MOUNT GIBSON IRON LIMITED 2024 ANNUAL REPORT
2024 Annual Report
2023/24 Performance Summary
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No Lost Time Injuries were recorded in the year, reducing the Lost Time Injury Frequency Rate
(LTIFR) to 0.0 incidents per million manhours at year end from 0.7 previously, while the Total
Recordable Injury Frequency Rate (TRIFR) reduced to 4.4 from 5.2 previously.
Iron ore sales increased 33% to 4.1 million wet metric tonnes (Mwmt) grading 65.3% Fe, and
total revenue increased 51% to $684.4 million.
Profit before tax and impairments doubled to $211.6 million, for a net profit after tax of $6.4
million after non-cash pre-tax impairments totalling $159.1 million and derecognition of
deferred tax assets totalling $30.2 million.
Operating cashflow from Koolan Island trebled to $284.3 million, reflecting increased sales
including the monetisation of high grade ore stockpiles.
Cash and investment reserves increased by $279.9 million to $442.3 million at 30 June 2024,
excluding the Company’s period-end 8.6% interest in Fenix Resources Ltd, valued at
$20.7 million.
Fenix holding subsequently increased to 10.06% after period-end through the exercise of
12.5 million 25 cent options.
Total Net Assets of $546.2 million at 30 June 2024.
Contents
2023/24 Performance Summary
3
Chairman’s Report
4
Chief Executive Officer’s Report
5
Health & Safety
6
Operational Review
7
Climate Change
9
Environment and Community Affairs
12
Resources and Reserves Statement
13
Financial Report
15
Directors’ Report
16
Corporate Governance
99
Additional ASX Information
100
Corporate Directory
103
MOUNT GIBSON IRON LIMITED 2024 Annual Report
3
Chairman’s Report
I am pleased to present Mount Gibson Iron’s
Annual Report for the 2023/24 financial year.
The year was one in which the Company’s
flagship Koolan Island mining operation in the
Kimberley region of Western Australia
generated significant cashflow from increased
exports of high grade iron ore.
Group sales revenue totalled $667.7 million
Free on Board (FOB) from total high-grade ore
sales of 4.1 million wet metric tonnes (Mwmt)
grading 65.3% Fe, near the top end of the
Company’s guidance for the year. This
compared with revenue of $452.6 million on
sales of 3.0 Mwmt in the preceding year.
The Company recorded a modest net profit
after tax of $6.4 million, compared with $5.2
million in the prior year, after pre-tax
accounting impairments totalling $159.1
million and the derecognition of deferred tax
assets totalling $30.2 million. These non-cash
expenses primarily reflected the impact of
lower iron ore prices on the accounting
carrying values of the Koolan Island operation
and effectively brought forward depreciation
and amortisation expenses that would
otherwise be incurred in future years.
Importantly, gross profit before tax and
impairments doubled to $211.6 million,
compared with $105.9 million in the prior year,
and total cash and investment reserves
increased by $279.9 million to $442.3 million
at period end, compared with $162.4 million
previously. This excluded the value of the
Company’s 8.6% shareholding in Fenix
Resources Limited which had a market value of
approximately $20 million at the end of the
financial year. Mount Gibson has subsequently
increased this equity interest to just over 10%
by exercising one tranche of equity options it
received in part consideration for the sale of its
Mid-West iron ore mining and infrastructure
assets to Fenix in July 2023.
Mount Gibson’s operational and financial
improvement during the year reflected
consistent ore production from the Koolan
Island Main Pit and the processing and sale of
previously assembled high-grade ore
stockpiles. These stockpiles were monetised
by late December 2023, after which sales
became more closely aligned with mining
extraction rates.
As Koolan Island moves closer to its scheduled
closure in the next few years, and with iron ore
markets and global economic conditions
demonstrating increased volatility, Mount
Gibson is focused on safely maximising
cashflow over Koolan Island’s remaining life,
while continuing the search for meaningful
resources investment opportunities.
Your Directors are focused on maximising
value for all shareholders and are being
cautious to preserve capital so that Mount
Gibson is well positioned and has the flexibility
to act decisively when an appropriate
acquisition and growth opportunity arises.
While a dividend for the 2023/24 financial year
was not declared, the Board is constantly
reviewing all options for capital management,
including dividends. An on-market share
buyback was recently commenced as a value-
accretive measure.
In closing, I would like to thank my fellow
Directors and the employees and contractors
of Mount Gibson for their commitment and
efforts over the last year. I would also like to
thank our loyal shareholders for their
continued support. We look forward to
maximising the value from our existing assets
and to growing our business for the long term
benefit of all shareholders.
Lee Seng Hui
Chairman
4
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Chief Executive Officer’s Report
Mount Gibson delivered a solid operating and
financial performance during the 2023/24
financial year, particularly in the first half
given the benefit of previous investments
made at Koolan Island in overburden removal,
plant improvements and the build-up of high
grade stockpiles which were monetised
during the period. The second half was more
challenging as iron ore prices weakened and
mining was completed in the western part of
the Main Pit at Koolan Island, after which the
Company commenced the planned transition
to the eastern half of the pit which will be the
primary ore source over the mine’s remaining
2-3 year life.
The safety of our people remained a priority,
with continuous improvement in safety
performance being a critical focus. It is
therefore particularly satisfying to report
further substantial improvement in safety
performance over the course of 2023/24 with
Mount Gibson’s rolling 12 month Total
Recordable Injury Frequency Rate (TRIFR)
reducing to 4.4 incidents per one million
manhours worked as at 30 June 2024, down
from 5.2 at the end of the prior year. Similarly,
the Lost Time Injury Frequency Rate (LTIFR)
reduced to zero from 0.7 incidents per one
million manhours worked at the end of the prior
year. This represents the fifth consecutive year
of improvement on both these key measures
which is a significant credit to the MGX Team’s
focus on safety leadership, culture and
performance. We will continue to seek further
improvement in the year ahead.
In relation to operating performance, group
iron ore sales increased substantially, rising to
4.1 Mwmt of high grade iron ore from Koolan
Island at a consistent average sales grade of
65.3% Fe, and sales revenue rose by over 47%
to $667.7 million Free on Board (FOB).
Unit cash costs declined to $74 per wmt FOB
before royalties and capital projects, compared
with $77/wmt FOB in the prior year, but were
5% above our targeted range given inflationary
cost pressures and the high proportion of fixed
costs at the remote Koolan Island operation.
Notwithstanding this, Koolan Island generated
strong operating cashflow of $284.3 million –
three times more than in the prior financial year
- and underpinned the $279.9 million increase
in the Company’s cash and investment reserves
achieved over the year. This increase reflected
the stronger sales, including the high grade
stockpiles monetised in the first half of the year,
and significantly reduced waste stripping
requirements in the Main Pit. The waste-to-ore
stripping ratio is a major driver of costs at
Koolan Island and declined substantially as
expected, averaging 0.6:1 for the year,
compared with 2.2:1 in the prior year. The
stripping ratio will temporarily increase in the
coming financial year as mining extraction
transitions from west to east in the Main Pit,
and is expected to average less than 2:1 over
the remaining mine life.
By year end, mining was completed in the
western half of the Main Pit as planned, and
subsequent to period end, reconfiguration of
the haul ramp was also completed, thereby
providing mining access to the eastern half of
the high grade Main Pit orebody. Geotechnical
activities in the Main Pit are frequently
challenging and by year end the remedial
ground support program on the central footwall
rockfall area was underway. This work is
scheduled to be substantially completed in the
2024/25 financial year, facilitating the safe
recommencement of high grade ore extraction
in the underlying area. The Company has also
completed construction and commissioning of
the tertiary crushing circuit at the Koolan Island
processing plant, enabling more efficient and
lower-cost crushing of harder high-grade
material anticipated in the eastern end of the
Main Pit.
In the 2024/25 financial year, Mount Gibson is
targeting iron ore sales of 2.7–3.0 Mwmt at an
average unit cash cost of $95-100/wmt FOB
sold, before royalites and capital projects.
With Koolan Island approaching its scheduled
closure in the next few years and iron ore
markets showing increased volatility, Mount
Gibson is focusing on opportunities to safely
reduce costs wherever possible to maximise
cashflow over the operation’s remaining years.
Searches for quality new investment and
acquisition opportunities able to generate
longer term shareholder value are well
underway. During the financial year, the
Company added new investments in a number
of operating and development companies,
increasing the value of its equity positions from
approximately $5 million to $18.5 million at
year end. This position is in addition to the
Company’s shareholding in Fenix Resources
Limited (Fenix), acquired through the
divestment of the Company’s Mid-West iron ore
and infrastructure assets in mid-2023. At
period end, Mount Gibson’s initial 8.6% interest
in Fenix had a market value of approximately
$20 million, which the Company subsequently
increased after balance date to just above 10%
through the exercise of 12.5 million 25-cent
options. A further 12.5 million options may be
exercised at 30 cents each any time over the
next four years at the Company’s discretion.
In parallel with these activities, the Company
has continued to actively evaluate material
investment opportunities in Australia focused
primarily on bulk materials (iron ore, coking
coal and bauxite) and conventional base metals
projects (copper, zinc, lead). Mount Gibson also
continues assess earlier stage regional
exploration opportunities for base metals
deposits, particularly in Western Australia and
Queensland.
Recent market volatility, the lack of funding
readily available for many projects, and the
Company’s healthy cash reserves puts Mount
Gibson in an advantageous position for a
patient mid-tier mining organisation seeking to
act decisively on meaningful acquisition
opportunities.
We enter the new financial year with optimism
about the opportunities ahead, and I thank the
Mount Gibson Board members for their ongoing
support and guidance as we seek to maximise
outcomes for our shareholders.
Finally and most importantly, I thank all of
Mount Gibson’s hardworking employees and
contractors for their commitment and efforts
throughout the last year.
Peter Kerr
Chief Executive Officer
MOUNT GIBSON IRON LIMITED 2024 Annual Report
5
Health and Safety
Mount Gibson is committed to maintaining a
safe work environment and safety oriented
culture in which all personnel consider both
their own wellbeing and that of their
colleagues. Continuous improvement in safety
performance is a critical focus of the Company.
Performance during the 2023/24 financial year
improved very substantially compared with the
preceding two years and further improvements
continue to be targeted with respect to safety
leadership, culture and performance. The
rolling 12 month Total Recordable Injury
Frequency Rate (TRIFR) reduced by over 15%
to 4.4 incidents per one million manhours
worked as at 30 June 2024, down from 5.2 at
the end of the prior year and 11.4 in the year
before that.
Significantly, no Lost Time Injuries (LTI) were
recorded in the business during the 12 month
period, thereby reducing the Lost Time Injury
Frequency Rate (LTIFR) to 0.0 incidents per
one million manhours worked, compared with
0.7 at the end of the prior year, and 1.7 in the
year before that.
Overall safety performance is subject to
continuous assessment by executive and site
management. This has resulted in an ongoing
program of improvement initiatives, including
enhanced safety management protocols and
systems, safety awareness training and task-
specific safety protocols. The benefits of these
initiatives are evident in the significant
reduction in incidents over the year.
The Company will be actively working to
achieve continuing improvements in the
coming year.
Mount Gibson’s definition of TRIFR includes
Lost Time Injuries, Restricted Work Injuries
and Medically Treated Injuries. Using TRIFR
provides a useful tool for safety conversations
and active communication with the entire
workforce to help ensure Mount Gibson’s
people are not injured in their workplaces.
For details of the Company's safety
performance, including site statistics, please
refer to Mount Gibson Iron's 2024
Sustainability Report, as published on the
Mount Gibson website.
TRIFR
LTIFR
*LTIFR and TRIFR each represent incidents per one million manhours worked, on a rolling 12 month basis.
4
5
2
3
1
0
15
10
5
0
FY2020
FY2021
FY2023
FY2024
FY2024
0
FY2022
FY2020
FY2021
FY2023
FY2022
4.4
6
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Operational Review
During 2023/24, Mount Gibson achieved total
ore sales of 4.1 million wet metric tonnes
(Mwmt), with the operational focus on
increasing high-grade ore production and sales
to maximise cashflow over the remainder of the
mine life at Koolan Island.
Koolan Island
Koolan Island is located approximately 140km
north of Derby in the Kimberley region of
Western Australia. Significant operational
progress continued to be achieved at Koolan
Island during the year as the benefits of
previously completed bulk waste stripping,
upper footwall ground support programs and
processing plant repairs were realised.
Mine performance in 2023/24 reflected a
reduction in the waste-to-ore stripping ratio in
the Main Pit and the planned completion of
mining in the Western end of the pit. Total ore
and waste moved was 5.9 Mwmt, including 3.7
Mwmt of ore, compared with total movement of
12.9 Mwmt, including 4.0 Mwmt of ore, in the
prior year. This reflected a reduced average
stripping ratio of 0.6 tonnes of waste for every
tonne of ore mined in 2023/24 compared with
2.2:1 in 2022/23. The stripping ratio is a key
driver of operating costs at Koolan Island and
although it will rise in the coming year in line
with haul ramp repositioning and waste
extraction cycles, it was anticipated to average
approximately 1.8:1 over the remaining 2-3
year mine life of the Koolan Island operation.
Ore production in the period primarily came
from the western end of the Main Pit, and some
upper benches in the upper eastern end of the
pit where production was re-sequenced and
brought forward following the August 2023
rockfall on the central footwall (island-side).
Following detailed geotechnical assessment,
ground support remediation activities
commenced in the June 2024 quarter. This
work comprises a sequenced program of on-
wall drilling and rock-bolting, plus the
installation of protective mesh and a safety
barrier fence to enable the high-grade ore
zones directly beneath this area to be
safely extracted.
Mining in the western end of the Main Pit was
completed in June 2024, at a planned final
depth of approximately 170 metres below sea
(mean tide) level. A water collection sump was
then established in the western end to assist in
efficient water management and discharge
from the Main Pit. Mining operations then
began transitioning to the central and eastern
parts of the Main Pit as planned, involving a
reconfiguration of the primary haul ramp.
Shipping rates and cargo grades will be
temporarily reduced during the September
2024 quarter while the transition work was
undertaken.
Processing volumes increased by 12% over the
year to 4.0 Mwmt, compared with 3.6 Mwmt
the prior year, weighted to the December 2023
half year in which the Company processed the
substantial high grade ore stockpiles generated
in the preceding financial year. The ore
stockpiles were depleted by late December
2023 with processing through the plant being
supplemented by a mobile crushing contractor.
Processing thereafter was more closely aligned
with ex-pit ore production and will remain so
over the remaining mine life. In order to more
efficiently and cost-effectively process the
harder oversized material expected to be mined
from the central and eastern areas of the Main
Pit, the Company committed to the installation
of a tertiary crushing circuit. At the end of the
financial year, work was nearing completion
and commissioning was completed in the
September 2024 quarter.
Koolan Island ore sales totalled 4.1 Mwmt, near
the upper end of the Company's sales guidance
of 3.8-4.2 Mwmt, including a record 2.5 Mwmt
in the December half year. Sales from Koolan
Island are made under long term offtake
agreements on FOB terms, with pricing
referencing high grade (65% Fe) market
indices and Panamax shipping freight rates,
specification adjustments and penalties for
impurities. Provisional prices are recorded
following shipment departure and the final
pricing ultimately reflects monthly iron ore
price averages up to two months after the
month of shipment. Accordingly, the Company
is subject to provisional pricing adjustments in
current and subsequent periods.
Operating cashflow generated from Koolan
Island for the year totalled $284.3 million
compared with $95.3 million in the previous
year on the back higher sales volumes and
prices, reduced unit cash costs and the sale of
previously mined high-grade ore stockpiles in
the December 2023 half year. Revenues for the
year totalled $667.7 million with the cash
outflow items being cash operating and
capital costs ($319.3 million) and royalties
($64.1 million).
Koolan Island generated a profit before
interest, tax and impairments of $181.3 million
in 2023/24, compared with $118.4 million in
the prior year. After impairment expenses
totalling $159.1 million (2022/23: $74.3
million), the operation generated a profit
before interest and tax of $22.2 million
(2022/23: $44.1 million).
In relation to the August 2022 processing plant
fire at Koolan Island, the Company's property
damage and business interruption insurance
cover responded to the incident. The property
damage claim totalled $10.4 million, of which
the majority was received in the prior financial
year and the balance of $2.7 million was
received in 2023/24. The business interruption
claim was in the process of being finalised with
insurers at year end and settlement of the claim
was subsequently agreed for a total of $27.3
million, with proceeds due to be received in full
by the end of the September 2024 quarter.
Mid-West Operations
The Company ceased to operate the Mid-West
as a separate segment following completion of
the divestment of most of its former Mid-West
iron ore mining and infrastructure assets to
Fenix in July 2023. Mount Gibson recorded a
pre-tax gain of $35.9 million on the transaction
and also subsequently received a dividend
totalling $1.2 million on its Fenix shareholding.
The assets sold to Fenix comprised Mount
Gibson's mining rights and other obligations at
the suspended Shine iron ore mine near Yalgoo,
the closed hematite iron ore mine at Extension
Hill near Perenjori, rail sidings at Perenjori and
Mullewa, two bulk materials storage sheds at
Geraldton Port and various items of plant and
equipment. Fenix also assumed rehabilitation
and other contractual obligations associated
with these assets, which at the time of
sale were provisioned by Mount Gibson at
$8.2 million.
Consideration for the divestment comprised
$10.0 million in cash, 60 million Fenix shares
and 25 million 5 year options in Fenix,
exercisable in two equal tranches at $0.25 and
$0.30 each respectively. At the end of the
reporting period, the value of Mount Gibson's
share and option holdings in Fenix was $20.7
million. Subsequent to balance date, Mount
Gibson exercised the tranche of $0.25 per
share options, taking its shareholding in Fenix
to 10.06%.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
7
The Company has retained its mining and
exploration interests in the historic Tallering
Peak mining area, to the north of which it
continues to explore prospective ground for
base metals mineralisation, together with its
Fields Find exploration interest.
Mid-West Rail Refund/Credit
Mount Gibson retained its rights to the long-
standing historical rail credit refund resulting
from third party use of certain parts of the Mid-
West rail network. Following achievement of a
contractual rail volume threshold at Extension
Hill during prior years, the Group earned an
entitlement to receive a partial refund of
historical rail access charges from the Mid-West
rail leaseholder, Arc Infrastructure, based upon
the future usage by third parties of specific
segments of the Perenjori to Geraldton railway
line. This entitlement commenced upon
termination of the Group's then existing rail
agreements in early 2019, and was calculated
at various volume-related rates, and capped at
a total of approximately $35 million (subject to
indexation) and a time limit expiring in 2031.
The contractual cumulative cap of this credit
refund was reached in the year, with the final
credit amount of $1.9 million reflected in other
revenue for 2023/24.
Exploration and Business
Development
Mount Gibson continues to pursue potential
investment opportunities consistent with the
Company's objective to extend and grow its
business into new operations, targeting
opportunities in the bulk commodities (iron ore,
steel-making coal and bauxite) and base
metals (copper, lead, zinc) sectors, primarily in
Australia. Equity positions with a combined
market value of $18.5 million at 30 June 2024
were held in a small number of resource
development companies where it is considered
that future financing or strategic opportunities
may arise.
Significant time continues being devoted to
new project generation, site visits and
discussions with third parties regarding further
potential acquisition and partnering
opportunities.
The Company also continues to assess regional
exploration opportunities for base metals
deposits particularly in Western Australia and
Queensland. In WA's Mid-West region, the
Company completed follow up work at the
Baillys prospect near the former Tallering Peak
iron ore mine, including a ground moving loop
electromagnetic survey, as well as continuing a
data review and planning additional mapping at
the Butcher's Track project north of Tallering
Peak. Negotiations also continued regarding
potential farm-in and joint venture
arrangements to prospective base metals
exploration projects in the WA Goldfields
region.
Operational Review Continued
8
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Climate Change
Climate Change and Energy
Management Policy
In line with the growing international focus on
climate change and to guide Mount Gibson’s
focus on reducing carbon emissions and
increasing energy efficiency, the Board has
formally adopted a Climate Change and Energy
Management Policy, as published on the
Company’s website.
The policy helps Mount Gibson to identify,
monitor and manage future energy and
emissions business risks, as legislation and
regulatory environment responds to climate
change imperatives.
Mount Gibson recognises that a pivotal aspect of
emissions reduction, at a Company level, is
energy management and decarbonisation.
In order to responsibly contribute to Australia’s
and the international community’s response to
climate change in a way that is realistic in the
context of Mount Gibson’s mining assets, Mount
Gibson is committed to:
Ÿ
Engaging collaboratively with government,
the community and industry on climate
change and emissions reduction matters;
Ÿ
Applying a target of continuous
improvement with regard to reducing
carbon emissions across business
operations through more energy efficient
processes or indirectly through use of offsets
as appropriate;
Ÿ
Developing energy management and
decarbonisation frameworks to enable the
review, identification, and reporting of
carbon emissions and energy use in existing
business operations as well as progressing
with adoption of initiatives to improve
energy efficiency and reduce carbon
emissions;
Ÿ
Continuing to annually report on its
environmental performance, carbon dioxide
emissions, energy usage status and energy
management and decarbonisation initiatives
consistent with evolving standards,
reporting and disclosure obligations; and
Ÿ
Making decarbonisation, carbon intensity
and energy efficiency key considerations in
the Company’s risk management processes.
Mount Gibson will continue to assess and
respond to physical climate change risks as
relevant taking into account the impact of severe
weather events and rising sea levels, regulatory
changes, shifts in demand for higher grades of
iron ore, reputational damage, directors’ duties
and increased oversight and operating costs.
Response to climate change
The Company accepts the scientific consensus
expressed by the Intergovernmental Panel on
Climate Change that continued emissions
resulting in global warming above 2 degrees
Celsius could lead to catastrophic economic and
social consequences. Mount Gibson supports
the Paris Agreement to limit global warming, and
the more recent 2021 Glasgow Climate Pact, to
limit global warming to less than 1.5 degrees
Celsius above pre-industrial levels.
The Company acknowledges that the response
to climate change will require engagement and
collaboration with Government, the community
and industry, to develop economically
sustainable measures in reducing global carbon
emissions to internationally agreed levels.
Mount Gibson has undertaken a risk review of
the transitional and physical risks arising from
climate change impacting its business, focussing
on risks connected to regulatory changes,
product demand, reputational damage,
directors’ duties, increased operating costs, the
impact of severe weather events and rising sea
levels. The detailed risk assessment outcome is
provided in Table 1 over the page.
It is accepted by Mount Gibson that there is a
risk that its existing operations, which are
estimated to continue for another 5 years, and
future acquisitions may well be impacted by
changing regulatory policy restricting
greenhouse gas emissions or imposing a carbon
tax as the world transitions towards a lower
carbon footprint. The Company is unable to
quantify the impact of such restrictions or taxes
at this time.
During the remaining mine life at Koolan Island,
Mount Gibson does not anticipate any
substantial increase to the physical climate
change risks it already faces having already
operated in a cyclonic region in the Kimberley for
over 15 years. The impact of adverse weather
events is already factored into its operations in
that location where infrastructure has been
engineered and is regularly maintained to
withstand cyclone conditions. That said, the
impact of physical climate change risks remains
an important consideration with any future
acquisition beyond existing operations.
Mount Gibson recognises that a pivotal aspect of
emissions reduction, at a Company level, is
energy management and decarbonisation.
Mount Gibson is mindful of reducing its
greenhouse gas (GHG) emissions where
possible, however substantive changes require
alternative power sources for Koolan Island,
such as the use of hybrid power stations and
electric trucks, but as yet, none are economically
feasible for the operation given the scale of
operations and available mine life. However,
irrespective of this, Mount Gibson accepts that
climate change is a matter of global
responsibility and an expert energy
management consulting group is currently
undertaking the second phase of a detailed
review of operations at Koolan Island to provide
guidance on realistic (i.e. fit for purpose)
changes that the business may make.
In preparing its report on climate change, Mount
Gibson has considered and supports the
recommendations of the Task Force on
Climate–related Financial Disclosures (TCFD).
The recommendations assist stakeholders in
assessing the Company’s performance in this
area. Mount Gibson’s Board and Operational Risk
Sustainability and Contracts Committee has
primary responsibility, together with
management, to review and formulate the
Company’s approach towards climate change
and management of climate change risks, as
tabulated in Table 1.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
9
Climate Change
Continued
More detailed information on Mount Gibson’s approach to managing climate change, including its annual Scope 1 and Scope 2 emissions data, can be
found in its annual Sustainability Report published on the Mount Gibson website.
The four key elements of the TCFD recommendations include:
Governance
Governance around climate
change related risks and
opportunities, in particular
Board and management
oversight.
Strategy
Disclosure of climate-related
risks over the short,
medium and longer term,
and the impact and
opportunities on business
strategy and financial
planning.
Metrics and targets
Disclosure of the metrics
and targets used to assess
and manage relevant
climate-related risks and
opportunities where such
information is available.
Risk management
Disclosure as to how the
organisation identifies,
assesses and manages
climate related risks and
how this is integrated within
the business’ overall risk
management system.
Mount Gibson will continue to work with relevant industry bodies to ensure
that any proposed regulatory framework is workable.
The Company is focussed on continuing to reduce its GHG emissions. This
includes the second phase of a detailed review of operations at Koolan
Island by a specialist energy management consulting group now underway
to provide guidance on realistic (i.e. fit for purpose) changes that the
business may make.
Mount Gibson will make investment decisions in respect of future projects
taking into account the risks of climate change and a forecasted carbon
price impact.
Mount Gibson’s ore reserves at its Koolan Island operation are high grade
having an average iron ore content of approximately 65% Fe. Higher grade
iron ore products require fewer GHG emissions in the process of steel
making and so will continue to have strong demand.
Mount Gibson is also assessing diversification options beyond iron ore to
other commodities where demand may increase as the global economy
moves towards lower GHG emissions.
Mount Gibson has not set voluntary emissions intensity targets but is
considering supporting external initiatives that are consistent with
transitioning to a lower carbon environment.
Mount Gibson needs to make sure it takes all reasonable actions to manage
its climate change risks and to be transparent in respect of its strategy
towards managing climate change impacts. This will extend to ensuring that
it is ready to report under the mandatory reporting regime which seems
likely to apply to the Company from the FY2026 reporting period.
Policy and regulatory changes
capping emissions may increase
operational costs. It is possible
that these changes may be
introduced within the next 5 years.
Demand for particular grades of
iron ore may change if market
demand shifts, for example, as a
result of the introduction of climate
change regulations directly
impacting the steel manufacturing
sector in China.
Mount Gibson may experience
reputational damage if stakeholders
consider that it is not responding
adequately to climate change risks.
This may impact the Company’s
investment profile in the market.
Directors have a responsibility to
manage and disclose climate
change risks relating to the
business and comply with any
mandatory reporting requirements.
Failure to do so may result in third
party litigation by shareholder
activists or enforcement by
regulatory groups. There is
growing community expectation
that companies will take steps to
reduce their GHG emissions.
Regulatory
Changes
Reduced product
demand
Reputational
Damage
Legal risks
TRANSITIONAL
RISKS
Risk Detail
Mitigation and opportunities
Table 1 – Climate Change Risks
10
MOUNT GIBSON IRON LIMITED 2024 Annual Report
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MOUNT GIBSON IRON LIMITED 2024 Annual Report
11
Mount Gibson recognises that it is critical for any
successful mining organisation to have a key
focus on environmental management and
rehabilitation, and on being a responsible
community citizen. These matters drive
towards sustainable outcomes.
Sustainability refers to the conditions under
which humans and nature can coexist in a
productive manner and permit the
environmental, social and economic
requirements of present and future generations.
These considerations remained a core focus for
Mount Gibson during the 2023/24 financial year.
Environment
Mount Gibson places significant emphasis on
environmental management and compliance.
The Company has focused strongly on
continuous improvement and innovation in its
environmental management activities, always
performing in a responsible manner and
ensuring a high standard of environmental
performance and compliance.
Environmental reporting is a core component of
successful environmental management and
many regulatory organisations require extensive
periodic reports, including various Western
Australian Government agencies such as the
Department of Energy, Mines, Industry
Regulation and Safety (DEMIRS), the
Department of Water & Environmental
Regulation (DWER), the Department of
Biodiversity Conservation and Attractions and
the Department of Health. In addition, plans
associated with specific species have been
approved by the Federal Department of
Agriculture, Water and Environment. DWER has
granted approval and licensing of works to allow
construction and operation of facilities on
“prescribed” premises and DEMIRS has granted
approval for Mining Proposals at each of the
Company’s mines.
The Group holds various environmental licences
and authorities, issued under both State and
Federal laws, to regulate its mining and
exploration activities in Australia. Along with
Regulations, these licences include conditions in
relation to specifying limits on emissions into the
environment, rehabilitation of areas disturbed
during the course of mining and exploration
activities, consumption of water, tenement
conditions associated with exploration and
mining, and the storage of hazardous
substances. The Group examines its
performance through detailed monitoring and
reports against these approval conditions
regularly to government. No notices of non
compliance, letters of warning nor any
other materially adverse findings was tabled by
any regulatory authority in relation to the
Group’s operations.
A key reporting obligation is the National
Greenhouse and Energy Reporting Scheme
(NGERS) which provides data on greenhouse
gas emissions and energy production. Diesel
combustion is Mount Gibson’s single largest
source of greenhouse gas emissions from its
mining operations.
Mount Gibson’s latest NGERS report reflects the
current phase of mining and processing
operations at Koolan Island. Total material
movement reduced in step with the reducing
waste-to-ore stripping ratio but haulage
distances increased as the floor of Main Pit
deepened, while total ore sales increased
substantially, in part due to the processing and
sale of previously mined high-grade material
held in stockpiles during the December 2023 half
year period.
Consequently, significant reductions were
recorded during the year with regard to energy
use and greenhouse gas emissions on both a
gross and unit basis. Total energy consumed
reduced by more than 27.5% to 603,433
gigajoules (GJ) in the year resulting in gigajoules
per 100 tonnes of ore sold reducing by 48%
compared with the prior year. Similarly, total
greenhouse gas emissions reduced by over 27%
to 41,574 tonnes CO2-equivalent (tCO2-e)
compared with the prior year. Accordingly, tCO2-
e per 100 tonnes of ore sold reduced by 45%
compared with the prior year. Unit energy
consumption and emissions vary and directly
reflect the waste:ore stripping ratio in the Main
Pit at Koolan Island. Consistent with the mine
plan, the strip ratio will be temporarily higher in
2024/25 reflecting the transition of mining from
the completed western half of the pit to the
eastern half of the pit during the first half of the
financial year.
For details of the Company’s environmental
performance, including emissions data and
other information relating to each site, please
refer to Mount Gibson Iron’s 2024 Sustainability
Report, as published on the Mount Gibson
website.
Community Affairs
Mount Gibson values its relationship with key
stakeholders and works hard to ensure a
clear mutual understanding of its impacts
from current and future operations. To do
this, the Company has an ongoing program of
stakeholder consultation within the
communities near to its mining and
infrastructure operations, and with an
additional emphasis on the recognition of
Traditional Owners and areas of special
heritage and cultural significance.
Mount Gibson’s stakeholders include its
customers, shareholders, employees,
suppliers, landowners, Traditional Owners,
regulators, local governments, interest
groups and the broader community. The
Company works throughout each year with
each of these stakeholder groups, whether
through formal agreements and meetings or
through informal updates, with the level of
consultation dependent on specific
stakeholder interests.
Mount Gibson’s approach is to actively
support its local communities, with a
particular focus on youth and education. In
line with our commitments, Mount Gibson
invested substantially in these areas in the
last 12 months, including through direct
contributions to community organisations,
sponsorships, educational scholarships and
direct support for community events and
initiatives.
For specific details of Mount Gibson Iron’s
community investment activities and
engagement with communities and
stakeholders, including total expenditure and
information relating to each site, please refer to
Mount Gibson Iron’s 2024 Sustainability Report,
as published on the Mount Gibson website.
Environment and Community
12
MOUNT GIBSON IRON LIMITED 2024 Annual Report
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MOUNT GIBSON IRON LIMITED 2024 Annual Report
13
Resources and Reserves
Continued
Competent Persons and Responsibilities
Mineral Resources:
The information in this report relating to Mineral Resources is based on information compiled by Ms Elizabeth Haren, a Competent Person who is a
Fellow and Chartered Professional of the Australasian Institute of Mining and Metallurgy and member of the Australian Institute of Geoscientists. Ms
Haren is employed by Haren Consulting and a consultant to Mount Gibson Iron Limited. Ms Haren has sufficient experience that is relevant to the style
of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012
Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Ms Haren consents to the inclusion in
this report of the matters based on her information in the form and context in which it appears.
Ore Reserves:
The information in this report relating to Ore Reserves is based on information compiled by Mr Brett Morey, a member of the Australasian Institute of
Mining and Metallurgy. Mr Morey is a full-time employee of Mount Gibson Iron Limited and has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012
Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Morey consents to the inclusion in the
report of the matters based on his information in the form and context in which it appears.
For more information, refer to Mount Gibson’s Annual Statement of Mineral Resources and Ore Reserves at 30 June 2024 as released to the ASX on
9 September 2024 and published on the Mount Gibson website.
14
MOUNT GIBSON IRON LIMITED 2024 Annual Report
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MOUNT GIBSON IRON LIMITED 2024 Annual Report
15
Directors’ Report
Your Directors submit their report for the year ended 30 June 2024 for Mount Gibson Iron Limited (Company or Mount Gibson) and
the consolidated group incorporating the entities that it controlled during the financial year (Group).
DIRECTORS
The names and details of the Company’s Directors in office during the financial period and until the date of this report are set out below.
Directors were in office for the entire period unless otherwise stated.
Names, Qualifications, Experience and Special Responsibilities
Lee Seng Hui LLB (Hons)
Chairman, Non-Executive Director
Mr Lee was appointed as a Non-Executive Director on 29 January 2010, Non-Executive Deputy Chairman on 14 December 2012, and
Chairman on 18 February 2014. Mr Lee graduated with Honours from the University of Sydney Law School. Mr Lee is the Chief Executive
and an Executive Director of Allied Group Limited which is listed on the Hong Kong Stock Exchange. He is the Chairman and a Non-
Executive Director of Tian An China Investments Company Limited, and Tian An Medicare Limited. He is also a Non-Executive Director
of APAC Resources Limited, one of Mount Gibson’s substantial shareholders. Mr Lee has not served as a director of any other ASX or
Hong Kong listed companies during the past three years.
Simon Bird B.Acc.Science (Hons) CA, FCPA, FAICD
Lead Independent Non-Executive Director
Mr Bird was appointed as an Independent Non-Executive Director on 23 February 2012. Mr Bird is the Lead Independent Director and
Chairman of the Audit and Financial Risk Committee. Mr Bird is a Chartered Accountant, Fellow of CPA Australia and Fellow of the
Australian Institute of Company Directors. Mr Bird has over 35 years of international corporate experience, including holding the
positions of Finance Director with Xpansiv Limited, General Manager Finance at Stockland Limited, Chief Financial Officer of GrainCorp
Limited, and Chief Financial Officer of Wizard Mortgage Corporation. He was also Chief Executive Officer of ASX-listed King Island
Scheelite Limited, a former Managing Director of ASX-listed Sovereign Gold Limited, a former Chairman of ASX-listed Rawson Resources
Limited and ASX-listed Tubi Group and a former Director of CPA Australia Limited. Mr Bird is the non-executive Chairman of ASX-listed
Maronan Metals Limited and a former Director of ASX-listed Pacific American Holdings Limited.
Alan Jones CA
Independent Non-Executive Director
Mr Jones was appointed as an Independent Non-Executive Director on 28 July 2006 and is the current Chairman of the Nomination,
Remuneration and Governance Committee. Mr Jones is a Chartered Accountant with extensive senior management and board
experience in listed and unlisted Australian public companies, particularly in the construction, engineering, finance and investment
industries. Mr Jones has been involved in the successful merger and acquisition of a number of public companies in Australia and
internationally. He is a Non-Executive Director of Mulpha Australia Ltd, Sun Hung Kai & Co Ltd (Hong Kong), Allied Group Ltd (Hong
Kong) and Air Change International Limited.
Professor Paul Dougas B.Eng (Chem), M.Eng.Science, FAICD, CEng., Hon Fellow Engineers Australia, FATSE
Independent Non-Executive Director
Professor Dougas was appointed as an Independent Non-Executive Director on 16 November 2011 and is Chairman of the Operational
Risk, Sustainability and Contracts Committee. He has over 40 years of design, process, project engineering, managerial, commercial
and corporate experience having commenced his career in the Melbourne & Metropolitan Board of Works before joining engineering
firm Sinclair Knight Merz in 1978. From initial technical roles, he assumed leadership roles in Sydney before returning to Melbourne as
Associate Director and Victorian Branch Manager in 1985. In 1995 he was appointed Managing Director Elect and Director of Marketing
before becoming Chief Executive Officer and Managing Director in 1996. For the following 15 years, he led a significant expansion of
the firm locally and internationally involving more than 50 local and international acquisitions. Professor Dougas was a Non-Executive
Director of ConnectEast Ltd from 2009 until its takeover in September 2011 and was also on the Sinclair Knight Merz Board from 1990
until 2011. He was a Non-Executive Director of Epworth Healthcare from 2012 to 2021 and is a former Chairman of the Global Carbon
Capture and Storage Institute, and Norman, Disney & Young and a former Non-Executive Director of Beacon Foundation and Calibre
Group Limited. Professor Dougas is also a Professorial Fellow in the School of Engineering at Melbourne University.
Ding Rucai
Non-Executive Director
Mr Ding was appointed to the Board on 12 December 2019. Mr Ding is the Chairman and executive director of Hong Kong listed
Shougang Fushan Resources Group Limited (Shougang Fushan). Shougang Fushan is Mount Gibson’s second largest shareholder and
also holds a significant share interest in APAC Resources Limited, Mount Gibson’s largest shareholder. Mr Ding is also a director of
Shougang Holding (Hong Kong) Limited, a company wholly owned by Shougang Group Co., Ltd. A senior engineer with a doctoral
degree in ferrous metallurgy from the University of Science and Technology Beijing, Mr Ding has more than 30 years’ experience in the
steel and coal resources industry, having held a variety of senior management and executive roles since joining the Shougang
organisation in 1989.
16
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Evian Delfabbro B.Eng (Civil), B.Commerce, Dip.Law. (appointed 28 August 2023)
Non-Executive Director
Ms Delfabbro was appointed to the Board on 28 August 2023. As a civil engineer and lawyer, Ms Delfabbro has over two decades of
experience in the commercial property, mining and construction sectors. She is currently a director of a boutique Sydney property
company and a Queensland hard-rock quarrying business. She has previously held senior management roles with former ASX-listed
commercial property company FKP Ltd, Port Bouvard Ltd and Thakral Holdings. Ms Delfabbro holds a Diploma of Law, Bachelor of Civil
Engineering and Bachelor of Commerce from the University of Sydney. Ms Delfabbro does not currently hold any other public directorship
positions.
Russell Barwick Dip.Min.Eng., FAICD, FAusIMM (resigned 23 August 2023)
Independent Non-Executive Director
Mr Barwick was appointed as an Independent Non-Executive Director on 16 November 2011 and was Chairman of the former Operational
Risk and Sustainability Committee. Mr Barwick resigned on 23 August 2023. Mr Barwick is a mining engineer with over 45 years of
technical, operational, managerial and corporate experience in international mining companies covering various commodities. He has
worked for Bougainville Copper Limited (CRA), Pancontinental Mining Ltd (Jabiluka Uranium) and CSR Limited (coal). He spent 16 years
with Placer Dome Asia Pacific in key development, operational and corporate roles in numerous countries culminating in his appointment
as Managing Director of Placer Niugini Ltd. He then served as Managing Director of Newcrest Mining Limited (2000 to 2001). For the
four years to the end of 2006, Mr Barwick was the Chief Operating Officer of Wheaton River Minerals Ltd and Goldcorp Inc., based in
Vancouver, Canada. He was subsequently the Chief Executive Officer of Canada-based Gammon Gold Inc. before returning to Australia
in 2008. He is a former non-executive director of Regis Resources Limited and more recently a retired non-executive director of ASX-
listed Lithium Power International and Chairman of its unlisted associate company of Minera Salar Blanco S.A. (Chile). Mr Barwick is
currently the Chairman of ASX-listed Red Metal Limited.
Andrew Ferguson
Alternate Director to Lee Seng Hui
Mr Ferguson was appointed Alternate Director to Lee Seng Hui on 24 September 2012. Mr Ferguson is Chief Executive Officer and an
Executive Director of APAC Resources Ltd, one of Mount Gibson’s substantial shareholders. Mr Ferguson holds a Bachelor of Science
Degree in Natural Resource Development and worked as a mining engineer in Western Australia in the mid 1990’s. He has over 20 years
of experience in the finance industry specialising in global natural resources. In 2003, Mr Ferguson co-founded New City Investment
Managers in the United Kingdom. He was the former co-fund manager of City Natural Resources High Yield Trust, and managed New
City High Yield Trust Ltd and Geiger Counter Ltd. He has also worked as Chief Investment Officer for New City Investment Managers
CQS Hong Kong.
COMPANY SECRETARY
David Stokes B.Bus, LLB, ACIS
Company Secretary & General Counsel
Mr Stokes was appointed Company Secretary and General Counsel on 2 April 2012. He is a corporate lawyer with a diverse range of
mining, commercial and governance experience having worked at a corporate and operational level in the energy and resources sectors
for over 20 years. Prior to joining Mount Gibson, Mr Stokes was General Counsel and Company Secretary at Gindalbie Metals Limited,
Corporate Counsel for Iluka Resources Limited and Resolute Mining Limited, and has also worked in private practice for a number of
years.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
17
CORPORATE INFORMATION
Corporate Structure
Mount Gibson is a company limited by shares that is incorporated and domiciled in Australia. It is the ultimate parent entity and has
prepared a consolidated financial report incorporating the entities that it controlled during the financial year. The structure of the Group
as at 30 June 2024 was as follows:
Nature of Operations and Principal Activities
The principal activities of the entities within the Group during the year were:
x
mining, processing and direct shipment of hematite iron ore at the Koolan Island mine site in the Kimberley region of Western
Australia;
x
treasury management; and
x
the pursuit of mineral resources acquisitions and investments.
Employees
The Group employed 389 employees (excluding contractors) as at 30 June 2024 (2023: 371 employees).
OPERATING AND FINANCIAL REVIEW
Introduction
The Board presents the 2023/24 Operating and Financial Review which has been prepared to provide shareholders with a clear and
concise overview of Mount Gibson’s operations, financial position and business strategies. This review also provides a summary of the
impact of key events which occurred in 2023/24 and the material business risks so that shareholders can make an informed assessment
of the results and prospects of the Group.
The review complements Mount Gibson’s financial statements for the year ended 30 June 2024 and has been prepared in accordance
with Regulatory Guidance 247 published by the Australian Securities and Investments Commission (ASIC).
Overview of the 2023/24 Financial Year
The 2023/24 financial year was an extremely positive one for Mount Gibson from an operating and financial perspective, generating
significant increased cashflow and cash reserves as a result of increased high-grade ore sales from Koolan Island.
The Group recorded a profit before tax and impairments of $211,554,000 compared with $105,858,000 in the prior year. After non-cash
impairment expenses totalling $159,100,000 and derecognition of deferred tax assets totalling $30,228,000, the Group recorded a net
profit after tax of $6,430,000 for the year ended 30 June 2024, compared with $5,179,000 in the prior financial year.
During the financial year ended 30 June 2024, the Company’s primary focus was on continued operational improvement at Koolan Island
to generate consistent high grade iron ore sales and operating cashflows. The Mid-West operations were divested to Fenix Resources
Limited (Fenix) in July 2023 in accordance with terms agreed late in the prior financial year, as previously reported.
18
MOUNT GIBSON IRON LIMITED 2024 Annual Report
The pre-impairment results reflected a strong operational performance at Koolan Island, particularly in the first half of the year during
which the Company successfully monetised high-grade ore stockpiles exceeding 1.0 Million wet metric tonnes (Mwmt) that had been
generated in the prior year while repairs were completed to the processing plant damaged by fire in August 2022. These ore stockpiles
were depleted by late 2023, after which processing and sales were more closely aligned with ore extraction from Main Pit. As anticipated,
production and sales in the June 2024 half-year were lower than in the prior half, reflecting the stockpile depletion, the planned
completion of mining in the deeper western half of Main Pit by period end, and some resequencing of production in the upper eastern
end of the pit following the August 2023 footwall rockfall.
Ore mining for the year totalled 3.7 Mwmt, compared with 4.0 Mwmt in the prior financial year, while Group ore sales increased by 36%
to 4.1 Mwmt grading 65.3% Fe – near the upper end of the Company’s annual guidance - compared with 3.0 Mwmt in the prior financial
year. Ore sales revenue totalled $667,678,000 Free on Board (FOB) at an average realised price of US$109 per dry metric tonne (dmt)
for Koolan Island’s high-grade fines. This compared with revenue of $450,586,000 FOB in the prior year at an average realised price of
US$103/dmt FOB.
Iron ore prices were volatile during the year amid continued global geopolitical tension and economic uncertainty. The benchmark Platts
62% Fe CFR price (including shipping freight) averaged US$119/dmt in 2023/24 compared with US$110/dmt the prior year, but
fluctuated significantly over the 12-month period, particularly in the June half-year. The price started the year at US$111/dmt and rose
to over US$140/dmt in the first half, before retreating and briefly dipping below US$100/dmt in April 2024 and ending the year at
US$107/dmt. Of more relevance to Mount Gibson, the Platts CFR fines price for high-grade 65% Fe fines was similarly volatile and
averaged US$131/dmt for the year compared with US$124 in the prior year. This equated to an average grade-adjusted premium of
5% per contained metal unit compared with 62% Fe fines, slightly lower than the premium of 7% in the prior year. Price volatility,
particularly in the second half, was partly offset by the weaker Australian dollar which averaged US$0.656 for the year compared with
US$0.673 in 2022/23.
The total cost of sales for 2023/24 including cash and non-cash costs plus royalties, was $491,417,000 on a FOB basis, equating to
$120/wmt FOB, compared with $338,394,000 FOB including royalties, equating to $112/wmt FOB, in the prior year.
Total cash reserves, comprising cash and cash equivalents, term deposits and financial assets held for trading excluding the Fenix
investment, increased by $279,872,000 over the year to $442,287,000, reflecting increased sales, higher realised prices and lower cash
unit costs, particularly in the first half of the year. The period end cash and investment reserves balance excluded the value of the 60
million shares and 25 million options in Fenix received as part consideration for the divestment of the Mid-West assets. At period end
the Company’s 8.6% shareholding and additional optionholding in Fenix were valued at a total of $20,745,000.
Operating Results for the Financial Year
The summarised operating results for the Group for the year ended 30 June 2024 are tabulated below:
Year ended:
30 June 2024
30 June 2023
30 June 2022
30 June 2021
30 June 2020
Net profit/(loss) before tax
$’000
52,454
30,453
(248,241)
92,133
120,717
Taxation benefit/(expense)
$’000
(46,024)
(25,274)
74,125
(28,127)
(36,519)
Net profit/(loss) after tax
$’000
6,430
5,179
(174,116)
64,006
84,198
Earnings/(loss) per share
cents/share
0.53
0.43
(14.55)
5.46
7.35
Koolan Island
The Koolan Island mine is located in the Buccaneer Archipelago, approximately 140km north of Derby, in the Kimberley region of
Western Australia. Significant operational progress continued to be achieved at Koolan Island during the year as the benefits of
previously completed bulk waste stripping, upper footwall ground support programs and processing plant repairs were realised.
Mining
Mine performance reflected a significant reduction in the waste-to-ore stripping ratio in the Main Pit and the planned completion of
mining in the Western end of the pit. Total ore and waste moved was 5.9 Mwmt, including 3.7 Mwmt of ore, compared with total
movement of 12.9 Mwmt, including 4.0 Mwmt of ore, in the prior year. This reflected a significantly reduced average stripping ratio of
0.6 tonnes of waste for every tonne of ore mined in 2023/24 compared with 2.2:1 in the prior year. The stripping ratio is a key driver
of operating costs at Koolan Island and although it will rise in the coming year in line with haul ramp repositioning and waste extraction
cycles, it is currently anticipated to average approximately 1.8:1 over the remaining 2-3 year mine life.
Ore production in the period primarily came from the western end of the Main Pit, and some upper benches in the upper eastern end
of the pit where production was re-sequenced and brought forward following the rockfall on the central footwall (island-side) in August
2023. As previously reported, the event was detected in advance by the site’s continuous radar monitoring systems and no people or
equipment were placed at risk. The area was not being actively mined at the time, and an exclusion zone was established in the area
to allow geotechnical assessment to be undertaken while operations continued elsewhere in Main Pit. Ground support remediation
activities commenced in the June 2024 quarter to enable future extraction of the underlying high grade iron ore in that location. This
work comprises a sequenced program of on-wall drilling and grouted rock-bolting, plus the installation of protective mesh and a safety
barrier fence to enable the high-grade ore zones directly beneath this area to be safely extracted.
Mining in the western end of the Main Pit was completed in June 2024, at a planned final depth of approximately 170 metres below sea
(mean tide) level. A water collection sump has now been established in the western end to assist in efficient water management and
discharge from the Main Pit. Mining operations are now transitioning to the central and eastern parts of the Main Pit, involving a
reconfiguration of the primary haul ramp. The transition work will occur during the September 2024 quarter in which shipment rates
and cargo grades will be temporarily reduced. Sales for FY25 are targeted at 2.7-3.0 Mwmt reflecting these transitioning activities and
ground support work necessary for mining and shipping rates to increase through FY25 and the following year.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
19
Processing
Processing volumes increased by 12% over the year to 4.0 Mwmt, compared with 3.6 Mwmt the prior year, weighted to the December
2023 half year in which the Company processed the substantial high-grade ore stockpiles generated in the preceding financial year.
The ore stockpiles were depleted by late December 2023 with processing through the plant being supplemented by a mobile crushing
contractor. Since then processing has been more closely aligned with ex-pit ore production which will continue over the remaining mine
life. In order to process on a more efficient and cost-effective basis, the harder oversized material expected to be mined from the
central and eastern areas of the Main Pit, the Company committed to invest $8.0 million on installation of a tertiary crushing circuit. At
the end of the financial year, work was nearing completion with commissioning anticipated in the September 2024 quarter.
Sales
Koolan Island ore sales for 2023/24 totalled 4.1 Mwmt, near the upper end of the Company’s sales guidance of 3.8–4.2 Mwmt. This
reflected record sales of 2.5 Mwmt in the December 2023 half year, during which the Company had the benefit of monetising its high
grade ore stockpiles, with sales in the June 2024 half year more closely aligned with ore extraction from the Main Pit.
Sales from Koolan Island are made under long term offtake agreements on FOB terms, with pricing referencing high grade (65% Fe)
market indices and Panamax shipping freight rates, specification adjustments and penalties for impurities. Provisional prices are
recorded following shipment departure and the final pricing ultimately reflects monthly iron ore price averages up to two months after
the month of shipment. Accordingly, the Company is subject to provisional pricing adjustments in current and subsequent periods.
Realised Pricing
As indicated above, the Koolan Island operation benefited from generally higher iron ore prices and a weaker Australian dollar,
particularly in the December 2023 half year. Significant price volatility in the June 2024 half year resulted in substantial adverse
provisional price adjustments, totalling $29 million in the June 2024 quarter, as iron ore prices weakened. Koolan Island fines, grading
65.3% Fe, realised an average price of US$109/dmt FOB in the reporting period compared with US$103/dmt in the prior corresponding
year. Shipping freight rates for Koolan Island to Chinese ports remained relatively steady compared with the prior year and averaged
approximately US$13-14/wmt in FY24.
Financial Results
Koolan Island generated a profit before interest, tax and impairments of $181,270,000 in the financial year, compared with $118,418,000
in the prior corresponding year. After impairment expenses totalling $159,100,000 ($74,300,000 in the prior year), Koolan Island
generated a profit before interest and tax of $22,170,000 ($44,118,000 in the prior year).
Operating cashflow generated from Koolan Island for the year totalled $284,324,000 compared with $95,252,000 in the previous year.
The improvement reflected increased ore sales volumes, higher realised prices and reduced unit cash costs, as well as the benefit of
the sale of previously mined high-grade ore stockpiles in the December 2023 half-year. Revenues for the year totalled $667,678,000,
with the outflow items being cash operating and capital costs ($319,261,000) and royalties ($64,093,000).
Koolan Island’s unit cash operating costs before royalties and capital projects were $74/wmt sold FOB for the year, approximately 4%
lower than the average cash operating cost of $77/wmt sold FOB in the prior year (before inventory build, major project costs and
royalties).
20
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Production and shipping statistics for Koolan Island for the 2023/24 financial year are tabulated below:
Koolan Island
Production Summary
Unit
Sept
Quarter
2023
Dec
Quarter
2023
Mar
Quarter
2024
Jun
Quarter
2024
Year
2023/24
Year
2022/23
% Incr/
(Decr)
Mining
Waste mined (incl. rehandle)
‘000 wmt
692
736
425
339
2,192
8,886
(75)
Ore mined
‘000 wmt
1,046
904
1,081
716
3,747
3,996
(6)
Total material movement
‘000 wmt
1,738
1,640
1,506
1,055
5,939
12,882
(54)
Stripping ratio
Waste:Ore
0.7
0.8
0.4
0.5
0.6
2.2
Processing (crushing)
Fines
‘000 wmt
960
897
701
678
3,236
3,603
(10)
Lump
‘000 wmt
238
199
177
190
805
-
-
Total ore crushed
‘000 wmt
1,198
1,096
878
868
4,040
3,603
12
Shipping/Sales
Fines
‘000 wmt
1,331
1,113
711
872
4,027
3,028
33
Lump
‘000 wmt
-
81
-
-
81
-
-
Total ore shipped
‘000 wmt
1,331
1,194
711
872
4,108
3,028
36
Average ore grade sold
% Fe
65.5
65.3
65.4
65.2
65.3
65.3
Average Platts 62% Fe CFR
price
US$/dmt
114
128
124
112
119
110
Average Platts 65% Fe CFR
price
US$/dmt
125
139
136
126
131
123
Koolan FOB fines price
(pre-adjustment)
US$/dmt
105
109
123
103
109
108
Provisional pricing adjustments
US$/dmt
-
19
1
(22)
1
(5)
Koolan FOB fines price
(after adjustment)
US$/dmt
105
128
124
81
110
103
Minor discrepancies may occur due to rounding.US$/dmt = USD per dry metric tonne
CFR = cost and shipping freight included; FOB = free on board (i.e. shipping freight deducted).
Koolan iron ore prices are shown on a FOB basis after shipping freight and specification penalties. Provisional pricing adjustments reflect realised
(in-period) adjustments and, for half-year and annual reporting periods, estimates (if material) of unrealised adjustments for those shipment cargoes
with future pricing periods, based on post-balance date observed prices. Final pricing ultimately reflects monthly iron ore price averages up to two
months after the shipment date.
For the purpose of wet to dry tonnage conversion, moisture content typically averages approximately ~3% for Koolan Island iron ore products.
Mid-West Operations
The Company has ceased to operate the Mid-West as a separate segment since completion of the divestment of most of its former
Mid-West iron ore mining and infrastructure assets to Fenix in July 2023, which was previously reported as a subsequent event in the
Company’s financial accounts for the 2022/23 financial year. The assets sold to Fenix comprised Mount Gibson’s mining rights and other
obligations at the suspended Shine iron ore mine near Yalgoo, the closed hematite iron ore mine at Extension Hill near Perenjori, rail
sidings at Perenjori and Mullewa, two bulk materials storage sheds at Geraldton Port and various items of plant and equipment. Fenix
also assumed the rehabilitation and other contractual obligations associated with these assets, which at the time of sale were provisioned
by Mount Gibson at $8,229,000.
Consideration for the divestment comprised $10,000,000 in cash, 60 million Fenix shares and 25 million 5-year options in Fenix,
exercisable in two equal tranches at $0.25 and $0.30 each respectively. At the end of the reporting period, the value of Mount Gibson’s
8.6% shareholding and optionholding in Fenix was $20,745,000.
The Company has retained its mining and exploration interests in the historic Tallering Peak mining area, to the north of which it
continues to explore prospective ground for base metals mineralisation, together with its Fields Find exploration interest.
Additionally, Mount Gibson retained its rights to the long-standing historical rail credit refund resulting from third party use of certain
parts of the Mid-West rail network. Following achievement of a contractual rail volume threshold at Extension Hill during the 2017/18
financial year, the Group earned an entitlement to receive a partial refund of historical rail access charges from the Mid-West rail
leaseholder, Arc Infrastructure, based upon the future usage by third parties of specific segments of the Perenjori to Geraldton railway
line. This entitlement commenced upon termination of the Group’s then existing rail agreements in early 2019, and was calculated at
various volume-related rates, and capped at a total of approximately $35,000,000 (subject to indexation) and a time limit expiring in
2031. The contractual cumulative cap of this credit refund was reached in the year, with the final credit amount of $1,876,000 reflected
in revenue.
Financial Position
The Group’s cash and cash equivalents, term deposits and financial assets held for trading totalled $442,287,000 at 30 June 2024, an
increase of $279,872,000 from the balance at 30 June 2023 of $162,415,000.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
21
Cashflow Summary
Koolan Island
Corporate &
Other
Total
$’000
$’000
$’000
Operating cashflow before royalties and capital expenditure
411,815
10,833
422,648
Royalties
(64,093)
-
(64,093)
Capital expenditure:
Mine development (including ground support activities)
(27,352)
-
(27,352)
Tertiary crusher project
(7,816)
-
(7,816)
Sustaining capital, equipment purchase, exploration and other
(28,230)
(1,057)
(29,287)
284,324
9,776
294,100
Realised net hedging loss
(3,629)
Tax paid
(2,149)
Other financing activities and net working capital movements
(8,450)
Total movement in cash and investment reserves in the period
279,872
Minor discrepancies may appear due to rounding.
Mount Gibson does not have bank borrowings.
As at balance date, the Company’s current assets totalled $529,913,000 and its current liabilities totalled $60,549,000. Accordingly, as
at the date of this report, the Group has sufficient funds in addition to access to further equity and debt funding to maintain its existing
operations and to advance its growth objectives.
Insurance
In relation to the August 2022 processing plant fire at Koolan Island, the Company’s property damage and business interruption
insurance cover responded to the incident. The property damage claim totalled $10,402,000 after deductible, of which the majority
was received in the 2022/23 financial year with the balance of $2,683,000 received during the 2023/24 financial year. The business
interruption claim resulting from the fire incident was in the process of being finalised with insurers at year end and has subsequently
been agreed for the amount of $27,270,000 after deductible. It is anticipated the business interruption claim proceeds will be received
in the first quarter of the 2024/25 financial year.
In late December 2023, the Federal Court issued its judgment regarding a long-standing historical claim by the Group against a former
insurer arising from the 2014 failure of the Koolan Island Main Pit seawall. The judgment found in favour of the Company’s reduced
claim amount which was not material.
Derivatives
As at 30 June 2024, the Group held foreign exchange collar option contracts covering the conversion of US$15,000,000 into Australian
dollars over the period July 2024 to September 2024 with an average cap price of A$1.00/US$0.6750 and an average floor price of
A$1.00/US$0.6275. These collar contracts had a marked-to-market unrealised net gain at balance date of A$198,000.
During the period, the Group also entered into commodity forward sales contracts totalling 595,000 tonnes of iron ore at prices of A$175
to A$195 per tonne (CFR, including shipping freight), with maturity dates over the period October 2023 to June 2024. Realised gains
and losses on these contracts are reflected in revenue.
Impairment
As disclosed in the Company’s financials for the year ended 30 June 2024, an impairment expense has been recorded as a result of
recent weaker iron ore prices impacting the recoverable carrying values of the Koolan Island non-current assets. The Group has recorded
a total impairment expense of $159,100,000 before tax, comprising impairments of deferred stripping costs ($61,950,000), other mine
properties ($59,518,000) and property, plant and equipment ($37,632,000). These expenses have the effect of bringing forward
non-cash depreciation and amortisation charges that would otherwise be incurred in future periods.
Derecognition of Deferred Tax Asset
In accordance with applicable accounting standards, the amount of $30,228,000 of the existing deferred tax asset relating to carried
forward tax losses and temporary timing differences has been derecognised and is included in the Group’s tax expense for the year
ended 30 June 2024. This accounting treatment does not impact the income tax position in which the Company retains the right to
utilise available carried forward tax losses and temporary timing differences.
22
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Exploration and Business Development
Mount Gibson continues to pursue potential investment opportunities consistent with the Company’s objective to extend and grow its
business into new operations, targeting opportunities in the bulk commodities (iron ore, steel-making coal and bauxite) and base metals
(copper, lead, zinc) sectors, primarily in Australia. Equity positions with a combined market value of $18,538,000 at balance date were
held in a small number of junior resource development companies where it is considered that future financing or strategic opportunities
may arise. Significant time is being devoted to new project generation, site visits and discussions with third parties with regard to
further potential acquisition and partnering opportunities.
The Company also continues to assess regional exploration opportunities for base metals deposits particularly in Western Australia and
Queensland. In WA’s Mid-West region, the Company completed substantial follow-up work at the Baillys prospect near Mount Gibson’s
former Tallering Peak iron ore mine, including a ground moving loop electromagnetic survey, as well as continuing a data review and
planning additional mapping at the Butchers Track project north of Tallering Peak. Negotiations also continued regarding potential
farm-in and joint venture arrangements to prospective base metals exploration projects in the WA Goldfields region.
Likely Developments and Expected Results
Mount Gibson’s overall objective is to maintain and grow long-term profitability through the discovery, development, operation and
acquisition of mineral resources. As an established producer and seller of hematite iron ore, Mount Gibson’s strategy is to grow its
profile as a successful and profitable supplier of raw materials.
The Board’s corporate objective is to grow the Company’s cash reserves and continue to pursue an appropriate balance between
shareholder distributions and the retention and utilisation of cash reserves for value-accretive investments. The Board has determined
the following key business objectives for the 2024/25 financial year:
•
Safety and Environment – continue the ongoing safety improvement focus on the Company’s worksites, the high standard of
environmental and rehabilitation activities and pursuit of appropriate carbon reduction initiatives.
•
Koolan Island – safely transition production to the eastern half of Main Pit to sustain production of high-grade iron ore and
maximise sales and cashflow over the remaining life of the operation.
x
Cost reductions – continue to drive for sustainable productivity and cost improvements across all business units.
•
Treasury management – responsibly manage the Group’s cash and financial reserves.
•
Growth – accelerate the search for resource acquisition and growth opportunities.
Group Sales Guidance
Mount Gibson is targeting total iron ore sales of 2.7–3.0 Mwmt of high-grade ore from its Koolan Island operation in the 2024/25
financial year, at a unit cash operating cost of $95-$100/wmt including deferred waste and before royalties. The annual guidance reflects
mining activities in the Koolan Island Main Pit, including the works required to reposition the haul ramp and footwall remediation ground
support activities which are necessary for mining and shipping rates to increase through 2024/25 and the following year.
DIVIDENDS
There were no dividends paid during the year ended 30 June 2024 (2023: $nil).
The Company has not declared a dividend for the year ended 30 June 2024.
SIGNIFICANT EVENTS AFTER BALANCE DATE
Subsequent to year end, the business interruption insurance claim resulting from the Koolan Island processing plant fire in August 2022
has been finalised with insurers for the negotiated amount of $27,270,000 after deductible. It is anticipated the business interruption
claim proceeds will be received in the first quarter of the 2024/25 financial year.
On 9 August 2024, the Company made a payment of $3,125,000 to exercise 12,500,000 options at $0.25 per option held in Fenix.
Subsequent to year end, the Board of Directors has approved an on-market share buy-back of up to 5% of the Company’s issued shares
as part of the its capital management strategy.
Other than the above, as at the date of this report there are no significant events after balance date of the Company or of the Group
that require adjustment of or disclosure in this report.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
23
INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITORS
The Company has, during current or previous financial periods, entered into deeds of access and indemnity with its Directors and
Officers. These deeds provide access to documentation and indemnification against liability for loss suffered, as a result of any act or
omission, to the extent permitted by the Corporations Act 2001, from conduct of the Group’s business.
During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company, the Company
Secretary and all Executive Officers of the Company and of any related body corporate against a liability incurred as such a Director,
Company Secretary or Executive Officer to the extent permitted by the Corporations Act 2001.
The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the
directors’ and officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms of the contracts.
The Company has agreed to indemnify its auditors, EY, to the fullest extent possible as part of the terms of its audit engagement
agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify
EY during or since the financial year.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or
agreed to indemnify an officer or auditor of the Company or any related body corporate against a liability incurred as such an officer or
auditor.
SHARE OPTIONS, PERFORMANCE RIGHTS AND RESTRICTED SHARES
There were no options exercised or forfeited during the financial year or prior to the date of this Report. There are no options over
ordinary shares in the Company on issue as at balance date and as at the date of this Report.
There were no Performance Rights vested and exercised during the year. There are no Performance Rights on issue as at balance date
and as at the date of this Report.
On 14 December 2023, the Company issued 1,952,900 restricted shares (which included 1,488,500 shares reallotted) as part of its
Executive Loan Share Plan. There were 10,630,500 restricted shares on issue at balance date and, following an issue made after balance
date, there are 14,102,300 restricted shares on issue under the Loan Share Plan as at the date of this report. During the year, there
were no restricted shares vested in accordance with their issue conditions.
Refer to the Remuneration Report for further details of shares outstanding.
DIRECTORS’ INTERESTS IN THE SHARES, OPTIONS AND PERFORMANCE RIGHTS OF THE COMPANY
As at the date of this report, the interests of the Directors in the Shares and Options of the Company were:
Ordinary Shares
Options over Shares
Performance Rights
over Shares
SH Lee(i)
-
-
-
A Jones
-
-
-
S Bird
51,899
-
-
P Dougas
796,602
-
-
E Delfabbro
-
-
-
R Ding
-
-
-
A Ferguson (Alternate for Mr Lee)
-
-
-
(i)
For the purposes of Corporations Act Regulation 2M.3.03(1)-Item 18, Mr Lee does not have a disclosable shareholding. However, we note that for purposes of
ASX Listing Rule 3.19A.2, Mr Lee has previously declared an indirect “relevant interest” in 452,767,297 ordinary shares in the Company through his association
with Allied Group Limited, a substantial shareholder of the Company – refer ASX announcement dated 7 October 2021.
DIRECTORS’ MEETINGS
The number of meetings of Directors (including meetings of Committees of Directors) held during the year and the number of meetings
attended by each Director were as follows:
Directors’
Meetings
Audit and Risk
Management
Committee
Meetings
Nomination,
Remuneration and
Governance
Committee
Operational
Risk,
Sustainability, and
Contracts
Committee
Number of Meetings Held
5
4
4
4
SH Lee
5
1*
3
-
A Jones
5
4
4
-
S Bird
5
4
-
4
P Dougas
5
-
3*
4
R Ding
5
-
-
-
E Delfabbro (appointed 28 August 2023)
4*
3*
-
4
R Barwick (resigned 23 August 2023)
1
-
-
-
A Ferguson (Alt. for Mr Lee)
-
-
-
-
*Committee appointments were restructured in August 2023. Each Director has attended every Committee meeting relevant to their period of appointment.
24
MOUNT GIBSON IRON LIMITED 2024 Annual Report
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group has developed Environmental Management Plans for its various operating and development sites. The Environmental
Management Plans have been approved where applicable by various Western Australian Government agencies including the Department
of Energy, Mines, Industry Regulation and Safety (DEMIRS), the Department of Water & Environmental Regulation (DWER), the
Department of Biodiversity Conservation and Attractions and the Department of Health. In addition, plans associated with specific
species have been approved by the Federal Department of Agriculture, Water and Environment.
DWER has granted approval and licensing of works to allow construction and operation of facilities on “prescribed” premises and DEMIRS
has granted approval for Mining Proposals at each of the mines.
The Group holds various environmental licences and authorities, issued under both State and Federal laws, to regulate its mining and
exploration activities in Australia. Along with Regulations, these licences include conditions in relation to specifying limits on emissions
into the environment, rehabilitation of areas disturbed during the course of mining and exploration activities, consumption of water,
tenement conditions associated with exploration and mining, and the storage of hazardous substances. The Group examines its
performance through detailed monitoring and reports against these approval conditions regularly to government. No notices of
non-compliance, letters of warning nor any other materially adverse findings was tabled by any regulatory authority in relation to the
Group’s operations. The Group continues to report under the National Greenhouse and Energy Reporting (NGER) Act 2009. Diesel
consumption is the Group’s single largest source of greenhouse gas emissions as it is combusted in vehicles and power generators.
PROCEEDINGS ON BEHALF OF THE COMPANY
There are no proceedings on behalf of the Company under section 237 of the Corporations Act 2001 in the financial year or at the date
of this report.
ROUNDING
Amounts in this report and the accompanying financial report have been rounded to the nearest thousand dollars ($’000) unless
otherwise stated under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Report)
Instrument 2016/191. The Company is an entity to which the instrument applies.
CURRENCY
Amounts in this report and the accompanying financial report are presented in Australian dollars unless otherwise stated.
CORPORATE GOVERNANCE
The Company’s Corporate Governance Statement is contained in the Additional ASX Information section of the Annual Report.
AUDITOR’S INDEPENDENCE DECLARATION
In accordance with section 307C of the Corporations Act 2001, the Directors received the attached Independence Declaration from the
auditor of the Company on page 21 which forms part of this Report.
NON-AUDIT SERVICES
The Directors are satisfied that the provision of non-audit services (where provided) is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. There were no non-audit services provided by EY during the financial
year ended 30 June 2024.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
25
REMUNERATION REPORT (AUDITED)
Introduction
This Remuneration Report outlines the remuneration arrangements in place for Directors and Key Management Personnel of the Group
in accordance with the requirements of the Corporations Act 2001 and its Regulations.
For the purposes of this report Key Management Personnel of the Group are defined as those persons having authority and responsibility
for planning, directing and controlling the major activities of the Group, directly or indirectly, including any directors of the Company
and its subsidiaries.
The 2023 Remuneration report was approved by 97.8% of shareholders voting at the Annual General Meeting of Shareholders held on
15 November 2023. For 2024, the Board has adopted a similar approach to the 2023 Remuneration Report relating to disclosure of STI
and LTI metrics and vesting as detailed below.
Nomination, Remuneration and Governance Committee (NRGC)
The NRGC comprises two independent Non-Executive Directors, being Messrs Jones (Chairman) and Dougas, and one non-independent
Non-Executive Director, being Mr Lee, the Chairman of the Board.
The NRGC is responsible for overseeing the remuneration arrangements for the Board and Key Management Personnel.
The NRGC assesses the appropriateness of the nature and amount of remuneration of Key Management Personnel on a periodic basis
by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the
retention of a high quality, high performing Board and executive team.
Remuneration Policy
The Remuneration Policy of the Group has been put in place to ensure that:
remuneration policies and systems support the Company’s wider objectives and strategies;
Directors’ and senior executives’ remuneration is aligned to the long-term interests of shareholders within an appropriate control
framework; and
there is a clear relationship between the executives’ performance and remuneration.
Remuneration Structure
In accordance with best practice corporate governance, the structure of Non-Executive Director and senior executive management
remuneration is separate.
Non-Executive Director Remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of
the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined
from time to time by a general meeting of shareholders. An amount not exceeding the amount determined is then divided between the
Non-Executive Directors as agreed. The latest determination was at the Annual General Meeting held on 16 November 2011 when
Shareholders approved an aggregate remuneration of $1,250,000 per year. Total Non-Executive Director fees of $611,193 were
paid/payable in the 2023/24 financial year.
Each Non-Executive Director receives a fee for being a Director of the Company.
Non-Executive Directors should be adequately remunerated for their time and effort and the risks involved. Non-Executive Directors
are remunerated to recognise the responsibilities, accountabilities and associated risks of Directors.
Each Non-Executive Director’s performance and remuneration is reviewed on an annual basis by the Chairman and NRGC.
Non-Executive Directors’ fixed remuneration comprises the following elements:
cash remuneration; and
superannuation contributions made by the Company.
Board operating costs do not form part of Non-Executive Directors’ remuneration.
26
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Senior Executives’ Remuneration
Objective
The Company aims to reward senior executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Company and so as to:
reward senior executives for Company and individual performance contributing towards key Company objectives;
align the interests of senior executives with those of shareholders;
link reward with the strategic goals and performance of the Company;
be appropriately structured given the remaining mine life of the Company’s key operating asset; and
ensure total remuneration is competitive by market standards.
Use of Remuneration Consultants
The NRGC from time to time seeks advice from independent remuneration consultants regarding senior executives’ remuneration
structures and levels. Such consultants are engaged by, and report directly to, the NRGC, and are required to confirm in writing their
independence from the Group’s senior and other executives. No remuneration consultants were engaged during the year.
Fixed Remuneration
The components of the senior executives’ fixed remuneration are determined individually and may include:
cash remuneration;
statutory superannuation;
employee death, disability and salary continuance insurances;
accommodation and travel benefits;
motor vehicle, parking and other benefits; and
reimbursement of entertainment, home office and telephone expenses.
The senior executives’ remuneration is reviewed on an annual basis by the Chief Executive Officer, whose own remuneration and
recommendations for other senior executives’ remuneration is reviewed annually by the NRGC.
In determining the remuneration package, the NRGC reviews the individual’s remuneration with the use of market data for positions
with comparable companies. Where appropriate, the package is adjusted so as to keep pace with market trends and ensure continued
remuneration competitiveness, which includes conducting a comparative analysis. The Company seeks to position the overall fixed
remuneration for senior management at around the 50th (median) percentile level when compared to its peers for equivalent positions.
Variable Remuneration
Short-term Incentives (STI)
Senior executives may receive variable remuneration in the form of STI of up to 50% of their annual fixed remuneration package
(comprising salary and statutory superannuation). STI payments are based on the Board’s assessment of the executive’s performance
towards achieving key Company objectives over the relevant period.
On an annual basis, the performance of each senior executive is reviewed immediately prior to or just after the reporting date. The
NRGC then determines the amount of STI to be allocated to each executive with approval from the Board. The total potential STI
available for award is ultimately at the Board’s discretion. Payments are made in cash after the reporting date. Where an executive
resigns during or after the relevant financial year, it remains at the discretion of the Board as to whether any of the STI is payable for
the relevant financial year. However, STI's are generally not paid upon resignation of an executive unless there are exceptional
circumstances.
The focus for the 2023/24 financial year was on the Company's operational safety and environmental performance and on achieving the
annual budget outcomes related to safety, sales, costs and cashflow generation. The executive STI targets have been selected with
the objective of achieving the Company’s operational performance and financial outcomes at a group and individual level.
The Board assessed the Company’s and senior executives’ performances based on the actual results achieved to the end of May 2024
and forecasts for the month of June 2024. The Board also exercised its discretion taking into account the individual efforts of senior
executives over the period.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
27
The outcomes of the target reviews for the 2023/24 financial year are summarised in the following table:
Area
Description/KPI
Weighting
Actual Achievements
1. Environment,
Social and
Governance
(ESG)
No critical incidents,
compliance (minimal
reported issues) and
innovations
15%
x Targets achieved or exceeded.
x No critical environmental incidents incurred, and good timely
reporting and regulatory relationships well maintained.
x Continuation of long range mine closure planning and the receipt of
associated approvals. Testing panels established for reduced-cost
siltstone ground cover applications to achieve required revegetation
outcomes, with further efficiencies targeted.
x Transfer of Mid-West environmental approvals as part of the
Mid-West asset divestment, extinguishing the Company’s
rehabilitation liabilities on the divested assets.
x Implementation of emissions reduction initiatives underway, including
through the installation of hybrid hydrogen units, with solar power
applications under review. Government grant applications
progressed. Diesel fuel burn substantially reduced in line with mine
plan and primary fleet purchases, and site power-saving initiatives.
x Female employees increased across the organisation from 21% at
30 June 2023 to 24% at 30 June 2024.
x Indigenous employees 14% of Koolan Island workforce.
x Strong relationship with the Dambimangari Traditional Owners.
x Enhancements in risk management processes and reporting.
2. Sales Volumes
Reference to internal
budget estimates and
Company guidance
3.8-4.2 Mwmt
10%
x Achieved near upper end of guidance.
x Shipping totalled 4.1 Mwmt for the year.
3. Cash Costs
Reference to internal
budget estimates and
Company guidance
$65-70/wmt
(excluding royalties
and capital projects)
20%
x Cash costs $74/wmt, approximately 5% above guidance but lower
after adjusting for year-end inventories.
x Aggregate capital expenditure in line with internal forecasts.
4. Earnings and
cashflow
By reference to
budgeted pre-tax
earnings and cashflow
10%
x Achieved.
x Earnings (before tax and impairment charges) well in excess of
internal budget targets.
x Cashflow well in excess of internal budget targets.
x The property damage component of the insurance claim relating to
the August 2022 processing plant fire incident was settled for
$10 million, and the business interruption component is expected to
be settled on acceptable terms in the September 2024 quarter.
5. Business
growth
Acquisition reviews,
equity investments
and exploration
activities
15%
x Significant increase in acquisition opportunities reviewed, in line with
the growth in cash reserves.
x Sale of Mid-West assets successfully completed, resulting in receipt
of cash, shares and options in Fenix Resources Limited, and
assignment of Mid-West rehabilitation liabilities.
x Investments made, with a fair value of $19 million at 30 June 2024
(excluding the share and option holdings in Fenix Resources).
x Exploration activities progressing in the Mid-West.
6. Personal
Performance
Personal leadership,
communications and
technical performance
30%
x This is effectively a Board discretion item having reference to STI
targets and overall business influence and performance.
x Continued demonstrable improvements in safety leadership,
communication and trends. The Lost Time Injury Frequency Rate
(per one million manhours worked, rolling 12 month basis) declined
to zero, and the Total Recordable Injury Frequency Rate declined
from 5.2 to 4.4.
x Detailed individual STI targets are set for each of the executive team
based on leadership behaviours, workplace health and safety
leadership and achievements, environmental performance, revenue
and offtake matters, commercial activities, budgeting and forecasting
competency, financial/treasury management and reporting, human
resources and culture activities, business growth, IT systems,
investor/stakeholder relations, Traditional Owner engagement, risk
management and control, legal compliance and governance matters.
28
MOUNT GIBSON IRON LIMITED 2024 Annual Report
For the 2023/24 financial year, a total STI cash incentive of $750,500 was awarded to Key Management Personnel, representing STI
cash incentives available to Mr Kerr (95% of entitlement), Ms Dobson (85% of entitlement) and Mr Stokes (75% of entitlement). The
amount of the STI is provided for in the Company’s financials for the year and will be paid in September 2024.
For the coming 2024/25 financial year, the Board will follow the STI key performance indicators as set out in the table above and
continue to refine these measures in assessing the STI award of each executive.
Long-term Incentives (LTI)
The Company’s LTI plan, known as the Loan Share Plan (LSP), was established in August 2016. Under the LSP, ordinary shares in the
Company may be issued to eligible participants, with vesting of the shares being subject to the satisfaction of stipulated performance
conditions. Historically the key performance metric for LSP shares vesting has been linked to share price performance based on a 5 day
volume-weighted average price (VWAP) calculation after the first 12 months of issue and within the following 4 year period.
At the time of grant, the shares are issued at their market value with the recipient required to pay this market value in order to take up
the share offer. The Company or any of its subsidiaries will provide a loan to fund the acquisition price. The loan is interest-free and
secured against the shares in the form of a holding lock preventing all dealing in the shares. The loan is limited recourse such that if
the shares do not ultimately vest and are therefore forfeited, this is treated as full repayment of the loan balance. The Board considers
it is appropriate that the loans supporting the award of the LTI shares are limited recourse loans with the recipient’s liability restricted
to the issue price of the shares (adjusted for dividends and other security issues in accordance with the terms of the LTI scheme) rather
than full recourse. A full recourse loan structure effectively acts as a margin loan rather than a reward linked to share price performance.
The Board considers that from a risk/reward perspective, limited recourse loans are to be preferred given the scheme is intended to act
as an incentive to drive executive and Company performance rather than create the risk of a substantial financial burden for the
executive. In a declining market scenario, the overhang of this type of financial burden is not consistent with good governance as it
gives rise to potential conflicts of interests in terms of future decision making and acceptable levels of risk.
Where an executive resigns prior to the vesting of the LSP shares, it remains at the discretion of the Board as to whether any of the
LSP shares remain on issue. If an employee resigns prior to vesting, the LSP shares are forfeited and sold or reallocated into future LSP
or Dividend Reinvestment Plan share issues.
Under the LTI scheme the Board retains the absolute discretion as to how a participant’s unvested LTI shares may be dealt with (if at
all) if there has been a change in control event. This could include waiving vesting requirements but would ultimately depend upon
circumstances relevant to the Board at that time.
While the loan balance remains outstanding, any dividends paid on the shares, net of the tax on the dividends, will be automatically
applied towards repayment of the loan. In making the loan in respect of the newly issued shares, there is no cash cost to the Company
other than the associated ASX listing fees.
The Company has a policy restricting executives from entering into arrangements to protect the value of unvested LTI entitlements
under equity-based remuneration plans.
Since the 2021/2022 financial year, LSP shares have been issued such that they have a two-year vesting period, versus the previous
one year vesting period, during which the relevant executive must remain continuously employed by the Group.
On 14 December 2023, the Company issued 1,952,900 shares (which included 1,488,500 shares reallotted) under the LSP. In
accordance with the terms of the LSP, the shares were issued at a share price of $0.546 per share and pursuant to the vesting conditions,
these shares do not vest unless a share price target of a 10% premium to the issue price is met between 14 December 2024 and
14 December 2028 and the participants remain continuously employed by the Group until at least 14 December 2025.
A summary of the historical status of LSP share awards as at 30 June 2024 is provided in the table below:
Financial
Year
Award
Shares
Vesting Metrics
Term
Status
Forfeited
2023/24
1,952,900
10% Share Price Increase above $0.546 and
minimum 24 months continuous employment
14 December 2023 –
13 December 2028
Unvested
-
2022/23
3,851,000
10% Share Price Increase above $0.436 and
minimum 24 months continuous employment
1 September 2022 –
31 August 2027
Unvested
970,900
2021/22
2,063,100
10% Share Price Increase above $0.931 and
minimum 24 months continuous employment
1 July 2021 – 30 June 2026
Unvested
517,600
2020/21
2,986,400
10% Share Price Increase above $0.617 and
minimum 12 months continuous employment
1 July 2020 – 30 June 2025
Vested
-
2019/20
1,705,800
10% Share Price Increase above $1.03 and
minimum 12 months continuous employment
1 July 2019 – 30 June 2024
Unvested
– Lapsed
1,705,800
2018/19
2,998,351
10% Share Price Increase above $0.443 and
minimum 12 months continuous employment
1 July 2018 – 30 June 2023
Vested
1,074,623
2017/18
No award
-
-
-
-
2016/17
4,749,456
10% Share Price Increase above $0.316 and
minimum 12 months continuous employment
1 July 2016 – 30 June 2021
Vested
-
Note: “10% Share Price Increase” means a 10% share price increase from date of grant - based on a 5 day VWAP – any time after the first 12 months of
the Term.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
29
For the coming 2024/25 financial year, invitations to participants in the LSP awards was made on 3 July 2024. Invitations were based
on similar vesting conditions to the 2023/24 award, namely a share price target of a 10% premium to the issue price and the participant
remaining continuously employed by the Group to 3 July 2026. Any dividends accruing during vesting periods and upon vesting will be
used, net of tax on the dividend, to pay down the 5-year non-recourse LSP loan. The actual issue price and number of shares issued
to participants under the LSP will ultimately be determined based on the 5 trading day VWAP prior to issue. The value of the LSP shares
is $0.1654 per share.
A summary of the 2024 LSP share is provided below
Financial
Year
Award
Shares
Vesting Metrics
Term
Status
Forfeited
2024/25
3,471,800
10% Share Price Increase above $0.42 and
minimum 24 months continuous employment
3 July 2024 – 3 July 2029
Unvested
-
Employment Contracts
As at the date of this report, the Group had entered into employment contracts with the following executives:
Peter Kerr
The key terms of his contract include:
Commenced as Chief Financial Officer on 19 September 2012 and subsequently appointed as Chief Executive Officer 1 October 2018
with no set term;
Annual Salary Package increase by minimum of CPI from 1 July every year;
STI Bonus of up to one half of Annual Salary Package;
LTI Bonus of up to one third of Annual Salary Package; and
If the Company wishes to terminate the contract other than if Mr Kerr is guilty of any grave misconduct, serious or persistent
breach of the terms of the contract or wilful neglect in the discharge of his duties, the Company is obliged to pay out 12 months
Annual Salary Package plus any other accrued entitlements and bonuses. If Mr Kerr wishes to terminate the contract, he must
provide six months’ notice.
David Stokes
The key terms of his contract include:
Commenced 2 April 2012 with no set term;
Annual Salary Package increase by minimum of CPI from 1 July every year;
STI Bonus of up to one half of Annual Salary Package;
LTI Bonus of up to one third of Annual Salary Package; and
If the Company wishes to terminate the contract other than if Mr Stokes is guilty of any grave misconduct, serious or persistent
breach of the terms of the contract or wilful neglect in the discharge of his duties, the Company is obliged to pay out 12 months
Annual Salary Package plus any other accrued entitlements and bonuses. If Mr Stokes wishes to terminate the contract, he must
provide six months’ notice.
Gillian Dobson
The key terms of her contract include:
Commenced as Group Commercial Manager on 23 April 2013 and subsequently appointed as Chief Financial Officer on 1 October
2018 with no set term;
Annual Salary Package increase by minimum of CPI from 1 July every year;
STI Bonus of up to one half of Annual Salary Package;
LTI Bonus of up to one third of Annual Salary Package; and
If the Company wishes to terminate the contract other than if Ms Dobson is guilty of any grave misconduct, serious or persistent
breach of the terms of the contract or wilful neglect in the discharge of his duties, the Company is obliged to pay out six months
Annual Salary Package plus any other accrued entitlements and bonuses. If Ms Dobson wishes to terminate the contract, she must
provide three months’ notice.
Details of directors and key management personnel disclosed in this report
[i]
Directors
SH Lee
Chairman
A Jones
Non-Executive Director
S Bird
Lead Non-Executive Director
P Dougas
Non-Executive Director
E Delfabbro
Non-Executive Director (appointed 28 August 2023)
R Ding
Non-Executive Director
A Ferguson
Alternate Director to Mr Lee
R Barwick
Non-Executive Director (resigned 23 August 2023)
[ii] Key Management Personnel
P Kerr
Chief Executive Officer
D Stokes
Company Secretary and General Counsel
G Dobson
Chief Financial Officer
30
MOUNT GIBSON IRON LIMITED 2024 Annual Report
All directors and key management personnel have held the above positions for the period from 1 July 2023 to the date of this report
unless otherwise stated.
Remuneration of Key Management Personnel for the year ended 30 June 2024
Short Term
Post
Employment
Long Term
Share
Based
Payment
Salary &
Fees
Non
Monetary(a)
Cash
Incentives
(b)
Accrued
Annual
Leave(c)
Super-
annuation
Long
Service
Leave(d)
Loan Share
Plan(e)
Total
%
Perform-
ance
Related(f)
30 June 2024
$
$
$
$
$
$
$
$
Directors
SH Lee
108,870
-
-
-
11,976
-
-
120,846
-
A Jones
108,326
-
-
-
11,916
-
-
120,242
-
S Bird
117,534
-
-
-
12,929
-
-
130,463
-
P Dougas
119,684
-
-
-
-
-
-
119,684
-
E Delfabbro (i)
86,490
-
-
-
9,514
-
-
96,004
-
R Ding
-
-
-
-
-
-
-
-
-
A Ferguson (Alt)
-
-
-
-
-
-
-
-
-
R Barwick (ii)
18,333
3,604
-
-
2,017
-
-
23,954
-
Sub-total
559,237
3,604
-
-
48,352
-
-
611,193
Other KMP
P Kerr
769,591
25,143
378,600
-
27,500
23,227
173,701
1,397,762
40
D Stokes
402,847
20,412
161,400
4,473
27,500
12,741
85,747
715,120
35
G Dobson
467,782
17,807
210,500
-
27,500
14,121
99,822
837,532
37
Sub-total
1,640,220
63,362
750,500
4,473
82,500
50,089
359,270
2,950,414
Totals
2,199,457
66,966
750,500
4,473
130,852
50,089
359,270
3,561,607
(i)
Ms Delfabbro was appointed on 28 August 2023.
(ii) Mr Barwick resigned on 23 August 2023.
(a)
Non-Monetary items include the value (where applicable) of benefits such as group life insurance cover that are available to all employees of Mount Gibson and car parking,
and are inclusive of Fringe Benefits Tax where applicable.
(b)
Cash incentives represent the cash value of the executives’ short-term incentive awards for the 2023/24 year. Refer to “Short-term Incentives” section above.
(c)
Annual leave has been separately categorised and is measured on an accrual basis and reflects the movement in the accrual over the twelve-month period. Any reduction in
accrued leave reflects more leave taken or cashed out than that which accrued in the period.
(d)
Represents the accrual for long service leave over the twelve-month period.
(e)
The fair values of the awards under the Loan Share Plan (restricted shares) were calculated as at the grant date and represent the accounting expense incurred by the Company
for the stated financial period, reflecting the terms of the particular restricted shares. The amount included as remuneration is not related to or indicative of the benefit (if
any) that individual executives may in fact receive (refer the Long-term Incentives (LTI) section of this report).
(f)
Performance related remuneration reflects the proportion of the total remuneration relating to cash incentives (STI) and share based payments (LTI).
Options
There were no options granted to Directors or Executives during the year ended 30 June 2024 and there were no options outstanding
as at 30 June 2024. Other than those shares issued under the LSP and accounted for as in-substance options, there were no shares
issued on the exercise of options during the year ended 30 June 2024 (2023: nil).
Shares
On 14 December 2023, a total of 1,952,900 restricted shares (which included 1,488,500 shares reallotted) were granted under the LSP.
The award has been accounted for as an in-substance option award with the fair value assessed at grant date as $0.2164 per LSP share.
Refer section above titled “Long-term Incentives” for details of the shares issued under the LSP.
Grant
Date
LSP
Shares
Granted
(#)
LSP
Shares
Forfeited
(#)
Fair Value
at Grant
Date1
($/LSP
share)
Value of
LSP
Shares
Granted
($)
Exercise
Price
($)
Vesting
Date &
Condit-
ions
Expiry
Date
LSP
Shares
Vested
in Year
(#)
Value of
LSP
Shares
Vested
in Year3
($)
P Kerr
14-Dec-23
1,018,000
-
$0.2164
220,295
$0.546
Note 2
14-Dec-28
-
-
D Stokes
14-Dec-23
392,700
-
$0.2164
84,980
$0.546
Note 2
14-Dec-28
-
-
G Dobson
14-Dec-23
542,200
-
$0.2164
117,332
$0.546
Note 2
14-Dec-28
-
-
Total
1,952,900
-
422,607
-
-
1.
Determined at the time of grant per AASB 2, refer note 28(d) in the financial statements.
2.
In order for the LSP shares to vest, participants must remain continuously employed by the Group to 14 December 2025 and the Company’s share price, as
measured by a rolling 5-day volume weighted average price of the Company’s shares traded on the ASX, must on 14 December 2024 or at any time prior to
expiry, be above a 10% premium to the issue price of the LSP shares.
3.
Determined at the time of exercise at the intrinsic value of the LSP share.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
31
During the year ended 30 June 2024, there were no alterations to the terms and conditions of LSP shares after their grant date.
Performance Rights
There were no Performance Rights granted as part of remuneration, or vested and exercised, during the year ended 30 June 2024. At
30 June 2024, there were no Performance Rights on issue. There were no shares issued on the exercise of Performance Rights during
the year ended 30 June 2024 (2023: nil).
Share and right holdings of Key Management Personnel as at 30 June 2024
Balance
1 July 2023
Granted as
Remuneration
Forfeited
Net Change
Other
Balance
30 June 2024
Ord
Ord
Ord
Ord
Ord
Directors
SH Lee(i)
-
-
-
-
-
A Jones
-
-
-
-
-
S Bird
51,899
-
-
-
51,899
P Dougas
796,602
-
-
-
796,602
E Delfabbro(iii)
-
-
-
-
-
R Ding
-
-
-
-
-
A Ferguson (Alt. for Mr Lee)
-
-
-
-
-
Other KMP(ii)
P Kerr
4,770,803
1,018,000
-
-
5,788,803
D Stokes
2,639,035
392,700
-
-
3,031,735
G Dobson
2,177,300
542,200
-
-
2,719,500
Total
10,435,639
1,952,900
-
-
12,388,539
(i)
For the purposes of Corporations Act Regulation 2M.3.03(1)-Item 18, Mr Lee does not have a disclosable shareholding. However, we note that for purposes of
ASX Listing Rule 3.19A.2, Mr Lee has previously declared an indirect “relevant interest” in 452,767,297 ordinary shares in the Company through his association
with Allied Group Limited, a substantial shareholder of the Company – refer ASX announcement dated 7 October 2021.
(ii) The closing balance at 30 June 2024 for Other KMP includes 10,630,500 LSP shares (in-substance options) held by Mr. Kerr (4,664,300 LSP shares), Mr. Stokes
(2,474,900 LSP shares), Ms. Dobson (2,719,500 LSP shares) and Mr. Mitchell who resigned on 3 February 2023 (771,800 LSP shares). 2,986,400 of the LSP
shares had vested as at balance date.
(iii) Ms Delfrabbro was appointed on 28 August 2023.
32
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Remuneration of Key Management Personnel for the year ended 30 June 2023
Short Term
Post
Employment
Long Term
Share
Based
Payment
Salary &
Fees
Non
Monetary(a)
Cash
Incentives
(b)
Accrued
Annual
Leave(c)
Super-
annuation
Long
Service
Leave(d)
Loan Share
Plan(e)
Total
%
Perform-
ance
Related(f)
30 June 2023
$
$
$
$
$
$
$
$
Directors
SH Lee
104,680
-
-
-
10,991
-
-
115,671
-
A Jones
103,653
-
-
-
10,884
-
-
114,537
-
R Barwick
100,000
3,764
-
-
10,500
-
-
114,264
-
S Bird
106,849
-
-
-
11,219
-
-
118,068
-
P Dougas
97,381
-
-
-
-
-
-
97,381
-
R Ding
-
-
-
-
-
-
-
-
-
A Ferguson (Alt)
-
-
-
-
-
-
-
-
-
Sub-total
512,563
3,764
-
-
43,594
-
-
559,921
Other KMP
P Kerr
722,500
17,319
263,688
18,274
27,500
38,655
204,406
1,292,342
36
D Stokes
366,486
13,226
101,700
7,048
34,481
19,115
113,513
655,569
33
G Dobson
438,499
11,815
140,433
14,598
27,500
25,423
121,370
779,638
34
M Mitchell (i)
289,013
16,687
-
-
27,500
-
(79,193)
254,007
-
Sub-total
1,816,498
59,047
505,821
39,920
116,981
83,193
360,096
2,981,556
Totals
2,329,061
62,811
505,821
39,920
160,575
83,193
360,096
3,541,477
(i)
Mr Mitchell resigned on 3 February 2023.
(g)
Non-Monetary items include the value (where applicable) of benefits such as group life insurance cover that are available to all employees of Mount Gibson and car parking,
and are inclusive of Fringe Benefits Tax where applicable.
(h)
Cash incentives represent the cash value of the executives’ short-term incentive awards for the 2022/23 year. Refer to “Short-term Incentives” section above.
(i)
Annual leave has been separately categorised and is measured on an accrual basis and reflects the movement in the accrual over the twelve-month period. Any reduction in
accrued leave reflects more leave taken or cashed out than that which accrued in the period.
(j)
Represents the accrual for long service leave over the twelve-month period.
(k)
The fair values of the awards under the Loan Share Plan (restricted shares) were calculated as at the grant date and represent the accounting expense incurred by the Company
for the stated financial period, reflecting the terms of the particular restricted shares. The amount included as remuneration is not related to or indicative of the benefit (if
any) that individual executives may in fact receive (refer the Long-term Incentives (LTI) section of this report).
(l)
Performance related remuneration reflects the proportion of the total remuneration relating to cash incentives (STI) and share based payments (LTI).
Other Transactions and Balances with Key Management Personnel
There were no other transactions and balances with key management personnel during the years ended 30 June 2024 and 30 June 2023.
Company Performance
The table below shows the performance of the Group over the last 5 years:
30 June 2024
30 June 2023
30 June 2022
30 June 2021
30 June 2020
Net profit/(loss) after tax
$’000
6,430
5,179
(174,116)
64,006
84,198
Earnings/(loss) per share
$/share
0.0053
0.0043
(0.1455)
0.0546
0.0735
Closing share price
$
0.41
0.44
0.54
0.95
0.61
End of remuneration report.
Signed in accordance with a resolution of the Directors.
LEE SENG HUI
Chairman
Date: 20 August 2024
MOUNT GIBSON IRON LIMITED 2024 Annual Report
33
Competent Person Statements
Exploration Results
The information in this report that relates to Exploration Results including sampling techniques and data management is based on
information compiled by Brett Morey, a Competent Person who is a member of the Australasian Institute of Mining and Metallurgy.
Mr Morey is a full-time employee of Mount Gibson Iron Limited and has sufficient experience relevant to the style of mineralisation
and type of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the
2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Morey
consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
Mineral Resources:
The information in this report relating to Mineral Resources is based on information compiled by Ms Elizabeth Haren, a Competent
Person who is a member and Chartered Professional of the Australasian Institute of Mining and Metallurgy and member of the
Australian Institute of Geoscientists. Ms Haren was previously a full-time employee of, and is a consultant to, Mount Gibson Iron
Limited, and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to
the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves’. Ms Haren consents to the inclusion in the report of the matters based
on her information in the form and context in which it appears.
Ore Reserves
The information in this report relating to Ore Reserves is based on information compiled by Mr Brett Morey, a member of the
Australasian Institute of Mining and Metallurgy. Mr Morey is a full-time employee of Mount Gibson Iron Limited and has sufficient
experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken
to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Mr Morey consents to the inclusion in the report of the matters based on his information in
the form and context in which it appears.
34
MOUNT GIBSON IRON LIMITED 2024 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the directors of Mount Gibson Iron
Limited
As lead auditor for the audit of the financial report of Mount Gibson Iron Limited for the financial year
ended 30 June 2024, I declare to the best of my knowledge and belief, there have been:
a.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
b.
No contraventions of any applicable code of professional conduct in relation to the audit; and
c.
No non-audit services provided that contravene any applicable code of professional conduct in
relation to the audit.
This declaration is in respect of Mount Gibson Iron Limited and the entities it controlled during the
financial year.
Ernst & Young
J K Newton
Partner
20 August 2024
MOUNT GIBSON IRON LIMITED 2024 Annual Report
35
Consolidated Income Statement
For the year ended 30 June 2024
2024
2023
Notes
$’000
$’000
Revenue
3[a]
667,678
450,586
Interest revenue
3[b]
16,802
2,028
TOTAL REVENUE
684,480
452,614
Cost of sales
4[a]
(491,417)
(338,394)
GROSS PROFIT
193,063
114,220
Other income
3[c]
45,546
27,115
Impairment of property, plant and equipment
19
(37,632)
(12,203)
Impairment of right-of-use assets
19
-
(1,105)
Impairment of mine properties
19
(121,468)
(62,097)
Net foreign exchange loss
4[c]
(519)
(87)
Net marked-to-market loss
4[d]
(3,111)
(2,171)
Repair and restoration costs – Koolan Island
-
(10,504)
Administration and other expenses
(19,019)
(16,590)
PROFIT BEFORE TAX AND FINANCE COSTS
56,860
36,578
Finance costs
4[b]
(4,406)
(6,125)
PROFIT BEFORE TAX
52,454
30,453
Tax expense
5
(46,024)
(25,274)
PROFIT AFTER TAX ATTRIBUTABLE TO MEMBERS OF THE COMPANY
6,430
5,179
Earnings per share (cents per share)
x
basic earnings per share
29
0.53
0.43
x
diluted earnings per share
29
0.53
0.43
36
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2024
2024
2023
$’000
$’000
PROFIT FOR THE PERIOD AFTER TAX
6,430
5,179
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be subsequently reclassified to profit or loss
Change in fair value of cash flow hedges
218
(218)
Change in fair value of debt instruments classified as financial assets designated
at fair value through other comprehensive income (OCI)
-
92
Deferred income tax
(65)
37
OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR, NET OF TAX
153
(89)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
6,583
5,090
MOUNT GIBSON IRON LIMITED 2024 Annual Report
37
Consolidated Balance Sheet
As at 30 June 2024
2024
2023
Notes
$’000
$’000
ASSETS
Current Assets
Cash and cash equivalents
6
36,258
55,038
Term deposits
7
387,490
103,950
Financial assets held for trading
8
18,539
3,427
Other financial assets
9
20,745
-
Derivative financial assets
12
198
196
Trade and other receivables
10
4,856
6,879
Inventories
11
56,346
105,417
Prepayments
5,481
6,184
Assets associated with disposal group classified as held for sale
13
-
2,058
Total Current Assets
529,913
283,149
Non-Current Assets
Property, plant and equipment
15
25,879
51,380
Right-of-use assets
16
12,365
24,232
Deferred exploration and evaluation costs
17
2,480
1,946
Mine properties
18
81,671
260,138
Prepayments
-
165
Deferred tax assets
5
11,990
55,933
Total Non-Current Assets
134,385
393,794
TOTAL ASSETS
664,298
676,943
LIABILITIES
Current Liabilities
Trade and other payables
20
43,018
47,614
Employee benefits
7,918
6,946
Interest-bearing loans and borrowings
21
9,144
11,194
Derivative financial liabilities
22
-
344
Provisions
23
469
596
Liabilities associated with disposal group classified as held for sale
13
-
9,125
Total Current Liabilities
60,549
75,819
Non-Current Liabilities
Employee benefits
597
452
Interest-bearing loans and borrowings
21
2,707
11,851
Provisions
23
54,272
49,590
Total Non-Current Liabilities
57,576
61,893
TOTAL LIABILITIES
118,125
137,712
NET ASSETS
546,173
539,231
EQUITY
Issued capital
24
633,102
633,102
Accumulated losses
26
(1,012,668)
(1,019,098)
Reserves
25
925,739
925,227
TOTAL EQUITY
546,173
539,231
38
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Consolidated Cash Flow Statement
For the year ended 30 June 2024
2024
2023
Notes
$’000
$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
667,235
420,049
Proceeds from rail credit
4,667
9,181
Proceeds from insurance
3,791
7,853
Payments to suppliers and employees
(343,472)
(304,231)
Interest paid
(1,865)
(2,762)
Income tax paid
(2,146)
-
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
6[b]
328,210
130,090
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
10,521
1,723
Dividend received
1,200
-
Proceeds from sale of property, plant and equipment
697
4,838
Purchase of property, plant and equipment
(34,640)
(26,470)
Proceeds from/(payment for) term deposits
(276,900)
(96,450)
Proceeds from sale of subordinated notes
-
16,310
Proceeds from sale of financial assets held for trading
149
20,191
Payment for financial assets held for trading
(19,805)
(1,861)
Proceeds from sale of disposal group
10,000
-
Payment for deferred exploration and evaluation expenditure
(551)
(2,059)
Payment for mine development
(25,703)
(45,503)
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES
(335,032)
(129,281)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares
-
677
Repayment of insurance premium funding facility
(1,163)
(12,296)
Repayment of lease liabilities
(10,073)
(10,852)
Proceeds from loan facility
-
25,000
Repayment of loan facility
-
(25,000)
Payment of borrowing costs
(772)
(1,189)
NET CASH FLOWS (USED IN) FINANCING ACTIVITIES
(12,008)
(23,660)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(18,830)
(22,851)
Net foreign exchange difference
50
310
Cash and cash equivalents at beginning of year
55,038
77,579
CASH AND CASH EQUIVALENTS AT END OF YEAR
6[a]
36,258
55,038
MOUNT GIBSON IRON LIMITED 2024 Annual Report
39
Consolidated Statement of Changes in Equity
For the year ended 30 June 2024
Attributable to Equity Holders of the Parent
Total Equity
Issued Capital
Accumulated
Losses
Share Based
Payments
Reserve
Net Unrealised
Gains / (Losses)
Reserve
Dividend
Distribution
Reserve
Equity
Reserves
$’000
$’000
$’000
$’000
$’000
$’000
$’000
At 1 July 2022
632,425
(1,024,277)
22,193
(64)
906,019
(3,192)
533,104
Profit for the period
-
5,179
-
-
-
-
5,179
Other comprehensive loss
-
-
-
(89)
-
-
(89)
Total comprehensive loss for the year
-
5,179
-
(89)
-
-
5,090
Transactions with owners in their capacity as owners
Exercise of shares vested under LSP
677
-
-
-
-
-
677
Share-based payments
-
-
360
-
-
-
360
At 30 June 2023
633,102
(1,019,098)
22,553
(153)
906,019
(3,192)
539,231
At 1 July 2023
633,102
(1,019,098)
22,553
(153)
906,019
(3,192)
539,231
Profit for the period
-
6,430
-
-
-
-
6,430
Other comprehensive income
-
-
-
153
-
-
153
Total comprehensive income for the year
-
6,430
-
153
-
-
6,583
Share-based payments
-
-
359
-
-
-
359
At 30 June 2024
633,102
(1,012,668)
22,912
-
906,019
(3,192)
546,173
40
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report
For the year ended 30 June 2024
(a)
Corporate information
The consolidated financial statements of the Group, comprising the Company and the entities that it controlled during the year
ended 30 June 2024, were authorised for issue in accordance with a resolution of the Directors on 20 August 2024.
The Company is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities
Exchange.
The nature of operations and principal activities of the Group are the mining and export of hematite iron ore from Koolan Island in
the Kimberley region of Western Australia, treasury management and the pursuit of mineral resources acquisitions and investments.
The address of the registered office is Level 1, 2 Kings Park Road, West Perth, Western Australia, 6005, Australia.
(b)
Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, applicable Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board. The financial report complies with Australian Accounting Standards as issued by the Australian
Accounting Standards Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board. The financial report has been prepared on a historical cost basis, except for derivative financial instruments and
certain financial assets that have been measured at fair value.
The Group has adopted all Accounting Standards and Interpretations mandatory to annual periods beginning on or before
1 July 2023. Adoption of these standards and interpretations did not have a material effect on the financial position or performance
of the Group at the date of initial application. The accounting policies adopted are consistent with those followed in the preparation
of the Group’s annual consolidated financial statements for the year ended 30 June 2023, except for the adoption of new standards
and interpretations as of 1 July 2023.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless
otherwise stated, under the option available to the Company under Australian Securities and Investment Commission (ASIC)
(Rounding in Financial/Directors’ Report) Instrument 2016/191. The Company is an entity to which the instrument applies.
For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity.
(c)
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its controlled entities.
The financial statements of controlled entities are prepared for the same reporting period as the Company, using consistent
accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated
in full. Unrealised losses are eliminated unless costs cannot be recovered.
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 its power over the investee.
Controlled entities are consolidated from the date on which control is transferred to the Group and cease to be consolidated from
the date on which control is transferred out of the Group.
Where there is loss of control of a controlled entity, the consolidated financial statements include the results for the part of the
reporting period during which the Company has control.
1.
Introduction
MOUNT GIBSON IRON LIMITED 2024 Annual Report
41
Notes to the Consolidated Financial Report (continued)
(a)
Foreign currency
The functional currency of the Company and its controlled entities is Australian dollars (A$).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the
balance sheet date. All such exchange differences are taken to the income statement in the consolidated financial report.
(b)
Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST) except:
x where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the
GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
x receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
balance sheet.
Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(c)
Other accounting policies
Other material accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial
statements are provided throughout the notes to the financial statements.
(d)
Key accounting judgements, estimates and assumptions
In the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates
of future events. Significant judgements and estimates which are material to the financial statements are provided throughout
the notes to the financial statements.
Other material accounting judgements, estimates and assumptions not provided in the notes to the financial statements are as
follows:
Determination of mineral resources and ore reserves
The Group estimates its mineral resources and ore reserves in accordance with the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves 2012 (the JORC Code). The information on mineral resources and ore reserves
was prepared by or under the supervision of Competent Persons as defined in the JORC Code. The amounts presented are based
on the mineral resources and ore reserves determined under the JORC Code.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that are valid at the
time of estimation which (or and) may change significantly when new information becomes available.
Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic
status of reserves and may, ultimately, result in the ore reserves being restated. Such changes in the ore reserves could impact
depreciation and amortisation rates, asset carrying values, deferred stripping costs and provisions for decommissioning and
restoration.
2.
Other Material Accounting Policies
42
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
2024
2023
Notes
$’000
$’000
[a]
Revenue
Revenue from contracts with customers – sale of iron ore
667,818
452,685
Other revenue:
Quotation period price adjustments – relating to prior year shipments
(896)
(513)
Quotation period price adjustments – relating to current year shipments
4,385
(867)
Realised loss on foreign exchange and commodity hedging contracts
(3,629)
(719)
667,678
450,586
[b]
Interest revenue
Interest revenue – calculated using the effective interest method
8,674
411
Interest revenue – other
8,128
1,617
16,802
2,028
[c]
Other income
Net unrealised gain on foreign exchange balances
-
321
Net gain on disposal group
[i]
35,942
-
Net gain on disposal of property, plant and equipment
301
3,058
Rail credit income
1,876
9,517
Insurance proceeds
3,791
7,853
Storage fee income
229
2,904
Dividend income
1,200
-
Other income
2,207
3,462
45,546
27,115
[i]
Pursuant to a Sale and Purchase Agreement (Mid-West Project) dated 28 June 2023, Mount Gibson agreed to the sale of certain
of its Mid-West iron ore mining and infrastructure assets and associated liabilities to Fenix Resources Limited (Fenix). The
consideration comprised $10,000,000 cash, 60,000,000 ordinary shares in Fenix and 25,000,000 Fenix options (exercisable in two
tranches of 12,500,000 options at $0.25 and $0.30 each respectively within 5 years of settlement). The sale was completed on
21 July 2023. The total consideration received was $29,495,000 based on valuations of the Fenix shares and options at completion
date, resulting in a gain on sale of $35,942,000 before tax.
3.
Revenue and Other Income
MOUNT GIBSON IRON LIMITED 2024 Annual Report
43
Notes to the Consolidated Financial Report (continued)
Recognition and measurement
Revenue from contracts with customers
The Group generates a significant proportion of revenue from the sale of iron ore. In some instances, the Group provides freight/shipping
services. Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer and at the
amount that reflects the consideration which the Group expects to receive in exchange for those goods or services.
The Group has generally concluded that it is the principal in its revenue contracts because it typically controls the goods or services before
transferring them to the customer.
Iron ore sales
Each iron ore shipment is governed by a sales contract with the customer, including spot sales agreements and long-term offtake agreements.
For the Group’s iron ore sales not sold under Cost and Freight (CFR) Incoterms, the performance obligation is the delivery of the iron ore. From
time to time, some of the Group’s iron ore sales may be sold under CFR Incoterms, whereby the Group is also responsible for providing
freight/shipping services. In these situations, the freight/shipping service represents a separate performance obligation.
Revenue from iron ore sales is recognised when control of the iron ore passes to the customer, which generally occurs at a point in time when
the iron ore is physically transferred onto a vessel. This is the point where title passes to the customer together with significant risks and rewards
of ownership.
All or substantially all of the Group’s sales are provisionally priced, where the final price is referenced to a future market-based (Platts) index
price. Adjustment to the sales price occurs based on movements in the index price up to the end of the quotational period (QP). These are
referred to as provisional pricing arrangements and are such that the selling price for the iron ore is determined on a specified future date after
shipment to the customer. Adjustments to the sales price therefore occur up until the end of the QP. The period between provisional pricing
and the end of the QP is generally between two and three months. Revenue is measured as the amount to which the Group expects to be
entitled at the end of the QP, being the estimated forward price at the date the revenue is recognised. For those arrangements subject to CFR
shipping terms, a portion of the transaction price is allocated to the separate freight/shipping services provided. For provisional pricing
arrangements, any future changes that occur over the QP are embedded within trade receivables. Given the exposure to the commodity price,
these provisionally priced trade receivables are measured at fair value through profit or loss (see note 10). Subsequent changes in the fair value
of provisionally priced trade receivables are recognised in revenue but are presented separately to revenue from contracts with customers.
Changes in fair value over the term of the provisionally priced trade receivable are estimated by reference to movements in the index price as
well as taking into account relevant other fair value consideration including interest rate and credit risk adjustments.
Freight/shipping services
For CFR arrangements, the Group is responsible for providing freight/shipping services (as principal) after the date that the Group transfers
control of the iron ore to its customers. The Group, therefore, has a separate performance obligation for freight/shipping services which is
provided solely to facilitate the sale of the commodities it produces.
The transaction price (as determined above) is allocated to the iron ore and freight/shipping services using the relative stand-alone selling price
method. Under these arrangements, revenue is recognised over time using an output basis to measure progress towards complete satisfaction
of the service as this best represents the Group’s performance. This is on the basis that the customer simultaneously receives and consumes
the benefits provided by the Group as the services are being provided. The costs associated with the freight/shipping services are also recognised
over the same time period as shipping occurs.
Interest Revenue
Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial
asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Key estimates and judgments
For the Group’s CFR customers, the Group is responsible for providing freight/shipping services. While the Group does not actually provide nor
operate the vessels, the Group has determined that it is principal in these arrangements because it has concluded it controls the specified services
before they are provided to the customer. The terms of the Group’s contract with the service provider gives the Group the ability to direct the
service provider to provide the specified services on the Group’s behalf.
The Group has also concluded that revenue for freight/shipping services is to be recognised over time because the customer simultaneously
receives and consumes the benefits provided by the Group. The fact that another entity would not need to re-perform the freight/shipping
services that the Group has provided to date demonstrates that the customer simultaneously receives and consumes the benefits of the Group’s
performance as it is performed. The Group determined that the output method is the best method for measuring progress of the freight/shipping
services because there is a direct relationship between the Group’s effort and the transfer of service to the customer. The Group recognises
revenue on the basis of the time elapsed relative to the total expected time to complete the service.
44
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
2024
2023
Notes
$’000
$’000
[a]
Cost of sales
Mining and site administration costs
194,169
210,692
Depreciation of property, plant and equipment – mining and site administration
17,219
6,770
Depreciation of right-of-use assets – mining and site administration
8,936
8,635
Capitalised deferred stripping costs
18
-
(11,020)
Amortisation of capitalised deferred stripping costs
18
48,502
61,807
Amortisation of mine properties
18
38,568
37,689
Crushing costs
50,387
41,324
Depreciation of property, plant and equipment – crushing
6,632
5,662
Depreciation of right-of-use assets – crushing
1,422
1,213
Transport costs
-
164
Port costs
10,264
6,319
Depreciation of property, plant and equipment – port
10
145
Depreciation of right-of-use assets - port
-
208
Royalties
64,093
42,308
Consumables stock write-down
830
1,703
Net ore inventory movement
28,539
(71,331)
Net movement in net realisable value on ore inventories
11[i]
21,846
(3,048)
Rehabilitation revised estimate adjustments
23
-
(846)
Cost of sales – Free on Board (FOB) basis
491,417
338,394
[b]
Finance costs
Finance charges on banking facilities
1,477
3,158
Finance charges on lease liabilities
967
1,185
2,444
4,343
Non-cash interest accretion on rehabilitation provision
23
1,962
1,782
4,406
6,125
[c]
Net foreign exchange loss
Net realised loss on foreign exchange transactions
512
87
Net unrealised loss on foreign exchange balances
7
-
519
87
[d]
Net marked-to-market (gain)/loss
Unrealised marked-to-market (gain)/loss on foreign exchange derivatives
(127)
(271)
Unrealised marked-to-market (gain)/loss on financial assets held for trading
3,238
2,442
3,111
2,171
[e]
Administration and other expenses include:
Depreciation of property, plant and equipment
165
166
Depreciation of right-of-use assets
492
492
Share-based payments expense
28(a)
359
360
Insurance premiums
2,020
1,890
Net realised loss on sale of financial assets
-
89
Exploration expenses
17
18
112
[f]
Cost of sales and Administration and other expenses above include:
Salaries and wages expense and other employee benefits
77,860
66,321
Lease expense – short-term
5,794
7,165
Lease expense – low value assets
151
166
Lease expense – variable
15
3,009
4.
Expenses
MOUNT GIBSON IRON LIMITED 2024 Annual Report
45
Notes to the Consolidated Financial Report (continued)
Recognition and measurement
Employee benefits expense
Wages, salaries, sick leave and other employee benefits
Liabilities for wages and salaries, including non-monetary benefits and other employee benefits expected to be settled within 12 months of the
reporting date are recognised in other payables in respect of employees' services up to the reporting date. They are measured at the amounts
expected to be paid when the liabilities are settled. Liabilities for sick leave are recognised when the leave is taken and are measured at the
rates paid or payable.
Redundancy
Provision is made for redundancy payments where positions have been identified as excess to requirements, the Group has communicated a
detailed and formal plan and a reliable estimate of the amount payable can be determined.
Annual leave and long service leave
The Group expects its annual leave benefits to be settled wholly within 12 months of each reporting date. The obligation is measured at the
amount expected to be paid when the liabilities are settled.
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of future payments to
be made in respect of services provided by employees up to the reporting date. Consideration is given to future wage and salary levels, experience
of employee departures and periods of service. Future payments are discounted using market yields at the reporting date on high quality corporate
bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.
Share-Based Payment Plans
The policy relating to share-based payments is set out in note 28.
Superannuation
Contributions made by the Group to employee superannuation funds, which are defined contribution plans, are charged as an expense when
incurred.
Borrowing costs
Borrowing costs are recognised as an expense when incurred except for borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset which are capitalised as part of the cost of that asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of plant, machinery and equipment (leases that have a
lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value
assets recognition exemption to leases of plant and equipment that are considered of low value. Lease payments on short-term lease and leases
of low-value assets are recognised as an expense on a straight-line basis over the lease term.
Depreciation and amortisation
Refer to notes 15 and 18 for details on depreciation and amortisation.
Impairment
Impairment expenses are recognised to the extent that the carrying amounts of assets exceed their recoverable amounts. Refer to note 19 for
further details on impairment.
46
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
2024
2023
$’000
$’000
Major components of tax expense for the years ended 30 June 2024 and 2023
are:
Income Statement
Current tax
Current income tax charge/income
2,147
8,763
Deferred tax
Relating to origination and reversal of temporary differences:
Income tax benefit recognised from previously unrecognised tax losses and
deductible temporary differences
30,228
-
Deferred tax relating to movement in temporary differences
13,649
16,511
Tax expense reported in Income Statement
46,024
25,274
Statement of Changes in Equity
Deferred income tax
Remeasurement of financial assets designated at fair value through OCI
66
(37)
Deferred income tax expense reported in equity
66
(37)
Reconciliation of tax expense
A reconciliation of tax expense applicable to accounting profit before tax at the
statutory income tax rate to tax expense at the Group’s effective tax rate for the
years ended 30 June 2024 and 2023 is as follows:
Accounting profit before tax
52,454
30,453
x
At the statutory income tax rate of 30% (2023: 30%)
15,736
9,136
x
Expenditure not allowed for income tax purposes
524
397
x
Unrecognised deferred tax assets
30,228
15,972
x
Adjustments in respect of current income tax of previous year
54
(226)
x
Non-refundable tax offset relating to dividend franking credits
(514)
-
x
Other
(4)
(5)
Tax expense reported in Income Statement
46,024
25,274
5.
Taxation
MOUNT GIBSON IRON LIMITED 2024 Annual Report
47
Notes to the Consolidated Financial Report (continued)
5.
Taxation (Continued)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
2024
2023
2024
2023
2024
2023
$’000
$’000
$’000
$’000
$’000
$’000
CONSOLIDATED
Accrued liabilities
(5,347)
(4,190)
-
-
(5,347)
(4,190)
Capital raising costs
(246)
(11)
-
-
(246)
(11)
Deferred income
(2,572)
(2,261)
-
-
(2,572)
(2,261)
Donations
-
(105)
-
-
-
(105)
Derivatives
-
-
36
112
36
112
Financial assets designated at fair value
through OCI
-
(66)
-
-
-
(66)
Inventory
(6,697)
(1,670)
-
-
(6,697)
(1,670)
Prepaid expenditure
-
-
43
197
43
197
Fixed assets, mine properties and
exploration expenditure
-
-
3,357
47,684
3,357
47,684
Provisions
(19,113)
(20,124)
-
-
(19,113)
(20,124)
Borrowing cost
(530)
(558)
-
-
(530)
(558)
Research and development carried forward
tax offset
-
(1,063)
-
-
-
(1,063)
Tax losses
(27,121)
(89,850)
-
-
(27,121)
(89,850)
Tax (assets)/liabilities
(61,626)
(119,898)
3,436
47,993
(58,190)
(71,905)
Derecognition of deferred tax assets
46,200
15,972
-
-
46,200
15,972
Net tax (assets)/liabilities
(15,426)
(103,926)
3,436
47,993
(11,990)
(55,933)
Balance
1 July 2023
Recognised
in Income
Recognised
in Equity
Balance
30 June 2024
$’000
$’000
$’000
$’000
Movement in temporary differences during the financial year
ended 30 June 2024
Accrued liabilities
(4,190)
(1,157)
-
(5,347)
Capital raising costs
(11)
(235)
-
(246)
Deferred income
(2,261)
(311)
-
(2,572)
Donations
(105)
105
-
-
Derivatives
112
(76)
-
36
Financial assets designated at fair value through OCI
(66)
66
-
Inventory
(1,670)
(5,027)
-
(6,697)
Prepaid expenditure
197
(154)
-
43
Fixed assets, mine properties and exploration expenditure
47,684
(44,327)
-
3,357
Provisions
(20,124)
1,011
-
(19,113)
Borrowing cost
(558)
28
-
(530)
Research and development carried forward tax offset
(1,063)
1,063
-
-
Tax losses
(89,850)
62,729
-
(27,121)
Derecognition of deferred tax assets
15,972
30,228
-
46,200
(55,933)
43,877
66
(11,990)
2024
2023
$’000
$’000
Deferred tax assets that have not been recognised in respect of:
Temporary differences
19,079
-
Tax losses
27,121
15,972
46,200
15,972
48
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
5.
Taxation (Continued)
Balance
1 July 2022
Recognised
in Income
Recognised
in Equity
Balance
30 June 2023
$’000
$’000
$’000
$’000
Movement in temporary differences during the
financial year ended 30 June 2023
Accrued liabilities
(15,705)
11,515
-
(4,190)
Capital raising costs
(9)
(2)
-
(11)
Deferred income
(1,169)
(1,092)
-
(2,261)
Donations
(90)
(15)
-
(105)
Derivatives
609
(497)
-
112
Financial assets designated at fair value through OCI
(29)
-
(37)
(66)
Inventory
(2,325)
655
-
(1,670)
Prepaid expenditure
143
54
-
197
Fixed assets, mine properties and exploration
expenditure
69,116
(21,432)
-
47,684
Provisions
(18,012)
(2,112)
-
(20,124)
Borrowing cost
(282)
(276)
-
(558)
Research and development carried forward tax offset
(1,063)
-
-
(1,063)
Tax losses
(103,591)
13,741
-
(89,850)
Derecognition of deferred tax assets
-
15,972
15,972
(72,407)
16,511
(37)
(55,933)
MOUNT GIBSON IRON LIMITED 2024 Annual Report
49
Notes to the Consolidated Financial Report (continued)
5.
Taxation (Continued)
Recognition and measurement
Income Tax
Deferred income tax is provided for using the full liability balance sheet approach.
Deferred income tax liabilities are recognised for all taxable 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; and
•
in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except
where the timing of the reversal of the temporary differences 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 differences, and the carry-forward of
unused tax assets and unused tax losses can be utilised:
•
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
•
in respect of deductible temporary differences associated with investments in controlled entities, associates and interests in joint ventures,
deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet 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 balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the income statement.
Tax consolidation
Mount Gibson and its wholly-owned Australian controlled entities have formed an income tax consolidated group under the Tax Consolidation
Regime. Using the Group allocation approach, each entity in the group recognises its own current and deferred tax liabilities, except for any
deferred tax liabilities resulting from unused tax losses and tax credits, which are immediately assumed by the parent entity in addition to its
own current and deferred tax amounts. The current tax liability of each group entity is then subsequently assumed by the parent entity.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable
to other entities in the Group. Details of the tax funding agreement are disclosed below.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a
contribution to (or distribution from) wholly-owned tax consolidated entities.
Members of the tax consolidated group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between
the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect
of this agreement on the basis that the possibility of default is remote.
The head entity and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts.
The Group has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to
members of the tax consolidated group. The current and deferred tax amounts are measured in a systematic manner that is consistent with the
broad principles in AASB 112 Income Taxes. The nature of the tax funding agreement is discussed further below.
In addition to its own current and deferred tax amounts, the head entity also recognises current tax liabilities (or assets) and the deferred tax
assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.
Members of the tax consolidated group have entered into a tax funding agreement. Under the funding agreement, the funding of tax within the
Group is based on accounting profit. The tax funding agreement requires payments to/from the head entity to be recognised via an inter-entity
receivable (payable) which is at call. To the extent that there is a difference between the amount charged under the tax funding agreement and
the allocation under the accounting policy, the head entity accounts for these as equity transactions with the subsidiaries.
The amounts receivable or payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is
issued as soon as practicable after the end of each financial year.
The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments.
Key estimate: recoverability of potential deferred tax assets
The Group recognises deferred tax assets in respect of tax losses to the extent that the future utilisation of these losses is considered probable.
Assessing the future utilisation of these losses requires the Group to make material estimates related to expectations of future taxable income.
Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws. To the extent that
future cash flows and taxable income differ significantly from estimates, this could result in material changes to the deferred tax assets recognised,
which would in turn impact future financial results.
Management has derecognised tax losses to the extent that they may not be utilised and determined that the deferred tax asset held at
30 June 2024 will be utilised within the next two years.
50
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
2024
2023
$’000
$’000
[a] Reconciliation of cash
For the purposes of the Cash Flow Statement, cash and cash equivalents comprise the following at 30 June:
Cash at bank and on hand
18,258
23,038
Short-term deposits
18,000
32,000
36,258
55,038
Cash at bank earns interest at floating daily bank deposit rates. Short-term deposits are made for varying periods of between one day and
three months depending on the immediate cash requirements of the Group and earn interest at short-term deposit rates.
Recognition and measurement
Cash and short-term deposits in the balance sheet comprise cash at bank and on hand and short-term deposits with an original maturity period of
three months or less.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding
bank overdrafts, if any.
[b] Reconciliation of the net profit after tax to the net cash flows from operations
Net profit after tax
6,430
5,179
Adjustments to reconcile profit after tax to net cash flows:
Depreciation of property, plant and equipment
24,026
12,743
Depreciation of right-of-use assets
10,850
10,548
Amortisation of capitalised deferred stripping costs
48,502
61,807
Amortisation of other mine properties
38,568
37,689
Impairment of property, plant and equipment
37,632
12,203
Impairment of right-of-use assets
-
1,105
Impairment of mine properties
121,468
62,097
Net gain on disposal of property, plant and equipment
(301)
(3,058)
Net gain on disposal group
(35,942)
-
Interest revenue
(16,802)
(2,028)
Exploration expenses written off
18
112
Share based payments
359
360
Borrowing costs
772
1,189
Interest accretion on rehabilitation provision
1,962
1,782
Net ore inventory movement
28,539
(71,331)
Rehabilitation provision revised estimate adjustment
-
(846)
Insurance premium funding
11,622
Write down to net realisable value on consumables inventories
830
1,703
(Reversal of)/write down to net realisable value on ore inventories
21846
(3,048)
Unrealised (gain) on foreign exchange balances
7
(321)
Unrealised marked-to-market (gain) on foreign exchange derivatives
(127)
(271)
Unrealised marked-to-market loss on financial assets held for trading
3,238
2,442
Realised (gain)/loss on sale of financial assets held for trading
-
89
Dividend received
(1,200)
-
Changes in assets and liabilities:
Decrease in trade and other receivables
1,828
2,272
(Increase)/decrease in inventory
865
(1,448)
(Increase) in prepayments
(2,143)
(49)
(Increase)/decrease in deferred tax assets
43,878
25,274
Increase/(decrease) in trade and other payables
(7,883)
(38,135)
Increase in employee benefits
1,117
976
(Decrease) in other provisions
(127)
(567)
Net Cash Flow from Operating Activities
328,210
130,090
[c]
Non-cash financing activities
There were no non-cash financing activities relating to leases of right-of-use assets during the year ended 30 June 2024
(2023: $27,687,000).
6.
Cash and Cash Equivalents
MOUNT GIBSON IRON LIMITED 2024 Annual Report
51
Notes to the Consolidated Financial Report (continued)
Notes
2024
2023
$’000
$’000
Current
Term deposits – financial assets at amortised cost
[i]
387,490
103,950
387,490
103,950
[i] Term deposits are made for varying periods of between three and twelve months depending on the cash requirements of the Group
and earn interest at market term deposit rates. Term deposits are held with various financial institutions with short term credit ratings
of A-2 or better (Standard & Poors). As these instruments have maturity dates of less than twelve months, the Group has assessed
the credit risk on these financial assets using life-time expected credit losses. In this regard, the Group has concluded that the
probability of default on the term deposits is relatively low. Accordingly, no impairment allowance has been recognised for expected
credit losses on the term deposits.
Recognition and measurement
See note 37 for the accounting policy for financial assets classified as financial assets at amortised cost.
2024
2023
$’000
$’000
Current
Tradeable corporate bonds at fair value through profit or loss
1
153
Quoted share investments at fair value through profit or loss
18,538
3,274
18,539
3,427
Financial assets held for trading comprise corporate bonds and equity securities which are traded in active markets. These financial assets
are acquired principally for the purpose of selling or repurchasing in the short term. The portfolio of tradeable corporate bonds is managed
by a professional funds management entity, and Mount Gibson is able to vary or terminate the portfolio management mandate at any
time, with applicable notice periods.
Recognition and measurement
See note 37 for the accounting policy for financial assets classified as financial assets at fair value through profit and loss.
2024
2023
$’000
$’000
Current
Listed investment shares - at fair value through profit and loss
18,900
-
Investment options – at fair value through profit and loss
1,845
-
20,745
-
Other financial assets comprise shares in Fenix Resources Limited (Fenix) which are traded in an active market, and options over unissued
shares in Fenix. These financial assets were acquired as part of the consideration from the sale of the majority of the Group’s Mid-West
mining and infrastructure assets to Fenix in July 2023 (refer note 3[c]). The Group holds these financial assets as part of its strategy to
maintain an exposure to bulk materials and infrastructure assets in the Mid-West region.
Recognition and measurement
See note 37 for the accounting policy for financial assets classified as other financial assets.
7.
Term Deposits
8.
Financial Assets Held for Trading
9.
Other Financial Assets
52
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
2024
2023
Notes
$’000
$’000
Current
Trade debtors – at amortised cost
[a][i]
333
508
Expected credit loss
-
-
333
508
Trade debtors – at fair value through profit or loss
[a][i]
461
18
Sundry debtors
[a][ii]
1,662
4,182
Other receivables
2,400
2,171
4,856
6,879
[a] Terms and conditions
Terms and conditions relating to the above financial instruments:
[i]
Generally, on presentation of ship loading documents and the provisional invoice the customer settles 95% of the provisional sales
invoice value within 10 days. The remaining 5% is settled within 30 days of presentation of the final invoice. The vast majority of
sales are invoiced and received in US dollars (US$). The balance of other trade debtors is invoiced and received in Australian dollars
(A$).
[ii] Sundry debtors are non-interest bearing and have payment terms of between 30 and 90 days. There is an insignificant probability of
default as sundry debtors are short term, have no history of default and customers have passed the Group’s internal credit assessment.
2024
2023
Notes
$’000
$’000
Consumables – at cost
23,995
23,336
Write down to net realisable value (NRV)
(3,704)
(4,358)
Consumables at lower of cost and NRV
20,291
18,978
Ore – at cost
67,051
95,589
Write down to NRV
[i]
(30,996)
(9,150)
Ore at lower of cost and NRV
36,055
86,439
Total inventories at lower of cost and NRV
56,346
105,417
[i] At 30 June 2024, the Group assessed the carrying values of ore inventories stockpiled at Koolan Island mine site. Assumptions used
in the assessment include prevailing and anticipated iron ore prices and exchange rates, ore specifications, estimated costs to make
the ore inventories available for sale, and associated sales and shipping freight costs.
Based on these assumptions, the Group recorded a write down of ore inventories of $21,846,000 (2023: $3,048,000 write-back)
during the financial period.
Recognition and measurement
Inventories are carried at the lower of cost and net realisable value.
For iron ore, cost comprises direct material, labour and expenditure in getting such inventories to their existing location and condition, based on
weighted average costs incurred during the period in which such inventories were produced.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs
necessary to make the sale.
Consumables relating to plant and equipment are recognised as inventory. Consumable stocks are carried at cost less accumulated impairment.
Key estimate
Consumables are written down to net realisable value if considered damaged or, have become wholly or partially obsolete. A new assessment is
made of the write down in each subsequent period.
10. Trade and Other Receivables
11. Inventories
MOUNT GIBSON IRON LIMITED 2024 Annual Report
53
Notes to the Consolidated Financial Report (continued)
2024
2023
Notes
$’000
$’000
Current
Foreign currency option contracts
37[b][i]
198
196
198
196
2024
2023
Notes
$’000
$’000
Current Assets
Inventories
-
167
Property, plant and equipment
15
-
1,891
-
2,058
Current Liabilities
Interest-bearing loans and borrowings
-
896
Provision for decommissioning rehabilitation
23
-
8,229
-
9,125
Recognition and measurement
The group recognises assets held for sale when assets are considered immediately available for sale and the sale is highly probable.
Assets held for sale are measured at the lower of their carrying amounts and fair value less cost to sell.
Assets held for sale are not amortised or depreciated unless the group withdraws from its plan to sell.
An impairment loss is recorded if the asset’s fair value less cost to sell is lower than its carrying amount.
12. Derivative Financial Assets
13. Disposal Group Classified As Held for Sale
54
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
Name
Country of
Incorporation
Percentage of Equity Interest Held by the
Group
2024
2023
%
%
Mount Gibson Mining Limited*
Australia
100
100
Geraldton Bulk Handling Pty Ltd
Australia
100
100
Gibson Minerals Limited*
Australia
100
100
Aztec Resources Limited*
Australia
100
100
x
Koolan Shipping Pty Ltd*
Australia
100
100
x
Brockman Minerals Pty Ltd*
Australia
100
100
x
Koolan Iron Ore Pty Ltd*
Australia
100
100
x
KIO SPV Pty Ltd*
Australia
100
100
*Entities subject to Class Order relief
Pursuant to ASIC Instrument 2016/785, relief has been granted to Mount Gibson Mining Limited, Aztec Resources Limited and Koolan Iron
Ore Pty Ltd from the Corporations Act 2001 requirements for the preparation, audit and lodgement of financial reports. As a condition of
the Class Order, Mount Gibson Iron Limited, Mount Gibson Mining Limited, Aztec Resources Limited and Koolan Iron Ore Pty Ltd (Closed
Group) entered into a Deed of Cross Guarantee on 1 May 2008. The class order relief was granted to Gibson Minerals Limited on
28 September 2023. The effect of this deed is that Mount Gibson Iron Limited has guaranteed to pay any deficiency in the event of winding
up of these controlled entities or if they do not meet their obligations under the terms of overdrafts, loans, leases or other liabilities subject
to the guarantee. The controlled entities have also given a similar guarantee in the event that Mount Gibson Iron Limited is wound up or if
it does not meet its obligations under the terms of overdrafts, loans, leases or other liabilities subject to the guarantee.
The Consolidated Income Statement and Balance Sheet of the Closed Group are set out below:
Consolidated Income Statement of the Closed Group
2024
2023
$’000
$’000
Revenue
667,678
450,586
Interest revenue
16,802
2,027
TOTAL REVENUE
684,480
452,613
Cost of sales
(491,417)
(333,914)
GROSS PROFIT
193,063
118,699
Other income
19,357
24,174
Write back/(expected credit loss) of non-current other receivables
17,785
(3,459)
Impairment expenses
(159,100)
(74,538)
Repair and restoration costs – Koolan Island
-
(10,504)
Administration and other expenses
(21,734)
(16,338)
PROFIT BEFORE TAX AND FINANCE COSTS
49,371
38,034
Finance costs
(4,406)
(6,107)
PROFIT BEFORE TAX
44,965
31,927
Tax expense
(38,535)
(26,748)
PROFIT AFTER TAX ATTRIBUTABLE TO MEMBERS OF THE COMPANY
6,430
5,179
14. Interests in Subsidiaries
MOUNT GIBSON IRON LIMITED 2024 Annual Report
55
Notes to the Consolidated Financial Report (continued)
Consolidated Balance Sheet of the Closed Group
2024
2023
Notes
$’000
$’000
ASSETS
CURRENT ASSETS
Cash and cash equivalents
36,258
54,498
Term deposits and subordinated notes
387,490
103,950
Financial assets held for trading
18,539
153
Other financial assets
20,745
-
Derivative financial assets
198
196
Trade and other receivables
4,840
6,512
Inventories
56,346
105,417
Prepayments
5,481
5,923
Assets associated with disposal group classified as held for sale
-
1,847
TOTAL CURRENT ASSETS
529,897
278,496
NON-CURRENT ASSETS
Other receivables
-
9,340
Property, plant and equipment
25,879
51,380
Right-of-use assets
12,365
24,232
Deferred exploration and evaluation costs
2,480
1,946
Mine properties
81,671
260,138
Prepayments
-
165
Deferred tax assets
11,935
49,434
TOTAL NON-CURRENT ASSETS
134,330
396,635
TOTAL ASSETS
664,227
675,131
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
42,834
46,819
Employee benefits
7,918
6,604
Interest-bearing loans and borrowings
9,144
11,194
Derivative financial liabilities
-
344
Provisions
469
596
Liabilities associated with disposal group classified as held for sale
-
8,450
TOTAL CURRENT LIABILITIES
60,365
74,007
NON-CURRENT LIABILITIES
Other payables
113
-
Employee benefits
597
452
Interest-bearing loans and borrowings
2,707
11,851
Provisions
54,272
49,590
TOTAL NON-CURRENT LIABILITIES
57,689
61,893
TOTAL LIABILITIES
118,054
135,900
NET ASSETS
546,173
539,231
EQUITY
Issued capital
633,102
633,102
Accumulated losses
[i]
(1,012,668)
(1,019,098)
Reserves
925,739
925,227
TOTAL EQUITY
546,173
539,231
[i] Accumulated losses
Balance at the beginning of the year
(1,019,098)
(1,024,277)
Net profit attributable to members of the closed group
6,430
5,179
Balance at the end of the year
(1,012,668)
(1,019,098)
56
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
Land
Plant and Equipment
Buildings
Capital Works in Progress
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Gross carrying amount at cost
-
-
228,998
281,015
101,404
104,628
17,346
11,150
347,748
396,793
Accumulated depreciation and impairment
-
-
(212,810)
(245,950)
(101,055)
(99,442)
(8,004)
(21)
(321,869)
(345,413)
Net carrying amount
-
-
16,188
35,065
349
5,186
9,342
11,129
25,879
51,380
Reconciliation
Carrying amount at the beginning of the year
-
100
35,065
43,633
5,186
9,538
11,129
3,695
51,380
56,966
Additions
-
1,550
18,639
10,095
576
255
17,338
11,131
36,553
23,031
Transfers
-
-
10,993
3,444
149
232
(11,142)
(3,676)
-
-
Disposals
-
-
(396)
(1,780)
-
-
-
-
(396)
(1,780)
Depreciation expense
-
-
(21,386)
(10,756)
(2,640)
(1,987)
-
-
(24,026)
(12,743)
Impairment expense (Note 19)
-
-
(26,727)
(9,366)
(2,922)
(2,816)
(7,983)
(21)
(37,632)
(12,203)
Transfer to assets associated with disposal group
classified as held for sale (Note 13)
-
(1,650)
-
(205)
-
(36)
-
-
-
(1,891)
Carrying amount at the end of the year
-
-
16,188
35,065
349
5,186
9,342
11,129
25,879
51,380
Assets pledged as security
-
-
16,188
35,065
349
5,186
9,342
11,129
25,879
51,380
Refer note 21 for details of security arrangements.
15. Property, Plant and Equipment
MOUNT GIBSON IRON LIMITED 2024 Annual Report
57
Notes to the Consolidated Financial Report (continued)
15. Property, Plant and Equipment (Continued)
Recognition and measurement
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Depreciation and amortisation
The cost of owned property, plant and equipment directly engaged in mining operations is depreciated over its expected economic life on a units-
of-production method, with due regard given to the life of the related area of interest. Leased plant and equipment directly engaged in mining
operations is written down to its residual value over the lesser of the lease term and its useful life. Other assets which are depreciated or amortised
on a basis other than the units-of-production method typically are depreciated on a straight-line basis over the estimated useful life of the asset.
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may
not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which
the asset belongs.
Individual assets in the cash-generating units are not written down below their recoverable amount. Refer note 19 for further details on impairment.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the
continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the item) is included in the income statement in the period the item is derecognised.
Key judgement, estimates and assumptions
Units of production method of depreciation and amortisation
The Group applies the units-of-production method of depreciation and amortisation of its mine assets based on ore tonnes mined. These
calculations require the use of estimates and assumptions. Material judgement is required in assessing the available ore reserves, mineral
resources and the production capacity of the operations to be depreciated under this method. Factors that are considered in determining ore
reserves, mineral resources and production capacity include the Group’s history of converting mineral resources to ore reserves and the relevant
timeframes, the complexity of metallurgy, markets and future developments. The Group uses economically recoverable mineral resources
(comprising proven and probable ore reserves) to depreciate assets on a units-of-production basis. However, where a mineral property has been
acquired and an amount has been attributed to the fair value of mineral resources not yet designated as ore reserves, the additional mineral
resources may be taken into account. When these factors change or become known in the future, such differences will impact pre-tax profit and
carrying values of assets.
Impairment of property, plant and equipment
The carrying value of property, plant and equipment is reviewed for impairment if there is any indication that the carrying amount may not be
recoverable. Where a review for impairment is conducted, the recoverable amount is assessed by reference to either the ‘value-in-use’ (being the
net present value of expected future cash flows of the relevant cash generating unit) or the ‘fair value less cost of disposal’.
In determining value-in-use, future cash flow forecasts for each cash generating unit (i.e. each mine) are prepared utilising management’s latest
estimates of mine life, mineral resource and ore reserve recovery, operating and development costs, royalties and taxation, and other relevant cash
inflows and outflows. Cash flow scenarios for a range of commodity prices and foreign exchange rates are assessed using internal and external
market forecasts, and the present value of the forecast cash flows is determined utilising a discount rate based on industry weighted average cost
of capital.
The Group’s cash flows are most sensitive to movements in iron ore prices, the discount rate and key operating costs. Variations to the expected
future cash flows, and the timing thereof, could result in material changes to any impairment assessment or losses recognised, if any, which could
in turn impact future financial results. Refer note 19 for further details on impairment.
58
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
Leased Property
Leased Plant and
Equipment
Total
2024
2023
2024
2023
2024
2023
$’000
$’000
$’000
$’000
$’000
$’000
Gross carrying amount at cost
2,214
2,214
29,997
32,071
32,211
34,285
Accumulated depreciation and impairment
(1,721)
(1,229)
(18,125)
(8,824)
(19,846)
(10,053)
Net carrying amount
493
985
11,872
23,247
12,365
24,232
Reconciliation
Carrying amount at the beginning of the year
985
2,552
23,247
7,000
24,232
9,552
Additions
-
238
1,177
27,670
1,177
27,908
Disposals
-
-
(2,194)
(1,575)
(2,194)
(1,575)
Depreciation
(492)
(700)
(10,358)
(9,848)
(10,850)
(10,548)
Impairment expense (Note 19)
-
(1,105)
-
-
-
(1,105)
Carrying amount at the end of the year
493
985
11,872
23,247
12,365
24,232
Recognition and measurement
The group recognises right-of-use assets at the commencement date of the lease (ie. the date the underlying asset is available for use). Right-of-
use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before
the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the lease asset at the
end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and
the lease term. Right-of-use assets are subject to impairment. Where a review for impairment is conducted, the recoverable amount is assessed
by reference to the ‘fair value less cost of disposal’. Refer note 19 for further details on impairment.
2024
2023
Notes
$’000
$’000
Deferred exploration and evaluation – at cost
2,480
1,946
2,480
1,946
Reconciliation
Carrying amount at beginning of the year
1,946
-
Additions
552
2,058
Exploration expenditure written off
(18)
(112)
Carrying amount at the end of the year
2,480
1,946
Recognition and measurement
Acquisition costs
Exploration and evaluation costs arising from acquisitions are carried forward where exploration and evaluation activities have not, at balance date,
reached a stage to allow a reasonable assessment regarding the existence of economically recoverable reserves.
Exploration and evaluation costs
Costs arising from exploration and evaluation activities are capitalised if activities in the area of interest have not yet reached a stage which permits
a reasonable assessment of the existence or otherwise of economically recoverable reserves or sale. To the extent that it is determined in the
future that this capitalised expenditure should be written off, this will reduce profits and net assets in the period in which this determination is
made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that
area of interest. Where uncertainty exists as to the future viability of certain areas, the value of the area of interest is written off to the income
statement or provided against.
16. Right-of-use Assets
17. Deferred Exploration and Evaluation Costs
MOUNT GIBSON IRON LIMITED 2024 Annual Report
59
Notes to the Consolidated Financial Report (continued)
2024
2023
$’000
$’000
Mine properties – at cost
1,792,574
1,868,706
Accumulated amortisation and impairment
(1,710,903)
(1,608,568)
81,671
260,138
Koolan Island
2024
2023
Reconciliation
$’000
$’000
Deferred stripping costs
Carrying amount at the beginning of the period
152,104
239,200
Capitalised deferred stripping costs
-
11,020
Amortisation expensed
(48,502)
(61,807)
Impairment expense (Note 19)
(61,950)
(36,309)
Carrying amount at the end of the period
41,652
152,104
Other mine properties
Carrying amount at the beginning of the period
108,034
133,193
Additions
27,351
31,435
Mine rehabilitation – revised estimate adjustment (Note 23)
2,720
6,883
Amortisation expensed
(38,568)
(37,689)
Impairment expense (Note 19)
(59,518)
(25,788)
Carrying amount at the end of the period
40,019
108,034
Total mine properties
81,671
260,138
The security pledged for financing facilities includes mining mortgages over the mining tenements and contractual rights to mine hematite
deposits owned by the Group (refer note 21).
Recognition and measurement
Deferred stripping
As part of its mining operations, the Group incurs mining stripping (waste removal) costs both during the development and production phase of its
operations.
When stripping costs are incurred in the development phase of a mine before the production phase commences (development stripping), such
expenditure is capitalised as part of the cost of constructing the mine and subsequently amortised over its useful life using a units of production
method, in accordance with the policy applicable to mine properties. The capitalisation of development stripping costs ceases when the mine or
relevant component thereof is commissioned and ready for use as intended by management.
Waste development costs incurred in the production phase create two benefits, being either the production of inventory or improved access to the
ore to be mined in the future. Where the benefits are realised in the form of inventory produced in the period, the production stripping costs are
accounted for as part of the cost of producing those inventories. Where production stripping costs are incurred and the benefit is improved access
to ore to be mined in the future, the costs are recognised as a stripping activity asset within mine properties.
If the costs of the inventory produced and the stripping asset are not separately identifiable, the allocation is undertaken based on the waste-to-
ore stripping ratio for the particular ore component concerned. If mining of waste in a period occurs in excess of the expected life-of-component
waste-to-ore strip ratio, the excess is recognised as part of the stripping asset. Where mining occurs at or below the expected life-of-component
stripping ratio in a period, the entire production stripping cost is allocated to the cost of the ore inventory produced.
Amortisation is provided on the units-of-production method over the life of the identified orebody component. The units-of-production method
results in an amortisation charge proportional to the depletion of the economically recoverable mineral resources (comprising proven and probable
reserves).
18. Mine Properties
60
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
18. Mine Properties (Continued)
Other mine properties
Other mine properties represent the accumulation of all acquisition, exploration, evaluation and development expenditure incurred by or on behalf
of the Group in relation to areas of interest in which the mining of mineral resources has commenced. When further development expenditure is
incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of the cost of that mine
property only when substantial future economic benefits are established, otherwise such expenditure is classified as part of the cost of production.
Amortisation is provided on the units-of-production method over the life of the mine, with separate calculations being made for each mineral
resource. The units-of-production method results in an amortisation charge proportional to the depletion of the economically recoverable mineral
resources (comprising proven and probable reserves).
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that
area of interest. Impairment expenses are recognised to the extent that the carrying amount of the mine properties asset exceeds its estimated
recoverable amount. Refer to note 19 for further details on impairment.
Key judgement and estimate
Determining the beginning of production
Judgment is required to determine when capitalisation of development costs ceases and amortisation of mine assets commences upon the start of
commercial production. This is based on the specific circumstances of the project, and considers when the specific asset is substantially complete
and becomes ‘available for use’ as intended by management which includes consideration of the following factors:
x
completion of reasonable testing of the mine plant and equipment;
x
mineral recoveries, availability and throughput levels at or near expected levels;
x
the ability to produce iron ore in saleable form (where more than an immaterial amount is produced); and
x
the achievement of continuous production.
Stripping activity assets
Judgment is required to identify a suitable production measure to be used to allocate production stripping costs between inventory and any stripping
activity asset(s) for each orebody component. The Group considers that the ratios of the expected volume of waste to be stripped for an expected
volume of ore to be mined for a specific component of orebody, to be the most suitable production measure.
In identifying and defining the orebody components, judgment is required to determine the expected volumes of waste to be stripped and ore to
be mined in each of these components. These assessments are based on the information available in the mine plan which will vary between mines
for various reasons, including, the geological characteristics of the orebody, the geographical location and/or financial considerations.
Stripping ratio
Material judgment is required in determining the waste capitalisation ratio for each component of the mine. Factors that are considered include:
x
any proposed changes in the design of the mine;
x
estimates of the quantities of ore reserves and mineral resources for which there is a high degree of confidence of economic extraction;
x
identifiable components of the orebody;
x
future production levels;
x
impacts of regulatory obligations and taxation legislation; and
x
future cash cost of production.
Impairment of capitalised mine development expenditure
The future recoverability of capitalised mine development expenditure is dependent on a number of factors, including the level of mineral resources
and ore reserves, future technological changes which could impact the cost of mining, future legal changes (including changes to environmental
restoration obligations) and changes to commodity prices and exchange rates.
The Group regularly reviews the carrying values of its mine development assets in the context of internal and external consensus forecasts for
commodity prices and foreign exchange rates, with the application of appropriate discount rates for the assets concerned.
To the extent that capitalised mine development expenditure is determined not to be recoverable in the future, this will reduce profits and net
assets in the period in which this determination is made. Capitalised mine development expenditure is assessed for recoverability along with
property, plant and equipment as described below. Refer note 19 for further details on impairment.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
61
Notes to the Consolidated Financial Report (continued)
The Group reviews the carrying value of the assets of each Cash Generating Unit (CGU) at each balance date for indicators of potential
impairment or reversal thereof. Where such indicators exist, the Company utilises the approaches under applicable accounting
pronouncements for assessment of any impairment expenses or reversals.
As at 30 June 2024, the following were considered indicators of impairment relating to the Company’s operations:
x
the market capitalisation of the Group was below the book value of its net assets; and
x
the benchmark price of iron ore, being the Company’s sole product, decreased 4.4% from US$111.60 per dry metric tonne (dmt) of
62% Fe CFR fines as at 30 June 2023 to US$106.70/dmt as at 30 June 2024.
Accordingly, the Group has performed an impairment assessment on the Koolan Island CGU. Based on this assessment, the following
impairment amounts have been recognised in the financial report:
2024
2023
$’000
$’000
Koolan Island
159,100
74,300
Mid-West
-
1,105
Total loss on impairment of non-current assets
159,100
75,405
The above impairment values have been allocated proportionately to each CGU’s non-current assets as follows:
Koolan Island
Mid-West
Total
2024
2023
2024
2023
2024
2023
Notes
$’000
$’000
$’000
$’000
$’000
$’000
Deferred stripping costs
18
61,950
36,309
-
-
61,950
36,309
Other mine properties
18
59,518
25,788
-
-
59,518
25,788
Total mine properties
121,468
62,097
-
-
121,468
62,097
Property, plant and equipment
15
37,632
12,203
--
-
37,632
12,203
Right-of-use assets
16
-
-
1,105
-
1,105
Total impairment loss of
non-current assets
159,100
74,300
-
1,105
159,100
75,405
The Group assessed the recoverable amount of the Koolan Island CGU as at 30 June 2024 using the Fair Value Less Costs of Disposal
(FVLCD) approach. The recoverable amount of the Koolan Island CGU at 30 June 2024 is $130,200,000 (2023: $375,015,000). The FVLCD
is assessed as the present value of the future cash flows expected to be derived from the operation less disposal costs (level 3 in the fair
value hierarchy), utilising the following key assumptions:
x
Cashflow forecasts based on historical performance and budgeted revenues and operating and capital costs over the life of mine;
x
Discount rate of 13.00% (nominal, after tax);
x
Iron ore price forecasts for the 62% Fe benchmark fines CFR price (northern China), expressed in real 2024 terms, of US$108.61/dmt
in 2025 (falling to US$100.85/dmt in 2026 and US$99.36/dmt in 2027), at an exchange rate of A$1.00/US$0.68 in 2025 (rising to
A$1.00/US$0.69 in 2026 and 2027) with sensitivities undertaken for a broad range of inputs; and
x
Cost inflation estimates of 3.00% per annum.
Koolan Island CGU’s recoverable value is most sensitive to changes in iron ore prices, the A$/US$ exchange rate and mining unit costs. It
is estimated that changes in these key assumptions would impact the recoverable amount of the CGU as at 30 June 2024 as follows:
Key Assumption
Increase/(Decrease) in CGU Recoverable
Amount
1000 basis points
increase in key
assumptions
1000 basis points
decrease in key
assumptions
$’000
$’000
Benchmark price of 62% Fe CFR fines iron ore
(87,000)
(234,000)
A$/US$ exchange rate
(210,000)
(97,000)
Mining unit cost per wmt mined
(190,000)
(129,000)
19. Impairment of Non-Current Assets
62
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
Recognition and measurement
Recoverable amount of assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists,
the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs of disposal and value-in-use. Recoverable amount is determined for an individual asset,
unless the asset’s value-in-use cannot be estimated to be close to its fair value less cost of disposal and it does not generate cash inflows that are
largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset.
The fair value less costs of disposal is assessed as the present value of the future cash flows expected to be derived from the cash-generating unit
less disposal costs using forecast iron ore prices and post-tax discount rate that reflects current market assessments.
In allocating an impairment loss, the carrying amount of an individual asset is not taken below its individual recoverable amount.
An assessment is also made at each reporting date as to whether there is any indication that a previously recognised impairment loss may no longer
exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed
only where there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.
If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation and amortisation, had no impairment loss been recognised for the asset in prior years. Such
reversal is recognised in profit or loss unless the asset is carried at the revalued amount, in which case the reversal is treated as a revaluation
increase. After such a reversal, the depreciation or amortisation charges are adjusted in future periods to allocate the asset’s revised carrying amount,
less any residual value, on a systematic basis over its remaining useful life.
Key judgement and estimates
Impairment of capitalised mine development expenditure
The future recoverability of capitalised mine development expenditure is dependent on a number of factors, including the level of mineral resources
and ore reserves, future technological changes which could impact the cost of mining, future legal changes (including changes to environmental
restoration obligations) and changes to commodity prices.
The Group regularly reviews the carrying values of its mine development assets in the context of internal and external consensus forecasts for
commodity prices and foreign exchange rates, with the application of appropriate discount rates for the assets concerned.
To the extent that capitalised mine development expenditure is determined not to be recoverable in the future, this will reduce profits and net assets
in the period in which this determination is made. Capitalised mine development expenditure is assessed for recoverability along with property, plant
and equipment as described below.
Impairment of property, plant and equipment
The carrying value of property, plant and equipment is reviewed for impairment if there is any indication that the carrying amount may not be
recoverable. Where a review for impairment is conducted, the recoverable amount is assessed by reference to the higher of value-in-use (being the
net present value of expected future cash flows of the relevant cash generating unit) and ‘fair value less costs of disposal’.
In determining value-in-use, future cash flow forecasts for each cash generating unit (i.e. each mine) are prepared utilising management’s latest
estimates of mine life, mineral resource and ore reserve recovery, operating and development costs, royalties and taxation, and other relevant cash
inflows and outflows. Cash flow scenarios for a range of commodity prices and foreign exchange rates are assessed using internal and external
market forecasts, and the present value of the forecast cash flows is determined utilising a discount rate based on industry weighted average cost of
capital.
The Group’s cash flows are most sensitive to movements in iron ore prices, the discount rate and key operating costs. Variations to the expected
future cash flows, and the timing thereof, could result in material changes to any impairment assessment or losses recognised, if any, which could in
turn impact future financial results.
2024
2023
Notes
$’000
$’000
Current
Trade creditors – at amortised cost
[i]
8,591
6,729
Accruals and other payables – at amortised cost
[i]
34,427
40,885
43,018
47,614
[i]
Current trade creditors and other payables are non-interest bearing and are normally settled on 30 day terms.
Recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of payables, net of directly attributable transaction costs. Trade payables,
accruals and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end
of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods
and services.
20. Trade and Other Payables
MOUNT GIBSON IRON LIMITED 2024 Annual Report
63
Notes to the Consolidated Financial Report (continued)
2024
2023
Notes
$’000
$’000
Current
Lease liabilities
[i],[a]
9,144
10,031
Insurance premium funding facility
[b]
-
1,163
9,144
11,194
Non-Current
Lease liabilities
[i],[a]
2,707
11,851
2,707
11,851
[i] Lease liabilities
Minimum lease payments for right-of-use assets:
x
Not later than one year
9,597
10,998
x
Later than one year but not later than five years
2,756
12,352
Total minimum lease payments
12,353
23,350
Future finance charges
(502)
(1,468)
11,851
21,882
The following off-balance sheet financing facilities had been negotiated and were available at the reporting date:
Performance bonding facility
[c]
Used at reporting date
6,586
6,681
Unused at reporting date
13,414
13,319
20,000
20,000
Corporate loan facility
[c]
Used at reporting date
-
-
Unused at reporting date
-
75,000
-
75,000
Terms and conditions relating to the above financing facilities:
[a] Lease Facility
The Group has lease liabilities for right-of-use assets which are repayable monthly with final instalments due in March 2026. Interest
is applied at a weighted average incremental borrowing rate of 5.47% pa.
[b] Insurance Premium Funding Facility
Insurance premium funding arrangements were entered into by the Group to spread the cost of its annual insurance premiums over
the term of the arrangement. Interest was charged at 5.32% pa. The facility was repayable monthly over 10 months with the final
instalment paid in July 2023.
[c] Corporate Loan Facility and Performance Bonding facility
In May 2011, the Company entered into a Facility Agreement comprising a Corporate Loan facility and a Performance Bonding facility.
The undrawn Corporate Loan facility was cancelled in April 2013 and subsequently amended and reinstated on 23 December 2021 for
a term of 23 months with a loan facility limit of $100,000,000. The loan facility limit reduced to $75,000,000 in June 2023 and to
$50,000,000 in September 2023. On 22 December 2022, the loan facility was amended to extend the maturity date to 31 May 2024
in relation to the amount of $50,000,000. The loan facility was fully repaid in the 2022/23 financial year and subsequently cancelled
effective 1 September 2023.
The Performance Bonding facility was amended in June 2017 to reduce the amount from $55,000,000 to $20,000,000 and in December
2023 the term was extended to 30 September 2026. As at balance date, bonds and guarantees totalling $6,586,000 were drawn
under the Performance Bonding facility.
The security pledge for the Facility Agreement is a fixed and floating charge over all the assets and undertakings of Mount Gibson
Iron Limited, Mount Gibson Mining Limited, Geraldton Bulk Handling Limited, Koolan Iron Ore Pty Ltd and Aztec Resources Limited
together with mining mortgages over the mining tenements owned by Mount Gibson Mining Limited and Koolan Iron Ore Pty Ltd.
The relevant assets of Mount Gibson Mining Limited and Geraldton Bulk Handling Pty Ltd were released from the security at completion
of the Mid-West asset disposal (refer Note 3[c][i]).
21. Interest-Bearing Loans and Borrowings
64
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
Recognition and measurement
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of
an identifiable asset for a period of time in exchange for consideration.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over
the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable
lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include the exercise price of a purchase option reasonably certain to be exercised by the Group and payment of penalties for terminating a lease, if
the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are
recognised as an expense in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest
rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.
Other loans and borrowings
All other loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method.
Fees paid on the establishment of loan facilities are included as part of the carrying amount of the loans and borrowings.
Gains and losses are recognised in the profit or loss when the liabilities are derecognised.
2024
2023
Notes
$’000
$’000
Current
Foreign currency option contracts
37[b][i]
-
344
-
344
22. Derivative Financial Liabilities
MOUNT GIBSON IRON LIMITED 2024 Annual Report
65
Notes to the Consolidated Financial Report (continued)
Road Resealing
Decommissioning Rehabilitation
Total
2024
2023
2024
2023
2024
2023
$’000
$’000
$’000
$’000
$’000
$’000
Current
-
127
469
469
469
596
Non-Current
-
-
54,272
49,590
54,272
49,590
-
127
54,741
50,059
54,741
50,186
Reconciliation
Carrying amount at the beginning of the year
127
476
50,059
50,688
50,186
51,164
Provision for period
-
358
-
-
-
358
Amounts utilised during the period
(127)
(707)
-
(219)
(127)
(926)
Interest accretion on rehabilitation provision - expensed
-
-
1,962
1,782
1,962
1,782
Revised estimate adjustment – profit or loss
-
-
-
(846)
-
(846)
Revised estimate adjustment – mine properties asset (Note 18)
-
-
2,720
6,883
2,720
6,883
Liabilities associated with disposal group classified as held for sale (Note 13)
-
-
-
(8,229)
-
(8,229)
Carrying amount at the end of the year
-
127
54,741
50,059
54,741
50,186
Road resealing
This provision related to the cost of roadworks associated with the completion of mining activities at Extension Hill mine site.
Decommissioning rehabilitation
This provision represents the present value of decommissioning and rehabilitation costs for the Tallering Peak and Koolan Island sites. The cost estimates forming the basis of the provisions (except
the Tallering Peak site) were prepared as at the end of the financial year by independent consultants specialising in mine closure planning and mine rehabilitation cost estimates. The timing of
decommissioning and rehabilitation expenditure is dependent on the life of the mines and on the timing of the rehabilitation requirements, which may vary in the future. Based on current estimates,
the bulk of expenditure on decommissioning rehabilitation is expected to be incurred at Koolan Island within 3-4 years from balance date.
23. Provisions
66
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
2024
2023
$’000
$’000
23. Provisions (Continued)
The following table summarises the decommissioning rehabilitation provision by mine site:
Tallering Peak
469
469
Koolan Island
54,272
49,590
54,741
50,059
Decommissioning rehabilitation provision relating to liabilities associated with disposal
group classified as held for sale:
Extension Hill
-
4,210
Shine
-
4,019
-
8,229
The key assumptions underpinning the cost estimates are as follows:
Koolan Island
Shine
Extension Hill
2024
2023
2024
2023
2024
2023
Inflation rate
2.70%
3.00%
-
3.00%
-
3.00%
Discount rate
4.09%
3.96%
-
3.95%
-
4.18%
An increase of 1,000 basis points in the discount rate applied at 30 June 2024 would result in a decrease to the decommission rehabilitation
provision and mine properties asset at Koolan Island of approximately $798,000.
A decrease of 1,000 basis points in the discount rate applied at 30 June 2024 would result in an increase to the decommissioning rehabilitation
provision and mine properties asset at Koolan Island of approximately $815,000.
Recognition and measurement
Rehabilitation costs
Long-term environmental obligations are based on the Group’s environmental management plans, in compliance with current environmental and
regulatory requirements.
Full provision is made based on the present value of the estimated cost of restoring the environmental disturbance that has occurred up to the
balance sheet date. Increases due to additional environmental disturbances, relating to the development of an asset, are capitalised and amortised
over the remaining life of the area of interest.
Annual increases in the provision relating to the change in the present value of the provision are accounted for in the income statement as borrowing
costs.
The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other
circumstances. Cost estimates are not reduced by potential proceeds from the sale of assets.
Restructuring provision
Restructuring provisions are recognised by the Group only when a detailed formal plan identifies the business or part of the business concerned,
the location and number of employees affected, a detailed estimate of the associated costs and an appropriate timeline, and that the employees
affected have been notified of the plan’s main features.
Other Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, 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.
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 the current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A provision for dividends is not recognised as a liability unless the dividends have been declared, determined or publicly recommended on or before
the balance date.
Key estimate: mine rehabilitation provision
The Group assesses its mine rehabilitation provision annually in accordance with the accounting policy stated above. Material judgment is required
in determining the provision for mine rehabilitation as there are many factors that will affect the ultimate liability payable to rehabilitate the mine
site. These include future development, changes in anticipated rehabilitation activities and costs, changes in technology, commodity price changes
and changes in interest rates, inflation rates and discount rates. When these factors change or become known in the future, such differences will
impact the mine rehabilitation provision in the period in which they change or become known.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
67
Notes to the Consolidated Financial Report (continued)
2024
2023
$’000
$’000
[a] Ordinary shares
Issued and fully paid
633,102
633,102
2024
2023
Notes
Number of
Shares
$’000
Number of
Shares
$’000
[b] Movement in ordinary shares on issue
Balance at the beginning of the financial year
1,204,253,233
633,102
1,202,329,505
632,425
Shares fully paid under LSP
-
-
1,923,728
677
1,204,253,233
633,102
1,204,253,233
633,102
Restricted shares – reserved for Loan Share Plan:
Balance at the beginning of the financial year
8,677,600
-
8,238,528
-
Shares issued under LSP
[f]
464,400
-
3,851,300
-
Conversion of fully paid shares under LSP
-
-
(1,923,728)
-
Shares forfeited under LSP
-
-
(1,488,500)
-
Shares reallotted from treasury shares
1,488,500
-
-
-
10,630,500
-
8,677,600
-
Treasury shares:
Balance at the beginning of the financial year
1,488,500
-
-
-
Shares forfeited under LSP, not reallotted
-
-
1,488,500
-
Shares reallotted under LSP
(1,488,500)
-
-
-
-
-
1,488,500
-
Total shares on issue
1,214,883,733
633,102
1,214,419,333
633,102
[c] Terms and conditions of contributed equity
Ordinary shares have the right to receive dividends as declared, and in the event of winding up the Company, to participate in the proceeds
from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder
to one vote, either in person or by proxy, at a meeting of the Company.
Effective from 1 July 1998, the Corporations legislation abolished the concept of authorised capital and par values. Accordingly, the
Company does not have authorised capital nor a par value in respect of its issued shares.
[d] Share options
As at 30 June 2024, there were no options on issue (2023: nil).
Share options carry no right to dividends and no voting rights.
[e] Performance rights
During the year ended 30 June 2024, no Performance Rights were issued.
No Performance Rights vested during the year (2023: nil).
As at 30 June 2024, there were no Performance Rights on issue (2023: nil) – see note 28(c).
[f] Loan Share Plan (in-substance options)
During the year ended 30 June 2024, 1,952,900 shares (which included 1,488,500 shares reallotted) were issued under the LSP.
There were no shares vested under the LSP during the year (2023: nil).
[g] Capital management
The primary objectives of the Group’s capital management program are to safeguard the Group’s ability to continue as a going concern,
so that it can provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce
the cost of capital.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust
the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders, buy back shares or issue
new shares or other securities.
No changes were made in the objectives, policy or processes for managing capital during the year ended 30 June 2024.
24. Issued Capital
68
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
2024
2023
Notes
$’000
$’000
Share based payments reserve
[a]
22,912
22,553
Net unrealised gains reserve
[b]
-
(153)
Dividend distribution reserve
[c]
906,019
906,019
Equity reserves
[d]
(3,192)
(3,192)
925,739
925,227
[a] Share based payments reserve
This reserve is used to record the value of equity benefits provided to employees and directors
as part of their remuneration.
Balance at the beginning of the year
22,553
22,193
Share based payments
359
360
Balance at the end of the year
22,912
22,553
[b] Net unrealised gains reserve
This reserve records movement for financial assets classified as fair value through other
comprehensive income and gains and losses on hedging instruments classified as effective
cash flow hedges.
Balance at the beginning of the year
(153)
(64)
Change in fair value of cash flow hedges
218
(218)
Change in fair value of debt instrument classified as financial assets designated at
fair value through other comprehensive income
-
92
Deferred income tax on cash flow hedges
(65)
37
Balance at the end of the year
-
(153)
[c]
Dividend distribution reserve
This reserve is used to record profits from prior income years for the purpose of future
dividend distribution by the Company.
Balance at the beginning of the year
906,019
906,019
Dividends paid during the period
-
-
Balance at the end of the year
906,019
906,019
[d] Equity reserves
This reserve is used to record the gain or loss arising from the sale or acquisition of non-
controlling interests to or from third party investors.
Balance at the beginning of the year
(3,192)
(3,192)
Movement during the period
-
-
Balance at the end of the year
(3,192)
(3,192)
25. Reserves
MOUNT GIBSON IRON LIMITED 2024 Annual Report
69
Notes to the Consolidated Financial Report (continued)
2024
2023
Notes
$’000
$’000
Balance at the beginning of the year
(1,019,098)
(1,024,277)
Net profit attributable to members of the Company
6,430
5,179
Balance at the end of the year
(1,012,668)
(1,019,098)
[a] Exploration expenditure commitments
[i]
Minimum obligations not provided for in the financial report and are payable:
x
Not later than one year
566
446
x
Later than one year but not later than five years
1,309
1,398
x
Later than five years
1,359
1,492
3,234
3,336
[b] Property, plant and equipment commitments
[ii]
Commitments contracted for at balance date but not recognised as liabilities
x
Not later than one year
5,187
6,176
x
Later than one year but not later than five years
-
-
5,187
6,176
[c] Contractual commitments
[iii]
Commitments for the payment of other mining and transport contracts:
x
Not later than one year
12,911
11,855
x
Later than one year but not later than five years
565
-
13,476
11,855
[d] Short-term lease commitments
[iv]
Commitments for the payment of short-term leases:
x
Not later than one year
-
-
-
-
[i]
In order to maintain current rights to explore and mine the tenements at its various mines and projects, the Group is required to
perform minimum exploration work to meet the expenditure requirements specified by the Department of Mines, Industry Regulation
and Safety.
[ii] The Group has contractual commitments to purchase property, plant and equipment at Koolan Island.
[iii] Amounts disclosed as contractual commitments relate primarily to supplier arrangements at Koolan Island where financial obligations,
including minimum notice periods, apply in the case of termination.
[iv] Leases of plant and equipment with lease terms of 12 months or less.
26. Accumulated Losses
27. Expenditure Commitments
70
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
2024
2023
Notes
$’000
$’000
(a) Recognised share-based payment expense
Expense arising from equity-settled share-based payment transactions
4[e]
359
360
The share-based payment plans are described below. There have been no cancellations of any of the plans during 2024 or 2023.
(b) Employee Option Scheme
An Employee Option Scheme has been established where the Company may, at the discretion of the Board, grant options over the ordinary
shares of the Company. The options, issued for nil consideration, are granted in accordance with performance guidelines established by
the Directors of the Company. All Directors, officers and employees are eligible for this scheme. No options were issued during the year
ended 30 June 2024. As at balance date, no options over unissued shares were on issue.
(c) Performance Rights Plan
The Company has established a Performance Rights Plan. Rights are granted at no cost to recipients and convert (vest) into ordinary
shares on completion by the recipient of minimum periods of continuous service and the satisfaction of specified performance hurdles,
including those related to the Company's Total Shareholder Return measured against a comparator group of companies over specified
periods. There were no Performance Rights issued during the year and there were no Performance Rights on issue as at 30 June 2024.
(d) Loan Share Plan
The Company previously established a Loan Share Plan (LSP) under which ordinary shares in the Company may be issued to eligible
participants, with vesting of the shares being subject to the satisfaction of stipulated market conditions. The shares are issued at their
market value with the recipient required to pay this market value in order to take up the share offer. The Company or any of its subsidiaries
will provide a loan to fund the acquisition price. The loan is interest-free and is secured against the shares in the form of a holding lock
preventing all dealing in the shares. The loan is limited recourse such that if the shares do not ultimately vest and are therefore forfeited,
this is treated as full repayment of the loan balance. While the loan balance remains outstanding, any dividends paid on the shares, net
of the tax on the dividends, will be automatically applied towards repayment of the loan. In making the loan in respect of the newly
issued shares, there is no cash cost to the Company as the shares are newly issued.
On 14 December 2023, the Company issued 1,952,900 shares (which included 1,488,500 shares reallotted) under the LSP. In accordance
with the terms of the LSP, the shares were issued at a share price of $0.546 per share and pursuant to the vesting conditions, these
shares do not vest unless a share price target of a 10% premium to the issue price is met between 14 December 2024 and 14 December
2028 and the participants remain continuously employed by the Group until at least 14 December 2025. The award was accounted for
as an in-substance option award and the fair value at grant date assessed at $0.2164 per loan-funded share. In calculating this fair value,
a Monte Carlo simulation model was utilised over several thousand simulations to predict the share price at each vesting test date and
whether the 10% hurdle would be satisfied, with the resultant values discounted back to the grant date. The underlying share price and
the exercise price were assumed at $0.55 and the period to exercise was assumed as 3.5 years (being halfway between the first possible
vesting date and the expiry of the LSP shares), the risk-free rate was 4.95% based on Australian Government bond yields with three year
lives, the estimated volatility was 50% based on historical share price analysis, and the dividend yield was assumed as nil.
The following table shows the number and weighted average exercise prices (WAEP) of, and movements in, LSP shares during the year:
2024
2023
Number of
LSP Shares
WAEP1
Number of
LSP Shares
WAEP1
Balance at beginning of the year
8,677,600
$0.65
8,238,528
$0.67
-
granted during the year
1,952,900
$0.55
3,851,300
$0.44
-
exercised during the year
-
-
(1,923,728)
$0.35
-
forfeited during the year
-
-
(1,488,500)
$0.60
Balance at end of the year
10,630,500
$0.63
8,677,600
$0.65
1 Weighted average exercise price at balance date after dividend adjustments.
28. Share-Based Payment Plans
MOUNT GIBSON IRON LIMITED 2024 Annual Report
71
Notes to the Consolidated Financial Report (continued)
28. Share-Based Payment Plans (Continued)
Recognition and measurement
Share-based payment transactions
The Group provides benefits to employees (including directors) of the Group in the form of share-based payment transactions, whereby employees
render services in exchange for shares or rights over shares (equity-settled transactions).
Options
There is currently a Directors, Officers, Employees and Other Permitted Persons option plan.
The cost of any options issued under this plan is measured by reference to their fair value at the date at which they are granted. The fair value is
typically determined by using a binomial model. No account is taken of any performance conditions, other than conditions linked to the price of
the shares of the Company.
Performance rights
There is a Mount Gibson Iron Limited Performance Rights Plan (PRP). The PRP enables the Company to provide its executives with long term
incentives which create a link between the delivery of value to shareholders, financial performance and rewarding and retaining the executives.
The cost of Performance Rights issued under the PRP is measured by reference to their fair value at the date at which they are granted. The fair
value is determined using either a Black-Scholes or Monte Carlo option valuation model.
Loan share plan
There is a Mount Gibson Iron Limited Loan Share Plan (LSP). The LSP enables the Company to provide its executives with long term incentives
which create a link between the delivery of value to shareholders, financial performance and rewarding and retaining the executives. This plan is
accounted for as an in-substance option award.
The cost of these share rights is measured by reference to the fair value at the date at which they are granted. The fair value is measured by
reference to the quoted market price on the Australian Stock Exchange and using a Monte Carlo simulation model.
Equity-Settled Transactions Generally
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 on the date on which the relevant employees become fully entitled to the award (vesting date).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the
vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of the Group, will ultimately vest. This opinion is
formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being
met as the effect of these conditions is included in the determination of fair value at grant date.
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 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, both the cancelled and 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, Performance Rights and LSP shares is reflected as additional share dilution in the computation of
earnings per share.
72
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
Basic earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would
be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the calculations of basic and diluted earnings per share:
2024
2023
Notes
$’000
$’000
Profit used in calculating basic and diluted earnings per share:
Profit attributable to ordinary equity holders of the Company
6,430
5,179
Number of Shares
Number of
Shares
Weighted average number of ordinary shares used in calculating basic earnings per share
1,204,253,233
1,202,968,123
Effect of dilution
- Restricted shares (in-substance options)
(i)
-
-
Weighted average number of ordinary shares used in calculating diluted earnings per share
1,204,253,233
1,202,968,123
Earnings per Share (cents per share):
Basic earnings per share
0.53
0.43
Diluted earnings per share
0.53
0.43
(i)
10,630,500 restricted shares that could potentially dilute basic earnings per share in the future were not included in the calculation of
diluted earnings per share because they were antidilutive during the reporting period.
Conversions, calls, subscriptions or issues after 30 June 2024
There have been no issues of shares or exercises, conversions or realisations of options, performance rights or restricted LSP shares under
any of the Company’s share-based payment plans since 30 June 2024.
Recognition and measurement
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity
(other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
Diluted earnings per share are calculated as net profit attributable to members of the company, adjusted for:
i)
costs of servicing equity (other than dividends) and preference share dividends;
ii)
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses;
and
iii) other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary
shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
29. Earnings Per Share
MOUNT GIBSON IRON LIMITED 2024 Annual Report
73
Notes to the Consolidated Financial Report (continued)
[b]
Dividends not recognised at the end of the reporting period:
The Company has not declared a dividend for the year ended 30 June 2024.
[c]
Franked dividends:
The amount of franking credits available for the subsequent financial year are:
Franking account balance as at the end of the financial year at 30%
2,664
1
Franking credits that will arise from the payment of income tax payable as at the end
of the financial year
362
-
The amount of franking credits available for future reporting periods:
3,026
1
Impact on the franking account of dividends proposed or declared before the financial
report was authorised for issue but not recognised as a distribution to equity holders
during the period
-
-
3,026
1
Tax rates
The tax rate at which paid dividends have been franked is 30%.
1.
The Group has a Performance Bonding facility drawn to a total of $6,586,000 as at balance date (2023: $6,681,000). The performance
bonds secure the Group’s obligations relating primarily to environmental matters and infrastructure assets.
2.
Certain claims arising with customers, employees, consultants, and contractors have been made by or against certain controlled
entities in the ordinary course of business, some of which involve litigation or arbitration. The Directors do not consider the outcome
of any of these claims will have a material adverse impact on the financial position of the consolidated entity.
[a] Compensation of Key Management Personnel
2024
2023
$
$
Short-term
3,021,396
2,937,613
Post employment
130,852
160,575
Long-term
50,089
83,193
Share-based payment
359,270
360,096
3,561,607
3,541,477
[b] Other Transactions and Balances with Key Management Personnel
There were no other transactions and balances with key management personnel during the year.
2024
2023
$’000
$’000
30. Dividends Paid and Proposed
Declared and paid during the year:
[a]
Dividends on ordinary shares:
During the year ended 30 June 2024, no dividends were declared or paid in respect of the 2022/23 financial year.
31. Contingent Liabilities
32. Key Management Personnel
74
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
Ultimate parent
Mount Gibson Iron Limited is the ultimate Australian parent company.
Director-related entity transactions
Sales
During all or part of the year, Mr Lee and Mr Ferguson were directors of APAC Resources Limited (APAC) which has a 37.40% beneficial
shareholding in Mount Gibson Iron Limited.
During the period, a sale agreement was in place for the sale of 20% of iron ore from Koolan Island’s available mined production over the
life of mine to APAC.
During the financial year, the Group sold 876,740 wmt (2023: 694,582 wmt) of iron ore to APAC.
Amounts recognised at the reporting date in relation to director-related entity transactions:
2024
2023
$’000
$’000
Assets and Liabilities
Current Assets
Receivables – APAC
528
-
Total Assets
528
-
Current Liabilities
Payables – APAC
-
450
Total Liabilities
-
450
Sales Revenue
Sales revenue – APAC
142,566
104,886
Total Sales Revenue (before shipping freight)
142,566
104,886
2024
2023
$
$
Amounts received or due and receivable by EY for:
Fees for auditing the statutory financial report of the parent covering the group and auditing
the statutory financial reports of any controlled entities
323,554
334,340
Special purpose fees for auditing the statutory financial report of Gibson Minerals Limited for
the years ended 30 June 2017 to 30 June 2022
-
100,000
Other services in relation to the entity and any other entity in the consolidated entity
1,247
4,471
324,801
438,811
33. Related Party Transactions
34. Auditor’s Remuneration
MOUNT GIBSON IRON LIMITED 2024 Annual Report
75
Notes to the Consolidated Financial Report (continued)
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Chief Executive Officer
and the executive management team in assessing performance and in determining the allocation of resources.
Since the divestment of the Group’s Mid-West iron ore mining and infrastructure assets in July 2023, the Group had one reportable
segment during the year ended 30 June 2024. The Koolan Island segment includes the mining, crushing and sale of iron ore direct from
the Koolan Island iron ore operation.
Operating results for each reportable segment are reviewed separately by management for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently
with operating profit or loss in the consolidated financial statements.
Except as noted below, the accounting policies applied for internal reporting purposes are consistent with those applied in the preparation
of the financial statements.
For the purposes of segment reporting, revenue is disclosed net of shipping freight costs on a Free on Board (FOB) basis and includes
quotation period price adjustments and realised gains and losses on foreign exchange and commodity forward sale contracts.
There have been no inter-segment revenues.
Items that are managed on a Group basis and are not allocated to segments as they are not considered part of core operations of any
segment are as follows:
Finance costs and revenue on investments
Interest revenue
Foreign exchange gains/(losses)
Unrealised gains/(losses) on derivatives
Corporate costs
During the year ended 30 June 2024, revenue received from the sale of iron ore comprised purchases by the following (unnamed) buyers
who each on a proportionate basis equated to greater than 10% of total sales for the period:
2024
Customer
$’000
# 1
527,946
# 2
142,566
Other
(2,834)
667,678
During the year ended 30 June 2023, revenue received from the sale of iron ore comprised purchases by the following (unnamed) buyers
who each on a proportionate basis equated to greater than 10% of total sales for the period:
2023
Customer
$’000
# 1
345,804
# 2
104,886
Other
(104)
450,586
Revenue from external customers by geographical location is based on the port of delivery. Iron ore shipments were predominantly to
China during the year ended 30 June 2024.
All segment assets are located within Australia.
35. Segment Information
76
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
35. Segment Information (Continued)
Mid-West
Koolan Island
Unallocated*
Consolidated
2024
2023
2024
2023
2024
2023
2024
2023
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Segment revenue
Revenue from sale of iron ore, net of shipping freight and realised gains/(losses) on
derivatives
-
-
667,678
450,586
-
-
667,678
450,586
Interest revenue
-
-
-
-
16,802
2,028
16,802
2,028
Segment revenue, net of shipping freight
-
-
667,678
450,586
16,802
2,028
684,480
452,614
Segment result
Earnings/(loss) before impairment, interest, tax, depreciation and amortisation
-
8,254
325,235
238,553
35,347
(13,382)
360,582
233,425
Write down of inventories to net realisable value (i)
-
(159)
(22,676)
1,504
-
-
(22,676)
1,345
Impairment expenses (ii)
-
(1,105)
(159,100)
(74,300)
-
-
(159,100)
(75,405)
Earnings/(loss) before interest, tax, depreciation and amortisation
-
6,990
143,459
165,757
35,347
(13,382)
178,806
159,365
Depreciation and amortisation
-
(490)
(121,289)
(121,639)
(657)
(658)
(121,946)
(122,787)
Segment result
-
6,500
22,170
44,118
34,690
(14,040)
56,860
36,578
Finance costs
(4,406)
(6,125)
Profit before tax
52,454
30,453
(i)
Write down of inventories to net realisable value:
Write down of consumables inventories
-
159
830
1,544
-
-
830
1,703
Write down/(reversal of write down) of ore inventories
-
-
21,846
(3,048)
-
-
21,846
(3,048)
-
159
22,676
(1,504)
-
-
22,676
(1,345)
(ii) Impairment expenses (note 19):
Impairment of property, plant and equipment
-
-
37,632
12,203
-
-
37,632
12,203
Impairment of right-of-use assets
-
1,105
-
-
-
-
-
1,105
Impairment of mine properties
-
-
121,468
62,097
-
-
121,468
62,097
-
1,105
159,100
74,300
-
-
159,100
75,405
*
‘Unallocated’ includes interest revenue of $16,802,000 (2023: $2,028,000), net realised loss on foreign exchange transactions of $512,000 (2023: $87,000 loss), unrealised marked-to-market loss on financial assets held for
trading of $3,238,000 (2023: $2,442,000), net gain on disposal group of $35,942,000 (2023: $nil) and corporate expenses such as head office salaries and wages.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
77
Notes to the Consolidated Financial Report (continued)
35. Segment Information (Continued)
Mid-West
Koolan Island
Unallocated*
Consolidated
2024
2023
2024
2023
2024
2023
2024
2023
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Segment assets
Current financial assets
-
3,780
18,563
18,457
449,523
147,253
468,086
169,490
Assets associated with disposal group classified as held for sale
-
2,058
-
-
-
-
-
2,058
Other current assets
-
502
59,910
109,090
1,917
2,009
61,827
111,601
Property, plant and equipment
-
27
25,302
51,118
577
235
25,879
51,380
Right-of-use assets
-
-
11,872
23,248
493
984
12,365
24,232
Deferred exploration and evaluation costs
-
-
-
-
2,480
1,946
2,480
1,946
Mine properties
-
-
81,671
260,138
-
-
81,671
260,138
Other non-current assets
-
-
-
165
-
-
-
165
Deferred tax assets
-
-
-
-
11,990
55,933
11,990
55,933
Total assets
-
6,367
197,318
462,216
466,980
208,360
664,298
676,943
Segment liabilities
Financial liabilities
-
1,260
51,190
64,258
3,679
5,485
54,869
71,003
Liabilities associated with disposal group classified as held for sale
-
9,125
-
-
-
-
-
9,125
Other liabilities
-
470
60,620
54,537
2,636
2,577
63,256
57,584
Total liabilities
-
10,855
111,810
118,795
6,315
8,062
118,125
137,712
Net assets/(liabilities)
-
(4,488)
85,508
343,421
460,665
200,298
546,173
539,231
* ‘Unallocated’ current financial assets include cash and cash equivalents of $21,574,000 (2023: $39,396,000), term deposits of $387,340,000 (2023: $103,700,000), financial assets held for trading of $18,539,000
(2023: $3,427,000), other financial assets of $20,745,000 (2023; $nil), trade debtors and other receivables of $1,127,000 (2023: $534,000) and derivatives of $198,000 (2023: $196,000).
‘Unallocated’ financial liabilities include trade and other payables of $3,136,000 (2023: $2,923,000), interest-bearing loans and borrowings of $543,000 (2023: $2,218,000) and derivatives of $nil (2023: $344,000).
78
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
Subsequent to year end, the business interruption insurance claim resulting from the Koolan Island processing plant fire in August 2022 has
been finalised with insurers for the negotiated amount of $27,270,000 after deductible. It is anticipated the business interruption claim
proceeds will be received in the first quarter of the 2024/25 financial year.
On 9 August 2024, the Company made a payment of $3,125,000 to exercise 12,500,000 options at $0.25 per option held in Fenix.
Subsequent to year end, the Board of Directors has approved an on-market share buy-back of up to 5% of the Company’s issued shares as
part of its capital management strategy.
Other than the above, as at the date of this report there are no significant events after balance date of the Company or of the Group that
require adjustment of or disclosure in this report.
[a] Financial risk management objectives
The Group’s principal financial instruments, other than derivatives, comprise bank, cash and short-term deposits, financial assets held for
trading, trade and other receivables, trade and other payables, and lease liabilities.
The main purpose of these financial instruments is to manage short term cash flows for the Group’s operations.
The Group has various other financial instruments such as trade receivables and trade creditors, which arise directly from its operations.
The Group also enters into derivatives transactions, principally forward currency contracts, and from time to time also enters into foreign
currency collar options and iron ore swaps. The purpose is to manage the currency and commodity price risks arising from the Group’s
operations.
The main risks arising from the Group’s financial instruments are foreign currency risk, interest rate risk, credit risk, commodity price risk
and liquidity risk. The Board reviews and agrees management’s recommended policies for managing each of these risks, as summarised
below and in accordance with the Company’s Financial Risk Management Policy.
[b] Foreign currency risk
The Group is exposed to the risk of adverse movement in the A$ compared to the US$ as its iron ore sales receipts are predominantly
denominated in US$. The Group has used derivative financial instruments to manage specifically identified foreign currency exposures by
hedging a proportion of forecast US$ sales transactions in accordance with its risk management policy. The primary objective of using
derivative financial instruments is to reduce the volatility of earnings and cashflows attributable to changes in the A$/US$ exchange rate
and to protect against adverse movements in this rate.
The Group recognises derivative financial instruments at fair value at the date the derivative contract is entered into. The Group applies
hedge accounting to forward foreign currency contracts and collar option contracts that meet the criteria of cash flow hedges.
At 30 June 2024, the notional amount of the foreign exchange hedge book totalling US$15,000,000 is made up exclusively of collar option
contracts with maturity dates in the 3 months ended 30 September 2024 and with an average cap price of A$1.00/US$0.6750 and an
average floor price of A$1.00/US$0.6275.
As at 30 June 2024, the net marked-to-market unrealised gain on the total outstanding US dollar foreign exchange hedge book of
US$15,000,000 was $198,000. This was recognised in the profit or loss as at balance date.
It is the Group’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximise hedge
effectiveness.
36. Events After the Balance Sheet Date
37. Financial Instruments
MOUNT GIBSON IRON LIMITED 2024 Annual Report
79
Notes to the Consolidated Financial Report (continued)
37. Financial Instruments (Continued)
The Group uses the following derivative instruments to manage foreign currency risk from time to time as business needs and conditions
dictate:
Instrument
Type of Hedging
Objective
Forward exchange contracts
Cash flow hedge
To hedge sales receipts against cash flow volatility arising from the
fluctuation of the A$/US$ exchange rate.
Collar options
Cash flow hedge
To hedge sales receipts against cash flow volatility arising from the
fluctuation of the A$/US$ exchange rate by limiting exposure to exchange
rates within a certain range of acceptable rates.
[i]
Foreign exchange contracts – cash flow hedges
At balance date, the following foreign exchange contracts designed as a hedge of anticipated future receipts that will be denominated in
US$ were outstanding:
2024
2023
Average
Contract
Rate
Contract
Amount
US$
Contract
Amount
A$
Fair
Value
A$
Average
Contract
Rate
Contract
Amount
US$
Contract
Amount
A$
Fair
Value
A$
A$/US$
$’000
$’000
$’000
A$/US$
$’000
$’000
$’000
Collar Option Contracts
Within one year:
15,000
23,904
198
6,000
8,571
(166)
- call strike price
0.6750
0.7000
- put strike price
0.6275
0.6750
Within one year:
-
-
-
6,000
8,571
(117)
- call strike price
0.7000
- put strike price
0.6685
Within one year:
-
-
-
6,000
8,571
(15)
- call strike price
0.7000
- put strike price
0.6395
Within one year:
-
-
-
10,000
14,286
35
- call strike price
0.7000
- put strike price
0.6104
Within one year:
-
-
-
24,000
34,286
(46)
- call strike price
0.7000
- put strike price
0.6371
Within one year:
-
-
-
16,000
23,188
161
- call strike price
0.6900
- put strike price
0.6150
Total
15,000
23,904
198
68,000
97,473
(148)
At balance date, the following foreign exchange contracts were recognised on the balance sheet and income statement:
2024
2023
Notes
$’000
$’000
Current assets
12
198
196
Current liabilities
22
-
(344)
Total collar option contracts
198
(148)
80
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
37. Financial Instruments (Continued)
[ii] Foreign currency sensitivity
The following table details the effect on profit and other comprehensive income after tax of a 10% change in the A$ against the US$ from
the spot rates at 30 June 2024 and 30 June 2023.
Sensitivity to a 10% change in A$ against US$ at
balance date
Net Profit
Other Comprehensive Income
2024
2023
2024
2023
$’000
$’000
$’000
$’000
10% appreciation in the A$ spot rate with all other variables
held constant
(680)
(759)
1,268
3,769
10% depreciation in the A$ spot rate with all other variables
held constant
830
928
(760)
(4,457)
The sensitivity analysis of the Group’s exposure to the foreign currency risk at balance date has been determined based on the change in
value due to foreign exchange movement based on exposures at balance sheet date. A positive number indicates an increase in profit and
other comprehensive income.
At balance date, the Group’s exposure to foreign currency risks on financial assets and financial liabilities, excluding derivatives, which are
primarily denominated in US dollars, are as follows:
2024
2023
$’000
$’000
Financial Assets
Cash
(included within note 6)
10,504
12,321
Trade and other receivables
(included within note 10)
461
18
Financial Liabilities
Trade and other payables
(included within note 20)
(284)
(409)
Net exposure
10,681
11,930
The net exposure in US dollars at balance date is U$7,075,000 (2023: U$7,910,000).
[c]
Interest rate risk
The Group’s exposure to market interest rates relates primarily to the Group’s cash and cash equivalents, term deposits and subordinated
notes, trade debtors, financial assets at fair value through profit or loss and financial assets held for trading (tradeable corporate bonds).
The Group’s policy is to manage its interest costs using a mix of fixed and variable rate debt (as appropriate).
The Group regularly analyses its interest income rate exposure. Within this analysis, consideration is given to potential renewals of existing
positions and alternative financing arrangements.
At balance date, the Group’s exposure to interest rate risks on financial assets and financial liabilities was as follows:
MOUNT GIBSON IRON LIMITED 2024 Annual Report
81
Notes to the Consolidated Financial Report (continued)
37. Financial Instruments (Continued)
Fixed interest rate maturing in:
Total carrying amount
per balance sheet
Weighted Average
Interest
Floating interest rate
1 year or less
Over 1 to 5 years
Non-interest bearing
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
CONSOLIDATED
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
%
%
i) Financial assets
Cash
36,252
55,034
-
-
-
-
6
4
36,258
55,038
4.50
2.90
Term deposits
-
-
337,201
103,950
50,289
-
-
-
387,490
103,950
5.59
5.15
Financial assets held for trading
-
-
1
153
-
-
18,538
3,274
18,539
3,427
6.50
7.00
Other financial assets
-
-
-
-
-
-
20,745
-
20,745
-
-
-
Trade and other receivables
-
-
-
-
-
-
4,856*
6,879
4,856
6,879
-
-
Derivative financial assets
-
-
-
-
-
-
198
196
198
196
-
-
Total financial assets
36,252
55,034
337,202
104,103
50,289
-
44,343
10,353
468,086
169,490
ii) Financial liabilities
Trade and other payables
-
-
-
-
-
-
43,018
47,614
43,018
47,614
-
-
Interest-bearing loans and borrowings
-
-
9,144
11,194
2,707
11,851
-
-
11,851
23,045
5.47
5.25
Derivative financial liabilities
-
-
-
-
-
-
-
344
-
344
-
-
Total financial liabilities
-
-
9,144
11,194
2,707
11,851
43,018
47,958
54,869
71,003
* Includes trade receivables at fair value amounting to $461,000 (2023: $18,000) that expose the Group to interest rate risk.
82
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
37. Financial Instruments (Continued)
[i]
Interest rate sensitivity
The following table details the effect on profit and other comprehensive income after tax of 25 basis points change in interest rates, in
absolute terms.
Sensitivity of 25 basis points change in interest
rates
Net Profit
Other Comprehensive Income
2024
2023
2024
2023
$’000
$’000
$’000
$’000
x
25 basis points increase in interest rate with
all other variables held constant
731
277
-
-
x
25 basis points decrease in interest rate
with all other variables held constant
(731)
(277)
-
-
The sensitivity analysis of the Group’s exposure to Australian variable interest rates at balance date has been determined based on exposures
at balance sheet date. A positive number indicates an increase in profit and equity.
[d] Credit risk
The Group’s maximum exposures to credit risk at balance date in relation to each class of recognised financial assets, other than derivatives,
is the carrying amount of those assets as indicated in the balance sheet.
In relation to derivative financial instruments, whether recognised or unrecognised, credit risk arises from the potential failure of
counterparties to meet their obligations under the contract or arrangement. The Group’s maximum credit risk exposure in relation to
forward exchange and collar exchange contracts is the full amount of the foreign currency it will be required to pay or purchase when
settling the forward or collar exchange contract, should the counterparty not pay the currency it is committed to deliver to the Group.
The majority of the Group’s customers are located in China. The Group minimises concentrations of credit risk in relation to trade receivables
by undertaking transactions with a number of customers and by the use of advance payments and letters of credit which effectively protect
at least 95% of the estimated receivable amount at the time of sale.
Credit risk from balances with banks and financial institutions is managed in accordance with a Board-approved policy. Investments of
surplus funds are made only with approved counterparties with an acceptable Standard & Poor’s credit rating and within credit limits
assigned to each counterparty. Counterparty credit limits are reviewed by the Board on an ongoing basis, and may be updated throughout
the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty
failure. No material exposure is presently considered to exist by virtue of the possible non-performance of the counterparties to financial
instruments.
There are no significant concentrations of credit risk within the Group.
[e] Commodity price risk
The Group’s operations are exposed to commodity price risk as the Group sells iron ore to its customers. The majority of the Group’s sales
revenue is derived under long term sales offtake contracts. The pricing mechanism in these contracts reflects a market based clearing
index. The pricing mechanism adopts the Platts Iron Ore Index Price (Platts Index) which is published daily for iron ore “fines” with Fe
content ranging from 52% to 65% and is quoted on a US$ per dry metric tonne “Cost and Freight” North China basis. “Lump” iron ore
typically receives a premium to the published Platts Index “fines” price.
During the period, the Group also entered into iron ore collar option contracts totalling 595,000 tonnes of iron ore at prices of A$175 to
A$195 per tonne (CFR, including shipping freight), with maturity dates over the period October 2023 to June 2024. Movement in the market
value of the collar option contracts were taken to the income statement.
[f]
Equity risk
The Group’s listed equity investments are susceptible to market price risk arising from uncertainties about future values of the investment
securities. The Group manages the equity price risk through diversification and by placing limits on individual and total equity instruments.
At the reporting date, the exposure to equity investments at fair value listed on the Australian Securities Exchange (“ASX”) was:
2024
2023
$’000
$’000
Financial assets held for trading
(included within note 8)
18,538
3,274
Other financial assets
(included within note 9)
20,745
-
39,283
3,274
Given that the changes in fair values of the equity investments held are strongly positively correlated with changes of the ASX market index,
the Group has determined that an increase/(decrease) of 10% on the ASX market index could have an impact of approximately $3,901,798
(2023: $326,824) increase/(decrease) on the income and equity attributable to the Group.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
83
Notes to the Consolidated Financial Report (continued)
37. Financial Instruments (Continued)
The Group enters into provisionally priced ore sales contracts and iron ore collar option contracts, for which price finalisation is referenced
to relevant market indices at specified future dates. The open sales contracts that are subject to provisional pricing adjustments as at
30 June 2024 is $135,783,000 (2023: $173,866,000). The Group’s exposure at balance date to the impact of movements in the iron ore
price upon provisionally invoiced sales volumes and iron ore collar derivatives is set out below:
Sensitivity at Balance Date
2024
2023
$’000
$’000
Ore Sales Revenue:
- 10% increase in iron ore prices
13,578
17,387
- 10% decrease in iron ore prices
(13,578)
(17,387)
The sensitivities have been determined as the dollar impact of a 10% increase and decrease in benchmark iron ore prices on trade
receivables subject to provisional pricing and on derivative financial liabilities at each reporting date, while holding all other variables,
including foreign exchange rates, constant. The relationship between iron ore prices and exchange rates is complex, and movements in
exchange rates can impact commodity prices. The above sensitivities should therefore be used with caution.
[g] Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of its cash reserves. The Group
manages liquidity risk by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial assets and
liabilities.
The Group’s capital risk management objectives are to safeguard the business as a going concern, to provide appropriate returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure in order to reduce the cost of capital (being
equity and debt).
Mount Gibson does not have a target debt/equity ratio but has a policy of maintaining a flexible financing structure so as to be able to take
advantage of new investment opportunities that may arise.
At 30 June 2024, the Group had unutilised performance bonding facilities totalling $13,414,000 (2023: $13,319,000). Refer note 21.
Tabulated below is an analysis of the Group’s financial liabilities according to relevant maturity groupings based on the remaining period
from the balance sheet date to the contractual maturity date. As the amounts disclosed in the table are the contractual undiscounted cash
flows, these balances will not necessarily agree with the amounts disclosed in the balance sheet.
30 June 2024
30 June 2023
Less
than 6
months
6 to 12
months
1 to 5
years
Over 5
years
Total
Less
than 6
months
6 to 12
months
1 to 5
years
Over 5
years
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Financial Liabilities
Trade and other payables
43,018
-
-
-
43,018
47,614
-
-
-
47,614
Interest-bearing loans and
borrowings
4,895
4,702
2,756
-
12,353
7,088
5,079
12,353
-
24,520
Derivatives
-
-
-
-
-
344
-
-
-
344
47,913
4,702
2,756
-
55,371
55,046
5,079
12,353
-
72,478
84
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
37. Financial Instruments (Continued)
[h] Fair value of financial assets and financial liabilities
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows,
based on the lowest level input that is material to the fair value measurement as a whole:
Level 1 – quoted market prices in an active market (that are unadjusted) for identical assets or liabilities
Level 2 – valuation techniques (for which the lowest level of input that is material to the fair value measurement is directly or indirectly
observable)
Level 3 – valuation techniques (for which the lowest level of input that is material to the fair value measurement is unobservable)
The fair values of other financial assets (options) are valued internally using the Black Scholes valuation techniques with prevailing short
and long term observable market inputs sourced from Bloomberg to determine an appropriate mid-price valuation (level 2).
The fair values of derivative financial instruments are sourced from an independent valuation by the Group’s treasury advisors using the
valuation techniques with prevailing short and long term observable market inputs sourced from Reuters/Bloomberg to determine an
appropriate mid-price valuation (level 2).
The fair values of quoted notes and bonds (classified as either financial assets held for trading or at fair value through other comprehensive
income) and listed investment shares are determined based on market price quotations at the reporting date (level 1).
The fair values of trade receivables classified as financial assets at fair value through profit and loss are determined using a discounted cash
flow model incorporating market observable inputs sourced from Platts index pricing (level 2). This model also incorporates interest rate
and credit risk adjustments.
The fair values of cash, short-term deposits, other receivables, trade and other payables and other interest-bearing borrowings approximate
their carrying values, as a result of their short maturity or because they carry floating rates of interest.
The carrying amounts and fair values of the financial assets and financial liabilities for the Group as at 30 June 2024 and 30 June 2023 are
shown below.
2024
2023
Notes
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
$’000
$’000
$’000
$’000
Financial assets
Cash
6
36,258
36,258
55,038
55,038
Term deposits
7
387,490
387,490
103,950
103,950
Financial assets held for trading
8
18,539
18,539
3,427
3,427
Subordinated notes
9
20,745
20,745
-
-
Derivatives
12
198
198
196
196
Trade debtors and other receivables
10
4,856
4,856
6,879
6,879
468,086
468,086
169,490
169,490
Financial liabilities
Trade and other payables
20
43,018
43,018
47,614
47,614
Interest-bearing loans and borrowings
21
11,851
11,851
23,045
23,045
Derivatives
22
-
-
344
344
54,869
54,869
71,003
71,003
Net financial assets
413,217
413,217
98,487
98,487
Recognition and measurement
Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through other comprehensive income
(OCI), or fair value through profit or loss.
The classification of financial assets at initial recognition that are debt instruments depends on the financial asset’s contractual cash flow characteristics
and the Group’s business model for managing them. With the exception of trade receivables that do not contain a material financing component or
for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a material financing component or for which the
Group has applied the practical expedient for contracts that have a maturity of one year or less, are measured at the transaction price determined
under the revenue accounting policy (see note 3).
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are
‘solely payments of principal and interest’ (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business
model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place
(regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
85
Notes to the Consolidated Financial Report (continued)
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
x
Financial assets at amortised cost (debt instruments)
x
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
x
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
x
Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
The Group measures financial assets at amortised cost if both of the following conditions are met:
x
The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
x
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Interest
received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised
in profit or loss when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost include term deposits, trade receivables (not subject to provisional pricing) and other receivables (see
notes 7 and 10).
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading (see note 8), financial assets designated upon initial
recognition at fair value through profit or loss or financial assets mandatorily required to be measured at fair value, i.e., where they fail the SPPI test.
Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including
separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets
with cash flows that do not pass the SPPI test are required to be classified and measured at fair value through profit or loss, irrespective of the
business model.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value
recognised in profit or loss.
As the Group applies the SPPI test to determine the classification of financial assets, the requirements relating to the separation of embedded
derivatives is no longer needed for financial assets. An embedded derivative will often make a financial asset fail the SPPI test thereby requiring the
instrument to be measured at fair value through profit or loss in its entirety. This is applicable to the Group’s trade receivables subject to provisional
pricing (see note 10). These receivables relate to sales contracts where the selling price is determined after delivery to the customer, based on an
index price at the end of the relevant quotational period stipulated in the contract. This exposure to the market-based index price causes such trade
receivables to fail the SPPI test. As a result, these receivables are measured at fair value through profit or loss from the date of recognition of the
corresponding sale, with subsequent movements being recognised in other revenue (see note 3).
Financial assets at fair value through OCI
The Group measures debt instruments at fair value though OCI if both of the following conditions are met: -
x
The financial asset is held with a business model with both the objective of both holding to collect contractual cash flows and selling; and
x
The contractual terms meet the SPPI test.
For debt instruments at fair value through OCI, interest income and impairment losses are recognised in profit and loss and computed in the same
manner as for financial assets carried at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative
fair value change recognised in OCI is recycled to profit and loss.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are
based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original EIR. ECLs are recognised in two stages. For credit exposures for which there has not been a
material increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the
next 12-months (12-month ECL). For those credit exposures for which there has been a material increase in credit risk since initial recognition, a
loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (lifetime ECL).
For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach
in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset’s
lifetime ECL at each reporting date. The Group has established a provision matrix for trade receivables that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and the economic environment. For any other financial assets carried at
amortised cost (which are due in more than 12 months), the ECL is based on the 12-month ECL when there has not been a material increase in credit
risk since origination. The 12-month ECL is the proportion of lifetime ECLs that results from default events on a financial instrument that are possible
within 12 months after the reporting date.
When there has been a material increase in credit risk since origination, the allowance will be based on the lifetime ECL. When determining whether
the credit risk of a financial asset has increased materially since initial recognition and when estimating ECLs, the Group considers reasonable and
supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and
analysis, based on the Group’s historical experience and informed credit assessment including forward-looking information. The Group considers a
financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset
to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before
taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering
the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.
86
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
Derivative financial instruments and hedging
Derivative financial instruments are initially recognised at fair value on the date the derivative contract is entered into and are subsequently
remeasured to fair value.
Any gains and losses arising from changes in the fair value of derivatives, except those that qualify as cash flow hedges, are taken directly to net
profit or loss for the year.
For the purpose of hedge accounting, hedges are classified as either fair value hedges when they hedge the exposure to changes in the fair value of
a recognised asset or liability, or cash flow hedges where they hedge exposure to variability in cash flows that is either attributable to a particular
risk associated with a recognised asset or liability or a forecasted transaction. All hedges are currently classified as cash flow hedges.
In relation to cash flow hedges to hedge firm commitments which meet the conditions for hedge accounting, the portion of the gain or loss on the
hedging instrument that is determined to be an effective hedge is recognised directly in equity and the ineffective portion is recognised in the income
statement.
When the hedged firm commitment results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised, the
associated gains or losses that had previously been recognised in equity are included in the initial measurement of the acquisition cost or other
carrying amount of the asset or liability.
For all other cash flow hedges, the gains or losses that are recognised in equity are transferred to the income statement in the same year in which
the hedged firm commitment affects the net profit and loss, for example when the future sale actually occurs.
Effectiveness is tested at inception of each hedge and monthly thereafter until the hedge expires. The cumulative dollar offset method is applied in
the measurement of effectiveness. The cumulative approach involves comparing the cumulative change (to date from inception of the hedge) in the
hedging instrument’s fair values to the cumulative change in the hedged item’s (or USD cash flow) attributable to the risk being hedged.
Effectiveness of the forward exchange contracts is monitored by comparing the forward net present value of the underlying cash flows to the forward
net present value of the fair value associated with the hedging instrument. Prospective and retrospective testing is undertaken by the Group’s
treasury advisors.
At each balance date, the Group measures ineffectiveness using the ratio offset method. For foreign currency cash flow hedges if the risk is over
hedged, the ineffective portion is taken immediately to other income or expense in the income statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting.
At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecasted transaction
occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the income
statement.
2024
2023
$’000
$’000
[a]
Information relating to Mount Gibson Iron Limited:
Current assets
7,000
6,024
Total assets
1,134,017
1,162,032
Current liabilities
362
781
Total liabilities
587,844
622,801
Issued capital
633,102
633,102
Issued capital – restricted shares under Loan Share Plan
7,419
6,353
Accumulated losses
(452,999)
(458,516)
Dividend distribution reserve
335,739
335,739
Share based payments reserve
22,912
22,553
Total Shareholder’s Equity
546,173
539,231
Net profit after tax of the parent entity
5,517
4,985
Total comprehensive profit of the parent entity
5,517
4,985
38. Parent Entity Information
MOUNT GIBSON IRON LIMITED 2024 Annual Report
87
Notes to the Consolidated Financial Report (continued)
[b]
Details of any guarantees entered into by the parent entity
There are cross guarantees given by Mount Gibson Iron Limited in relation to the debts of its subsidiaries as described in note 14 and
note 21.
The parent entity has further provided bank guarantees in respect of obligations to various authorities. Refer to note 21.
[c]
Details of any contingent liabilities of the parent entity
The parent entity had contingent liabilities as at reporting date as set out in note 31. For information about guarantees given by the
parent entity, refer [b] above.
[d]
Details of any contractual commitments by the parent entity for the acquisition of property, plant and
equipment
There are no contractual commitments by the parent entity for the acquisition of property, plant and equipment as at reporting date.
[e]
Tax Consolidation
The Company and its 100%-owned entities have formed a tax consolidated group. Members of the Group entered into a tax sharing
arrangement in order to allocate income tax expense to the wholly-owned controlled entities. The agreement provides for the allocation
of income tax liabilities between the entities should the head entity default on its tax payment obligations. At balance date, the possibility
of default is remote. The head entity of the tax consolidated group is Mount Gibson Iron Limited.
88
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Notes to the Consolidated Financial Report (continued)
A.
New and amended Accounting Standards and Interpretations adopted from 1 July 2023
Since 1 July 2023, the Group has adopted all Accounting Standards and Interpretations mandatory to annual periods beginning on or
before 1 July 2023. Adoption of these standards and interpretations did not have a material effect on the financial position or
performance of the Group.
B.
New and amended Accounting Standards and Interpretations issued but not yet effective
Other Australian Accounting Standards and Interpretations relevant to the Group that have recently been issued or amended but are
not yet effective for the Group’s reporting period, have not been adopted by the Group for the period ended 30 June 2024 are outlined
in the table below:
Reference
Title
Summary
Application
date of
standard
Application
date for
Group
AASB 2020-1
AASB 2022-6
Amendments to
Australian
Accounting
Standards –
Classification of
Liabilities as Current
or Non-current
Amendments to
AASs – Non-Current
Liabilities with
Covenants
A liability is classified as current if the entity has no right at the end
of the reporting period to defer settlement for at least 12 months
after the reporting period. The AASB recently issued amendments
to AASB 101 to clarify the requirements for classifying liabilities as
current or non-current. Specifically:
ჭThe amendments specify that the conditions which exist at the
end of the reporting period are those which will be used to
determine if a right to defer settlement of a liability exists.
ჭ
Management intention or expectation does not affect
classification of liabilities.
ჭIn cases where an instrument with a conversion option is
classified as a liability, the transfer of equity instruments would
constitute settlement of the liability for the purpose of classifying it
as current or non-current.
A consequence of the first amendment is that a liability would be
classified as current if its repayment conditions failed their test at
reporting date, despite those conditions only becoming effective in
the 12 months after the end of the reporting period.
In response to this possible outcome, the AASB has proposed
further amendments:
ჭ Specifying that conditions with which an entity must comply after
the reporting period do not affect the classification at the reporting
date
ჭ Adding presentation and disclosure requirements for non-current
liabilities subject to conditions in the next 12 months
ჭClarifying specific situations in which an entity does not have a
right to defer settlement for at least 12 months after the reporting
date
These amendments are applied retrospectively. Earlier application
is permitted.
1 January
2024
1 January
2024
1 July 2024
1 July 2024
39. New and Amended Accounting Standards
and Interpretations
MOUNT GIBSON IRON LIMITED 2024 Annual Report
89
Notes to the Consolidated Financial Report (continued)
Reference
Title
Summary
Application
date of
standard
Application
date for
Group
AASB 2014-
10
Amendments to
Australian
Accounting
Standards – Sale or
Contribution of
Assets between an
Investor and its
Associate or Joint
Venture
The amendments to AASB 10 Consolidated Financial Statements
and AASB 128 Investments in Associates and Joint Ventures clarify
that a full gain or loss is recognised when a transfer to an associate
or joint venture involves a business as defined in AASB 3 Business
Combinations. Any gain or loss resulting from the sale or
contribution of assets that does not constitute a business, however,
is recognised only to the extent of unrelated investors’ interests in
the associate or joint venture.
These amendments are applied prospectively. Earlier application is
permitted.
1 January
2025
1 July 2025
AASB 2014-
10
Amendments to
Australian
Accounting
Standards – Sale or
Contribution of
Assets between an
Investor and its
Associate or Joint
Venture
The amendments to AASB 10 Consolidated Financial Statements
and AASB 128 Investments in Associates and Joint Ventures clarify
that a full gain or loss is recognised when a transfer to an associate
or joint venture involves a business as defined in AASB 3 Business
Combinations. Any gain or loss resulting from the sale or
contribution of assets that does not constitute a business, however,
is recognised only to the extent of unrelated investors’ interests in
the associate or joint venture.
These amendments are applied prospectively. Earlier application is
permitted.
1 January
2025
1 July 2025
AASB 18
Presentation and
Disclosure in
Financial Statements
Effective for annual reporting periods beginning on or after 1
January 202713
AASB 18 has been issued to improve how entities communicate in
their financial statements, with a particular focus on information
about financial performance in the statement of profit or loss. The
key presentation and disclosure requirements established by AASB
18 are:
ჭThe presentation of newly defined subtotals in the statement of
profit or loss
ჭThe disclosure of management-defined performance measures
(MPM)
ჭ
Enhanced requirements for grouping information (i.e.
aggregation and disaggregation)
AASB 18 is accompanied with limited consequential amendments to
the requirements in other accounting standards, including AASB 107
Statement of Cash Flows.
AASB 18 introduces three new categories for classification of all
income and expenses in the statement of profit or loss: operating,
investing and financing. Additionally, entities will be required to
present subtotals for ‘operating profit or loss’, ‘profit or loss before
financing and income taxes’ and ‘profit or loss’.
For the purposes of classifying income and expenses into one of the
three new categories, entities will need to assess their main
business activity, which will require judgement. There may be more
than one main business activity.
AASB 18 also requires several disclosures in relation to MPMs, such
as how the measure is calculated, how it provides useful information
and a reconciliation to the most comparable subtotal specified by
AASB 18 or another standard.
AASB 18 will replace AASB 101 Presentation of Financial
Statements.
1 January
2027
1 July 2027
The Group has elected not to early adopt any of these new standards or amendments in these financial statements. The Group intends
to adopt these standards when they become effective. An impact assessment of the standards issued but not yet effective is yet to be
performed.
90
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Consolidated Entity Disclosure Statement
As at 30 June 2024
Name of entity
Type of entity
% of share
capital
Country of
incorporation
Country of tax
residence
Mount Gibson Mining Limited
Body Corporate
100
Australia
Australia
Geraldton Bulk Handling Pty Ltd
Body Corporate
100
Australia
Australia
Gibson Minerals Limited
Body Corporate
100
Australia
Australia
Aztec Resources Limited
Body Corporate
100
Australia
Australia
Koolan Iron Ore Pty Ltd
Body Corporate
100
Australia
Australia
Koolan Shipping Pty Ltd
Body Corporate
100
Australia
Australia
Brockman Minerals Pty Ltd
Body Corporate
100
Australia
Australia
KIO SPV Pty Ltd
Body Corporate
100
Australia
Australia
MOUNT GIBSON IRON LIMITED 2024 Annual Report
91
Directors’ Declaration
In accordance with a resolution of the directors of Mount Gibson Iron Limited, I state that:
1.
In the opinion of the Directors:
(i)
the financial statements, notes and the additional disclosures included in the Directors Report designated as audited of the
Group are in accordance with the Corporations Act 2001, including:
A.
giving a true and fair view of the financial position of the Group as at 30 June 2024 and of its performance for the
year ended on that date;
B.
complying with Accounting Standards and the Corporations Regulations 2001;
(ii)
the financial statements and notes also comply with International Reporting Standards as disclosed in note 1;
(iii)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and
payable;
(iv)
the consolidated entity disclosure statement required by section 295(3A) of the Corporations Act 2001 is true and correct; and
(v)
as at the date of this declaration, there are reasonable grounds to believe that the Company and the subsidiaries identified in
Note 14 will be able to meet any obligations or liabilities to which they are or may become subject to, by virtue of the Deed of
Cross Guarantee between the Company and those subsidiaries.
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 2024.
Signed in accordance with a resolution of the directors.
LEE SENG HUI
Chairman
Date: 20 August 2024
92
MOUNT GIBSON IRON LIMITED 2024 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor’s report to the members of Mount Gibson Iron
Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Mount Gibson Iron Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated balance sheet as at 30 June 2024, the
consolidated income statement, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated cash flows statement for the year then ended, notes
to the financial statement, including material accounting policy information, the consolidated entity
disclosure statement and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a.
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2024
and of its consolidated financial performance for the year ended on that date; and
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial report
section of our report. We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia.
We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a
separate opinion on these matters. For each matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
93
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 2
1.
Provision for rehabilitation
Why significant
How our audit addressed the key audit matter
As a consequence of its operations the Group
incurs obligations to rehabilitate and restore its
mine sites. Rehabilitation activities are
governed by local legislative requirements. As
at 30 June 2024 the Group’s consolidated
balance sheet includes provisions of $54.7
million in respect of these obligations (refer to
note 23).
We considered this to be a key audit matter
because estimating the costs associated with
these future activities requires judgement and
estimation for factors such as timing of when
rehabilitation will take place, the extent of the
rehabilitation and restoration activities and
economic assumptions such as inflation rates and
discount rates which are used to determine the
provision amount.
We evaluated the assumptions and
methodologies used by the Group in arriving at
their rehabilitation cost estimates. In doing so
we:
•
Involved our climate change and
sustainability services specialists to assess
the competence, qualifications and
objectivity of the Group’s external expert
whose work formed the basis of the Group’s
cost estimates.
•
Tested the reasonableness of the timing of
the rehabilitation cashflows and the
resultant inflation and discount rate
assumptions used in the Group’s provision
estimates, having regard to available
economic data on future inflation and
discount rates.
•
Evaluated the adequacy of the Group’s
disclosures relating to rehabilitation
obligations in the financial report and
considered the treatment applied to
changes in the rehabilitation and
restoration provision.
94
MOUNT GIBSON IRON LIMITED 2024 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 3
2.
Impairment assessment for the Koolan Island Cash Generating Unit (CGU)
Why significant
How our audit addressed the key audit matter
The carrying value of the Group’s property, plant
and equipment and mine property assets at 30
June 2024 was $107.6 million. Of this total
amount $107.0 million related to the Koolan
Island CGU.
Management undertook an impairment trigger
assessment at 30 June 2024 and concluded that
an impairment trigger had occurred in respect of
the Koolan Island CGU. Accordingly,
management performed an impairment
assessment for the Koolan Island CGU at 30 June
2024 and based on this assessment concluded
that an impairment charge of $159.1 million was
required (refer to note 19).
We considered this to be a key audit matter
because of the significant judgement and
estimation required in the determination of the
recoverable amount of the Koolan Island CGU
including assumptions relating to future iron ore
prices, exchange rates, operating and capital
costs and an appropriate discount rate to reflect
the risk associated with the forecast cash flows
having regard to the current status of the project.
We assessed the reasonableness of the Group’s
impairment assessment process and the
recoverable amount of the Koolan Island CGU. Our
audit procedures included the following:
•
In conjunction with our valuation specialists,
we evaluated the reasonability of key input
assumptions and valuation methodologies used
by the Group to determine recoverable
amount. We assessed the key input
assumptions such as forecast foreign exchange
rates, forecast iron ore prices and discount
rate with reference to market prices (where
available), market research, market practice,
market indices and broker consensus
forecasts.
•
Tested the mathematical accuracy of the
Group’s discounted cash flow model used to
measure recoverable amount and agreed
relevant data, including assumptions on timing
and future capital and operating expenditure,
to the Group’s feasibility studies for the Koolan
Island CGU and the latest Board approved life
of mine plan.
•
Assessed the work of the Group’s internal
expert with respect to the capital and
operating assumptions used in the cash flow
forecasts. This included understanding the
underlying cost estimation process,
information in Board reports and releases to
the market. We also examined the
qualifications, competence and objectivity of
the experts and assessed whether key capital
and operating expenditure assumptions were
consistent with information in Board reports
and releases to the market.
•
Assessed the work of the Group’s external
expert with respect to the reserve assumptions
used in the cash flow forecasts. This included
understanding the Group’s reserve estimation
process. We also examined the qualifications,
competence and objectivity of the Group’s
experts, and assessed whether key reserve
economic assumptions were consistent with
those used elsewhere in the financial report.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
95
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 4
Why significant
How our audit addressed the key audit matter
•
Assessed the impact of a range of sensitivities
to the economic assumptions underpinning the
Group’s impairment assessment.
•
Assessed the allocation of the impairment
expense to the non-current assets.
•
Evaluated the adequacy of the Group’s
disclosures in the financial report with respect
to the Group’s impairment assessment and
resultant impairment expense for the Koolan
Island CGU.
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 Company’s 2024 annual report other than the financial report and our
auditor’s report thereon. We obtained the directors’ report that is to be included in the annual report,
prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the annual
report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of:
a.
The financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001; and;
b.
The consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001; and for such internal control as the directors determine is necessary to
enable the preparation of:
i.
the financial report (other than the consolidated entity disclosure statement) that gives a
true and fair view and is free from material misstatement, whether due to fraud or error;
and
ii.
the consolidated entity disclosure statement that is true and correct and is free of
misstatement, whether due to fraud or error.
96
MOUNT GIBSON IRON LIMITED 2024 Annual Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 5
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating 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
judgment and maintain professional scepticism 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.
•
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.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
97
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 6
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, actions taken to eliminate
threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year 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 audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 19 of the directors’ report for the
year ended 30 June 2024.
In our opinion, the Remuneration Report of Mount Gibson Iron Limited for the year ended 30 June 2024,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
J K Newton
Partner
Perth
20 August 2024
98
MOUNT GIBSON IRON LIMITED 2024 Annual Report
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MOUNT GIBSON IRON LIMITED 2024 Annual Report
99
1
EVERBRIGHT SECURITIES INVESTMENT SERVICES (HK) LTD
2
APAC RESOURCES INVESTMENTS LIMITED
3
TRUE PLUS LIMITED
4
CITICORP NOMINEES PTY LIMITED
5
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
6
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
7
BNP PARIBAS NOMS PTY LTD
8
DEBORTOLI WINES PTY LIMITED
9
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
10 PRECISION OPPORTUNITIES FUND LTD
11 MR PETER KERR
12 TREASURY SERVICES GROUP PTY LTD
13 BNP PARIBAS NOMINEES PTY LTD
14 MR DAVID JOHN STOKES
15 BNP PARIBAS NOMINEES PTY LTD
16 MS GILLIAN DOBSON
17 BNP PARIBAS NOMS (NZ) LTD
18 SAVIVE PTY LTD
19 MR JINGYUN OUYANG
20 JETOSEA PTY LTD
Additional ASX Information
(a) Distribution of equity securities
As at 10 September 2024 the number of Shareholders, by size of holding, in each class of share, are as follows:
(b) Equity security holders
As at 10 September 2024 the names of the twenty largest holders of shares are:
Ordinary Shares
Number of holders
% of Issued Capital
% of Shares Held
Number of Shares
Ordinary Shares
Number of Shares
220,257,802
209,867,038
163,866,874
120,287,089
71,847,235
43,846,953
28,252,772
27,591,539
19,354,888
8,885,181
7,395,203
5,763,100
4,942,721
3,899,035
3,780,022
3,717,600
3,398,488
2,757,262
2,700,000
2,638,111
18.08
17.23
13.45
9.87
5.90
3.60
2.32
2.26
1.59
0.73
0.61
0.47
0.41
0.32
0.31
0.31
0.28
0.23
0.22
0.22
1,624
818,354
0.07
3,476
9,760,752
0.80
1,645
13,148,572
1.08
2,935
95,728,471
7.86
488
1,098,899,384
90.20
10,168
1,218,355,533
100.00
1
-
1,000
1,001
-
5,000
5,001
-
10,000
10,001
-
100,000
100,001
Over
TOTAL
Unmarketable parcels
The minimum $500 parcel size at $0.2750 per share is 1,819 shares. 2,545 shareholders hold unmarketable parcels comprising a total of
2,077,218 shares.
955,048,913
263,306,620
1,218,355,533
Top 20 Holders
Total Remaining Holders Balance
Total Issued Ordinary Shares
78.39
21.61
100.00
100
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Koolan Island
M04/416-I
Live
100%
Koolan Island
M04/417-I
Live
100%
Koolan Island
E04/1266-I
Live
100%
Koolan Island
L04/29
Live
100%
Koolan Island
L04/68
Live
100%
Koolan Island
L04/101
Live
100%
Tallering Peak
M70/1062-I
Live
100%
Tallering Peak
M70/896-I
Live
100%
Tallering Peak
E70/3732
Live
100%
Tallering Peak
E70/5298
Live
100%
Tallering Peak
L70/60
Live
100%
Tallering Peak
L70/69
Live
100%
Tallering Peak
G70/192
Live
100%
Tallering Peak
E70/6560
Pending
100%
1
Fields Find
E59/1268-I
Live
1
Fields Find
M59/63-I
Live
1
Fields Find
E59/1996
Live
1
Fields Find
E59/1997
Live
1
Fields Find
E59/2382
Live
1
Fields Find
E59/2383
Live
2
Murchison
E09/2299
Live
50%
2
Murchison
E09/2499
Pending
Additional ASX Information
Continued
1.
APAC Resources Limited and its subsidiaries
452,767,297
37.40%
2.
Allied Properties Investments (1) Company Limited and its related corporate entities
452,767,297
37.40%
Note: Substantial shareholdings 1 and 2 are not cumulative and arise through common shareholdings.
3.
Shougang Corporation and Shougang Concord International Enterprises Company Limited
and each of their controlled entities
154,166,874
13.64%
4.
Shougang Fushan Resources Group Limited, True Plus Limited and its subsidiaries
154,166,874
13.64%
Note: Substantial shareholdings 3 and 4 are not cumulative and arise through common shareholdings.
5.
Paradice Investment Management Pty Ltd
114,552,189
9.433%
(c) Substantial Shareholders
(d) Voting rights
(e) Schedule of interests in mining tenements
Tenement
Status
Percentage Held
Location
Tenements Held by MGX
The names of Substantial Shareholders who have notified the Company in accordance with section 671B of the Corporations Act
2001 are provided below, together with details, as at the date of the Substantial Shareholder notification:
All ordinary Shares carry one vote per Share without restriction.
No voting rights attach to options.
Number of
Shares
% of current
issued share
capital
MGX Has Interests In
1 Tenements are held by another party. MGX holds rights to Iron on a portion of these tenements.
2 Tenements are held by another party. MGX is in a Farm-in and JV to earn 75% of these tenements.
MOUNT GIBSON IRON LIMITED 2024 Annual Report
101
1RWHV
102
MOUNT GIBSON IRON LIMITED 2024 Annual Report
103
MOUNT GIBSON IRON LIMITED 2024 Annual Report
Auditors
Ernst & Young
Ernst & Young Building
11 Mounts Bay Road
Perth 6000, Western Australia
Bankers
HSBC Bank Australia Ltd
188-190 St George’s Terrace
Perth 6000, Western Australia
Stock Exchange Listing
The company’s shares are listed on the Australian Securities Exchange.
ASX Code: MGX
Share Registry
Computershare Investor Services Pty Ltd
Level 17, 221 St George’s Terrace
Perth 6000, Western Australia
Telephone: 1300 787 272
Facsimile:
+61 8 9323 2033
Annual General Meeting of Shareholders
Mount Gibson will hold a hybrid AGM at 10:30am AWST (1:30pm AEDT)
on Wednesday 20 November 2024. Information explaining how
shareholders who are unable to attend the meeting in person may
access, vote and ask questions at the meeting is provided in the
Company's Notice of AGM released to the ASX in October 2024.
Easy Access to Information
See our website at www.mtgibsoniron.com.au for regular quarterly
reports and financial results. Additionally, shareholders or interested
parties can register to receive emailed updates shortly after the
company makes any regular or major announcement.
Board of Directors
Lee Seng Hui
Chairman, Non-Executive Director
Alan Jones
Non-Executive Director
Ding Rucai
Non-Executive Director
Paul Dougas
Non-Executive Director
Simon Bird
Non-Executive Director
Evian Delfabbro
Non-Executive Director
Company Secretary
David Stokes
Registered Office
Level 1, 2 Kings Park Road
West Perth 6005, Western Australia
Telephone: +61 8 9426 7500
Facsimile: +61 8 9485 2305
Email:
admin@mgx.com.au
Website: www.mtgibsoniron.com.au
Solicitors
King & Wood Mallesons
Level 30, QV1 Building
250 St Georges Terrace,
Perth 6000, Western Australia
Corporate Directory
www.mtgibsoniron.com.au