Suite 11.01,
1 Castlereagh Street,
Sydney NSW 2000 Australia
Tel +61 2 8397 9888
Email: info@magnis.com.au
www.magnis.com.au
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NEW YORK • TOWNSVILLE • TANZANIA
ANNUAL REPORT
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
1
Contents
0101 Contents
Contents
2
Chairman’s Statement
CEO Report
Review of Operations
Corporate Governance
and Sustainability Report
Annual Financial Report
Directors’ Report
3
4
5
20
29
30
Auditors’ Independence Declaration
54
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
55
56
57
58
59
99
Independent Auditor’s Report
100
Additional Shareholder Information
105
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
2
2
CORPORATE DIRECTORY
CORPORATE DIRECTORY
ABN 26 115 111 763
Board
F Poullas
[Executive Chairman]
H Daruwalla
[Non-Executive Director]
M Dajani
[Non-Executive Director]
M Siva
[Non-Executive Director]
C Bibby
[Non-Executive Director]
G Gunesekera
[Non-Executive Director]
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
P Tsegas
[Non-Executive Director]
Chief Executive Officer
D Taylor
Auditors
Hall Chadwick Melbourne Audit
Level 14, 44 Collins Street
Melbourne VIC 3000
Tel +61 3 9820 6400
Chief Financial Officer
J Behrens
General Counsel &
Company Secretary
D Glasgow
Registered Office
Suite 11.01,
1 Castlereagh Street,
Sydney NSW 2000
Australia
Tel +61 2 8397 9888
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 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
02 Chairman’s Statement
Dear Fellow Shareholders,
The last 12 months have been momentous for Magnis Energy Technologies.
We have started commercial production at the iM3NY Lithium-ion Battery
Plant based in Endicott, New York. Our wholly owned Nachu Graphite
Project recently had its previous Bankable Feasibility Study updated
and early infrastructure works have begun. We continue to work on
commercialising new battery technologies through our partners C4V whilst
moving closer to our ambition of producing anode materials.
The Lithium-ion battery industry continues to gain momentum and there
has been a major emphasis from the Biden Administration to support US
Based supply chain partners. It feels like we are in the right place at the
right time with our battery plant which is 95% powered by clean energy and
the iM3NY team is working towards hitting its goal of 38GWh of
annual capacity in 2030. The team continues to work on sourcing finance for
its large-scale expansion plans and are expecting to have answers in
the coming months from private and strategic investors along with
government funding.
We continue to work on new technologies in partnership with C4V including
next generation and fast charging batteries which we expect to be a game
changer in the marketplace.
Nachu and downstream graphite products remain a major focus of the
business. We are closing in on completing the resettlement village and
have started on water storage activities for the construction process. We
continue to work with potential offtake partners and financiers as we try to
bring Nachu into production in the coming years.
We take ESG principles and our corporate social responsibility very
seriously and we pride ourselves in the assistance we have provided
local communities especially in Tanzania where we have been involved in
developing many social infrastructure projects over the last several years.
Earlier this year we welcomed Claire Bibby, Hoshi Daruwalla and Giles
Gunesekera to our Board to strengthen the Company’s governance and
diversity as we move forward in our journey to fulfil on our vision on being
a major player in the energy transition supply chain. The new appointments
bring significant experience and skillsets across Governance, Sustainability
and Impact and technical and manufacturing know-how.
I would like to thank my fellow Board members, our senior management
team led by David Taylor along with all of our employees and contractors
both on and off site, for their exceptional efforts. Also, to our shareholders
for their ongoing support in our company.
Frank Poullas
EXECUTIVE CHAIRMAN
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
3
03 CEO Report
Dear Shareholders,
I am very pleased to provide my first report to you as the
Chief Executive Officer of Magnis. I would like to thank the
Board for entrusting me to lead the company on its next
stage of growth and expansion, and I am looking forward
to working in collaboration with all stakeholders to deliver
sustainable financial, environmental and social outcomes.
Since my commencement on 1 August, I have had the
opportunity to engage with the Board, our people, our
customers, our partners and our key stakeholders. This has
given me deep insights into the business and its operations,
and confirmed my early assessment that Magnis has built
a solid portfolio of assets across the lithium-ion battery
value chain that provide a strong foundation for growth and
success.
It has been encouraging to see our people’s focus on safety,
demonstrated by the positive safety outcomes achieved in
FY2022. As the company grows and evolves, we will increase
our efforts on developing and implementing industry best
practice policies, systems, processes, and procedures that
will ensure our workplace remains safe from both a physical
and mental well-being perspective. This will be a key
priority for myself and the executive team over the course
of the next financial year.
The significant progress made on the iM3NY battery cell
manufacturing plant has been a highlight of FY2022.
Despite global issues such as supply chain constraints and
labour impacts of COVID-19, the team has achieved an
outstanding result in bringing the plant into commercial
production in the early stages of FY2023. The focus for the
remainder of FY2023 will be on the ramp up of production
and revenues from sales, as well as finalising plans and
commencement of the next stage of scale up on our path
to a planned capacity of 38GWh by 2030. Discussions with
the US Department of Energy in relation to applications
for funding to support this growth have been positive
throughout FY2022, and we are confident that are we well
positioned to secure funding in FY2023.
Our partnership with Charge CCCV (“C4V) is an important
element of our growth plans. Key achievements for
FY2022 include the advancements made in fast charging
technology, as well as continued development of
sustainable processing technology for anode active
materials. Progress was also made by the C4V team on
the development of new battery technologies that aim to
improve the safety, performance and cost of future
battery products.
We continue to make positive progress on the development
of our Nachu Graphite project in Tanzania, with key
achievements for FY2022 being substantial progress
on the construction of the new village and associated
infrastructure, as well as completion of the majority of
updates to the 2016 bankable feasibility study. The focus
for FY2023 will be on finalising the completion of the
village, delivery of mine infrastructure works including
water supply and dams, and advancing the project to final
investment decision and achieving financial close.
Whilst the development of a local battery manufacturing
gigafactory in Townsville remains an option for Magnis, we
are currently working with all key stakeholders to identify
a way forward. We will continue to engage with other
government and industry stakeholders in relation to the
future development of policies focused on the development
of the battery metals and battery manufacturing sector
throughout Australia.
Despite the current global macroeconomic environment,
a number of tailwinds continue to underpin the future
growth and success of Magnis. These include a continued
and growing shift in demand preferences for electric
vehicles and mobility across both consumer and commercial
segements, an enormous focus on the deployment
of renewable energy technologies to reduce carbon
emissions, and policy and regulatory changes such as the
recent signing of The Inflation Reduction Act in the US
and the Climate Change Bill in Australia that support the
development and deployment of clean energy technologies.
Magnis is extremely well placed to take advantage of these
tailwinds, particularly in the next decade when the major
shifts and investments are required to make a significant
impact on climate change outcomes.
Our primary focus for FY2023 will be on the safe,
sustainable and disciplined execution of production ramp
up at the iM3NY facility and achieving financial close on the
Nachu Graphite project. We will also seek to identify growth
opportunities that meet our strategy and investment
criteria, and continue to build the internal resources,
systems, and processes that will underpin the long-term
growth of the company.
I look forward to your ongoing support as we progress on
this exciting journey together.
David Taylor
CHIEF EXECUTIVE OFFICER
4
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
04 Review of Operations
ABOUT MAGNIS
Magnis Energy Technologies Ltd is a vertically integrated
lithium-ion battery technology and materials company
with strategic assets, investments and partnerships in key
segments of the energy transition supply chain.
The company’s vision is to enable, support and accelerate
the mass adoption of electric vehicles and renewable
energy storage critical for the green energy transition.
Magnis also has a minority investment stake in C4V.
Apart from C4V’s portfolio of Lithium-ion battery IP and
Innovation developed over the last decade, C4V also
provides value chain solutions for Lithium-ion battery
manufacturing projects around the world through
cell design and engineering, cell fabrication process,
qualification of raw materials supply chain and cell
fabrication equipment supplier, blueprint of plants and
engaging with EPC contractors.
The company’s US based subsidiary Imperium3 New York,
Inc (“iM3NY”) operates a Gigawatt scale Lithium-ion battery
cell manufacturing plant in Endicott, New York that plans to
scale up to 38GWh of capacity by 2030. Magnis along with
its joint venture and Lithium-ion R&D technology partner
Charge CCCV LLC (“C4V”) are the major shareholders in
iM3NY. iM3NY has commercialised C4V’s patented cathode
chemistry to produce green credentialed lithium-ion battery
cells for use in both electric vehicles and battery energy
storage systems. iM3NY has exclusivity to C4V’s IP in the
US. Magnis is also a consortium partner along with C4V in a
greenfield battery project planned for Townsville, Australia.
Magnis has a 100% interest in the Nachu Project which is a
large-scale natural flake graphite project in Tanzania. The
project has both very high concentrate purity as well as a
large percentage of coarse flake sizes and both attributes
command premium prices. Magnis has also exclusively
licensed C4V’s anode processing IP and know-how to
produce high-quality, high-performance anode materials.
Magnis in conjunction with C4V have an anode development
program with pilot precursor anode material equipment in
New York.
Current Corporate Structure
Magnis Energy Technologies Ltd together with its consolidated subsidiaries as well as minority investment stakes have
operations and projects across battery manufacturing and technology as well as battery materials in the United States,
Tanzania and Australia. The current company structure along with their industry segment and geographic location is
illustrated below.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
5
Review of Operations
OUR YEAR IN REVIEW
iM3NY commences commercial production in August 2022. At gigawatt
scale capacity expect to produce ~15,000 cells per day
IM3NY successfully raises US$100m in debt refinancing
Compelling project returns (US$1.2bn NPV10 & 51% IRR) from recently
completed BFS Update.
Signed a binding Graphite offtake agreement with Traxys Europe for
600kt over 6 years
C4V’s cell to pack Technology, LiSER is able to achieve a superior
energy density of 190Wh/Kg (At the pack level) without the use of
Cobalt and Nickel
Extra Fast charging results show only 3% loss of the initial cell capacity
after approximately 2600 cycles using 7Ah commercial graded cells
with a 20 minute charge and 20 minute discharge
6
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
IMPERIUM3 NEW YORK
for three years and provides additional debt service
cost reductions for iM3NY based on certain milestones
being reached.
ABOUT IMPERIUM3 NEW YORK
Imperium3 New York’s (iM3NY) Gigafactory is located in
Endicott, in upstate New York at the birthplace of IBM’s first
manufacturing facility. Magnis along with its joint venture
and technology partner Charge CCCV LLC (“C4V”) are the
major shareholders in iM3NY. iM3NY’s began producing
lithium-ion battery cells in August 2022 for customers
globally in both the electric mobility and energy storage
sectors and plans to increase capacity to 38GWh annually by
2030.
FUNDING
In April 2021, iM3NY raised US$50m in debt from
infrastructure and energy alternative investment firm
Riverstone Credit Partners under a four-year senior
secured loan facility. Along with further equity from
Magnis, iM3NY was able to commence construction of its
Lithium-ion battery manufacturing facility. Earlier this year,
iM3NY was able to successfully refinance the debt from
Riverstone Credit Partners with an Intellectual Property-
based financing in collaboration with Aon and Atlas Credit
Partners. The new loan facility was used to not only to
refinance the existing US$50 million debt but also support
iM3NY’s long term growth plans. The loan also provided
strong validation of C4V’s patented technology with the
loan collateral backed by C4V’s IP. The new loan facility is
CONSTRUCTION OVERVIEW
iM3NY along with EPC contractor Ramboll are utilising a
phased approach to the design and construction of the
battery manufacturing facility. The facilities factory floor is
approximately 22,000sqm which exceeds three professional
football/soccer fields and optimises the existing fit out
of IBM’s Huron campus. The phased approach is described
below.
Phase 1 - The pilot line, will consist of existing facility
infrastructure, demolition and abatement, process room
design and construction, process equipment installations of
the mixing/coating and formation equipment as well as the
associated facility utility design and installations.
Phases 2 and 3 - Consist of building interior cell assembly/
filling dry room construction and filling/cell assembly dry
room process equipment and associated facility utility
design and installations.
Phase 4 - The final engineering and construction phase of
iM3NY’s battery cell plant facility will consist of design and
construction of the facility office space, quality control
lab, maintenance, packaging, installation of formation and
process equipment, and associated facility utility design and
installation.
A high level summary of key milestones over the last 12-18
months is illustrated below.
Q2 2021 & Q3 2021
KEY MILESTONES
> The facility clear-out work was completed
>
>
Construction material for facility customisation work
arrived at site
The iM3NY team collaborated with Ramboll working
through crucial design feed information including
master equipment list, master utility matrix, finalised
general arrangement drawings, temperature and
humidity re-quirements, storage and feed details
>
All three permits being air, envi-ronmental justice
and aquifer have been submitted to the dif-ferent
regulatory authorities
Dry Room construction materials
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
7
Review of Operations
Q4 2021
Construction of Cathode Wet Mixing Room
iM3NY employees on the factory floor
KEY MILESTONES
> De-humidifiers secured in final location
>
>
Internal and external works progressed on the dry room, cathode wet mixing room, mieroven preparation,
electrical sub-station, solvent recovery system and the anode mixing room
As part of the build out, iM3NY was required to obtain three major permits, namely the Environmental Justice
Plan, Air Permit and Aquifer Permit. During the Quarter, all state permits required were granted
Q1 2022
High & Low Bay Areas
Coating machine on production floor
KEY MILESTONES
>
>
8
The iM3NY team collaborated with EPC contractor Ramboll throughout the quarter with several mechanical, civil and
electrical works completed. Significant progress made on internal and exterior works, the cathode and anode mixing
rooms, cell assembly dry room, high bay dry room and the electrical sub-station
One of the key accomplishments made was the completion of the ‘Dry Room’. The dry room is an essential part of the
Li-ion cell manufacturing process, where most of the cell assembly is performed in an ultra-dry and ultra-clean inert
environment. This ultra-dry atmosphere ensures longevity of Li-ion cells with minimal side reactions and degradation
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Q2 2022 & Q3 2022
Inspection of Cell Assembly Equipment
Cathode Coating Drying Line
KEY MILESTONES
>
>
>
Electrolyte filling equipment was connected to the inside of the dry room. The controlled (moisture and temperature)
atmosphere of the dry room is of utmost importance especially during the cell electrolyte filling step. Any traces of
moisture will react with the electrolyte will slowly deteriorate the battery performance
A team of Korean technologists travelled to New York to provide technological expertise around the iM3NY plant for
installation and commissioning of major cell assembly equipment, including the electrolyte filling
Majority of equipment in place such as Mixing, Coating, Drying, Calendaring, Slitting, Stamping, Stacking, Electrolyte
Filling etc
Production
First Product
Commercial production commenced at iM3NY in August
with an initial phase allocated for testing and quality
assurance before production ramp up and sales start.
As soon as the cells pass the quality assurance stage,
annual manufacturing levels are expected to increase to
annual production levels of 1GWh by the end of 2023 and
will continue to ramp up to 1.8GWh and then double-digit
gigawatts over the rest of this decade. At Gigawatt scale
production, iM3NY expect to produce around15,000 cells
per day.
iM3NY currently employs 55 people. The total count is
expected to grow to 100 during Q4 2022.
The BMLMP chemistry and prismatic cell design (P Series)
promotes long cycle life, fast charging, and ensures greater
safety. The chemistry incorporates traditional electrolyte
along with a patented mixed metal phosphate composition
in the cathode that contributes to the overall safety and
performance benefits. Notably there is no Cobalt and no
Nickel in this high performing cell.
The prismatic cell is an advanced design with a newly
engineered seal, lid, and contact configuration that yields
high mechanical integrity and ease of assembly within
many different pack configurations. The design also
ensures volumetric efficiency for optimised capacity, cell
performance and ease of design-in for a wide variety of
devices. The prismatic design provides internal mechanical
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
9
Review of Operations
partitioning as an added safety feature over traditional
pouch design configuration. All aspects of the cell have
been considered and engineered to ensure maximum
performance, safety, and the ability to manufacture high
volumes. The manufacturing lines will also be highly
optimised for future technologies such as Solid-State
batteries. Along with carefully picked supply chain
partners and using hydroelectricity for its manufacturing,
with 95% of the power supply coming from clean energy,
the batteries produced at the iM3NY will be among the
greenest in the marketplace as was independently verified
by Abt Associates1.
1 As per ASX Announcement 6 October 2020.
iM3NY’s Prismatic Form Factor P Series Cells
iM3NY Future Plans
With strong demand globally, the iM3NY team are planning
to increase annual capacity to 38GWh by 2030. Significant
investment is required to meet the planned increase in
capacity. Ongoing talks continue with a number of groups
including potential government funding.
10
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Set out below is a table which provides further detail to the announcement made on 3 May 2021
(https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02370536-2A1295818?access_
token=83ff96335c2d45a094df02a206a39ff4), supplemented on 4 August 2021 (02403481.pdf (weblink.com.au) this latter
contract is not repeated in the table) and clarified in respect to one off-taker on 6 October 2021 (https://www.asx.com.au/
asxpdf/20211006/pdf/451bfpk2rpcng7.pdf.) for the offtake agreements representing (in aggregate) approximately US$655
million in future sales for Magnis’ subsidiary iM3NY. The disclosure made on 6 October accounts for US$243M of that total.
The table below provides details of the remaining offtake agreements.
Each of the parties in the table are resellers in that they take the cells produced by iM3NY and produce packages and
modules for sale for use as an energy storage medium. All will be on-selling the packaged product to a government body or
pursuant to a contract with the government in their country of registration, thus reducing counterparty
Item Nature of Agreement
Counterparty
and use
Date of
Agreement
Duration of
Agreement,
once supply
commences
Approximate
Value
Approximate
Value per annum
Product & supply chain
agreement – for use
with their solar panel
business
Manufacturing & supply
agreement – for use
as an energy storage
medium
Manufacturing & supply
agreement
Manufacturing & supply
agreement – energy
storage medium
Manufacturing & supply
agreement – energy
storage
Manufacturing & supply
agreement -
1.
2.
3.
4.
5.
6.
Premier Solar
8 November
2017
5 years
Energence
12 August
2019
6 years
Between
US$19.5m &
US$22m
Between
US$259.5m &
US$267.0m
US$3.9 – US$4.4M
US$43.25 –
US$44.5M
Martac
1 April 2021
2 years
US$13m
US$6.5M
EGYAI
10 April 2021
5 years
Green World
Corp
11 April 2021
5 years
Energy Link 3
11 June 2021
5 years
Between
US$18m &
US$18.5m
Between
US$48.0m &
US$48.4m
Between
US$33m &
US$82.0m
US$3.6m –
US$3.7m
US$9.6m
US$6.6 – US$16.4
1 Premier Solar Systems Pvt Ltd (Premier Solar) is an Indian registered company. Further information in relation to Premier Solar
can be found at its website (www.premiersolarsystems.com) or Premier Energies Limited, its parent entity’s website (www.
premierenergies.com).
2 Energence, is a company incorporated under the laws of The Philippines and has its registered office at Suite 1407, Tower One,
Ayala Triangle Park, Ayala Avenue, Makati Philippines. Further information can be found at its website https://energence.ph
3 Maritime Tactical Systems Inc. is a Florida based company that has as its principal place of business at 1227 South Patrick Drive
Suite 122, Satellite Beach, FL, 32937. Further information can be found on its website www.martacsystems.com
4 Econ Gayrimenkul Yatirim Anonim Irketi (EGYAI) is a Turkish registered entity having its registered office at Hamidiye Mahallesi
Hasdal Caddesi Sehit Hasan Kaya Sok. No:10/A (25/A)34408 Kagithane Istanbul Turkey and website https://emlakkulisi.com.
5 Green World Corporation is an Indian registered company. Further information in relation to Green World can be found at its
website (http://greenworldcorp.in). It was founded in 2007, having offices in Calcutta and specialising in Li-ion Solar Street
Lighting.
6 Energy Link 3 LLC is a US based entity registered in Delaware. Further information in relation to EnergyLink 3 can be found at its
website https://energylink3.com
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
11
Review of Operations
Imperium3 Townsville
CURRENT STATUS
PROJECT DESCRIPTION
Magnis along with technology partner C4V are members
of a consortium in Imperium3 Townsville Pty Limited
(“iM3TSV”) to develop a lithium-ion battery manufacturing
project. The project currently remains in greenfield stage
after successfully completing a Queensland Government
funded ($3.1 million grant) feasibility study for an 18
GWh lithium-ion battery cell manufacturing facility in
Townsville. The feasibility study was approved in August
2020 by the Queensland Government’s Department of State
Development, Tourism and Innovation.
The core objective of the study was to assess the technical
and commercial viability of developing a lithium-ion battery
manufacturing plant in Townsville. A significant outcome
of the study was to phase the project over 3 stages of 6
GWh each, for a total nominal capacity of 18 GWh. 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. The study results show project
returns of approximately 13% per annum.
The site is part of Lansdown Station approximately 40km
south of the Townsville CBD with a total property area of
357 hectares. 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.
The Queensland Government released the Queensland
Energy and Jobs Plan (QEJP) on 28 September 2022. The
QEJP is a 10-year plan that increases the state’s renewable
energy target to 70% by 2032, and transforms the energy
system with over $62 billion of estimated capital projects to
be funded across public and private sectors.
The QEJP estimates that by 2035 $62B of capital
expenditure will be required in the state’s energy system to:
>
>
>
>
build 22GW of new renewable generation (wind and
large-scale solar)
build up to 7GW of long-duration pumped hydro energy
storage (PHES)
build around 1,500km of new high voltage backbone
transmission infrastructure, along with transmission for
renewable energy zones (REZs)
convert publicly owned coal-fired power stations to
clean energy hubs.
A smarter grid will support 11GW of rooftop solar and
around 6GW of batteries in homes and businesses. This
provides a significant opportunity to develop domestic
manufacturing supply chains for the components which feed
into the large-scale and industrial renewable systems.
In addition to this announcement by the Queensland
Government, the Australian Government is currently
preparing a National Battery Strategy which is designed to
assist and guide industry and governments towards a shared
vision of end-to-end battery manufacturing onshore and
inform governments about policy requirements to support
future industry development.
Magnis continues to engage with all key stakeholders,
including in relation to the commercial arrangements
for land and infrastructure at the current proposed site,
potential alternative sites, and the overall National
Battery Strategy.
Artist impression of iM3TSV site
12
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
C4V
ABOUT C4V
C4V is an energy storage technology and IP company
headquartered in Vestal, New York that has discovered,
patented and commercially developed processing
technology and know-how for cathode and anode materials
for use in Lithium-ion batteries.
C4V’s commercially available P-Series battery cathode
chemistry is a cobalt and nickel-free cathode chemistry
that has a high voltage and cycle lifetime and importantly
its compositionally patented modifications at the crystal-
level provide high levels of safety in the event of thermal
runaway or fire exposure.
C4V also provides value chain solutions for Li ion battery
manufacturing projects around the world through
cell design and engineering, cell fabrication process,
qualification of raw materials supply chain and cell
fabrication equipment supplier, blueprint of plants and
Magnis’ Particle Engineering Equipment in New York
engaging with contractors.
Apart from being Magnis’ Lithium-ion battery JV partner in
iM3NY and anode materials technology partner, Magnis also
has a minority investment of 9.7% in C4V.
C4V R&D DEVELOPMENT PROGRAM IN REVIEW
Anode Development Program
Magnis in conjunction with C4V have been running an anode
development program over the last 6 years to optimise
and enhance their proprietary sustainable processing
technology for anode active materials.
This innovative processing technology uses Nachu’s
high purity and coarse flake size graphite concentrate as
feedstock which together avoids chemical and thermal
purification lends itself to low-energy and low-carbon
footprint products. The key findings of the program are
>
>
>
Consistent intrinsic high-grade and high-quality of
crystal with minimal imperfections in our natural flake
graphite lends itself to efficient and simple downstream
processing that does not use any chemical or extremely
high temperature thermal purification. This is expected
to reduce energy usage and costs
High yields (>70%) when producing Spherical Graphite
(SPG). This is done purely via C4V’s proprietary
mechanical processing and spheronizing steps
High purity (99.98%) Coated Spherical Graphite (CSPG)
anode material produced in test work using our pilot
equipment in New York.
LiSER
C4V unveiled their Nickel and Cobalt Free Platform Solution
called Lithium Slim Energy Reserve (LiSER) at the start of
2022. LiSER allows OEM’s to bypass modules and build packs
directly which enables maximum cell to pack translation
of performance. LiSER’s Cobalt and Nickel free lithium-
ion battery cell technology provides an energy density of
190Wh/Kg (at the pack level).
LiSER simplifies the module structure and using C4V’s
BMLMP technology with its inherent oxygen deficient
properties not only augments battery safety but also
delivers a voltage that is at least 20% higher than the LFP
formulations currently widely being used in the market.
While Nickel-rich NCA or NMC chemistries emit Nickel
oxide fumes, when burning with LiSER the toxic gaseous
build-up is non-carcinogenic. LiSER uses elements that are
environmental-friendly, sourced with a robust local supply-
chain and enable a significantly lower carbon footprint.
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Cell to Chassis: LiSER enables freedom from Modules
to deliver an Industry leading cell to chassis and cell to
pack solution with superior performance metrics.
Unique “Tab-less” prismatic design: LiSER is the first
ever “Tab-less” prismatic design that delivers extra fast
charge and higher power benefits.
Embedded Thermal Management: built-in cell cooling
loops enables LiSER to eliminate complicated thermal
management systems thereby reducing the weight and
energy consumption of the battery pack.
Strong Inherent Safety: LiSER technology also includes
exceptional safety characteristics due to C4V’s oxygen
deficient patented BMLMP technology.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
13
Review of Operations
Extra Fast Charging Programs
C4V continued to work on their Extra Fast
Charging (EFC) battery program over the
year using 7Ah (Amp hour) commercial
graded cells with 20 minute-charge and
20-minute discharge.
The tests were performed at 90% Depth
of Discharge (DoD) which equates to 90%
of the maximum energy being infused and
withdrawn during charge and discharge
cycles. After 1000 cycles, cells also went
under impedance measurement every
100th cycle.
These optimised commercial cells
exhibited minimal energy density loss
even at higher charge-discharge retaining
95% energy density of a regular cell run
at lower rates. To date, the EFC results
showed only a 3% initial capacity loss after
more than 2600 cycles. The plan is to take
this program to over 3000 cycles and then run new
programs at higher charging currents to achieve a
10-minute charge and then onto a 6-minute charge.
C4V’s LiSER cell technology Platform
EFC 7Ah cell cycling data with 20 minute-charge and 20 minute-discharge. Cells were also measured for the impedance every
100th cycle at slower rate to study the internal resistance developing as a function of charge-discharge
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Nachu
PROJECT BACKGROUND
The Nachu Project is approximately 20 km from the major
regional town of Ruangwa, in the Ruangwa District, Lindi
Region of Southern Tanzania. The Project is approximately
220 km by road from the port of Mtwara and approximately
600 km by main road from the major port city of Dar Es
Salaam. The Nachu tenement was originally a Tenement
Application held by Uranex Tanzania Ltd (UTL) when
the first indications of graphite were discovered. The
application was granted as a Prospecting Licence
PL9076/2013 on the 8th of April 2013, covering an area of
198.57 km2.
TANZANIAN CORPORATE STRUCTURE
Magnis Energy Technologies Ltd. has two subsidiaries in
Tanzania:
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UTL
Magnis Technologies (Tanzania) Ltd (MTT)
UTL is the company under which the discovery of the
extensive graphite mineralization on the tenement
(PL9076/2013) was made and which holds the Special
Mining Lease (SML550/2015). UTL will operate the mining
operations, tailings dam and water supply facilities. UTL
falls under the jurisdiction of the Ministry of Minerals. MTT
is the company that holds the SEZ (Special Economic Zone)
license for production of the advanced graphite products
through the production process developed by Magnis. The
original application for the SEZ was made in November
2016 which resulted in the granting of the SEZ license.
Following discussions with the EPZA (Export Processing
Zone Authority), a revised application with an amendment
proposal was made April 2018. MTT falls under the
jurisdiction of the Ministry of Industry and Trade and the
relevant authority is the EPZA.
MINERAL RESOURCE AND RESERVE ESTIMATE
The Nachu Graphite Project Mineral Resource Estimate as
of 1st February 2016 included a 174 Million Tonnes at 5.4%
graphitic carbon (Cg) at a 3% Cg cut-off grade, classified as
either Measured, Indicated or Inferred resources
and reported in accordance with the 2012 Edition of
the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code,
2012). The Mineral Resource Estimate is summarised below.
Nachu mineral resource estimate
Classification
Tonnes (mt)
Grade (% TGC)
Graphite (mt)
Measured
Indicated
Inferred
Total mineral resources
JORC Compliant Mineral Resource Estimates
63
61
50
174
4.7
5.7
5.8
5.4
3.0
3.5
2.9
9.3
Classification
Proved
Probable
Total Ore Reserves
JORC Compliant Ore Reserve Estimates
Nachu ore reserve estimate
Tonnes (mt)
Grade (% TGC)
Graphite (mt)
50.5
25.7
76.3
4.6
5.1
4.8
2.3
1.3
3.7
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
15
Review of Operations
Compelling BFS Update Results
Update to the 2016 BFS confirmed the Nachu Project as
a world class graphite project with strong technical and
financial viability combined with impactful sustainability
outcomes
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The update optimises process plant design to produce
a higher-grade product and protect flake size during
processing
The Project’s unique combination of larger flake sizes
and high purity concentrate positions it as a leading
future supplier
Post-Tax Life of Mine (LOM) Project NPV10 of
US$1.2bn(A$1.8bn) and Project IRR of 51% with a
payback period of 19 months
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Nachu is the only graphite project to be awarded a
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Special Economic Zone licence in Tanzania to produce
advanced graphite products, including very high purity
Jumbo and Super Jumbo Flakes as well as downstream
products for Lithium-ion batteries
The Nachu Project is a coarse flake graphite operation,
designed to treat 5 Mt/y run of mine (ROM) ore with
an average steady state production feed grade of 5.2%
total graphitic carbon (TGC).
The graphite ore will be hauled from an open pit mine
to the concentrator to produce a steady state average
of 236,000 t/y of graphite flake concentrate at 98.5%
(concentrate over 300 microns) and 99% (concentrate
under 300 micron size) TGC grades.
Key Highlights of the Nachu Graphite Project
Project Metrics
Project NPV10 LOM (Post Tax)
Project IRR LOM (Post Tax)
Payback Period1
Operating Expenditure2
Initial Project Capital Cost3
Special Economic Zone Period4
Concentrate Total Graphitic Carbon
(TGC)5
Concentrate Basket FOB Mtwara
Process Plant Capacity
Steady State Graphite Production6
Recovery Rate
Ore Reserve
Mineral Resources
Mine Life
Units
US$
%
Months
US$/t
US$
Years
%
US$/t
t/year
t/year
%
t
t
Years
Value
$1.2bn
51%
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$639
$324mn
10
98.5% - 99%
$1847
5,000,000
~236,000
89.6%
76M
174M
15.5
1. Payback period is at the Project (unlevered) level and thus does not consider financing costs
2.
Average Annual Operating Costs during steady state production from Year 2 to Year 12. Operating costs include all mining,
processing, product Logistics FOB and Miscellaneous and General Admin. Excludes sustaining capital and industrial mineral
royalties of 3%.
3. Additionally, there are contingency costs of US$39.6m and pre-production mining costs of US$33.7m
4.
Exemption from corporate tax and royalties for 10-years. This was recently renewed in May 2021. International arbitration
available if dispute resolution required and revenues from product sales will be paid into foreign accounts. Applies to Magnis
Technologies Tanzania Limited (MTT) only, a subsidiary of Magnis Energy Technologies Ltd. MTT will operate the processing
plant and produce and export advanced graphite products.
5. Jumbo and Super Jumbo Flakes at 98.5% and 99% for large flakes and below. Average TGC 98.8%
6. Steady state production from Year 2 to Year 12
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Resettlement Program
The compensation process as part of the Nachu Graphite
project is almost complete with the remaining part being
the completion of the resettlement eco-village for the 59
displaced families and 11 people identified as vulnerable
during the valuation process. The construction of the
resettlement village commenced during the year and is
expected to be completed in Q4 2022.
Recently, the following tasks were completed or had
progressed:
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Construction of the display house
Substructure for all the houses
Plastering of internal and external walls
Roof Trusses
Construction of kitchens and water tanks.
Planned Site works quotations from shortlisted contractors
for the construction of a Storage Water Dam (SWD1) have
been received. This construction contract will be awarded
following a detailed review of tender prices with works
expected to commence in late 2022.
SWD1 is part of the overall site water management system
and is being constructed early to ensure adequate water
supply in addition to the borefield for construction needs.
A design contract is being finalised with a Tanzanian
consultancy to complete the design of the Tailings Storage
Facility (TSF) and submit the design for approval with the
relevant Tanzanian Authorities. Knight Piesold Consulting’s
Johannesburg office completed the initial design for the
project in 2016 and will continue to be engaged by Magnis
to work with the Tanzanian Consultancy and bring their
wealth of international experience in Tailings Dam design to
ensure the dam meets international design standards.
Eco-Village Construction
Hon. Dr. Steve Lemono Kiruswa (MP), being briefed on the
Nachu Graphite Project
Concreting Works on site
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
17
Review of Operations
Sustainability – Community & Environment
Magnis is undertaking a sustainability driven approach to
developing the Nachu Project. Enhanced environmental,
social and governance performance, together with
sustainability principles ensures that the Project has a
positive impact on the local communities, the environment
and the stakeholders whilst delivering strong returns to
Magnis’ investors.
The following are some of the key sustainability measures
Magnis has undertaken or plans to undertake in respect to
the Nachu Project;
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Key environmental studies approved. An Environmental
Certificate by the National Environmental Management
Committee for the Nachu Project was awarded in
2015. The ESIA was completed by two consultancies,
MTL (Tanzania) and Digby Wells Environmental
(international) The document was completed to
Tanzanian standards for approval in Tanzania and then
updated to international standards by Digby Wells
such that it meets both IFC and Equator Principles
requirements
In the 2022 BFS update there has been a strategic
shift away from heavy fuel oil to natural gas for power
supply and process uses. This is expected to reduce the
calculated annual GHG emissions by up to 49,943 tCO2-e
per annum, which represents an approx. 34% reduction
from the 2016 BFS.
Renewable power from solar and battery storage to
form part of the future power supply/energy mix for the
Project
Basic design philosophy of the tailing storage facility is
to dispose of tailings in such a manner that minimises
the impact on the surrounding environment and
community whilst ensuring it is structurally sound,
safe to operate and economically viable. International
design standards will be used, and an Internationally
recognised consultancy will supervise final design
and construction
Magnis continues to place significant importance on
corporate social responsibility and has been engaged
in several social infrastructure projects for the last 10
years
Magnis has committed to local communities and the
Government of Tanzania to maximize local employment
through the employment of skilled people and also
training of the un-skilled
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A full sustainability framework will be established to
support and drive future operations
Front view of the Chunyu Mtumbuni Primary School Project
Community Development Programs
Magnis continues to place significant importance on
Corporate Social Responsibility (CSR), notably in its
Nachu graphite project in Tanzania. One of the Company’s
Tanzanian subsidiaries, Uranex Tanzania Ltd has been
engaged in social infrastructure and local community
projects for several years.
One of its recent social infrastructure projects was the
construction of the Chunyu Mtumbuni Primary school.
Uranex took over the Chunyu Mtumbuni Primary school
project after the project had been initiated by the village
four years ago but later abandoned due to a lack of funds.
Construction work involved levelling out the walls and the
foundations, adding roof support, aligning the window and
door-frames, laying the concrete floor, applying paint to the
blackboards and partitioning the classrooms. The school is
now up to Government standards. The village has a total of
230 households, which all have children from the age of 5
to 12.
Exterior of the building Interior of a classroom prior to Uranex taking over
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Nachu ESG Vendor Due-Diligence Report
Binding Offtake Agreement
On 20 December 2021, Magnis signed a binding offtake
agreement for 600,000 tonnes of high-grade natural flake
graphite concentrate with Traxys Europe SA (“Traxys”) over
a 6-year period. The agreement allows for the delivery of
natural graphite covering all flake sizes.
Traxys is a leading international physical commodity trader
and merchant in the metals and natural resources sectors
Headquartered in Luxembourg, its logistics, marketing,
distribution, supply chain management and trading
activities are conducted by over 450 employees, in over 20
offices worldwide, and its annual turnover is in excess of
USD $7 billion. Traxys is engaged in the sourcing, trading,
marketing and distribution of non‐ferrous metals, ferro‐
alloys, minerals, industrial raw materials and energy. The
Traxys Group serves a broad base of industrial customers
and offers a full range of commercial and financial services.
Current Project Status
As part of the BFS update, opportunities were identified
to improve the current capital cost estimates along with
further process optimization.. Initial discussions with
funders have also commenced with positive responses
received in relation to the overall bankability and
attractiveness of the project. The next milestones
include Final Investment Decision (FID) and achieving
financial close.
As an essential requirement for project financing of the
Nachu Graphite Project, Magnis appointed IBIS Consulting
to undertake an Environmental and Social Due-Diligence
of the Nachu Graphite Project in Tanzania. IBIS Consulting
is a premier emerging market sustainability consultancy
that assists private and public companies unlock value and
improve their environmental and social performance.
The objective of the due-diligence project was to
identify and assess all related potential environmental,
community, social and health and safety risks and impacts
associated with funding the Nachu Graphite Project. As
such, IBIS analysed gaps in processes with respect to
the “Environmental and Social Impact Assessment and
Resettlement Action Plan” against the following reference
framework of international standards and best practise
guidelines:
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Applicable local environmental, health & safety and
labour related laws, regulations and standards;
Applicable international treaties and protocols;
The IFC Performance Standards for Environmental and
Social Sustainability;
The World Bank Group and IFC General EHS Guidelines;
Applicable World Bank Group and IFC Sector specific
guidelines; and
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ILO Core Standards.
IBIS has prepared a vendor ESG due diligence report
illustrating the ESG management, performance and
compliance status of Magnis and outlining ESG risks and
an indication of liabilities costs to address these, at both
a corporate and site level. The report incorporates an ESG
Corrective Action Plan to address the gaps identified,
including a prioritised set of practicable recommendations
(with short, medium and long term actions), costs and
persons responsible.
Exterior of the building Interior of a classroom prior to Uranex taking over
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
19
05 Corporate Governance
and Sustainability
CORPORATE GOVERNANCE
Magnis Energy Technologies Ltd (Company or Magnis)
approach to corporate governance is more than merely
one of compliance and more focused on striving for
best industry practice and building excellent corporate
governance which it believes is essential for long-term
sustainability of its business and general performance
and will assist in the protection of the interests of all
stakeholders of the Company.
This Corporate Governance Statement (CGS) outlines the
main corporate governance practices currently in place for
Magnis and addresses the 4th Edition of the ASX Corporate
Governance Council’s Corporate Governance Principles and
Recommendations (ASX Recommendations). The Company
accords with most of the ASX Recommendations and where
it does not an explanation is provided as to why not.
All references to the Company’s website are to:
www.magnis.com.au
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT
Role of the Board and Governance Framework
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 governance1.
The Directors must act in the best interests of the
Company and, in general, are responsible for, and have the
authority to determine, all matters relating to the policies,
management and operations of the Company.
The role and responsibilities of the board is detailed in the
board charter available at: https://magnis.com.au/wp-
content/uploads/2021/12/MNS-Board-Charter.pdf
The Board’s responsibilities, in summary, include:
providing strategic direction and reviewing and
approving corporate strategic initiatives;
overseeing and monitoring organizational performance
and the achievement of the Company’s strategic goals
and objectives;
appointing, monitoring the performance of, and, if
necessary, removing the Chief Executive Officer and/or
Managing Director;
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ratifying the appointment or removal, and contributing
to the performance assessment of the members of the
senior management team;
planning for Board and executive succession;
ensuring there are effective management processes in
place and approving major corporate initiatives;
adopting an annual budget and monitoring management
and financial performance and plans;
monitoring the adequacy, appropriateness and
operation of internal controls;
identifying significant business risks and reviewing how
they are managed;
considering and approving the Company’s Annual
Financial Report and the quarterly Cashflow and
Activities reports;
enhancing and protecting the reputation of the
Company;
reporting to, and communicating with, shareholders;
and
setting business standards and standards for social and
ethical practices.
Day to day management of the Company and
implementation of Board policies and strategies has been
formally delegated to senior executives and management. It
is the responsibility of the Board to oversee the activities of
management in executing delegated tasks. In particular, the
Board has delegated management responsibility for:
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delivering key objectives and milestones in accordance
with market expectation as are set by the Company;
developing project budgets for capital and operating
expenditure for Board review and, if appropriate,
approval;
developing and maintaining an effective risk
management framework and keeping the Board and the
market fully informed about risk;
the prudent management of the Company’s cash
reserves in accordance with the approved annual
operating budget;
regulatory compliance across all jurisdictions in which
the Company undertakes business covering amongst
other things health and safety, tax, accounting, and
company reporting.
In making decisions regarding the appointment of Directors,
the Board assesses the appropriate mix of skills, experience
and expertise required by the Board and assesses the
extent to which the required skills and experience are
represented on the Board. When a vacancy exists, the Board
determines the selection criteria based on the skills deemed
necessary.
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Directors, senior executives and employees work under
employment contracts that provide accountability with
respect to expected duties, rights, responsibilities,
remuneration and entitlements such as superannuation,
leave, annual reviews, performance KPIs and termination
events.
Board Committees
During the reporting period the Board had and
reconstituted its three (3) separate Board Committees.
Details regarding the number of Board meetings and
committee meetings held during the year and the
attendance of each member is set out in the 2021 Director’s
Report which forms part of the Annual Report. The Board
and its Committees held sixteen meetings during the year
ended 30 June 2022. The Company Secretary is accountable
to the Board through the Chairman with respect to
corporate governance matters including the functioning of
the Board, and in communications to the ASX, as required
under the Listing Rules.
Nominations & Remuneration Committee
The Nominations & Remuneration was further reconstituted
on 28 January 2022. It comprises of the non-executive
directors, Mr. Mugunthan Siva remained as Chair, Ms.
Mona Dajani, Ms. Claire Bibby and Mr. Hoshi Daruwalla are
members.
A copy of the Nominations & Remuneration Committee
Charter is accessible from the Company’s website:
https://www.magnis.com.au/files/MNS-Nominations-And-
Renumeration-Committee-Charter.pdf The Committee
advises the Board on remuneration and incentive policies
and practices. It makes specific recommendations on
remuneration packages and other terms of employment
for senior executives and Non-Executive and Executive
Directors.
Any increase in the maximum remuneration of Non-
Executive and Executive Directors is the subject of
shareholder resolution in accordance with the Company’s
Constitution, the Corporations Act and the ASX Listing
Directors
7Board of
Board Committees
audit & risk
committee
Originally R. Petty then
C. Bibby (Chair)
appointed 28/1/22
nominations &
remuneration committee
M. Siva (Chair)
health, safety &
sustainability
Originally Z. Pavri then
G. Gunesekera (Chair)
appointed 28/1/22
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
21
Corporate Governance and Sustainability
Rules, as applicable. Currently this is $650,000 set in 2017.
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The Board may award additional remuneration to Non-
Executive and Executive Directors called upon to perform
extra services or undertake special duties on behalf
of the Company. The Nominations & Remuneration
Committee also identifies potential candidates often with
the use of external consultants for both the Board and
management level. Suitable candidates are usually based on
recommendations from this Committee.
The Nominations & Remuneration Committee promotes
screening checks and other tools prior to nominating
a candidate. Appointments to fill a casual vacancy are
appointed until the subsequent Annual General Meeting.
The Committee, Board and the candidate themselves
provide in the explanatory memorandum that accompanies
the notice of meeting all material information for
shareholders to make an informed decision to elect or
re-elect directors. The Committee may also identify and
nominate suitable candidates for filling Board vacancies for
the approval of the Board.
Audit & Risk Committee
Following the further reconstitution of the Board, which
occurred over December 2021 and January 2022 the Audit
& Risk Committee was changed on 28 January 2022. The
Committee now comprises of non-executive directors only,
with Ms. Claire Bibby as the Chair, Ms. Mona Dajani,and Giles
Gunesekera. The Executive Chairman Frank Poullas and the
CEO (if appointed) are may attend as ex-officio members of
the committee.
A copy of the Audit & Risk Committee Charter is accessible
from the Company’s website:
https://magnis.com.au/wp-content/uploads/2022/09/Audit-
Risk-Committee-Charter.pdf
The main responsibilities of the Committee were, inter alia,
to:
review and report to the Board on the
independence of the external auditor;
periodic reports and financial statements;
rotation of the external audit partner;
integrity of the half year and full year financial
statements
Monitor the prudence of gearing levels, interest
cover and compliance with banking covenants, (where
applicable)
Review policies relating to financial risk management,
including hedging of interest rate risk and foreign
currency exchange risk. Monitor compliance with such
policies and report to the Board on any relevant issues
Create a Risk Register of all business risks, having
regard to risk appetite rate and quantify those risks and
regularly review the risk register;
monitoring developments in corporate governance
practices;
Review compliance with applicable laws such as the
Corporations Act, the ASX Listing Rules and other
legislation and reporting requirements; and
ensuring management has processes to manage and
report on significant financial risks facing the business.
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The Audit & Risk Committee reviews the performance of the
external auditors on an annual basis.
Any written matters raised by the auditors are discussed
at the Committee meeting and then dealt with at the
board meetings. The auditors, are invited to attend audit
committee meetings that consider the half and full year
accounts and may at the request of the board attend board
meetings to discuss any matter that they believe warrants
attention by the Board or the Committee. The auditors also
attend the Annual General Meeting of shareholders of
the Company to answers questions in respect of the
Company’s Annual Financial Report and the conduct of the
annual audit.
Health, Safety and Sustainability Committee
Following the further reconstitution of the Board, the
composition of the Committee changed on 28 January 2022
with Giles Gunesekera taking over as the Chair and Mr.
Frank Poullas, Mr. Peter Tsegas, Mr. Mugunthan Siva and
Hoshi Daruwalla are members. Frank Poullas as a director
of iM3NY LLC and iM3NY Inc. and Peter Tsegas who assists
the Tanzanian operations are able to provide updates from
a health Safety & Sustainability viewpoint on the activities
of those business units and board of the Company receives
details about safety incidents.
provide assurance to the Board that it is receiving
adequate, timely and reliable information;
A copy of the Health, Safety and Sustainability Committee is
accessible from the Company’s website:
review the accounting policies and changes to those and
where changes are necessary advise the board;
https://www.magnis.com.au/files/MNS-Health-Safety-And-
Sustainability-Charter.pdf
Review the adequacy of Magnis policies relating to
financial reporting and controls, including compliance
with laws, regulations and ethical guidelines;
Monitor the ability of the Company to fund its activities,
having regard to current funding arrangements and its
cash-flow outlook
The responsibilities of the Committee include:
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Reviewing Reports from Executives of each entity in the
group in the areas of health safety & the environment in
which the entity operates;
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ensure that the Company and all the staff in all the
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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entities in the group are protected and safe so as to
ensure the company attracts and retains high quality
staff in all areas;
monitor the Company’s performance on health, safety,
sustainability and corporate responsibility matters
and report to the Board where that doesn’t meet
comparative industry requirements;
monitoring the Company’s compliance with Health,
Safety and Environment legislation;
review and oversee the development and
implementation of policies and procedures that will
allow the Company to operate its business in a safe,
sustainable and ethical manner;
review initiatives and practices in respect of the
Company’s community engagement and social
responsibility;
review the effectiveness of the risk framework that
relates to the health safety and environment in which
the group entities operate;
reviewing and making recommendations to the Board in
relation to significant public statements as they relate
to the areas that are considered as ESG (sustainability)
including assisting with the production and review of
the sustainability report; and
reviewing and recommending to the Board any
changes to be made to the Company’s Code of Conduct
and reviewing the effectiveness of the systems for
monitoring compliance.
Performance Evaluation and Remuneration
In prior reporting periods, the Board had not undertaken
any level of formal performance evaluation of Directors.
However, on an informal basis the Chairman has
previously consulted with the Directors seeking guidance
on ways in which the Board as a whole, as well as each
individual Director, can improve its and their contribution,
performance and execution of its and their responsibilities.
Due to the recent turnover of the board composition this
has not been carried out in the reporting period.
With the reconstitution of the Nomination & Remuneration
Committee and recent update of its Charter, this will be
carried out by that Committee in conjunction with external
consultants as required.
As the projects in which the company is involved come
online and the operations of the Company increase
consequently, it is proposed that a performance review
will be annual and will entail a questionnaire, which each
director will be required to complete. There will be facility
in the questionnaire for comments relating to the Board’s
or a Committee’s operation, performance, and areas for
improvement. The results of the review will be compiled by
the Chair of the Nomination & Remuneration Committee
and discussed with Board members at an appropriate Board
meeting.
The board skills matrix will be compiled and released in
FY23.
The performance of the Chief Executive Officer (CEO) and
Managing Director (MD) roles (when applicable) will be
reviewed periodically by the Board. The CEO will discuss
with all Senior executives on a regular basis and report to
the Chair of the Nomination & Remuneration Committee
before that committee brigs forward its recommendations
to the board for consideration. As noted above due to
the turnover of senior officers and Directors in the prior
period, a period performance did not occur. It is intended
to re-implement this process as the Board and Senior
Management shows stability.
Diversity
The Company places great importance on its people and
remains committed to promoting an inclusive workplace
by applying policies and practices designed to improve
both gender equality and diversity within the organisation.
Having a diverse workplace, with varying skills, cultural
backgrounds, ethnicity, and experience brings a range of
benefits to the business, such as improved business decision
making, wider range of skills, fosters innovation and
ultimately better solutions for the customers. The Diversity
Policy, which was reviewed and has been updated is on the
Website at the address below.
Company’s progress towards improving diversity
Diversity is driven by the leadership and commitment of
the board and senior management. The Company has made
a commitment to gender diversity at the board level and is
very pleased to have retained two female Board directors
that provide the Company with additional skills, depth, and
diversity of thought to help grow the business and enhance
its strong leadership and governance.
Female
Participation –
MNS
30th June 2022
30 June 2021
Board level
29%
29%
The Company is committed to creating an inclusive
workplace where discrimination, harassment and inequity is
not tolerated, and demeaning behaviour toward colleagues
or management by anyone in the company or the board is
not tolerated. As such the board has adopted in addition to
the Diversity Policy a Safe & Respectful Workplace Policy
and a Procedure for resolving workplace issues.
The Safe & Respectful Workplace Policy adopted by the
Board can be viewed on the Company’s website: https://
magnis.com.au/files/corporate-governance
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
23
Corporate Governance and Sustainability
PRINCIPLE 2: STRUCTURE THE BOARD TO BE
EFFECTIVE AND ADD VALUE
The composition of the board at the date of the Corporate
Compliance Statement is shown as below:
Name of
director
Frank Poullas
Peter Tsegas
Claire Bibby
Giles
Gunesekera
Hoshi
Daruwalla
Mugunthan
Siva
Mona Dajani
1
2
3
4
5
6
7
Category
Executive
Chairman
Executive
Director
Independent
Non-Executive
Director
Independent
Non-Executive
Director
Independent
Non-Executive
Director
Independent
Non-Executive
Director
Independent
Non-Executive
Director
Date of
appointment
9 Sep 2010
16 June 2015
28 January
2022
28 January
2022
31 December
2021
29 Mar 2021
29 Mar 2021
Board is considered majority Non- Executive, the Board
does maintain a Nominations & Remuneration Committee
(Committee). The Committee is responsible for selecting
and recommending to the Board candidates to fill any casual
vacancies that may arise on the Board from time to time.
Directors who have been appointed to fill casual vacancies
must offer themselves for election at the next Annual
General Meeting of the Company (AGM). In addition, at
each AGM, at least one Director must be a candidate for re-
election and no Director shall serve more than three years
without being a candidate for re-election (consistent with
the requirements of the Company’s Constitution).
•
•
•
•
New Directors may participate in an induction program
to assist them to understand the Company’s business
and the issues and are provided access to historical
minutes and other items.
The Board collectively has the right to seek independent
professional advice as it sees fit. Each Director
additionally enjoys the right to seek independent
professional advice, subject to the approval of the
Chairman.
All Directors have direct access to the Group General
Counsel & Company Secretary.
Directors also have access to the senior management
team. In addition to regular reports by senior
management to the Board meetings, Directors may
seek briefings from senior management on specific
matters and Directors are entitled to request additional
information.
The Board currently comprises seven Directors, 5 Non-
Executive and 2 Executive Directors with a broad range
of skills, expertise, and experience, and all of whom add
value to the operation of the Board. The Board comprises
5 Independent Directors, 1 Executive Director and an
Executive Chairman who has a shareholder stake of 1.74% in
the Company.
The independence of Directors is important to the
Board. Independence is determined by objective criteria
acknowledged as being desirable to protect investor
interests and optimise value to investors. The Board
regularly assesses the independence of its Directors.
In determining the status of a Director, the Company
considers that a Director is independent when he or she is
independent of management and free of any business or
other relationship (for example a significant shareholding)
that could materially interfere with or could reasonably
be perceived to interfere with the exercise of unfettered
and independent judgement. The Company’s criteria for
assessing independence are in line with standards set by the
Principles.
PRINCIPLE 3: INSTIL A CULTURE OF ACTING
LAWFULLY, ETHICALLY AND RESPONSIBLY
Code of Business Conduct and Ethics
The Company is committed to being a good corporate
citizen within all jurisdictions that it undertakes its business
activities, and the Board has undertaken to ensure that the
Company implements:
>
>
>
practices necessary to maintain confidence in the
Company’s integrity;
practices necessary to consider their legal obligations
and the reasonable expectations of their stakeholders;
and,
responsibility and accountability of individuals for
reporting and investigating reports of unethical
practices.
The Company has adopted a Code of Business Conduct and
Ethics which applies to each of its Directors and employees
and it can be viewed at
The appointment and removal of Directors is governed by
Company’s Constitution. Under the Constitution, the Board
must comprise of a minimum of three Directors. Given the
>
The Board is responsible for maintaining corporate
integrity and ethical behaviour to the Board and
seeks to set the standards for dealing ethically
24
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
with employees, investors, customers, regulatory
bodies and the financial and wider community, and
the responsibility and accountability of individuals
for reporting and investigating reports of unethical
behaviour.
Whistleblower Policy
Magnis seeks to identify and assess wrongdoing as early
as possible. The Company values support a culture that
encourages staff to speak up on matters or conduct that
concerns them. This policy provides information to assist
staff to make disclosures and sets out how the Company will
protect them from retaliation for whistleblowing. It can be
viewed
Anti-Bribery and Corruption Policy
Magnis has a zero tolerance to bribery and corruption
and operates its businesses with integrity. In Line with
its Whistleblower Policy it encourages the reporting of
material breaches of the Anti-Bribery and Corruption Policy,
or material incidents to the Chair of the Audit and Risk
Committee, the General Counsel & Company Secretary or
Board subject to safeguards afforded to whistleblowers.
It can be viewed at https://magnis.com.au/wp-content/
uploads/2022/08/MNS-Anti-Bribery-Corruption-Policy.pdf
Dealing in Securities
The Company has in place a formal Securities Dealing Policy
that regulates the way Directors, senior management and
others that are involved in the management of the Company
deal with securities.
The Share Trading Policy prohibits share trading in specific
trading blackouts. Trading by directors is governed by
the Corporations Act and timely disclosures are required
under the Listing Rules. Persons in possession of non-public
price sensitive information are required to be conscious
of the legal consequence of insider trading. The Securities
Dealing Policy is also available on the Company’s website.
It can be viewed at https://magnis.com.au/wp-content/
uploads/2021/12/MNS-Securities-Dealing-Policy.pdf
PRINCIPLE 4: SAFEGUARD THE INTEGRITY OF
CORPORATE REPORTS
The Audit and Risk Committee is responsible to assist
the Board in discharging its responsibilities to safeguard
the integrity of the Company’s financial reporting. The
Company reports frequently as it is considered a Mining
Exploration Company. The Committee provides advice and
recommendations to the Board to enable it to fulfil its
responsibilities with respect to financial reporting.
The Audit and Risk Committee Charter is available on the
Company website, it can be viewed at https://magnis.com.
au/wp-content/uploads/2022/09/Audit-Risk-Committee-
Charter.pdf
The Audit and Risk Committee Charter also details
processes around the appointment and oversight of
external auditors. The external auditor is required to be
available to shareholders at each Annual General Meeting
to answer questions about their findings during the
Company’s external audit.
In accordance with the Company’s legal obligations and
Recommendation 4.2 of the ASX Recommendations, the
Executive Chairman (in the absence of a Managing Director)
and the CFO are required to provide declarations to the
Board in relation to the Financial Statements.
Non-Audited Financials are released on a quarterly basis.
These are prepared internally, and the board on the advice
of the CFO must agree to the release of the Appendix 5B.
The Quarterly Activities Report is reviewed by the board
and approved for release by the Continuous Disclosure
Committee.
In doing so, the relevant officers represent to the Board
that the financial records have:
• been properly maintained
•
•
•
the financial statements comply with the appropriate
accounting standards,
give a true and fair view of the financial position and
performance of the entity
based a sound system of risk management and internal
controls, which totheir best belief and knowledge
operate effectively.
The Audit Committee communicates with the Auditors
on receipt of the Auditor recommendations and audited
financials, and they in turn make recommendations to
address any areas for improvement each audit cycle. These
are presented to the Audit & Risk Committee who then in
turn report to the board, please see above the detail around
the functions of the Audit & Risk Committee in this area.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
25
Corporate Governance and Sustainability
PRINCIPLE 5: MAKE TIMELY AND BALANCED
DISCLOSURE
materially impact the Company’s operations and financial
standing, including the market price of securities.with
Information communicated to shareholders via:
The Company is committed to complying with the
ASX Listing Rules and Corporations Act in particular
the continuous disclosure obligations and in so doing
ensuring that its shareholders are kept well-informed
of all significant developments affecting the Company’s
circumstances to promote transparency and investor
confidence.
Magnis has adopted a Continuous Disclosure Policy, (It
can be viewed at https://magnis.com.au/wp-content/
uploads/2022/08/MNS-Continuous-Disclosure-Policy2.
pdfwhich incorporates a continuous disclosure framework
that is based on ASX Listing Rules Chapter 3, and ASX
Listing Rules Guidance Note 8..
The Continuous Disclosure Policy provides a framework
for compliance with relevant disclosure obligations and
establishes the accountability of the Board for achieving
compliance. Specifically, the policy:
>
>
>
>
>
describes the Company’s obligations under ASX Listing
Rule 3.1 and the Corporations Act;
establishes internal processes for reporting of
information considered to be potentially price- sensitive
and for consideration by the Board as requiring
disclosure;
establishes processes for the disclosure of price
sensitive information, taking into account the
clarification provided by ASX Guidance Note 8;
establishes internal processes for briefing of analysts,
investor, and media groups, responding to market
speculation, leaks and rumours and calling trading halts
where appropriate to avoid trading occurring in an
uninformed market; and
outlines authorisation procedures for ASX
announcements, including their categories, summarized
these a predominantly determined by the Continuous
Disclosure Committee and where relevant the full
board.
As recommended, Magnis ensures its Board receives market
announcements promptly when made, especially where
these contain market sensitive information.
Before corporate presentations to substantive investors
or analyst presentations, the Company releases the
presentation on the ASX, unless entirely composed of
abstracts of historical releases.
PRINCIPLE 6: RESPECT THE RIGHTS OF
SECURITY HOLDERS
>
>
>
>
>
>
The ASX platform;
The Company’s website;
Annual audited financial report, half year unaudited
financials and report and Appendix 5B and
accompanying reports released quarterly;
Market-sensitive releases, including information that
relates to strategy and milestone accomplishment; and
Chairman or MD’s addresses to the AGM which are also
made available through the ASX website
The release of results of General and Annual General
Meetings.
Historical information retained on the Magnis website
includes:
>
>
>
>
>
ASX announcements;
Company Presentations;
Company Financials;
Directors’ and Management details; and
Charters and Policies
General Meetings
Shareholders have the right, and are encouraged, to attend
the Company’s General Meetings in particular the Annual
General Meeting, held in October/November each year,
and are provided with explanatory notes on the resolutions
proposed through the notice of meeting. A copy of the
notice of meeting is also posted on the Company website
and lodged with the ASX.
In addition, shareholders are invited to submit questions of
the board, auditors, or management, which are addressed at
the Annual General Meeting.
Shareholders are encouraged to vote on all resolutions
and unless specifically stated otherwise in the notice
of meeting, all shareholders are eligible to vote on all
resolutions. Shareholders who cannot attend the Annual
General Meeting may lodge a proxy in accordance with the
Corporations Act. Proxy forms may be lodged with the share
registry by mail, hand delivery, facsimile or electronically.
Transcripts of the Chair and MD’s presentations or speeches
are released to the ASX prior to the Meeting. These
transcripts, and the results of the meeting are posted on
the ASX and the Company’s website.
The Board strives to ensure that shareholders are informed
of all major developments and business events likely to
All shareholders are provided the option to receive
communications (in particular the Annual Report and the
26
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Notice of Meeting (including the proxy form) from the
Company and the share registry electronically and are
encouraged to do so, with election documentation included
in regular mail outs to shareholders. This use of technology
is in line with the Company’s focus on sustainability.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
The Company is in the process of building a new risk
management framework and Risk Register which will
initially be created by management, overseen by the Audit
& Risk Committee and reviewed frequently by the Board,
that encompasses all material risks, quantifying them and
setting appropriate actions, policies and other mitigants to
manage them. The identification and effective management
of risk, including calculated commercial risks are viewed as
an essential part of the Company’s approach for creating
long-term shareholder value.
The Company does not have an independent internal
audit function due to the size of the Company, however
its risk management policies and the Risk Register is
initially reviewed and monitored by the Audit and Risk
Committee. The Committee is obligated to work within the
mandate established by the Audit and Risk Committee’s
Charter, which is itself reviewed on an bi-annual basis.
The Company’s risk management framework intends to
integrate macro strategic goals with day-to-day business
procedures and functional responsibilities.
A review of the Company’s risk management framework has
not been carried out during the 30 June 2022 year, however
at the time of this statement the review has commenced
as has the creation of the Risk Register. The Committee
intends to continue the risk review throughout the
FY23 year.
ECONOMIC, ENVIRONMENTAL AND SOCIAL
SUSTAINABILITY RISKS
Corporate Responsibility
The Company acknowledges the importance of
sustainability as a core foundation and part of its corporate
responsibility to all stakeholders. The Company believes
that sustainable conduct is a delivery driver of value for
its shareholders and the broader community and external
stakeholders in the long-term. Magnis’ entities and investee
companies are committed towards ensuring support to
sustainable business practices. The impact of the Company’s
decision-making and operations all have an impact on the
economy, society and the environment which forms part of
its corporate responsibility.
This is no more evident than in respect to its subsidiary’s
operations in New York and Tanzania
Environment
The Company’s high quality green credentialed Lithium-ion
batteries to be produced by iM3NY, using C4V’s patented
BM-LMP Technology leads to longer battery life, faster
charging, and greater safety without the use of more
environmentally impactful Nickel and Cobalt. The Graphite
to be produced from the Nachu Graphite Project in Tanzania
can be produced without reliance on harsh chemicals.
Social
A key part of the Company’s sustainability approach is based
on proactively maintaining its social license to operate
through greater interaction and positive impacts on the
communities it operates in.
Its capital investments into the iM3NY operations in
New York has created numerous new jobs and supported
livelihoods and re-invigorated the local community in
which it operates. The iM3NY operations will be creating
approximately 150 new jobs in Endicott, New York at the
battery manufacturing plant in a revitalized area which
was a former office and manufacturing site. There are also
Future job creation opportunities being planned for the
Tanzania projects, once production is underway.
The Magnis group of companies is committed to complying
with the laws, regulations and guidelines that govern the
group’s operations in the multiple jurisdictions in which it
operates across Australia, United States and Tanzania.
Engagement with Local communities
In Tanzania, the Company has continued to partner with
several organisations in line with its commitment to operate
in a sustainable manner. There have been four key areas
where the Company has contributed and engaged with
the local communities in Tanzania in relation to its Nachu
Graphite Project:
1.
2.
3.
4.
Community Consultation: Engagement with the local
communities and neighbors surrounding its site
Financial literacy and Education: The Company has
ensured that financial literacy education has been rolled
out to various communities, by building work on the
local schools and provision of text books
Product materials community support: whereby the
Company has donated building materials and supplies
for the construction of various community clinics and
schools
Community Donation and Support Programs: The
Company has provided various donations to support
numerous charity and program campaigns during the
year.
In addition and as part of item 4 it has commenced the
building of a resettlement village of some 59 houses to
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
27
Corporate Governance and Sustainability
provide enhanced accommodation form the displaced local
inhabitants affected by the proposed mine.
People, Health and Safety
The Company has a focus on safety, health and providing an
equal work environment to all its employees, regardless of
their background and position. The focus is on maintaining
safe working environments through strong, safety-first
leadership and culture
The Sustainability, Health and Safety Committee’s mandate
includes the development, monitoring, and refining of
safety performance indicators to better understand
the processes and behaviours that are most effective in
minimising safety incidents and serious harm. The recently
reconstituted Committee will monitor and track any serious
consequence-based injury, and other major incidents
capable of causing or have caused serious or fatal harm with
various measures. All incidents, injuries and near misses
must be reported in accordance with incident management
procedures to ensure measures can be taken to prevent
reoccurrence.
The Company reports that there have been no safety
incidents for the financial year ending 30 June 2022.
The Audit and Risk Committee will be evaluating the
Company’s material exposure to economic, environmental,
and social sustainability risks. The results of these findings
will shape strategy and resource allocation.
The Board has recently re-constituted the Nominations
and Remuneration Committee, which in accordance
with its Charter (available on the Company’s website is
https://www.magnis.com.au/files/MNS-Nominations-And-
Renumeration-Committee-Charter.pdf
is responsible for reviewing and making recommendations
to the Board in respect of:
• Executive remuneration;
• Executive incentive plans;
•
Remuneration of the Company’s key management
personnel;
• Equity based incentive plans;
•
•
Recruitment, retention, performance measurement and
termination policies and procedures for non- executive
directors, the MD and any other executive director and
all senior executives reporting directly to the MD; and
The disclosure of remuneration in the Company’s
Annual Report.
Details of Remuneration and Nomination Committee are
outlined earlier in this Corporate Governance Statement
and in the Directors’ Report contained in the Annual Report.
Remuneration levels are set to attract and retain
appropriately qualified and experienced personnel.
Performance, duties and responsibilities, market
comparison and independent advice are all considered as
part of the remuneration process. The total remuneration
paid to Directors and key management personnel for the
reporting period are set out in the Remuneration Report.
Directors’ fees are reviewed and will be benchmarked
against fees paid to Directors of similar organisations with
similar growth. Directors are not provided with retirement
benefits other than statutory superannuation but are
eligible for securities (subject to shareholder approvals),
as described in the Directors Report. In 2021 Shareholders
approved the grant of unlisted options to the non-executive
directors who were re-elected at the AGM in November
2022, and these were described as to align the directors
with the growth in the company and to incentivize the
directors.
To ensure that the Company’s senior executives properly
perform their duties, the following procedures are in place:
•
•
•
Full year achievement reviews through the re-
constituted Nomination & Remuneration Committee.
Senior management assessed in terms of their
achievements against expectations.
A link between the outcomes, market rates, and the
performance review process which is outlined in the
Remuneration Report.
CONTINUOUS REVIEW OF CORPORATE
GOVERNANCE
Directors consider, on an ongoing basis, how management
information is presented to them and whether such
information is sufficient to enable them to discharge their
duties as Directors of the Company. Such information
must be sufficient from time to time considering changing
circumstances and economic conditions. The Directors
recognise that:
•
mineral exploration and pre-development of off-takes
of graphite, and the
• manufacture of lithium cells
each of those areas carry numerous risks.
Directors are committed and conscious of the role they
play with respect to the oversight of these businesses
and operational strategy. In particular the adoption of
skilled employees and contractors and adopting sound risk
mitigation frameworks designed to manage and address
particular and general risks relating to each of these
businesses and the overall business generally, noting the
multi-jurisdictional nature of the Company’s interests in
particular.
This Corporate Governance Statement was approved by a
resolution of the Board on 28 September 2022
28
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
06 Annual Financial Report
YEAR ENDED 30 JUNE 2022
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
29
07 Directors’ 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 2022.
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 10 September 2010. Elected Chairman -
29 August 2014.
Mr Poullas has spent over two decades working in the
technology, investment banking and engineering industries.
During the last 16 years, Mr Poullas has been involved
with assisting several ASX-Listed entities with funding and
strategic direction in the Lithium-ion Battery Materials and
Energy sectors.
Current and former directorships of other listed companies
in last three years:
None.
Special responsibilities
Mr Poullas is a member of the Health, Safety &
Sustainability Committee. As executive Chairman he is an
ex-officio member of each of the committees and a member
of the Continuous Disclosure Committee.
Mr. Hoshi Daruwalla
(Non-Executive Director)
Appointed - 1 Decembe 2021.
Mr Daruwalla is based in the United States and has a
career spanning over three decades where he has started,
operated and grew businesses across a variety of industries
globally from start-ups to significant multinationals. He
has held global senior management roles at corporations
such as Daikin Industries, American Air Filter – McQuay,
Hong Leong Group and Purafil. He has operated, seeded,
and scaled up businesses in 93+ countries, with successful
outcomes including receiving the prestigious U.S.
Presidential E- and E-Star awards for Excellence in U.S.
Exports awarded by the U.S. Secretary of Commerce.
Recently, Mr Daruwalla held the role of Executive VP –
Strategic Global Expansions; Chairman of the Board,
President and CEO of the North American entity of EcoPro
Battery. He is a Board Member and CEO Mentor at the State
of Georgia District Export Council (U.S. Department of
Commerce appointee), and holds a bachelor’s degree in
manufacturing engineering, Masters in Business
Administration, and is an alumnus of the Wharton Business
School.
Current and former directorships of other listed companies
in last three years:
None.
Special responsibilities
Member of the Health, Safety & Sustainability Committee
and the Nomination & Remuneration Committee, He will
transfer the Audit & Risk Committee and vacate his position
on the Health Safety & Sustainability Committee in FY23.
30
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Ms. Mona E. Dajani
(Non-Executive Director)
Appointed - 29 March 2021.
Mr. Mugunthan Siva
(Non-Executive Director)
Appointed - 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.
Special responsibilities
Member of the Nominations & Remuneration Committee
and member of the Audit & Risk Committee as noted
above Mona Dajani will transfer to the Health Safety &
Sustainability Committee and vacate her role on the Audit &
Risk Committee in FY23
Mr. Siva possesses three decades of experience in the
finance industry both locally and overseas specialising 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 & Remuneration Committee and
member of the Health, Safety & Sustainability Committee.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
31
Directors’ Report
Ms. Clair Bibby
(Non-Executive Director)
Mr. Giles Gunesekera
(Non-Executive Director)
Appointed - 28 January 2022.
Appointed - 28 January 2022.
Ms. Bibby has over 30 years professional experience as
a senior lawyer and executive coach. Claire has founded
and cofounded several businesses covering the legal,
executive coaching, property-tech and legal-tech spaces
and has held senior management appointments with
some of world’s largest companies and top-tier law firms.
Claire is a Non-Executive Director of two other ASX listed
companies noted below and sits on a number of unlisted
companies and charities including Arowana International
Limited. Claire has been recognised by several professional
organisations during her career including recently being
named by Australasian Lawyer as one of the Elite Women of
2021. Claire is also an Industry/Professional Fellow with the
University of Technology Sydney, School of Law.
Current and former directorships of other listed companies
in last three years:
Comms Group Limited (ASX:CCG), Clime Asset Management
(ASX:CIW); Arowana International Limited, (has since
delisted)
Giles is the Founder and CEO of Global Impact Initiative and
has over 25 years’ experience of building and developing
businesses for global organisations. GII is the only Impact
Investing business in the world that is acknowledged by the
United Nations as a Global LEAD company and recognised
for their high levels of engagement in the United Nations
Sustainable Development Goals (UNSDGs) Giles holds
numerous Volunteer Not-for-Profit Directorships ranging
from International Aid, Human Rights, Climate Action,
Disabilities, Education, Arts and Sports. Giles is on
Advisory Boards for the United Nations for Climate &
Health and Sustainable Finance. Giles has formal academic
qualifications from Oxford University, Melbourne
University, Monash University, and the Financial Services
Institute of Australia.
Current and former directorships of other listed companies
in last three years:
None.
Special responsibilities
Special responsibilities
Chair of the Audit & Risk Committee, and member of the
Nominations & Renumeration Committee.
Chair of the Health, Safety & Sustainability Committee and
member of the Audit & Risk Committee.
Mr. Peter Tsegas
(Non-Executive Director)
Appointed - 16 June 2015.
Mr Tsegas has over 20 years of experience in Tanzania
where he’s been a resident for over 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 (Appointed 29 November 2019,
Resigned 17 June 2020).
Special responsibilities
Member of the Health, Safety & Sustainability Committee.
32
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
FORMER DIRECTORS DURING 2021 REPORTING PERIOD
FORMER COMPANY SECRETARIES AND COUNSEL
Professor M.S. Whittingham, Non-Executive Director, 4
November 2016 to 31 December 2021.
Ms. Nawal Silfani - Company Secretary and General Counsel
- 30 November 2020 to 16 April 2021
Ms. Z. Pavri, Non-Executive Director, 29 March 2021 to 24
December 2021.
Mr. Jürgen Behrens - Company Secretary from 10 November
2020 to 30 November 2020 (and remains CFO)
Dr. R. Petty, Non-Executive Director, 29 March 2021 to 17
November 2021.
Mr. Frank Giordano - Company Secretary and Legal Counsel -
17 July 2020 to 10 November 2020.
Mr. Duncan Glasgow - Company Secretary & General
Councel
Mr. Julian Rocket
- Joint Company Secretary & Corporate Councel
Appointed - 10 February 2022.
Mr. Glasgow has over three decades of extensive experience
as a corporate and commercial lawyer and company
secretary who has worked across several ASX listed
companies as well as private companies in the energy,
mining, retailing and industrial sectors. He has a Bachelor
of Arts and a Bachelor of Laws from Macquarie University,
is a Fellow of the Institute of Chartered Secretaries and a
Fellow of the Governance Institute and holds an Unqualified
Practicing Certificate from the Law Society of NSW.
Appointed - 15 April 2021 General Counsel & Company
Secretary; appointed - 10 February 2022 Joint-Company
Secretary and Corporate Counsel.
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
listedcompanies.
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:
Unlisted Options
Performance
Director
Mr. F. Poullas
Mr. P. Tsegas
Ms. M. E. Dajani
Mr. M. Siva
Ms. C. Bibby
(Appointed 28 Jan 2022)
Mr. G. Gunesekera
(Appointed 28 Jan 2022)
Mr. H. Daruwalla
(Appointed 31 Dec 2021)
Professor M.S. Whittingham
(Resigned 31 Dec 2021)
Ms. Z. Pavri
(Resigned 24 Dec 2021)
Dr. R. Petty
(Resigned 17 Nov. 2021)
Ordinary Fully-Paid
(OFP) Shares
17,387,506
1,270,000
-
700,000
-
-
-
500,000
-
-
over
OFP Shares
1,000,000
1,000,000
2,000,000
2,000,000
-
-
-
-
2,000,000
-
Rights
2,000,000
2,000,000
-
-
-
-
-
-
-
-
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
33
Directors’ Report
PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The Group has business interests across the Lithium-ion battery supply chain in the USA, Australia, and Tanzania.
Magnis’ vision is to advance their multi-strategy business through:
>
>
>
>
Operating as a strategic partner, to support through its parent (in which it holds a majority interest) Imperium3 New
York, Inc’s (‘iM3NY’) lithium-ion battery manufacturing facility to build towards double-digit gigawatt production.
Partnering in other lithium-ion battery projects in conjunction with their technology partner, Charge CCCV LLC (“C4V”)
such as the greenfield lithium-ion battery project in Australia.
Developing the Group’s wholly owned Nachu Graphite mining project in Tanzania to produce high purity natural flake
graphite.
Working closely with C4V with plans to commercialise their lithium-ion battery technology and intellectual property
such as producing high performance anode material from their Nachu Graphite feedstock.
As at reporting period end, the primary activities and changes in state of affairs of the Company were as follows:
>
>
>
>
>
>
Mr. David Taylor appointed as Chief Executive Officer following an extensive global search managed by executive
search firm Korn Ferry. Mr. Taylor has 30 years of international experience leading the development and growth of
businesses and major projects across the property, construction, transport, renewables, energy, environmental and
social infrastructure sectors.
iM3NY Completes US$100 Million Intellectual Property-based Financing in Collaboration with Aon and Atlas Credit
Partners. The loan facility reduces iM3NY’s cost of capital and provides additional cash to the project’s balance sheet,
increasing its financial flexibility.
The Company’s battery technology partner Charge CCCV LLC (‘C4V’) announced that it had launched its LiSER
Technology. LiSER technology encompasses an in-house patented battery cell design that allows OEMs to bypass
modules and build the pack directly. This LiSER technology enables long and slim cells with super-fast charge and
discharge capabilities without losing the energy density benefits.
Successful extra fast charging results from optimised 7Ah (Amp hour) commercial cells using C4V’s patented BMLMP
Technology. Current results show negligible capacity loss after 250w cycles with 15 min charge and variable discharge
rates. The previous fast charging program concluded with significant results after more than 6,000 cycles. Most recently
for a program commenced during the reporting period by C4V over 2,600 cycles of 20-minute charge and 20-minute
discharge a 97% retention of capacity was recorded.
Magnis signed a Binding Offtake Agreement with Traxys Europe for the supply of natural flake graphite concentrate
from its Nachu Graphite project in Tanzania. The Offtake Agreement allows for the delivery of 600,000 tonnes of natural
graphite covering all flake sizes over a 6-year period.
Global engineering group Ausenco have been engaged to complete a Bankable Feasibility Study for the Nachu Graphite
Project. Ausenco has 26 offices in 14 countries, with projects in over 80 locations worldwide. Ausenco are highly
respected and well known for producing innovative capital efficient process plant designs.
The Resettlement Program for project affected persons from the development of the Nachu Graphite project is a key
precursor before construction of the plant and processing facility can commence. The Group’s wholly owned subsidiary
Uranex Tanzania Limited have appointed the major contractor to develop and construct the resettlement village.
Construction of the resettlement village has commenced with completion expected to occur by the end of 2022.
>
>
Magnis secured a total of A$20 million through the issuance of a Convertible Note facility with funding from two
US-based institutions, The Lind Partners and SBC Global Investment Fund.
The Company made three significant board appointments to help bolster its skills and capabilities. Each member brings
experience across manufacturing, ESG and sustainability, corporate governance, and risk management.
Post the reporting period end, the primary activities and changes in state of affairs of the Company were as follows:
> Commercial production commenced at the iM3NY Lithium-ion Battery Plant.
> The updated Bankable Feasibility Study was completed for the Nachu Graphite mining project in Tanzania.
34
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
REVIEW OF OPERATIONS
LITHIUM-ION BATTERY MANUFACTURING
The Group along with its technology partner Charge CCCV LLC (“C4V”) are the major shareholders in the New York
Lithium-ion battery manufacturing facility, iM3NY. iM3NY will commercialise C4V’s patented technology to produce
greencredentialed lithium-ion battery cells for use in energy storage and electric vehicle applications. Over the year, iM3NY
made significant progress to build out one of the largest home-grown, non-China reliant Gigawatt scale Lithium-ion Battery
Plants in the US. Notable milestones achieved are as follows:
>
>
>
>
>
Multi-national Engineering, Procurement and Construction contractor Ramboll together with the iM3NY team
are utilising a phased approach to the design and construction of the battery manufacturing facility. Engineering,
procurement, construction, process, and operational ramp up and construction are the major milestones.
Completion of the ‘Dry Room’. The dry room is an essential part of the Lithium-ion cell manufacturing process, where
most of the cell assembly is performed in an ultra-dry and ultra-clean inert environment. The ultra-dry atmosphere
ensures longevity of Lithium-ion cells with minimal side reactions and degradation.
Major New York state permits granted which are critical to continuing the construction build out, namely the
Environmental Justice Plan, Air Permit and Aquifer Permit.
Achieved semi-autonomous operation phase which allows for batches of cells to be produced for both marketing and
due diligence purposes.
Refinancing of the existing US$50 Million Riverstone debt with a US$100 Million Intellectual Property-based financing
in collaboration with Aon and Atlas Credit Partners. The loan facility provides additional cash to the project’s balance
sheet, significantly increasing its financial flexibility as well as plans for expansion.
Post the reporting period, iM3NY achieved the following:
>
Installation and commissioning of key equipment such as Mixing, Coating, Drying, Calendaring, Slitting, Stamping,
Stacking, Electrolyte Filling etc,
> Commenced the operations phase to commercially produce battery cells.
NACHU GRAPHITE PROJECT UPDATE
Magnis appointed global engineering consulting group Ausenco Services Pty Ltd to conduct a Bankable Feasibility Study
for the Nachu Graphite Project in Tanzania. The study is being based on an annual graphite production of 220,000 tonnes of
high-grade graphite concentrate. Uranex Tanzania Limited, a wholly owned subsidiary of the Group continued to conduct
early project works such as drilling and casing of several water bores to secure water for production and the clearing of
the Special Mining Licence boundary. In regard to the company’s resettlement program, Italframe Limited, a Tanzanian
Registered building contractor overseen by project consultants and Norplan Tanzania Ltd has been contracted to carry
out the construction of the village. Construction of the Eco-village to house the 59 families that were living on the special
mining licence area has progressed well with completion expected by the end of 2022.
CORPORATE DEVELOPMENT
Magnis made significant board appointments listed in the table below during the year to help bolster its skills and
Role
capabilities as the company enters a significant growth phase.
Date Joined
Name
Mr. Hoshi Daruwalla
31st December 2021
Each member brings experience across capital markets, ESG and sustainability, corporate governance, and investor
relations:
28th January 2022
Independent Non-Executive Director
Independent Non-Executive Director
Ms. Claire Bibby
Mr. Giles Gunesekera
Independent Non-Executive Director
28th January 2022
CAPITAL RAISINGS
On 3 August 2021, Magnis announced it had secured a total of $20,000,000 in funding from two US-based institutions The
Lind Partners and SBC Global Investment Fund, via a Convertible Note (‘Facility’) that would be used to assist the Company
with its aggressive growth plans to fast-track Gigawatt scale production at iM3NY’s Lithium-ion Battery Plant located in
Endicott, New York. Shares issued under the Facility will be in accordance with the terms and conditions of that Facility.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
35
Directors’ Report
FUTURE OUTLOOK AND STRATEGY
Magnis’ vision is to be a key global player in the lithium-ion battery value chain with a key focus on the electric vehicles
and clean energy storage markets. The Company envisions the following corporate developments to take place in the new
financial year
>
>
>
New York lithium-ion battery plant, Imperium3 New York Inc. (‘iM3NY’) to gradually increase commercial production to
meet customer orders.
iM3NY seeks to raise further capital to increase capacity towards double digit gigawatt scale.
Secure further graphite offtakes, complete the definitive feasibility study and progress the funding process for the
construction of 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 or declared during the year (2021: $NIL). The Directors do not anticipate the declaration or
payment of a dividend in the next financial year.
EMPLOYEES
Magnis Energy Technologies Ltd had 7 employees (including 1 executive director) on 30 June 2022 (2021: 5 employees).
Category of employee
All Employees and Board
Key Management Personnel
Board
Total
14
6
7
Gender
Male
12
6
5
Uranex Tanzania Limited had 13 full-time employees on 30 June 2022. (2021: 11 employees)
Category of employee
All Employees and Board
Total
13
Male
9
Gender
Female
2
-
2
Female
4
CORPORATE
Director Movements during the year
Directors
Appointment Date
Directors
Departure Date
Mr. H. Daruwalla
Ms. C. Bibby
Mr. G. Gunesekera
31 December 2021
Professor M.S. Whittingham
31 December 2021
28 January 2022
28 January 2022
Ms. Z. Pavri
Dr. R. Petty
24 December 2021
17 November 2021
36
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
CAPITAL FUNDS
On 3 August 2021, the Company announced having raised AUD$20M through the issue of convertible notes to two New
York based financiers with a Face Value of $21M. Magnis issued 84,291,378 Ordinary Fully Paid shares in relation to its $20M
Convertible Note (‘Facility’), that included:
>
>
>
14,000,000 (7M to each convertible note holder) as collateral shares that are required to be paid for or surrendered
within 18 months. As at 30 June 2022 there was 7M outstanding. Since the end of the financial year this number has
reduced to 3M and SBC has received a further 3,846,154 shares on 25 July 2022 thus reducing the amount outstanding
from the Convertible note to AUD$750,000.
38,166,378 shares were subsequently issued to Lind Global Fund II LP (‘LIND‘), and
32,125,000 shares were issued to SBC Global Investment Fund (‘SBC‘).
An interest expense of $1M was paid upfront, hence the AUD$21M Face Value of the Convertible Note and 5,000,000 shares
were issued to finance advisor Evolution Capital Advisors (‘Evolution’) instead of cash for their fees with regards to the
above convertible note financing. The shares issued to LIND extinguished their $10.5M portion of the convertible note in
the period, while AUD$1,750,000 remained outstanding as at 30 June 2022 from AUD$10.5M portion of the convertible
note that is held by SBC. Subsequent to 30 June 2022 the amount outstanding had reduced to AUD$750,000.
On 11 November 2021, Magnis issued 1,500,000 Ordinary Fully Paid shares by converting performance rights that had been
approved by members in 2020, to the qualifying directors under the Magnis Executive Rights Trust (‘MERT’) that became
eligible when the Company’s market capitalisation of AUD$500,000,000 was achieved. The relevant performance rights
were held by Frank Poullas, Peter Tsegas, and former director, the Distinguished Professor M. Stanley Whittingham, who
retired at 31 December 2021. An equity adjustment for $11,120 was required to reflect this conversion while 2,000,000
rights also lapsed relating to the director retiring.
On 26 November 2021 Magnis announced the issue of 36,000,000 unlisted options to be granted to the below holders, after
receiving shareholder approval at the AGM on 22 November 2021:
>
>
>
20,000,000 unlisted options at $0.40 exercise price, expiring 3 years from grant date to investors (‘LIND‘ & ‘SBC‘) as per
the convertible note funding facility announced on 3 August 2021. These expire on 25 November 2024.
10,000,000 unlisted options at $0.50 exercise price and a three (3) year term (ending 25 November 2024) were issued to
capital advisors (including Evolution), part of the remuneration for their role as lead manager.
6,000,000 unlisted options at $0.70 exercise price to Non-Executive Directors, expiring 25 November 2024, aimed to
form part of their overall remuneration package for incentivising three recently appointed directors. These were issued
to the Magnis Option Share Trust (‘MOST’).
In December 2021, MOST was issued with 1,375,000 unlisted options for employees, at $0.80 exercise price, with an
expiry date of 9 December 2024 and 1,000,000 unlisted options at $0.70 exercise price, relating to a retiring director were
forfeited.
SECURITIES AS AT 30 JUNE 2022
The Company had the following securities on issue as at 30 June 2022:
>
>
>
>
>
>
>
966,485,329 Ordinary Fully Paid shares on issue.
77,869,167 unlisted options remain issued with a strike price at $0.50 and expiring on 26 May 2023.
20,000,000 unlisted options remain issued to funding providers (‘LIND‘ & ‘SBC‘) with a strike price at $0.40 and expiring
on 25 November 2024.
10,000,000 unlisted options remain issued to capital advisors (including Evolution) with a strike price at $0.50 and
expiring on 25 November 2024.
10,125,000 unlisted options outstanding in the Magnis Option Share Trust (‘MOST’, formally called Uranex Option Share
Trust), with varying expiry dates ranging from 30 October 2022 to 9 December 2024 and varying exercise prices ranging
from $0.50 to $0.80. This includes 6,000,000 unlisted options outstanding previously issued directly to Non-Executive
Directors with a strike price at $0.70 and expiring on 25 November 2024.
4,000,000 performance rights outstanding in the Magnis Executive Rights Trust (‘MERT’)
500,000 Ordinary Fully Paid Shares issued following conversion of the equivalent performance rights are held in Magnis
Executive Rights Trust (‘MERT’)
>
750,000 Ordinary Fully Paid shares held in the Magnis Option Share Trust (‘MOST‘).
A consolidated cash balance of $100,238,244 (2021: $72,894,945).
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
37
Directors’ Report
EXERCISE OF LISTED OPTIONS
No listed options exist, and none were exercised.
EXERCISE OF UNLISTED OPTIONS
During the financial year, Magnis issued 43,559,405 Ordinary Fully Paid resulting from holders converting their 50c strike
price unlisted options, which resulted in the receipt of $21,779,703 in funds. As at 30 June 2022, 77,869,167 unlisted
options remain with a 50c strike price and a 2-year period from their 23 May 2021 issue date.
OPERATING RESULTS FOR THE YEAR
Lithium-ion battery investments
Graphite exploration and development
Intersegment elimination
Income and losses before tax
Income
$
417,616
34,063
-
451,679
2022
Results
$
(49,650,216)
(12,047,603)
-
(61,697,819)
SUBSEQUENT EQUITY EVENT: CONVERTIBLE NOTES
On 25 July 2022, Magnis announced it had issued 3,846,154 Ordinary Fully Paid shares at 26 cents for a total of $1,000,000
to US-based institution SBC Global Investment Fund, under the terms of the Convertible Note (‘Facility’) agreement,
announced to the ASX on 3 August 2021 and approved by shareholders at the 2021 AGM. The Facility has been used to assist
the Company’s subsidiary with its growth plans to fast-track Gigawatt scale production at the Lithium-ion Battery Plant
located in Endicott, New York.
38
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
REVIEW OF FINANCIAL POSITION
LIQUIDITY AND CAPITAL RESOURCES
The Group statement of cash flows shows a net increase in cash and cash equivalents for the year ended 30 June 2022 of
$20,889,367 (2021: $72,548,800).
During the year, the Group raised $23,561,500 (2021: $41,649,955) before costs via capital raisings and $21,779,703
proceeds from options exercised (2021: $Nil).
At year end the Group had liquid funds of $100,238,244 (2021: $72,894,945) available for future operational and investment
use and borrowings of $145,111,133 (2021: $65,175,758). For a breakup of liquidity, refer to Notes 6 and Note 14(c) for
borrowing.
SHARES AND OPTIONS ISSUED DURING PERIOD
During the year ended 30 June 2022, the Company issued 115,050,783 Ordinary Fully Paid shares raising $45,341,203 in
equity (2021: $41,649,995) as follows:
>
>
>
>
>
84,991,378 OFP shares were issued relating to the Facility raised $23,561,500 before fees.
43,559,405 OFP shares were issued raising $21,779,703 from exercising unlisted options with a strike price of $0.50.
1,500,000 OFP shares were issued under the terms of MERT.
20,000,000 OFP shares were cancelled under the terms of MEST.
5,000,000 OFP shares were issued in relation to equity funding costs.
CAPITAL EXPENDITURE
Capital expenditure by the Group on plant and equipment during the year was $34,105,551 (2021: $10,216,185).
GROUP PERFORMANCE
Annual Net Income
2022
2021
2020
2019
2018
Consolidated loss
after tax ($)
Shareholder Returns
Share price at
financial year end ($)
Basic loss per share
(cents)
Diluted loss
per share (cents)
RISK MANAGEMENT
61,697,819
12,032,230
7,378,601
5,549,553
5,417,885
2022
0.30
6.38
6.38
2021
0.26
1.41
1.41
2020
0.08
1.11
1.11
2019
0.19
0.92
0.92
2018
0.38
0.97
0.97
The Board is responsible for ensuring that risks are identified which has been delegated to the Audit & Risk Committee to
be reviewed on a timely basis and that the Group’s management addresses the risks identified.
>
>
The newly reconstituted Audit & Risk Committee reviews major risks to the business aside from its audit
responsibilities, which are recorded in the Risk Register, which is constantly reviewed and updated.
Management and staff operate under numerous policies in their day-to-day operations which are designed to assist in
reducing the identified risks.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
39
Directors’ Report
>
>
>
>
The Board strategically reviews operational activities and conveys to management as well as shareholders its objectives
and reports on progress against those 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 year saw a number of initiatives begun that straddled this in particular
the engagement of IBIS to perform a Vendor ESG Audit.
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 and to
the extent it can reduce sovereign risks for its Tanzanian assets the management of those. Also our US-based directors
Ms. Dajani and Mr. Daruwalla keep the Board informed of developments and assisted the Board to address any emerging
risks. One key matter was the refinancing of the Riverstone facility with iM3NY.
The other Committees have specific responsibilities for making recommendations for adoption, in the areas appropriate to
their Charters.
Numerous risks are associated with the Company’s businesses, failing to keep pace with technological advancements,
capital requirements, and growing competition makes the Company’s activities risky concerning its battery manufacturing
investments.
Likewise, the realisation of the project including processing, from its Nachu Graphite Project will be very capital intensive.
The degree of success depends on numerous factors, including negotiating suitable commercial off-take agreements,
funding, sovereign risks, relevant commodity prices, the quality and scale of the resource, and commercial partnerships
to manage 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.
In balancing and managing these diverse risks, 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 growing market size and recognition through
admission to the ASX All Ords.
Magnis from both a resource and technological view is positioned in the lithium-ion battery space, as such it benefits from
tailwinds of political, technical, and economic changes that are focussing on that. These forces, in particular the economic,
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.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Notwithstanding the impact of COVID in the first half of the year which made travel to the USA almost impossible iM3NY
has been assisted by the refinancing referred to above and has managed to have the plant 84% complete by the end of the
financial period.
Also, the DFS for the Nachu Graphite Project has progressed as has the construction of the resettlement village.
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 2022. The Vendor ESG audit conducted at the end of the reporting period did not reveal any concerning
gaps in respect to this or any other areas covered by the audit, specifically noting the positives arising from the Group’s
community engagement.
40
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
The New York lithium-ion battery plant is also subject to Environmental and Planning Regulations from various government
authorities, which are being strictly adhered to by iM3NY.
The Townsville Project (iM3TSV) remains at a preliminary stage, as the re-zoning was granted towards the end of the 3rd
quarter of the reporting period and as yet no commercial terms have been provided in order to progress this opportunity.
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
C. Bibby ^
H. Daruwalla
G. Gunesekera ^
A
9
4
9
9
4
3
9
4
5
4
B
9
3
8
9
4
3
6
4
5
4
A
2
1
1
2
2
2
3
1
-
1
B
2
-
-
2
2
2
-
1
-
1
A
*
*
*
2
*
-
2
2
2
-
B
*
*
*
2
*
-
-
2
2
-
A
2
-
2
2
-
-
*
-
2
2
B
2
-
1
1
-
-
*
-
1
2
Notes
A
Number of meetings held during the year whilst the director held office
B Number of meetings attended
*
there were no meetings whilst the person was a member of the committee
^ as noted below Claire Bibby & Giles Gunesekera commenced 28 January 2022
The Audit & Risk Committee initially comprised R. Petty (Chair), M. Siva, Z. Pavri and M.E. Dajani, this then changed following 28
January and is now composed of Claire Bibby (Chair) Giles Gunesekera and Mona Dajani .
The Nominations & Remuneration Committee initially comprised M. Siva (Chair), M.E. Dajani, R. Petty, and Z. Pavri., this has
changed from 28 January 2022 to Mugunthan Siva (Chair), Mona Dajani, Claire Bibby and Hoshi Daruwalla
The Health, Safety & Sustainability Committee initially comprised of Z. Pavri (Chair), F. Poullas, M.S. Whittingham, P. Tsegas, M. Siva
and R. Petty. This then changed to Giles Gunesekera (Chair), Frank Poullas, Peter Tsegas, Mugunthan Siva and Hoshi Daruwalla.
The committee’s reconstitution midway through the year was due to the changes to the composition of the board which occurred in
January 2022
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Directors and executives.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
41
Directors’ Report
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 Charter of the Remuneration & Nominations Committee, recently updated will ensure that the Committee sets
appropriate remuneration, goals and reviews existing STI and LTI structures and following that submits its recommendation
for any changes 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 and where additional work is required a rate has been set and approved by the board. The Board
determines payments to the Executive Directors (namely Peter Tsegas and Frank Poullas) and reviews their remuneration
annually, based on market practice and their duties 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.
Presently, Directors receive annual fees of between $65,000 to $70,000 and the Executive Chairman $120,000. An additional
$5,000 per annum is paid to Directors who Chair Committees, except for the Audit & Risk Committee, where the Chair
receives $15,000 per annum. Superannuation is payable under each Director’s service agreement and in accordance with the
Superannuation Guarantee Charge Act (Cth).
DIRECTOR AND OTHER EXECUTIVES DETAILS
Listed on pages 30-33 of this Annual Report are persons who acted as a director of the Company during either the whole of
the financial year or were appointed during the year and remained directors at the date of this report or were appointed
since the end of the financial year. For the purposes of this report, Key Management Personnel (KMP) of the Company
are those persons having authority and responsibility for planning directing and controlling the major activities of the
Company, directly or indirectly, and senior or key management employee. In addition to the Directors, the following were
KMP during the financial year:
> Mr. Rodney Chittenden - Project Director (from 1 September 2020)
> Mr. Duncan Glasgow - Company Secretary and Group General Counsel (from 10 February 2022)
> Mr. Julian Rockett - Joint Company Secretary and Corporate Counsel (from 10 February 2022)
> Mr. Aran Nagendra - Corporate Development and Investor Relations Manager (from 24 May 2021)
> Dr. Jawahar Nerkar - Director of Battery Technologies (from 19 July 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 a review by the Nomination & Remuneration Committee and based on
the performance of the Company.
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 Company’s intention is to position total employment costs within a relevant peer group. 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, hence the reason that performance rights were approved, and
shares issued to 2 directors, please see the comments below in respect to MERT.
42
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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. This review resulting in the issue to MOST of 1,375,000
options as noted above and below.
SHARE OPTION PLAN: MOST
Magnis Energy Technologies Ltd operates an ownership-based scheme for Directors and Employees of the Company. In
accordance with the provisions of the Plan, listed Ordinary Fully Paid shares and unlisted options are held on behalf of Plan
Participants by the Trustee of the Magnis Option Share Trust (‘MOST’). During the year ended 30 June 2022, 1,375,000
unlisted options (2021:750,000) on similar terms and conditions were allotted to the Trust pursuant to the rules of MOST.
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 Ordinary Fully Paid shares are held on behalf of Plan Participants
by the Trustee of the Magnis Employee Share Trust (‘MEST’). During the year ended 30 June 2022, NIL Ordinary Fully Paid
shares (2021:20,000,000) were issued to the MEST, held on behalf of one Plan Participant pursuant to their employment
agreement. However, during the year those rights were cancelled, pursuant to the respective terms of their grant, triggered
by the only 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 2022, NIL unlisted Performance
Rights (2021:12,500,000) 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. During the reporting period shares were issued to 3 Directors who were in
office at the time of their issue because the company’s market capitalisation passed the first threshold of AUD$500M. As a
consequence of the resignation of all except 2 participants, 4 million Performance rights remain, allocated to Frank Poullas
and Peter Tsegas as noted above.
SERVICE AGREEMENTS
Remuneration and other terms of employment for key management personnel are formalised in service agreements as set
out below:
Mr. Frank Poullas - Executive Chairman
> No agreement expiry date;
> Remuneration is $120,000 (2021: $120,000) per annum including 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 may be terminated by either Magnis Energy Technologies Ltd or Mr
Poullas by giving the other party 1 months’ notice; and
> The agreement is subject to annual review.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
43
Directors’ Report
Mr. Rodney Chittenden - Project Director
> No agreement expiry date;
> Remuneration is $250,000 from 1 April 2022 (2021: $125,000) 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.
Mr. Aran Nagendra – Corporate Development and Investor Relations Manager
>
>
>
No agreement expiry date;
Remuneration is $200,000 (2021:$145,000) 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
Nagendra by giving the other party 1 months’ notice; and
>
The agreement is subject to annual review.
Dr. Jawahar Nerkar - Director of Battery Technologies
>
>
>
No agreement expiry date;
Remuneration is $160,000 (2021:$150,000) per annum plus statutory superannuation guarantee
The agreement and the employment created by it may be terminated by either Magnis Energy Technologies Ltd or Dr
Nerkar by giving the other party 1 months’ notice; and
>
The agreement is subject to annual review.
Mr. Julian Rockett – Joint Company Secretary and Legal Counsel
>
>
>
Agreement expiry date 31 March 2023;
Remuneration is $36,000 from 1 Apr 2022 (2021:$132,000) per annum 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 $165,000 (2021:$140,000) 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
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 $362,964 was paid in consultancy fees to related parties of the KMP, and Non-Executive Directors during the
financial year (2021: $624,359). The consultancy and services are provided under normal commercial terms and are disclosed
in detail under Notes 24 and 25.
44
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Table 1: Remuneration for the year ended 30 June 2022
Salary &
Fees
$
Cash
Bonuses
$
Termination
Benefits
$
Post
Employment
Benefits ^
$
Share Based
Payments
Options#
$
Non Executive Directors
P. Tsegas
M. E. Dajani
M. Siva
C. Bibby
(Appointed 28 Jan 2022)
G. Gunesekera
(Appointed 28 Jan 2022)
H. Daruwalla
(Appointed 31 Dec 2021)
Prof. M.S. Whittingham
(Resigned 31 Dec 2021)
Z. Pavri
(Resigned 24 Dec 2021)
Dr. R. Petty
(Resigned 17 Nov. 2021)
Key management personnel
F. Poullas *
I. Nagendra
R. Chittenden
J. Behrens
J. Rockett *
D. Glasgow
(Appointed 10 Feb 2022)
Dr. J Nerkar
(Appointed 19 July 2021)
65,000
65,000
70,206
33,420
46,258
35,192
35,000
33,741
31,358
120,000
145,165
145,833
151,667
127,600
105,982
144,920
1,356,342
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,020
3,342
4,711
(4,225)
282,200#
282,200#
-
-
-
Total
$
60,775
347,200
359,426
36,762
50,969
35,192
-
(2,770)
32,230
3,520
282,200**
319,461
-
-
31,358
12,000
-
-
15,167
-
10,002
(4,225)
47,200
23,600
23,600
-
-
127,775
192,365
169,433
190,434
127,600
115,984
14,492
11,800
171,212
70,254
941,580
2,368,176
* Fees were paid to related entities.
^ Includes superannuation and movements in employee entitlements.
# Share Based Payments (SBP) consist of unlisted options issued in MOST.
** the options associated were forfeited as required under the terms of MOST.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
45
Directors’ Report
Table 2: Remuneration for the year ended 30 June 2021
Non Executive Directors
Prof. 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)
Hon. 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)
J. Dack
(Resigned 17 May 2021)
Salary &
Fees
$
87,500
105,000
17,000
17,000
17,000
17,000
38,167
150,000
104,167
24,200
125,000
73,772
263,786
1,039,592
Sign-On
Bonuses $
Termination
Benefits
Post
Employment
Benefits ^
$
Share Based
Payments
Options #
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
-
-
-
-
-
-
-
1,615
1,615
-
-
14,250
9,896
-
22,475
93,000
2,728
-
25,060
143,000
77,639
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
87,500
105,000
17,000
18,615
18,615
17,000
88,167
164,250
114,063
24,200
147,475
169,500
288,846
1,260,261
* Fees paid to related entities.
^ Includes superannuation and movements in employee entitlements.
# Share Based Payments (SBP) consist of unlisted share options issued.
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
Expiry Date
Grant Date
Fair Value
$
Number
Original
Exercise Price of
Option
$
Fair Value
Expense under
AASB 2
$
9-Dec-2021
9-Dec-2024
0.094400
1,375,000
26-Nov-2021
25-Nov-2024
0.141100
6,000,000
0.80
0.70
WEIGHTED AVERAGE FAIR VALUE OF OPTIONS GRANTED
7,375,000
129,800
846,600
976,400
0.13239
46
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Table 2: Options Exercised
Grant Date and
Vesting Date
Expiry Date
Grant Date Fair
Value
$
Number
Original
Exercise Price of
Option
$
Fair Value
Expense under
AASB 2
$
N/A
Table 3: Options Expired/Lapsed
Grant Date and
Vesting Date
Expiry Date
Grant Date Fair
Value
$
26-Nov-2019
31-Oct-22
0.000100
Number
1,000,000
1,000,000
Original
Exercise Price of
Option
$
Fair Value
Expense under
AASB 2
$
0.70
100
100
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
$
Number
Original
Exercise Price of
Option
$
Fair Value
Expense under
AASB 2
$
N/A
WEIGHTED AVERAGE FAIR VALUE OF OPTIONS GRANTED
0.000000
Table 5: Performance Rights Exercised
Grant Date and
Vesting Date
Expiry Date
Grant Date Fair
Value
$
18-Dec-2020
n\a
0.005340
Table 6: Performance Rights Lapsed
Grant Date and
Vesting Date
Expiry Date
Grant Date Fair
Value
$
18-Dec-2020
n\a
0.001555
Number
1,500,000
1,500,000
Number
2,000,000
2,000,000
Original
Exercise Price of
Option
$
Fair Value
Expense under
AASB 2
$
0.00
8,010
8,010
Original
Exercise Price of
Option
$
Fair Value
Expense under
AASB 2
$
0.00
3,110
3,110
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
47
Directors’ Report
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:
Ordinary shares
F. Poullas
P. Tsegas
M. E. Dajani
M. Siva
C. Bibby
(Appointed 28 Jan 2022) ~
G. Gunesekera
(Appointed 28 Jan 2022) ~
H. Daruwalla
(Appointed 31 Dec 2021) ~
Prof. M. S. Whittingham
(Resigned 31 Dec 2021) *
Z. Pavri
(Resigned 24 Dec 2021) *
Dr. R. Petty
(Resigned 17 Nov. 2021) *
A. Nagendra
R. Chittenden
J. Behrens
J. Rockett
D. Glasgow
(Appointed 10 Feb 2022) ~
Dr. J Nerkar
(Appointed 19 July 2021) ~
Year Start
Balance
16,600,000
770,000
-
700,000
-
-
-
-
-
-
-
860,334
3,500,000
-
-
-
Granted
Additions
(Disposals)
500,000
500,000
-
-
-
-
-
500,000
-
-
-
-
-
-
-
-
287,506
-
-
-
-
-
-
-
-
-
134,093
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,550,000)
-
-
-
Year End
Balance
17,387,506
1,270,000
-
700,000
-
-
-
500,000
-
-
134,093
860,334
950,000
-
-
-
~ Opening balance as at appointment date
* Closing balance as at resignation\termination date
22,430,334
1,500,000
421,599
(2,550,000)
21,801,933
48
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Option holding
The number of 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)
Options over ordinary shares
F. Poullas
P. Tsegas
M. E. Dajani
M. Siva
C. Bibby
(Appointed 28 Jan 2022) ~
G. Gunesekera
(Appointed 28 Jan 2022) ~
H. Daruwalla
(Appointed 31 Dec 2021) ~
Prof. M. S. Whittingham
(Resigned 31 Dec 2021) *
Z. Pavri
(Resigned 24 Dec 2021) *
Dr. R. Petty
(Resigned 17 Nov. 2021) *
A. Nagendra
R. Chittenden
J. Behrens
J Rockett
D. Glasgow
(Appointed 10 Feb 2022) ~
Dr. J Nerkar
(Appointed 19 July 2021) ~
Year Start
Balance
1,000,000
1,000,000
-
-
-
-
-
1,000,000
-
-
-
-
750,000
-
-
-
-
-
2,000,000
2,000,000
-
-
-
-
2,000,000
-
500,000
250,000
250,000
-
-
125,000
3,750,000
7,125,000
^ all options vest immediately and are convertible at anytime
~ Opening balance as at appointment date
* Closing balance as at resignation\termination date
Year End
Balance^
1,000,000
1,000,000
2,000,000
2,000,000
-
-
-
-
2,000,000
-
500,000
250,000
1,000,000
-
-
125,000
-
-
-
-
-
-
-
(1,000,000)
-
-
-
-
-
-
-
-
(1,000,000)
9,875,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
49
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
M. E. Dajani
M. Siva
C. Bibby
(Appointed 28 Jan 2022) ~
G. Gunesekera
(Appointed 28 Jan 2022) ~
H. Daruwalla
(Appointed 31 Dec 2021) ~
Prof. M. S. Whittingham
(Resigned 31 Dec 2021) *
Z. Pavri
(Resigned 24 Dec 2021) *
Dr. R. Petty
(Resigned 17 Nov. 2021) *
Year Start
Balance
2,500,000
2,500,000
-
-
-
-
-
2,500,000
-
-
7,500,000
Granted
-
-
-
-
-
-
-
-
-
-
-
Additions /
(Disposals)
(500,000)
(500,000)
-
-
-
-
-
Lapsed
-
-
-
-
-
-
-
(500,000)
(2,000,000)
-
-
-
-
Year End
Balance^
2,000,000
2,000,000
-
-
-
-
-
-
-
-
(1,500,000)
(2,000,000)
4,000,000
^ all rights vest immediately and are convertible at anytime
~ Opening balance as at appointment date
* Closing balance as at resignation\termination date
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:
50
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Identity of Related
Party
Nature of Relationship
Type of
Transaction
Terms &
Conditions of
Transaction
Aggregate Amount
2022
$
2021
$
Strong Solutions Pty Ltd
Mr. Frank Poullas is a related
party of Strong Solutions Pty Ltd
and a Director of Magnis Energy
Technologies Ltd
Peter Tsegas
Mr. Peter Tsegas is a Director of
Magnis Energy Technologies Ltd
Global Impact Initiative
Pty Ltd
Yatha Enterprises LLC
Mr. Giles Gunesekera is a related party
of Global Impact Initiative Pty Ltd and
Non-executive Director of Magnis
Energy Technologies Ltd
Mr. Hoshi Daruwalla is a related party
of Yatha Enterprises LLC and Non-
executive Director of Magnis Energy
Technologies Ltd
Mr. Troy Grant
(Resigned 23 Feb. 2021)
Hon. Troy Grant was a Director of
Magnis Energy Technologies Ltd
Normal
commercial
terms
Normal
commercial
terms
Normal
commercial
terms
Normal
commercial
terms
Normal
commercial
terms
Consulting
fees and
215,600
133,900
208,000
92,970
Consulting
fees
1,914
273,389
Consulting
fees
11,550
Consulting
fees
34,476
-
-
Consulting
fees
-
50,000
397,440
624,359
2022 REMUNERATION REPORT
The Remuneration Report received positive shareholder support from members greater than the 75% 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 2022 in Magnis Energy Technologies Ltd are:
Number of ordinary shares
Class of shares
Exercise price of option
Expiry date of option
2,000,000
77,869,167
375,000
375,000
1,375,000
6,000,000
10,000,000
20,000,000
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
117,994,167
WEIGHTED AVERAGE
0.700000
0.500000
0.500000
0.750000
0.800000
0.700000
0.500000
0.400000
0.500000
31/10/2022
25/05/2023
28/10/2023
28/10/2023
9/12/2024
25/11/2024
25/11/2024
25/11/2024
WEIGHTED AVERAGE REMAINING LIFE OF OPTIONS: 1.3720 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 2022 financial year, there were 43,559,405 (2021:Nil) shares issued because of exercising of options
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
51
Directors’ Report
PERFORMANCE RIGHTS
Details of performance rights as at 30 June 2022 in Magnis Energy Technologies Ltd are:
Number of ordinary shares
under option
Class of shares
Exercise price of option
Expiry date of option
4,000,000
4,000,000
Ordinary
WEIGHTED AVERAGE
0.00
0.00
n\a
WEIGHTED AVERAGE REMAINING LIFE OF RIGHTS: 9.0005 years
The holders of these MERT rights do not have the right, by virtue of the MERT right, 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
MERT right. During the 2022 financial year, there were 1,500,000 (2021: Nil) shares issued because of converting of rights.
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.
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 ‘Events After Reporting Period’ to the Financial
Statements.
52
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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
> Taxation services: $144,528
> Corporate services: $76,550
Shephard Consulting Limited: Dar es Salaam, Tanzania
> Taxation services: $2,729
>
Corporate services: $2,481
Sciarabba Walker & Company, LLP: New York, USA
> Taxation services: $483
> Corporate services: $36,582
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 11O 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 54 of this Annual Report
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
F. Poullas
EXECUTIVE CHAIRMAN
Sydney, 29 September 2022
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
53
08 Auditor’s Independence
Declaration
MAGNIS ENERGY TECHNOLOGIES LIMITED
AND CONTROLLED ENTITIES
ABN 26 115 111 763
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF MAGNIS ENERGY TECHNOLOGIES LIMITED AND CONTROLLED
ENTITIES
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Magnis Energy Technologies Limited and controlled
entities. As the lead audit partner for the audit of the financial report of Magnis Energy Technologies
Limited and controlled entities for the year ended 30 June 2022, I declare that, to the best of my
knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Anh (Steven) Nguyen
Director
Date: 30th September 2022
Hall Chadwick Melbourne
Level 14 440 Collins Street
Melbourne VIC 3000
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
54
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
09 Statement of Profit or Loss
& Other Comprehensive Income
YEAR ENDED 30 JUNE 2022
Consolidated
Notes
2022
$
2021
$
Income
Interest received
Foreign exchange gain
Profit on sale of fixed assets
Other revenue
R&D Grant
Government Grants and Assistance
30
Total income
Expenditure
Administration expenses
Depreciation expense
Directors’ fees
Employee benefits expense
Interest expense
Borrowing & Loan Costs
Legal and consulting expenses
Cost of Production expenditure
Share based payment to employees
Share based payment to non-employees
Share of net loss of associate accounted for using the equity method
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
25,470
19,405
395,121
2
11,681
-
451,679
174,359
12,782
242,755
-
69,191
120,500
619,587
31
11,973,628
2,658,702
33
32
28(a)
28(a)
731,768
589,017
213,397
436,006
5,854,371
2,224,277
10,109,724
1,814,418
24,822,292
2,766,734
4,579,321
1,484,673
1,099,528
976,300
300,380
-
-
5,963
40,050
-
1,113,169
1,007,597
62,149,498
12,651,817
(61,697,819)
(12,032,230)
5
-
-
(61,697,819)
(12,032,230)
(40,819,903)
(8,962,154)
(20,877,916)
(3,070,076)
(61,697,819)
(12,032,230)
-
7,600,580
2,617,977
1,259,882
2,617,977
8,860,462
(59,079,842)
(3,171,768)
(60,076,958)
(3,115,243)
997,116
(56,525)
(59,079,842)
(3,171,768)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
23
23
(6.38)
(6.38)
(1.41)
(1.41)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying Notes.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
55
10 Statement of Financial Position
YEAR ENDED 30 JUNE 2022
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non current assets
Other assets - iM3NY
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
Borrowings - Conv. Note Facility
Total current liabilities
Non current liabilities
Lease Liability
Provisions
Borrowings
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
Notes
2022
$
2021
$
6, 18(b)
100,238,244
72,894,945
7
8(a)
10,234,710
3,631,733
786,648
597,466
114,104,687
74,279,059
8(b)
13,655,704
12,316,982
9
10
11
12(a)
12(b)
13
14(a)
14(b)
14(c)
14(a)
14(b)
14(c)
15,096,142
15,096,142
30,149,281
266,305
6,170,865
4,982,338
49,414,529
21,552,388
44,343
14,840
114,530,864
54,228,995
228,635,551
128,508,054
3,646,194
3,672,966
386,200
176,430
1,750,000
214,076
48,345
-
5,958,824
3,935,387
31,010,410
73,230
-
-
145,111,133
65,175,758
176,121,543
65,248,988
182,080,367
69,184,375
46,555,184
59,323,679
15(a)
234,105,997
169,188,699
17
17,847,208
12,365,051
(206,510,298)
(137,450,231)
45,442,907
44,103,519
21,990,193
18,290,236
(20,877,916)
(3,070,076)
1,112,277
15,220,160
46,555,184
59,323,679
The above Statement of Financial Position should be read in conjunction with the accompanying Notes.
56
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
11 Statement of Changes in Equity
YEAR ENDED 30 JUNE 2022
YEAR ENDED
30 JUNE 2022
Notes
Issued Capital
$
FVOCI
Reserve
$
Share
Based
Foreign
Currency
Payment
Translation
Reserves
Reserve
$
$
Accumulated
(losses)
$
Non
controlling
Interests
$
Total
Equity
$
At 1 July 2021 restated
169,188,699
5,076,057
46,313
7,242,681
(137,450,231)
15,220,160
59,323,679
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
-
-
-
-
42,237,203
22,680,095
Share based payments to P&L
28(a)
Equity T\Fer on controlled entity
share capital purchase
(Forfeited) \ to Controlled Equity
Non-Controlled interest
Reclassification from reserve
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
965,180
-
1,899,000
-
-
-
-
16,283,919
(28,871,239)
(12,587,320)
(40,819,903)
(20,877,916)
(61,697,819)
2,617,977
-
-
2,617,977
2,617,977
(24,535,984)
(49,749,155)
(71,667,162)
-
-
-
-
-
-
-
-
-
-
(12,582,868)
100
3,699,957
45,937,160
-
-
-
-
22,680,095
965,180
(12,582,868)
1,899,100
(31,941,315)
31,941,315
-
-
-
-
At 30 June 2022
234,105,997
5,076,057
2,910,493
9,860,658
(206,510,298)
1,112,277
46,555,184
YEAR ENDED
30 JUNE 2021
Notes
Issued Capital
$
FVOCI
Reserve
$
Share
Based
Foreign
Currency
Payment
Translation
Reserves
Reserve
$
$
Accumulated
(losses)
$
Non
controlling
Interests
$
Total
Equity
$
At 1 July 2020
128,625,905
(2,524,523)
63,200
5,982,799
(113,333,319)
5,809,563
24,623,625
-
-
-
-
7,600,580
7,600,580
-
-
(202,830)
(14,952,028)
(15,154,858)
(8,982,154)
(3,070,076)
(12,032,230)
1,259,882
-
-
8,860,462
1,259,882
(9,164,984)
(18,022,104)
(18,326,626)
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
39,106,954
1,455,840
Share based payments to P&L
28(a)
Equity T\Fer on controlled entity
share capital purchase
(Forfeited) \ to Controlled Equity
Non-Controlled interest
Reclassification from reserve
-
-
-
-
-
-
-
-
-
-
-
46,013
-
(62,900)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100
12,480,673
51,587,627
-
-
-
-
1,455,840
46,013
-
(62,800)
-
-
(14,952,028)
14,952,028
-
-
At 30 June 2021(Restated)
169,188,699
5,076,057
46,313
7,242,681
(137,450,231)
15,220,160
59,323,679
The above Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
57
12 Statement of Cash Flows
YEAR ENDED 30 JUNE 2022
Cash flows from operating activities
Payments to suppliers and employees
Payment of exploration expenditure
Payment for development assets
Payments to production
Interest and other costs of finance paid
Interest received
Government Grants and Assistance
R&D grant
Consolidated
2022
$
2021
(Restated)
$
Notes
(34,129,140)
(15,704,828)
(1,105,713)
(1,013,435)
(715,088)
119,279
(1,099,528)
-
(10,091,609)
(1,922,824)
23,208
172,098
-
120,500
11,681
69,191
Net cash used in operating activities
18(a)
(47,106,189) (18,160,019)
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
(34,105,551)
(10,216,185)
(17,605,634)
(30,809,961)
(1)
(11,867)
395,121
242,754
6,526
902,432
Net cash flows used in investing activities
(51,309,539) (39,892,827)
Cash flows from financing activities
Proceeds from issues/sale of ordinary shares and options
25,149,000
74,647,509
Proceeds from issues/sale of ordinary shares - iM3NY
Proceeds remaining from Conv. Note Facility
Proceeds from exercise of options
Capital raising expenses
Proceeds from borrowings
Repayment of borrowings
Transaction costs related to loans and borrowings
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange differences
Add opening cash and cash equivalents
19,505,143
1,750,000
21,779,703
-
-
-
(3,104,000)
(1,991,491)
145,111,133
66,949,028
(63,983,309)
4,793,910
(26,902,575)
(13,797,310)
119,305,095 130,601,646
20,889,367
72,548,800
6,453,932
(373,470)
72,894,945
719,615
Closing cash and cash equivalents
18(b)
100,238,244
72,894,945
The above Statement of Cash Flows should be read in conjunction with the accompanying Notes.
58
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
13 Notes to the Financial
Statements
YEAR ENDED 30 JUNE 2022
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 in 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 model across the Lithium-ion battery supply chain that includes manufacturing
of lithium-ion battery cells in the USA, a greenfield battery project in Australia and a pre-mine development of its Nachu
Graphite project in Tanzania.
For the year ended 30 June 2022, the Group reported a net loss of $61,697,819 (2021: $12,032,230) and net operating cash
outflows of $47,106,189 (2021: $18,160,019). The operating cash outflows have been funded by cash inflows from equity
raisings and exercise of options of $40,720,703 (2021: $74,647,509) during the year. As at 30 June 2022 the Group had
net current assets of $118,055,268 (2021: $70,343,672) including cash reserves of $100,238,244 (2021: $72,894,945). The
Company’s cash portion was $20,075,464 while iM3NY reported $80,162,780 as at year end.
The company has assessed its ability to make further share placements (and /or secure Debt Finance). Based on the above,
the directors believe the financial statements have been prepared on a going concern basis which contemplates the
continuity of normal business activities, and the realisation of assets and settlement of liabilities in the ordinary course of
business.
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 28 September 2022
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
59
Notes to the Financial Statements
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 no new
or amended Australian Accounting Standards and AASB Interpretations as of 1 July 2021 other than the adoption by iM3NY
of AASB 16.
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.
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.
60
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
61
Notes to the Financial Statements
Prior Period Error and Restatement of Balances relating to iM3NY
Prior period error and restatement
The management of the subsidiary iM3NY identified various restatements in the company’s previously issued consolidated
financial statements for the year ended 30 June, 2021. These were corrected and balances were restated within the
financial statements for the year ended 30 June 2022.
a. Property, Plant and Equipment- restatement
During the reporting period, the management of the iM3NY carried out a review of the carrying value of the property,
plant and equipment noting a material overstatement reported for the year ended 30 June 2021 totalling a cumulative AUD
1,738,135. The error was related to storage of assets incurred in financial year 2019 which should have been expensed.
b. Bridge loan costs- restatement
The management of the iM3NY carried out a review of the bridge loan costs noting a material overstatement of expenses
and equity reported for the year ended 30 June 2021 totalling a cumulative AUD 5,752,096. The error was related to shares
issued a lender at an erroneous value.
c. Share based compensation- restatement
The management of iM3NY has identified that amount in respect of share-based compensation of the amount had not been
processed in the income statement totalling to AUD$1,862,451 resulting in increase of employee expenses and in equity
d. Capitalised loan costs- restatement
The management of iM3NY has also carried out a review of the capitalised loan costs carried forward from previous year
and noted a material overstatement of AUD$6,782,370. The error related to an amount paid to a unit holder which should
have been categorised as cost of funds instead of erroneously being presented as capitalised loan cost.
e. Unamortised loan costs- restatement
During the reporting period, it was noted by the management of iM3NY that the interest expenses and the unamortised
loan costs were overstated by an amount of AUD$345,099. The error was a result of unprocessed reduction in loan costs.
f. Member’s equity – restatement
Pursuant to the point b, c, and d above, the impact on the other side will be related to member’s equity. Member’s equity
will be reversed by a total amount of AUD$10,652,479.
Balance Sheet
iM3NY PPE
30 June 2021
(Previously
reported)
AUD $
Consolidated
iM3NY standalone
Adjustment
AUD $
30 June 2021
(Restated)
30 June 2021
(Previously
reported)
Adjustment
AUD $
30 June 2021
(Restated)
AUD $
AUD $
AUD $
23,290,573
(1,738,135)
21,552,438
23,290,573
(1,738,135)
21,552,438
Other assets (capitalised loan costs)
19,073,581
(6,782,370)
12,291,211
19,073,581
(6,782,370)
12,291,211
Other assets (amortization of loan costs)
(985,255)
345,099
(640,156)
(985,255)
345,099
(640,156)
Member's equity
179,841,178
(10,652,479)
169,188,699
56,200,581
(10,652,479)
45,548,102
Members equity- accumulated loss
138,095,114
(644,783)
137,450,331
1,566,138
1,738,135
3,304,273
Non-controlling interest
13,366,740
1,853,420
15,220,160
-
-
Income Statement
Bridge loan expenses (within other expenses)
5,752,096
(5,752,096)
-
5,752,096
(5,752,096)
-
-
Salary expenses
Interest expenses
850,373
1,862,451
2,712,824
346,062
(346,062)
-
850,373
346,062
1,862,451
2,712,824
(346,062)
-
62
ANNUAL REPORT 2022 - 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 2022
63
Notes to the Financial Statements
3. SEGMENT INFORMATION
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 a
lithium-ion battery Gigafactory in the USA as well as a development project in Australia. This activity is supplemented by
the development and planned mining of natural flake graphite for use in various industries, including in particular batteries
for storing electrical energy. 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 2022 as follows:
>
lithium-ion battery investments
> graphite exploration and development
2022
Segment financial
information
Segment revenue
Segment loss before tax
Segment current assets
Segment non-current assets
Lithium-ion Battery
Investment
USA
$
395,121
(49,650,216)
93,214,411
108,249,217
Segment liabilities
(179,555,851)
2021
Segment financial
information
Segment revenue
Segment loss before tax
Segment current assets
Segment non-current assets
Lithium-ion Battery
Investment
USA
$
242,844
(2,093,821)
69,337,823
44,850,037
Segment liabilities
(68,471,981)
Accounting policies
Lithium-ion Battery
Investment
Australia
$
Graphite
Exploration &
Development
Tanzania
$
22,495
24,063
-
(12,047,603)
Consolidated
$
451,679
(61,697,819)
114,104,687
114,530,864
58,092
-
-
20,832,185
6,281,647
(2,524,516)
(182,080,367)
Lithium-ion Battery
Investment
Australia
$
Graphite
Exploration &
Development
Tanzania
$
Consolidated
$
20,370
-
55,591
-
-
356,373
619,587
(9,938,409)
(12,032,230)
4,885,645
9,378,958
(712,394)
74,279,059
54,228,995
(69,184,375)
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.
64
ANNUAL REPORT 2022 - 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 2022
65
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
Relating to origination and reversal of temporary differences
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
Consolidated
2022
$
2021 restated
$
15,541,299
3,572,361
(17,582,312)
(3,891,510)
(2,041,013)
(319,149)
2,041,013
319,149
-
-
-
-
-
-
500,660
516,517
(500,660)
(516,517)
-
-
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 (2022:30%)
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
2022
2021
(61,697,819)
(12,032,230)
18,509,346
3,609,668
(90,114)
(12,015)
(596,151)
189,463
-
-
(48,125)
(110,063)
3,504
20,757
430,330
244,090
(626,478)
(50,390)
(17,582,312)
(3,891,510)
-
-
-
-
66
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
The benefit of these losses and temporary differences will only be obtained if:
>
>
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;
the Group continues to comply with the condition of deductibility imposed by law; and
> 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.
Group tax losses - 30 June 2022
Transferred tax losses
Tax losses in foreign companies
Total tax losses - 30 June 2022
Accounting policies
$
29,536,041
26,706,090
116,707,649
172,949,780
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 2022
67
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
2022
$
2021
$
814
2,651
20,074,650
3,572,435
80,162,780
69,319,859
100,238,244
72,894,945
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
Prepayments and other receivables- iM3NY
Less: allowance for expected credit loss
Security deposit
Consolidated
2022
$
377
2021
$
240
421,907
239,341
183,836
396,090
9,477,613
-
-
-
150,977
150,977
10,234,710
786,648
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 (2021: Nil) in the profit or loss, in respect of the expected credit losses
related to trade and other receivables for the year ended 30 June 2022.
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
8a. OTHER ASSETS
Movements in the allowance for expected credit losses are as follows:
Accrued interest
Short-term loan between Charge CCCV LLC & iM3NY
Less: allowance for expected credit loss
Short-term loan - Imperium3 Townsville
Inventory - iM3NY
Capitalised Loan Costs - iM3NY
Advances/Deposits-Purchases - iM3NY
Accounting policies
Short-term loan between Charge CCCV LLC & iM3NY
Consolidated
2022
$
22,495
-
-
2021
$
20,370
14,524
-
35,221
35,221
817,561
-
1,690,631
527,351
1,065,825
-
3,631,733
597,466
Loan receivables are recognised and measured at amortised cost, less any allowance for expected credit losses. All
remaining amounts due from C4V in 2021 were received during the year.
Allowance for expected credit losses
The consolidated entity has recognised a loss of $Nil (2021: $Nil) in profit or loss in respect of the expected credit losses
related to trade and other receivables for the year ended 30 June 2022.
8b. OTHER ASSETS – iM3NY
Movements in the allowance for provisions are as follows:
Capitalised Loan Costs - iM3NY
Less: allowance for amortisation - Loan Costs - iM3NY
Advances/deposits purchases- iM3NY
Consolidated
2022
$
2021
$
4,025,873
13,302,239
(279,574)
(985,257)
9,909,405
-
13,655,704
12,316,982
Accounting policies
Capitalised Loan Costs and Allowance for Amortisation of Capitalised Loan Costs - iM3NY
These are capitalised expenses incurred in securing and refinancing loaned funds for iM3NY Inc. and includes such items
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
69
Notes to the Financial Statements
as legal fees, agency fees, borrowing costs and other loan related costs that will be amortised in accordance to their
respective nature. The consolidated entity has recognised $3,746,299 (2021: $12,316,982) in respect of capitalised loan
costs, net of amortization, currency translation and loan costs w\off related to refinancing of Riverstone loan for the year
ended 30 June 2022.
Movements in Capitalised Loan Costs are as follows:
Opening balance
Additional loans capitalised
Less: allowance for amortisation - loan costs
Loan costs written off during the year due to refinancing
Currency translation
Closing balance
9. FINANCIAL ASSET at FVOCI
Equity investment in Charge CCCV LLC
Consolidated
2022
$
2021
$
12,316,982
-
-
13,302,239
705,683
(985,257)
(10,068,369)
792,003
-
-
3,746,299
12,316,982
Consolidated
2022
$
2021
$
15,096,142
15,096,142
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 intellectual
property, 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
C4Vintellectual property, 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 a 3.50% stake
in C4V, which effectively diluted the Company’s C4V ownership to 9.65%.
As at 30 June 2022 the Company’s ownership in C4V remains at 9.65% (2021:9.65%).
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.
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.
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
10. RIGHT OF USE ASSET
Right-of-use assets at start of period
Additions
Currency Translation
Depreciation expense
Right-of-use assets – Closing Carrying value
Accounting policies
Consolidated
2022
$
2021
$
266,305
476,363
29,091,679
-
1,509,925
(8,026)
(718,628)
(202,032)
30,149,281
266,305
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at
or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses.
The ‘additions’ reflect the adoption of AASB 16 by iM3NY and the amount is largely offset by the increase in Lease
Liabilities, see note 14(a).
11. DEVELOPMENT ASSETS
Development assets
Accounting policies
Consolidated
2022
$
2021
$
6,170,865
4,982,338
6,170,865
4,982,338
Development assets are stated at cost less accumulated amortisation 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.
As at 30 June 2022, the depreciation in development asset has not commenced yet because the exploration of mine has not
begun.
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 of disposal 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.amount of the cash-generating unit to which the asset belongs.
As at 30 June 2022, no impairment to the carrying value of the development assets has been deemed necessary.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
71
Notes to the Financial Statements
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
12. (a) PLANT AND EQUIPMENT iM3NY
Plant and Equipment - iM3NY
Accounting policies
Consolidated
2022
$
2021
$
4,982,338
5,577,131
715,088
(119,279)
473,439
(475,514)
6,170,865
4,982,338
Consolidated
2022
$
2021
restated
$
49,414,529
21,552,388
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. As at 30 June 2022, as the company’s assets have not been
brought into use, it has not been depreciated.
Impairment
In October 2019, the Group had an independent valuation undertaken by global engineering, architecture and consultancy
company Ramboll Energy were consulted to confirm that 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$230Million of manufacturing assets in place.
As at 30 June 2022, 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
Reclassification into other asset
Currency translation difference
Closing balance - Carrying value
Consolidated
2022
$
2021
restated
$
21,552,388
11,971,650
34,027,966
10,214,894
(9,909,405)
-
3,743,580
(634,156)
49,414,529
21,552,388
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
12. (b) PLANT AND EQUIPMENT
Plant and Equipment – Magnis & UTL
Accounting policies
Consolidated
2022
$
2021
$
44,343
14,840
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.
As at 3 June 2022, no impairment to the carrying value of its plant & equipment assets has been deemed necessary.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
73
Notes to the Financial Statements
Reconciliation of carrying amounts at the beginning and end of the year.
Consolidated Group
Plant
and
equipment
$
Office
equipment
$
Software
$
Office
furniture
and
fittings
$
Office
Improve-
ments
$
Motor
vehicles
$
Total
$
Year ended 30 June 2022
Balance at 1 July 2021 net of
accumulated depreciation
Additions
Disposals
1,058
32,709
12,972
35,228
-
-
Currency translation differences
(18,025)
(9,639)
Depreciation charge for the year
(6,781)
(3,626)
Balance at 30 June 2022 net of
accumulated depreciation
8,961
34,934
At 30 June 2022
Cost
Accumulated depreciation
and impairment
443,927
140,455
(434,966)
(105,521)
Net carrying amount
8,961
34,934
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
1,856
-
-
(155)
(643)
9,756
9,412
-
663
(6,859)
1,058
12,972
411,218
105,227
(410,160)
(92,255)
Net carrying amount
1,058
12,972
13. TRADE AND OTHER PAYABLES
Current
Trade payables
Other payables and accruals
Accounting policies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
628
-
182
14,840
1,211
5,447
2,990
77,585
-
-
-
-
(1,010)
(3,958)
(2,308)
(34,941)
(381)
(1,489)
(864)
(13,141)
448
-
-
44,343
16,986
66,502
36,505
704,376
(16,538)
(66,502)
(36,505)
(660,033)
448
93
654
-
(93)
(26)
628
-
-
-
-
-
-
-
-
44,343
4,386
16,091
-
-
(367)
10,066
-
48
(3,837)
(11,365)
182
14, 840
15,775
61,055
33,516
626,791
(15,147)
(61,055)
(33,334)
(611,951)
628
-
182
14,840
Consolidated
2021
$
2020
$
3,260,299
3,445,570
385,895
227,396
3,646,194
3,672,966
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.
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
14. (a) LEASE LIABILITIES
Lease Liabilities
Current
Lease Liabilities
Non Current
Consolidated
2022
$
2021
$
386,200
214,076
386,200
214,076
Consolidated
2022
$
31,010,410
31,010,410
2021
$
73,230
73,230
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.
The increase in lease liabilities is largely due to the adoption of AASB 16 by iM3NY, see note 10.
14. (b) PROVISIONS
Provisional for annual leave
Current
Non Current
Provision for lease liability
Provision for long service leave
Annual Leave and Long Service Leave
Consolidated
2022
$
176,430
176,430
2021
$
48,345
48,345
Consolidated
2022
$
2021
$
-
-
-
-
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.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
75
Notes to the Financial Statements
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 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
Convertible Note Facility
Current
Senior Secured Loan - iM3NY
Non Current
Consolidated
2022
$
1,750,000
1,750,000
2021
$
-
-
Consolidated
2022
$
2021
$
145,111,133
65,175,758
145,111,133
65,175,758
Convertible Note Facility
At period end, LIND received all their entitled shares issued, effectively extinguishing their $10.5M portion of the
convertible note, while shares issued to SBP effectively reduced their $10.5M portion of the convertible note to
$1,750,000 which remains outstanding at year end.
Secured loans and borrowings
On 19 April 2022, Magnis announced that its majority owned subsidiary Imperium3 New York Inc(iM3NY) entered into a
US$100 million loan facility (‘loan facility’), which was utilised to retire its US$50 million senior secured loan facility
entered into with Riverstone and provide additional cash and financial flexibility to take advantage of new long-term
growth opportunities.
The key terms of the loan facility are: Lender: ACP POST OAK CREDIT I LLC through Atlas Credit Partners (‘ACP’) in
collaboration with Aon, Amount: US$100 Million, Term: 3 Years, Guarantor: Charge CCCV LLC (C4V), Security: a lien over the
assets of iM3NY and the intellectual property of C4V (a minority shareholder in iM3NY) provided to iM3NY, and Interest
cost: Secured Overnight Financing Rate (SOFR - that has a floor of 1%) + a 6% margin and Credit Insurance Wrap Premium,
which in Year 1 is 8.25%, Year 2 is 4.6% or 2.5% (if milestone achieved) and in Year 3 is 4.35% or 2.25% (if further
milestone achieved).
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.
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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.
15. CONTRIBUTED EQUITY
a) Issued capital
Ordinary Fully Paid shares
Fully paid ordinary shares carry on vote per share and carry a right to dividends.
b) Movements in fully paid shares
At 30 June 2021 (Restated)
Shares restructure - iM3NY
Shares issued
Exercise of unlisted options
Exercise of unlisted rights
Transaction costs
Share issue to MEST
At 30 June 2022
Number
of shares
2022
$
966,485,329
234,105,997
851,434,546
169,188,699
-
22,680,095
84,991,378
23,561,500
43,559,405
21,779,703
1,500,000
-
5,000,000
(3,104,000)
(20,000,000)
-
966,485,329
234,105,997
During the year the Company raised funds from equity as follows:
>
$23,561,500 (2021: $41,649,995) from share placements of 84,991,378 (2021:166,428,325) Ordinary Fully Paid shares.
Transaction costs amounted to $3,104,000 (2021: $2,543,041).
> $21,779,703 (2021: $Nil) from the exercise of unlisted options, issuing 43,559,405 (2021:Nil) Ordinary Fully Paid shares.
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.
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 2022
77
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
2022
$
2021
$
Consolidated
Financial assets at FVOCI
Financial assets at FVOCI
3
15,096,142
15,096,142
15,096,142
15,096,142
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.
As at year end, C4V has a direct holding of 31.0% (2021:31.00%) in iM3NY LLC, being the holding company of Imperium3
New York Inc. (‘iM3NY Inc’), which owns battery plant assets located in a planned lithium-ion battery manufacturing facility
based at the Huron Campus in Endicott, New York. As such, C4V has a 31.19% (2021:32.61%) total indirect strategic interest
in the New York lithium-ion battery production plant via iM3NY LLC.
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 assessed all the items purchased. At that time the external valuer attributed the status and condition at a
valuation of US$71.34Million. In October 2019, the Group had an independent valuation undertaken by global engineering,
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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$230Million ($334Million) of
manufacturing assets in place, of which C4V has a total indirect strategic interest via iM3NY LLC that is equivalent to
US$72Million ($104Million). When the Riverstone Facility was paid out in April 2022, through the financing in collaboration
with Atlas and Aon the value of the manufacturing assets in place had increased sufficient for those entities to agree to a
funding package valued at US$100M
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 and 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
Feasibility Study)
Feasibility Study
n/a
Relationship of
Unobservable input
to fair value
The more advanced the project
the higher the fair value
Timeline to production
DCF
2 years post finance 2 years post finance
n/a
The longer the time to
Project life
DCF
20yrs
20yrs
Risk adjusted discount rate DCF
20%
45%
n/a
n/a
Capital required
DCF
$391.8M (US$270M)
$3Billion
n/a
Expected annual volumes DCF
240,000 tonne p.a.
18GWh
n/a
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
FV
n/a
n/a
$334M
(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
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
79
Notes to the Financial Statements
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.
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 $391.8M (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
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
commissioning to ensure an inexperienced workforce does not ramp up staff beyond stage 1. 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 anode processing
technology and its patented 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$230Million ($334Million) of manufacturing assets in place, of which C4V has a total indirect strategic interest via iM3NY
LLC equivalent to US$72Million ($104Million). 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.
The Nachu project is exposed to currency fluctuations between the United States Dollar (USD, US$) and the Tanzanian
Shillings (TzS). Where possible, the Group mitigates this risk by executing supply agreements in USD, 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 Committee may consider entering into simple forward foreign exchange contracts.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
81
Notes to the Financial Statements
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 AU$0.065M / (AU$0.081M)
Risk adjusted discount rate
5% change would increase/ (decrease) fair value
by AU$4.15M / (AU$2.722M)
Expected annual volumes
5% change would increase/ (decrease) fair value
by AU$0.818M / (AU$0.818M) ($0.564M)
Valuation of battery
5% change would increase/ (decrease) fair value
by AU$4.754M / (AU$4.754M)
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 Inc’). 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
As at year end, the Company has a direct holding of 62.0% of its Common Stock units (2021:62.00%) in iM3NY LLC (LLC),
being the holding company of Imperium3 New York Inc. (‘iM3NY Inc’), which owns battery plant assets located in a lithium-
ion battery manufacturing facility based at the Huron Campus in Endicott, New York. As such, the Company has a 61.42%
(2021:59.88%) total indirect interest in the New York lithium-ion battery production plant via LLC. The table below provides
the total direct and indirect strategic interests of all investors in LLC and iM3NY Inc, as at 30 June 2022:
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
Direct and
Indirect
Strategic
Ownership in
IM3NY
LLC
2022
Direct
Share
Ownership
in iM3NY
Inc
2022
Indirect
Ownership in
iM3NY Inc
2022
Direct
Share
Ownership in
iM3NY LLC
2021
Direct
Share
Ownership
in iM3NY
Inc
2021
Indirect
Ownership in
iM3NY Inc
2021
62.00%
31.00%
5.00%
2.00%
n\a
n\a
n\a
n\a
n\a
n\a
61.42%
31.19%
0.51%
0.64%
0.48%
62.00%
31.00%
5.00%
2.00%
n\a
n\a
n\a
n\a
n\a
n\a
59.88%
32.61%
0.53%
0.67%
0.50%
Magnis
C4V
Primet
C&D
Atlas
Total iM3NY LLC
100.00%
95.50%
94.24%
100.00%
95.50%
94.19%
Riverstone Group
Prisma Pelican Fund
HSBC Bank
Total Riverstone, HSBC +
Prisma
n\a
n\a
n\a
n\a
3.86%
0.32%
0.32%
4.50%
5.12%
0.32%
0.32%
5.76%
n\a
n\a
n\a
n\a
3.86%
0.32%
0.32%
4.50%
5.17%
0.32%
0.32%
5.81%
Total iM3NY Inc.
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
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$71.34Million. 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$230Million ($334Million) of
manufacturing assets in place, of which Magnis has a total indirect interest equivalent to US$141Million ($205Million).
17. RESERVES
a) Reserves
Foreign currency translation
Share based payment
FVOCI Reserve
Consolidated
2022
$
2021
(Restated)
$
9,860,658
7,242,681
2,910,493
46,313
5,076,057
5,076,057
17,847,208
12,365,051
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
83
Notes to the Financial Statements
b) Nature and purpose of reserves
i. Foreign currency translation reserve
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.
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
Consolidated
2022
$
2021
$
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
(37,663,313)
(19,194,721)
-
13,142
3,336,222
1,276,679
-
-
11,365
643,389
46,013
-
(395,121)
(242,755)
(552,497)
7,112,967
-
-
-
-
(Increase)/decrease in trade and other receivables
(11,192,154)
(2,146,105)
(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
16,051
146,827
(13,099)
-
-
-
(706,765)
127,363
(1,161,298)
(4,311,726)
(90,234)
(352,636)
Net cash outflow from operating activities
(47,106,189)
(18,160,019)
a) Reconciliation of cash and cash equivalents
Cash at bank and in hand
100,238,244
72,894,945
100,238,244
72,894,945
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ANNUAL REPORT 2022 - 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
2022
$
89,817
89,817
2021
$
82,460
82,460
Exploration expenditure commitments beyond twelve months could not be reliably 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 2022.
The Group has guarantees for property leases and banking finance facilities of $150,977 (2021: $150,977).
21. EVENTS AFTER REPORTING PERIOD
On 25 July 2022, Magnis announced it had issued 3,846,154 Ordinary Fully Paid shares at 26 cents for a total of $1,000,000
to US-based institution SBC Global Investment Fund, under the terms of the Convertible Note (‘Facility’) agreement,
announced to the ASX on 3 August 2021 and approved by shareholders at the 2021 AGM. The Facility has been used to
assist the Company with its aggressive growth plans to fast-track Gigawatt scale production at the Lithium-ion Battery
Plant located in Endicott, New York as well as for general working capital, including to advance early works with the Nachu
Graphite Project, along with any support required towards the Townsville Battery Plant.
On 1 August 2022, Mr David Taylor commenced his newly appointed role as Chief Executive Officer, after a 6-month global
search managed by executive search firm Korn Ferry.
On 4 August 2022, the Company announced that Magnis Option Share Trust (‘MOST’) was issued with 1,000,000 unlisted
options for employees, at $0.63 exercise price, with a 3-year expiry period from their 1 August 2022 issue date.
On 12 August 2022, the Company announced that commercial production has commenced at the iM3NY New York Lithium-
ion Battery Plant based in Endicott, New York.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
85
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
2022
$
2021
$
(a) Amounts received or due and receivable by Magnis Group Auditor (Australia) for:
An audit or review of the financial report of the entity and any other entity in the
consolidated Group.
64,092
79,973
Other services in relation of the entity and any other entity in the consolidated
Group:
• Taxation services
• Corporate services
144,528
76,550
48,247
2,948
285,170
131,168
(b) Amounts received or due and receivable by related practices of Magnis Group Auditor (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
-
-
-
-
-
Consolidated
2022
$
2021
(Restated)
$
(a) Reconciliation of earnings to profit or loss:
Net loss - Loss used in calculating basic loss per share
61,697,819
12,032,230
Shares
2022
Shares
2021
(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
966,485,329
851,434,546
Basic loss per share (cents per share):
(6.38)
(1.41)
Accounting policies
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.
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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
2022
$
2021
$
1,437,175
1,039,592
-
143,000
78,337
77,639
965,180
-
2,480,692
1,260,231
(b) Other transactions and balances with key management personnel and their related parties
Transactions with Directors’ related entities.
Assets and liabilities
Trade and other payables
Current liabilities
2022
$
2021
$
29,355
68,100 -
29,355
68,100
(c) Outstanding balances arises from purchases of goods and services at the reporting date in relation to other
transactions with key management personnel.
Identity of
related party
Nature of relationship
Type of
transaction
Terms &
Conditions of
Transaction
Agregated Amount
2022
$
2021
$
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
and IT Services
Normal
Commercial
Terms
215,600
133,900
208,000
92,970
Mr. Peter Tsegas Mr. Peter Tsegas is a Non-Executive
Consulting Fees
Normal
1,914
273,389
Director of Magnis Energy
Technologies Ltd
Global Impact
Initiative Pty Ltd Global Initiative Pty Ltd and Non-executive
Director of Magnis Energy Technologies Ltd
Giles Gunesekera is a related party of
Consulting Fees
Yatha Enterprises Hoshi Daruwalla is a related party of
LLC
Yatha Enterprises LLC and Non-executive
Director of Magnis Energy Technologies Ltd
Consulting Fees
Mr. Troy Grant
(Resigned
23 Feb. 2021)
Mr. Troy Grant was a Non-Executive Director Consulting Fees
of Magnis Energy Technologies Ltd
Commercial
Terms
Normal
Commercial
Terms
Normal
Commercial
Terms
Normal
Commercial
Terms
11,550
34,476
-
-
-
50,000
624,359
231,537
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
87
Notes to the Financial Statements
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 5.40% (2021:6.64%) of the OFP shares in Magnis Energy Technologies Ltd.
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ANNUAL REPORT 2022 - 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
Total Net Assets
Equity
Issued capital
Equity settled employee benefits reserve
Equity FVOCI reserve
Retained profits
Total equity
Contingent liabilities
Parent
2022
$
2021
$
(13,424,544)
(8,889,419)
(13,424,544)
(8,889,419)
20,016,515
3,926,870
89,874,398
56,352,702
2,363,544
336,867
2,410,163
565,302
87,464,235
55,787,399
209,970,061
167,732,859
2,910,492
3,883,456
5,076,057
5,076,057
(130,492,376)
(120,904,973)
87,464,235
55,787,399
Other than funding arising from a letter of support provided by the company to iM3NY, the parent entity had no contingent
liabilities as at 30 June 2022. (2021:Nil).
Capital commitments - Plant and equipment
The parent entity had no capital commitments for plant and equipment at as 30 June 2022 and 30 June 2021.
Remuneration commitments
The parent entity has a remuneration commitment of $166,337 as at 30 June 2022 (2021:$83,042).
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
89
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
Uranex (Tanzania) Ltd
Country of
incorporation
Tanzania
Magnis Technologies (Tanzania) Limited
Tanzania
Uranex Mozambique Limitada
Uranex ESIP Pty Ltd
iM3NY LLC 2
Imperium3 New York Inc. 3
Mozambique
Australia
USA
USA
Ownership
Direct
Direct
Direct
Direct
Direct
Class of
shares
Ordinary
Ordinary
Ordinary
Ordinary
Common
Indirect
Common
Equity Holdings 1
2022
%
2021
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
62.00%
61.42%
62.00%
59.88%
1 percentage of voting power is in proportion to ownership (direct and indirect).
2 iM3NY LLC was incorporated for consolidation purposes on 16 April 2021. The remaining 38% has been attributed to non-
controlling interests.
3 Imperium3 New York Inc. was incorporated for consolidation purposes on 29 June 2020 of which 95.5% is owned directly by
iM3NY LLC (2021:95.5%) while 4.5% has been attributed to non-controlling interests. As at year end the company has a total
indirect interest in Imperium3 New York Inc. of approx. 61% via iM3NY LLC.
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 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.
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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.
From late March 2021 to April 2021, iM3NY undertook a restructuring where iM3NY LLC was created as the new holding
company of iM3NY, as a result of the binding Riverstone Credit Partners, L.P. funding agreement. As part of the syndicated
funding package, new investors were introduced in iM3NY, while existing iM3NY investors were migrated into the newly
created iM3NY LLC. This restructuring effectively 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.
In July 2021 Magnis provided further funding for the iM3NY lithium-ion battery project by increasing its investment in
iM3NY LLC’s Series A preference shares while maintaining its holding of common shares.
As at year end the company maintains its controlling ownership of 62% in iM3NY LLC, while the holding company maintains
its controlling ownership of 95.5% in iM3NY.
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.
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.
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
91
Notes to the Financial Statements
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.
Dividends 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
Expense arising from the issue of MOST options (employees)
Expense arising from the issue of MOST options (non-employee)
Expense arising from the issue of DIRECT options (employees)
Expense arising from the issue of DIRECT options (non-employee)
Expense arising from the issue of MERT rights (employees)
Total expense arising from equity-settled payment transactions
a) Recognised share-based payment expenses
Consolidated
2022
$
129,700
-
846,600
1,899,000
(11,120)
2,864,180
2021
$
5,963
-
-
-
40,050
46,013
The expense recognised for employees and contractors received during the year is shown below:
b) Types of share-based payment plans
OPTION SHARE PLAN: MOST - (‘EMPLOYEES’)
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 Ordinary Fully Paid 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 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.
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
c)
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
d)
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
2022
No.
3,750,000
7,375,000
-
2022
WAEP
0.69
0.72
-
2021
No.
10,000,000
750,000
-
2021
WAEP
0.58
0.63
-
(Expired \ Lapsed) during the year
(1,000,000)
(0.70)
(7,000,000)
(0.54)
Outstanding at the end of the year
Exercisable at the end of the year
10,125,000
10,125,000
0.72
0.72
3,750,000
3,750,000
0.69
0.69
The range of exercise prices for options outstanding at the end of the year was between $0.40 and $0.80 (2021:
$0.50 and $0.75).
Rights granted under share-based payment
The below table shows the number of, and movements in, MERT performance share rights issued during the year.
WAEP
No.
2022
No.
2022
2021
Outstanding at the beginning of the year
7,500,000
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
-
(1,500,000)
(2,000,000)
4,000,000
4,000,000
-
-
-
-
-
-
-
12,500,000
-
(5,000,000)
7,500,000
7,500,000
During 2022, 1,500,000 OFP shares (2021: NIL) were issued as a result of converting performance rights.
2021
WAEP
-
-
-
-
-
-
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
93
Notes to the Financial Statements
(e) Weighted average remaining estimated life
The weighted average remaining estimated life outstanding as at 30 June 2022 is :
> Share options - MOST:
1.22 years (2021:1.54 years)
> Share options - Direct:
2.41 years (2021: Nil)
> Share rights - MERT:
9.00 years (2021:9.42 years)
f) Weighted average fair value
The weighted average fair value granted during the year to 30 June 2022 is :
•
•
•
Share options - MOST:
$0.09440 (2021: $0.00795)
Share options - Direct:
$0.14110 (2021: Nil)
Share rights - MERT:
$0.00923 (2021:0.00534)
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 2022:
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
2022
Nil
54 - 57
0.032 - 0.938
2.0 - 3.0
40 - 80
26.5 - 73.0
2
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 7,375,000
(2021:750,000) 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’].
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ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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
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 2022
95
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
Assets
Liabiiities
2022
$’000
2021
Restated
$’000
2022
$’000
2021
Restated
$’000
US dollars
4,793,355
3,933,337
69,703
107,007
The Group had net assets denominated in foreign currencies of US$4,723,652 (assets less liabilities) as at 30 June 2022
(2021:US$3,826,330).
Based on this exposure, had the Australian dollar weakened or 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 $93,636 higher /
$84,719 lower, while the consolidated entity’s net assets \ equity would have been
$36,766 higher / $326,407 lower. 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 2022 was $19,405 (2021:$12,782)
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
2022
$
2021
$
100,238,244
72,894,945
The weighted average interest rate for the Group at reporting date was 0.4850% (2021:0.0470%).
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 2022 and 2021.
30 June 2021
Carrying
Amount
Net Loss
$
Equity
$
Net Loss
$
Equity
$
Interest Rate Risk -1%
Interest Rate Risk +1%
Consolidated Entity
Financial asset
Cash and cash equivalents
100,238,244
(1,002,382)
(1,002,382)
1,002,382
1,002,382
96
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
30 June 2021
Carrying
Amount
Net Loss
$
Equity
$
Net Loss
$
Equity
$
Interest Rate Risk -1%
Interest Rate Risk +1%
Consolidated Entity
Financial asset
Cash and cash equivalents
72,894,945
(728,949)
(728,949)
728,949
728,949
The sensitivity was higher during 2022 than 2021 because of higher cash balances. The analysis assumes the carrying
amounts noted will be maintained over the next financial year.
(c) Credit risk
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
2022
$
-
2021
$
-
3,646,194
3,672,966
-
-
-
-
3,646,194
3,672,966
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 and Cashflow boost
No Government grants and assistance was received during the full-year to 30 June 2022 (2021:$120,500 representing
$70,500 in JobKeeper payments and $50,000 in Cashflow boost).
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
97
Notes to the Financial Statements
31.
ADMINISTRATION EXPENSES
Audit Fees
Insurance
Rental expenses
Travel costs
C4V Service Supply Fees
Other expenses
Audit Fees - iM3NY
Insurance - iM3NY
Rental expenses - iM3NY
Travel costs - iM3NY
Other expenses - iM3NY
32. LEGAL AND CONSULTANCY EXPENSES
Legal
Consultants
Marketing
Legal - iM3NY
Consultants - iM3NY
Marketing - iM3NY
Consolidated
2022
$
90,681
96,024
132,510
152,071
827,259
1,627,789
2021
$
95,163
81,997
12,104
18,466
800,701
410,184
2,926,334
1,418,615
156,728
3,238,892
2,744,663
162,738
2,744,273
38,892
20,204
567,058
88,234
525,699
9,047,294
1,240,087
11,973,628
2,658,702
Consolidated
2022
$
889,211
2,860,162
276,881
2021
$
378,466
702,772
223,287
4,026,253
1,304,525
337,437
109,106
-
215,631
553,294
-
71,042
180,148
4,579,321
1,484,673
33. BORROWING COSTS AND LOAN AMORTIZATION
Loan Amortization - iM3NY
Borrowing Costs - iM3NY #
Consolidated
2022
$
2021 Restated
$
3,336,221
643,389
21,486,071
2,123,345
24,822,292
2,766,734
98
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
14 Directors’ Declaration
In accordance with a resolution of the Directors of Magnis Energy Technologies Ltd, I state that:
1.
In the opinion of the Directors:
a)
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 2022 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.
b)
The financial statements and Notes also comply with International Financial Reporting Standards as disclosed in
Note 1.
c)
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.
2.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2022.
On behalf of the board
F Poullas
EXECUTIVE CHAIRMAN
Sydney, 29 September 2022
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
99
15 Independent Auditor’s Report
MAGNIS ENERGY TECHNOLOGIES LIMITED
AND CONTROLLED ENTITIES
ABN 26 115 111 763
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS 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 2022, 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)
(b)
giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial
performance for the year then ended; and
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 the independence declaration required by the Corporations Act 2001, 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 $61,697,819 during the year ended 30 June 2022 and net operating cash outflows of $47,106,189, as of that
date; 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 significant 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
100
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS 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 2022. 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
Refer to Note 9 ‘Financial Assets at FVOCI
Our procedures included, amongst others:
At 30 June 2022, 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 9.
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 9 as well as checking
the mathematical accuracy of the model and underlying
calculations.
Gaining an understanding of quantum of funds required
to ensure Nachu and iM3NY 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.
Key Audit Matter
How Our Audit Addressed the Key Audit Matter
Development Asset
Refer to Note 11 ‘Development Asset’
The Group has $6,170,865 recorded as
development asset as at 30 June 2022. The
Group’s accounting policy
in respect of
exploration and evaluation assets is outlined in
Note 11.
This is a key audit matter because the carrying
value of the assets are material to the financial
statements and significant judgements are
applied in determining whether an indicator of
impairment exists in relation to capitalised
exploration and expenditure assets
in
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
meetings and updates from the Group’s exploration
partners;
o obtained management’s
the
assessment of impairment at the end of the year
and evaluated it for reasonableness;
position
on
o
reviewed the tenements profile and ensured any that
have been surrendered were expensed as required;
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
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
101
Independent Auditor’s Report
Key Audit Matter
Property, Plant and Equipment
How Our Audit Addressed the Key Audit Matter
Our procedures included amongst others:
Refer to Note 12 ‘Property,
Plant and Equipment’
The group has $49,458,872 of property, plant
and equipment at 30 June 2022. Included in the
is equipment held by a
carrying value
subsidiary amounting
to $49,414,529. We
focused on this matter as a key audit matter as
equipment is the most significant asset of the
group.
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
impairment by
comparing them to historical results in addition to
economic and industry forecasts.
indicated potential
We assessed
the adequacy of group's
disclosures in relation to the carrying value of
property, plant & equipment.
Key Audit Matter
How Our Audit Addressed the Key Audit Matter
Borrowings
Refer to Note 14 (c) ‘Non Current - Borrowings’
The Group has $145,111,133 of current
borrowings as at 30 June 2022.
Magnis’s subsidiary iM3NY entered into an
agreement with Atlas Credit Partners through
AON for a loan facility of USD 100 million (AUD
145.11 million) which was used to retire the
USD 48.475 million ( AUD 63.98 million) senior
debt facility entered into with Riverstone and to
provide additional cash for the business.
Our procedures included, amongst others:
Gained an understanding the loan as per the loan
agreement.
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.
Recalculated the interest expenses recognised in
the income statement
We assessed the adequacy of the Group’s
disclosures in respect of borrowings.
This is considered to be a key area of audit
focus due to its materiality to the financial report.
issues
the share
Traced
the various ASX
announcements and ensured that the conversion
reconciliation was in accordance with the ASX and the
agreement.
to
Recalculated the amount owing at year end under the
convertible bond agreement based on the share price
and the number of shares converted on each
conversion date.
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
102
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
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 2022, but does not include the financial report and our auditor’s
report thereon. Our opinion on the financial report does not cover the other information and 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.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
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
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
103
Independent Auditor’s Report
–
–
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the
direction, supervision and performance of the Group audit. We remain solely responsible for our audit
opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the
audit of the financial report of the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
We have audited the remuneration report included in pages 13 to 19 of the directors’ report for the year ended 30
June 2022.
In our opinion, the remuneration report of Magnis Energy Technologies Limited, for the year ended 30 June 2022,
complies with 300A of the Corporations Act 2001
Responsibilities
The directors of the company are responsible for the preparation and presentation of the remuneration report in
accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
Anh (Steven) Nguyen
Director
Date: 30th September 2022
Hall Chadwick Melbourne Audit
Level 14 440 Collins Street
Melbourne VIC 3000
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
104
ANNUAL REPORT 2022 - MAGNIS ENERGY TECHNOLOGIES LTD.
16 Additional Shareholder
Information
Corporate Governance Statement for 2022 can be viewed at:
https://magnis.com.au/files/Corporate-Governance-Statement.pdf
The security holder information set out below was current at 30 September 2022.
Substantial shareholders
Name
Citicorp Nominees Pty Limited
Mazzdel Pty. Limited
No. of Holders
61,142,962
52,235,853
%
6.30
5.38
Number of holders in each class of security
Class Of Security
Securities
% of Securities
No. of Holders
% No. of Holders
Ordinary Fully Paid
970,331,483
100
20,641
100
Voting Rights attached to each Class of Security
Each Ordinary Fully Paid Share is entitled to one vote at any General Meeting of the Company and participates in any
distribution equally with all other Ordinary Fully Paid Shares
The unlisted Options have no voting rights
Distribution Schedule
Holding
Distribution
Range
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Unmarketable Parcel details
Securities
% of Securities
No. of Holders
% No. of Holders
695,503,068
222,918,640
30,095,832
21,005,129
807,314
71.68
22.97
3.10
2.16
0.08
1,235
6,780
3,758
7,680
1,187
5.98
32.85
18.21
37.21
5.75
Range
Securities
% of Securities
No. of Holders
% No. of Holders
Unmarketable Parcel
1,851,285
0.19
2.074
10.05
Company Secretaries
Phone & registered office address
Other Stock Exchanges
Duncan Glasgow
Julian Rockett
Ph: 8397 9888
Address of Registered Office
Suite 11.01, 1 Castlereagh Street,
Sydney NSW 2000 Australia
There are no other exchanges
although there are 2 OTC markets,
namely OTCQX and FSE
MAGNIS ENERGY TECHNOLOGIES LTD. - ANNUAL REPORT 2022
105
Additional Shareholder Information
Largest 20 shareholders
Name
A/C
Designation
Number of shares
% of ordinary
shares
1 CITICORP NOMINEES PTY LIMI...
2 MAZZDEL PTY LIMITED
3 MAZZDEL PTY LIMITED
61,142,962
30,602,175
13,129,580
11,720,000
9,016,368
8,039,464
6,761,917
6,221,498
5,000,000
4,796,905
4,445,000
4,383,032
4,279,322
4,119,921
17
18
19
20
SYDNEY WYDE HOLDINGS PTY...