with AASB 2
Share Based Payment by a competent professional
initiated by the management.

 Ascertained whether journal entries are required to be
posted to reflect these options or if disclosure note is
adequate.

 Evaluated

the accuracy and completeness of

the
disclosures in accordance with AASB 2 Share Based
Payment.

 Subsequently, we reviewed reports produced by Hall
together with advice
Chadwick Corporate Finance
provided by Hall Chadwick Melbourne. Based on our
review, we have not included in the accounts any
reporting of the valuation attributable to the 121,428,572
options granted in respect of the February 2021 capital
raise, on the basis that the options granted are not a
share based expense within the definition of ASSB 2.

Liability limited by a scheme approved under
Professional Services Legislation.
Hall Chadwick Melbourne Audit
ABN 41 134 806 025 Registered Company Auditors.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Independent Auditor’s Report

INDEPENDENT AUDITOR’S REPORT TO THE DIRECTORS OF MAGNIS ENERGY TECHNOLOGIES

LIMITED

Key Audit Matter

How Our Audit Addressed the Key Audit Matter

Stock Options (Continued)

 Regarding the 20,000,000 shares issues to former
director , due to the role being terminated by 30th June
2021, we have agreed with management’s accounting
treatment to ignore any accounting with respect to the
shares issued (in compliance with AASB2).

 With the remaining options granted during the 2021 year
to management and officeholders, due to immaterial
differences when comparing the reports produced by
Remuneration Strategies and Hall Chadwick Corporate
Finance, we have accepted the valuation reports
produced by Remuneration strategies and accounted for
the share based payment expense in accordance with
AASB 2.

Key Audit Matter

How Our Audit Addressed the Key Audit Matter

AASB 3 Business Combination
Refer to Note 27 ‘Interests in controlled entities”’

IM3NY became a subsidiary of Magnis Energy
Technologies Limited on 29 June 2020. The purchase
has been accounted for as an asset acquisition and not
a business combination, due to factors which include
the equipment assets had been relocated from a
previous owner’s facility and at the time of the
transaction were still in the process of being
recommissioned ahead of the commencement of
production. Magnis provided further funding for the
lithium-ion battery project and increased its total interest
in iM3NY to 59.88% by undertaking a debt for equity
swap via a cash settlement of $ 30,616,287.

Our procedures included, amongst others:

 Obtaining and assessing the management’s review
and assessment of the fair value of assets in the
subsidiary substantiated by adequate supporting
documents.

 Evaluated

the

impacts of AASB 3 Business
Combinations and ascertaining if the entries posted
by
the
requirements of the standards and the current
arrangements with the subsidiary.

the management are

reflective of

 Ascertained if the management has accounted for

the Non-Controlling interest correctly.

 Evaluating the accuracy and completeness of the
disclosures in accordance with AASB 3 Business
Combinations.

Liability limited by a scheme approved under
Professional Services Legislation.
Hall Chadwick Melbourne Audit
ABN 41 134 806 025 Registered Company Auditors.

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

INDEPENDENT AUDITOR’S REPORT TO THE DIRECTORS OF MAGNIS ENERGY TECHNOLOGIES
LIMITED

Information Other Than The Financial Report And Auditor’s Report Thereon

The directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our
auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly
we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report,
our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this
regard.

Responsibilities of the Directors for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial
report, the directors are responsible for assessing the ability of the Group to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative
but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional skepticism throughout the audit. We also:

–

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.

Liability limited by a scheme approved under
Professional Services Legislation.
Hall Chadwick Melbourne Audit
ABN 41 134 806 025 Registered Company Auditors.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Independent Auditor’s Report

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

14Additional Shareholder Information

A) QUOTED SECURITIES

The security holder information set out below was current at 26 October 2021.

There were 929,434,546 ordinary shares on issue held by 15,082 shareholders all of which are quoted on the Australian Stock
Exchange. There are no restricted shares on issue. Details of unquoted securties is provided towards the end of this section.

Range

100,001 and Over

10,001 to 100,000

5,001 to 10,000

1,001 to 5,000

1 to 1,000

Total

Unmarketable Parcels:

Securities

707,207,574

184,914,459

22,638,959

14,494,943

178,611

76.09

19.90

2.44

1.56

0.02

No. of Holders

1,133

5,521

2,827

5,146

455

7.51

36.61

18.74

34.12

3.02

929,434,546

100.00

15,082

100.00

Holdings of less than a marketable parcel of ordinary shares: Holders: 744 (4.93%) Units: 532,494 shares (0.6%)

On-market buy-back

There is no current on-market buy-back.

Substantial shareholders

Name

CITICORP NOMINEES PTY LIMITED

MAZZDEL PTY LIMITED AND AS ATF

No. of Holders

67,033,413

55,339,853

7.21%

5.95%

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

LARGEST 20 SHAREHOLDERS

Name

CITICORP NOMINEES PTY LIMITED

MAZZDEL PTY LIMITED AND AS ATF

SMARTEQUITY EIS PTY LTD

MR MATTHEW JOHN BOYSEN

MR FRANK POULLAS AND ATF

BNP PARIBAS NOMINEES PTY LTD

SBC GLOBAL INVESTMENT FUND

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

MR MARLON PATHER

JKB ALPHA PTY LTD

LIND GLOBAL FUND II LP

MISS HAZEL DARCY

MS RUIE YAO

MR JOHN PETER SAUNIG

DR CRAIG GEOFFREY SURTEES

KMJ CONSULTING PTY LTD

STONE INVESTMENTS & HOLDINGS PTY LIMITED

SYDNEY WYDE HOLDINGS PTY LTD

MAXMA FAMILY PTY LTD

MR JURGEN BEHRENS

Total

Grand total

Voting Rights

Number of shares

% of ordinary shares

67,033,413

55,339,853

20,750,000

19,339,464

16,709,879

13,345,899

9,750,000

5,172,912

5,000,000

4,575,000

4,254,921

4,230,000

4,179,322

4,100,309

3,921,387

3,830,000

3,660,000

3,650,000

3,500,000

7.21

5.95

2.23

2.08

1.80

1.44

1.05

0.56

0.54

0.49

0.46

0.45

0.44

0.42

0.41

0.40

0.39

0.38

257,342,359

672,092,187

929,434,546

27.69

72.31

100.00

At a general meeting, shareholders are entitled to one vote for each fully paid share held. On a show of hands, every
shareholder present in person or by proxy shall have one vote and upon a poll, every shareholder so present shall have one
vote for each fully paid share held.

B. UNQUOTED SECURITIES

I. Unlisted Options

Type of security

Unlisted Options held in the Magnis Option Share
Trust (Vested)
(Number of option holders – 4)

Unlisted Options (vested)
(Number of option holders – 392)

Issue date

Number of
options

Varying dates

3,750,000

Exercise Price

Varying between
$0.50 to $0.75

Expiry date

Varying expiry
ranging from
31 October 2022
to 28 October 2023

26/05/2021

121,428,572

$0.50

26 May 2023

II. Unlisted Performance Rights

7,500,000 Performance Rights are held by related parties on terms disclosed in the remuneration report.

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

Contents

ABN 26 115 111 763

CORPORATE DIRECTORY

01Contents

Chairman’s Statement

Review of Operations

Corporate Governance

and Sustainability Report

Annual Financial Report

Directors’ Report

Auditors’ Independence Declaration

Statement of Profit and Loss

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Directors’ Declaration

Independent Auditor’s Report

Additional Shareholder Information

Board

F Poullas

Tanzania Office

House No 19, Plot No. 890 Yacht Club

[Executive Chairman]

Road

Masaki, Dar es Salaam, Tanzania

Tel +255 739 500 023

Distinguished Professor

M S Whittingham

(Non-Executive Director)

P Tsegas

(Non-Executive Director)

M Dajani

[Non-Executive Director]

Dr R M Petty

[Non-Executive Director]

Z Pavri

M Siva

Chief Financial Officer

J Behrens

General Counsel &

Company Secretary

J R Rockett

Registered Office

Suite 9.03

Level 9

Aurora Place

88 Phillip Street

Sydney NSW 2000 Australia

Tel +61 2 8397 9888

Internet Address

www.magnis.com.au

Email Address

info@magnis.com.au

Share Register

Link Market Services Limited

Tower 4, 727 Collins Street

Melbourne VIC 3000 Australia

Tel 1300 554 474

Fax +61 3 9287 0303

Auditors

Hall Chadwick Melbourne Audit

Melbourne VIC 3000

Tel +61 3 9820 6400

Bankers

National Australia Bank Ltd

Level 15, 680 George Street

Sydney NSW 2000 Australia

Tel +61 2 9237 9290

STOCK EXCHANGE LISTING/ASX

Magnis Energy Technologies Ltd shares

(code MNS) are listed on the Australian

Securities Exchange.

[Non-Executive Director]

Level 14, 44 Collins Street

ANNUAL REPORT 2020 - MAGNIS ENERGY TECHNOLOGIES

MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2021

Suite 9.03, Level 9, 88 Phillip Street
Sydney NSW 2000 Australia
Tel
Email

+61 2 8397 9888
info@magnis.com.au

www.magnis.com.au

100

ANNUAL REPORT 2021 - MAGNIS ENERGY TECHNOLOGIES LTD.

NEW YORK • TOWNSVILLE • TANZANIA

2021

ANNUAL REPORT