ANNUAL REPORT
2018
LiHO-+LiHO-+LiHO-+23VanadiumV22TitaniumTi3LithiumLiFor personal use only BANKERS
National Australia Bank Ltd
SHARE REGISTRY
Computershare Investor Services Pty Ltd
Level 2, Reserve Bank Building
45 St Georges Terrace
Perth
WA 6000
STOCK EXCHANGE LISTING
Neometals Ltd are listed on the
Australian Stock Exchange
(Home Branch – Perth)
ASX Code: NMT
ACN: 099 116 631
ABN: 89 099 116 631
North American OTC Market
(DR Symbol: RDRUY)
ANNUAL GENERAL MEETING
3pm Friday 30 November 2018
Parmelia Hilton Perth
14 Mill St
Perth WA 6000
DIRECTORS
Steven Cole
Non-Executive Chairman
Christopher Reed
Managing Director
David Reed
Non-Executive Director
Dr Natalia Streltsova
Non-Executive Director
Douglas Ritchie
Non-Executive Director
Dr Jenny Purdie
Non-Executive Director
(Appointed 26 September 2018)
Les Guthrie
Non-Executive Director
(Appointed 26 September 2018)
COMPANY SECRETARY
Jason Carone
REGISTERED OFFICE
Level 3, 1292 Hay Street
West Perth
WA 6005
CONTACT DETAILS
Telephone (+618) 9322 1182
Facsimile (+618) 9321 0556
www.neometals.com.au
AUDITORS
Deloitte Touche Tohmatsu
Brookfield Place, Tower 2
123 St Georges Terrace
Perth
WA 6000
For personal use only CONTENTS
Review of Operations 2
Directors’ Report
Remuneration Report
Audit Report
Auditor’s Independence Declaration
Directors’ Declaration
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Financial Statements Contents
Notes to the Consolidated Financial Statements
19
26
41
45
46
47
48
49
50
51
52
Additional Stock Exchange Information
106
NEOMETALS ANNUAL REPORT 2018
For personal use only REVIEW OF
OPERATIONS
The directors of Neometals Ltd (“Company” and “Neometals”) present
the annual financial report for the Company and its controlled entities
(“Consolidated Entity” and “Group”).
Neometals’ primary focus during the
year centred on advancing its advanced
integrated lithium business unit, the
titanium/vanadium project (Barrambie) and
developing its technology business unit.
Lithium Business Unit
Figure 1
Neometals Horizons of Growth
S
E
L
A
S
MATURE BUSINESS
RAPILY GROWING BUSINESS
EMERGING BUSINESS
TIME
2
NEOMETALS ANNUAL REPORT 2018
Li Concentrate (Li2O)Li Compound (LiOH)LiB RecyclingFor personal use only
3
Li
Lithium
REVIEW OF OPERATIONS (CONTINUED)
Neometals Ltd
13.8%,
Mineral Resources
Limited (MRL)
43.1%,
Ganfeng Lithium
Co., Ltd (Ganfeng)
43.1% through
Reed Industrial
Minerals Pty Ltd
(RIM)
Mt Marion Lithium Project
Production achieved a steady state annualised production
of 400ktpa of combined 6% and 4% grade during the year.
A total of 382ktpa of spodumene concentrate was exported
(209K WMT 6% and 173K WMT 4%).
Construction of the upgrade to the concentrator circuits to facilitate production
of 6% Li2O only concentrate is in progress and on track for completion
in quarter two FY19 with the plant being ramped up to 100% high grade
production shortly thereafter.
The achieved price for 6% and 4% spodumene products averaged A$879
per wet tonne for all tonnes exported. Pricing is linked to international lithium
carbonate and hydroxide prices rather than bilateral spodumene market prices.
The 6% spodumene price for quarter four of FY18 was agreed at US$961
per dry tonne CFR China (US$929 per wet tonne). CFR cash costs for FY18
averaged A$576 per wet tonne exported.
During the year RIM repaid 50% of the shareholder loans advanced for working
capital purposes. The remaining 50% was repaid in July 2018. The repayment to
Neometals was $8,208,916 in total.
Mt Marion is a globally significant lithium deposit, containing total Indicated and
Inferred Mineral Resources 77.8Mt at 1.37% Li2O and 1.09% Fe, at a cut-off
grade of 0.5% Li2O
NEOMETALS ANNUAL REPORT 2018
3
For personal use only REVIEW OF OPERATIONS (CONTINUED)
In Q1 2018
the price
of lithium
carbonate
battery grade
in China
peaked at
US$24,750/
tonne
LITHIUM MARKET COMMENTARY
Market Analysis
Lithium carbonate and lithium hydroxide prices rose to historical highs during
the year buoyed by strong demand growth from the lithium-ion battery industry.
In Q1 2018 the price of lithium carbonate battery grade in China peaked at
US$24,750/tonne. In recent months new raw material supply has entered the
market, especially from hard rock mining operations in Australia, along with
new lithium carbonate supply from lithium brine operations in Western China
and Chinese lithium chemical converters. These changes have resulted in a
downwards trend in Chinese domestic prices for lithium carbonate. By the
end of June Chinese domestic prices for battery grade lithium carbonate had
dropped to US$18,000 per tonne and are expected to soften further in H2 2018.
International prices for lithium carbonate and lithium hydroxide have been
at high levels during the year and relatively stable. This is largely because of
the longer-term pricing arrangements in supply contracts outside of China,
growing demand for lithium hydroxide and a relatively balanced market.
Demand for lithium hydroxide is growing at a more rapid rate than demand
for lithium carbonate owing to the preferential use of this material in the
production of cathode materials required by the automotive sector for NMC
and NCA batteries.
Battery grade lithium hydroxide prices have been at or near US$20,000
per tonne CIF North Asia since late 2017 but some softening is anticipated in
H2 2018.
The FOB price of spodumene has been at or near US$900 per tonne in recent
months and has been fairly stable. With the addition of new spodumene
supply in H2 2018 and lower Chinese lithium carbonate prices there is some
downwards pressure on spodumene prices. However, this is currently being
offset by increasing demand from Chinese lithium chemical converters.
4
NEOMETALS ANNUAL REPORT 2018
For personal use only 3
Li
Lithium
REVIEW OF OPERATIONS (CONTINUED)
Neometals
100% through
Neomaterials
Pty Ltd
Table 1
KLR Indicative Key
Dates and Schedule
Kalgoorlie Lithium Refinery
During the year Neometals made substantial advances towards
its goal of becoming an integrated lithium chemical producer.
These included:
• Neometals subsidiary, Neomaterials Pty Ltd, executed an option agreement
for the sub-lease of a 40Ha industrial site 5km from Kalgoorlie (adjacent to
critical infrastructure) and entered a Memorandum of Understanding (“MOU”)
with City of Kalgoorlie-Boulder (“CKB”); and
• Front-End Engineering and Design (‘’FEED’’) Study commencement by M+W
Group (“M+W”) for the Neometals Kalgoorlie Lithium Refinery (“KLR”).
The KLR is expected to increase the value of the spodumene concentrate that
would be purchased under the Company’s Mt Marion Spodumene Concentrate
Offtake Option (“Offtake Option”). When exercised, the Offtake Option will
provide source spodumene concentrate for conversion into battery grade
lithium hydroxide and lithium carbonate for supply to Lithium Ion Battery (“LIB”)
cathode and cell makers. The KLR is being designed to have 10,000tpa lithium
carbonate equivalent (“LCE”) production capacity from mid-2021, subject to the
Board making a final project investment decision (‘’FID’’) in mid-2019.
NEOMETALS ANNUAL REPORT 2018
5
Vendor Test-work/Updated Cost StudyMarch 2018CompletedFEED StudyMay 2018In progressFinalise plant locationMay 2018CompletedFEED Study ResultsMarch Q 2019Feasibility Study Results and Investment DecisionJune Q 2019Start Commissioning (subject to Investment Decision)Mid 2021For personal use only REVIEW OF OPERATIONS (CONTINUED)
M+W was appointed during the quarter to deliver the FEED Study for the
Company’s KLR by the end of CY 2018. The FEED Study will establish project
capital and operating costs to an accuracy of +/- 15%, sufficient accuracy from
which to determine project feasibility. The Feasibility Study report will integrate
the FEED Study results with commercial studies so the Company can make a
project investment decision.
The FEED Study is based on the successful process flowsheet testing report
delivered by Veolia Water Technologies’ HPD division in March 2018. The Veolia
program produced a 99.99% pure battery grade lithium hydroxide material from
Mt Marion run of mine spodumene concentrates (6% Li2O) and demonstrated
that the proposed KLR refining process is technically fit for purpose. These
results validate the suitability of a conventional direct-conversion sulphate
process and the data has been used to develop material balances for each unit
operation and the process design criteria in the FEED Study. Leading Chinese
lithium chemical producer Ganfeng Lithium uses a technically-similar direct
sulphate conversion process and has been producing battery grade lithium
hydroxide from Mt Marion concentrates for more than a year.
Neometals undertook site selection studies over the past 3 years and concluded
that the Kalgoorlie area offers the best logistic and cost solution for conversion
of bulk spodumene concentrates. The Company has executed an option
agreement with the City of Kalgoorlie-Boulder (“CKB”) over a sub-lease for a
40-hectare site near the township. The site is only 70km by major highway from
Mt Marion, sits near the Kalgoorlie rail terminal and has adjacent reticulated
power and gas supply. Reducing the concentrate transport distance reduces the
environmental footprint and operating cost to improve the competitive position
of the operation against conversion plants in China.
Kalgoorlie
Figure 2
Proposed KLR
Site Location
Great Eastern Hwy
Coolgardie
Coolgardie to Esperance Hwy
6
NEOMETALS ANNUAL REPORT 2018
Kalgoorlie
Nickel
Smelter
G
o
l
d
Boulder
K
a
l
g
o
o
rli
e
t
o
fi
e
l
d
s
G
a
s
P
i
p
K
a
m
b
a
l
d
a
H
w
y
e
li
n
e
Kambalda
Lake
Lefroy
Dome Depot
Widgiemooltha
Depot
Proposed Kalgoorlie Litium Refinery SiteMt Marion Lithium OperationsMt Edwards Lithium ProjectFor personal use only
REVIEW OF OPERATIONS (CONTINUED)
The agreement provides Neometals with a two-year option over the site
(with provision for an additional two-year extension). During this time Neometals
will complete Feasibility and FEED studies and secure a low cost reclaimed
industrial water supply. The MOU also provides the Company with assistance
from CKB in procurement of certain infrastructure and utilities for the KLR.
Site studies and permit application drafting is in progress.
Approximately seven tonnes of spodumene concentrate is required to
produce one tonne of lithium hydroxide, so raw material transport will represent
a significant proportion of refinery operating costs. Reducing haulage
of bulk concentrates, reagents and residues is therefore critical to project
economics and minimisation will contribute to a reduced environmental
footprint for the operation. Strategically, Australia remains as one of the
most secure free-market jurisdictions in which to develop downstream lithium
production. Chinese spodumene converters and South American brine-
based lithium producers have chosen Australia as the location to diversify
their production base through the construction of several widely publicised
spodumene conversion plants in Western Australia.
Subsequent to the end of the quarter, Azure Capital was engaged to advise
on the financing of the Lithium Hydroxide Refinery. This shall include conducting
a formal offtake and partner selection process.
During the year the Company continued to assess the development of a lithium
processing facility close to its Mt Marion Lithium Operation. The retention by
the Company of its binding offtake option rights for a minimum of 12.37% of
production from Mt Marion from February 2020, which will provide a secure
supply of feedstock at the Company’s discretion, to support the prospective
development of its own downstream processing plant.
Figure 3
Neometals Integrated
Lithium Strategy
Stage 1 – 2018
Pit
Concentrator
Mt Marmion
China
Ganfeng
Lithium
Conversion
Plant (China)
Lithium
Hydroxide /
Carbonate
Lithium
Battery
Producer
Electric
Vehicle
Stage 2 – 2021
Pit
Concentrator
Mt Marmion
Lithium
Conversion
Plant (WA)
Integrated Producer
Lithium
Battery
Producer
Electric
Vehicle
NEOMETALS ANNUAL REPORT 2018
7
For personal use only REVIEW OF OPERATIONS (CONTINUED)
3
Li
Lithium
Neometals
100% through
Mt Edwards
Lithium Pty Ltd
Mt Edwards Lithium Project
During the second half of the financial year Neometals acquired
100% of the lithium rights of the Mt Edwards Lithium Project
(“Mt Edwards”) for cash consideration of $2.5M, additional
contingent payments upon satisfaction of certain milestones
and a royalty (see ASX announcement date 15th March 2018).
The Company has secured the underlying tenure to all the tenements
comprising Mt Edwards (other than M15/87), together with some neighbouring
tenements and the nickel rights on an adjoining nickel rights package.
Mt Edwards is located 40km south of Mt Marion and is situated centrally
within what is emerging as a highly endowed and globally significant lithium
province. The tenements cover an area of 240 square kilometres and historical
exploration confirms that multiple fertile Lithium-Caesium-Tantalum (“LCT”)
pegmatites are present.
The Company intends to conduct exploration aimed at defining lithium
resources that can provide additional feedstocks at the KLR. The Company
engaged CSA Global to review the extensive historical data sets and produce
a prospectivity and targeting study. Exploration has since commenced on
the project.
Shortly after acquisition Neometals announced a maiden JORC nickel
mineral resource estimate at Mt Edwards. While the Company has acquired
Mt Edwards for its lithium prospectivity, the associated nickel rights package
contains valuable nickel resources. Neometals was able to evaluate and
upgrade the historical nickel Mineral Resource to comply with JORC Code
2012 standards using the historical resource data (refer to ASX announcement
dated 19th April 2018).
8
NEOMETALS ANNUAL REPORT 2018
For personal use only REVIEW OF OPERATIONS (CONTINUED)
Figure 4
Project Location
and Tenure Map
Following the initial Mt Edwards nickel resource estimate announced in April
(3.05 million tonnes at 1.6% Ni for 48,200t of contained nickel), Neometals
updated the estimate when the assignment of nickel rights was completed
over four additional deposits. The Mt Edwards, Widgie Townsite, Widgie 3
and Gillett deposits were added to the portfolio as part of the acquisition of
nickel rights previously held by Apollo Phoenix Resources Pty Ltd (see ASX
announcement dated 25th June 2018). The revised nickel Resource Estimate
saw an approximate 155% increase in contained nickel with 7.4 million tonnes
at 1.7% nickel for 123,340 tonnes contained.
Nickel is an essential component of batteries for the electric vehicle (EV) and
static/grid power storage markets.
NEOMETALS ANNUAL REPORT 2018
9
Mt Marion Lithium OperationsMt Edwards Lithium ProjectFor personal use only 22
23
Ti
V
Titanium
Vanadium
REVIEW OF OPERATIONS (CONTINUED)
Titanium
Business Unit
Barrambie Titanium Project
The Barrambie Titanium and Vanadium Project in Western
Australia (“Barrambie”) is one of the world’s highest-grade
titanium deposits and hosts significant levels of high grade
vanadium.
Neometals is undertaking a dual track evaluation of development alternatives
for Barrambie with a staged development approach afforded by distinct high-
grade zones and co-product streams. Neometals is investigating direct shipping
ore (“DSO”) being toll beneficiated and smelted in China as a phase 1 operation
with a parallel phase 2 development utilising on-site processing options.
During the year, Neometals updated the Barrambie Mineral Resource Estimate
(see ASX announcement dated 17th April 2018) which now contains a Total
Indicated and Inferred Mineral Resource Estimate1 of 280.1 million tonnes2 at
9.18% TiO2 and 0.44% V2O5 to 80m vertical depth. Contained Titanium Dioxide
(TiO2) in the total mineral resource estimate exceeds 25 million tonnes whilst
contained Vanadium Pentoxide (V2O5) in the total mineral resource estimate
exceeds 1.2 million tonnes. Within the total resource is a high-grade Titanium
subset of the total mineral resource estimate of 53.6 million tonnes3 at 21.17%
TiO2 and 0.63% V2O5 and a high-Grade Vanadium subset of Total Mineral
Resource estimate of 64.9 million tonnes4 at 0.82% V2O5 and 16.90% TiO2.
In addition, the total Barrambie Exploration Target1 is estimated to be 470 to
700Mt, grading at 6 to 10% TiO2 and 0.3 to 0.5% V2O5.
The updated estimate is a result of an additional 20 diamond drill holes (“DDH”)
and 21 reverse circulation (RC) drill holes drilled into the deposit this financial
year. The key take-away for Neometals is the project’s significance in terms of
size (resources and exploration target) and grade/s (including a discrete high-
grade titanium component) coupled with strong optionality in terms of timing,
scale and commodity focus for optimal development.
During the year, Neometals despatched a 40-tonne bulk sample from the
Eastern band of Barrambie following successful sighter test work on cores
from the aforementioned drill program. The Eastern band is the main feed
Neometals
100% through
Australian
Titanium Pty Ltd
1 See ASX Announcement titled
“Updated Barrambie Mineral
Resource Estimate” dated
17th April 2018
2 Based on Cut-off grades of
≥10% TiO2 or ≥0.2% V2O5
3 The high-grade titanium and
vanadium figures are a sub-set
of the total Mineral Resource.
These figures are not additive
and are reporting the same
block model volume but using
different cut-off grades
4 The high-grade titanium and
vanadium figures are a sub-set
of the total Mineral Resource.
These figures are not additive
and are reporting the same
block model volume but using
different cut-off grades
10
NEOMETALS ANNUAL REPORT 2018
For personal use only REVIEW OF OPERATIONS (CONTINUED)
Barrambie Section
source for potential phase 1 DSO operations. The sighter beneficiation and
pyrometallurgical test-work, to confirm the traditional flowsheet suitability
to produce titanium, vanadium and iron products was awarded to The Institute
of Multipurpose Utilisation of Mineral Resources Academy of Geological
Sciences (“IMUMR”). IMUMR is based in Chengdu, is rated as one of the top
metallurgical institutes in China and has extensive experience in the mineral
processing and smelting of Vanadium Titano-Magnetite (“VTM”) deposits
including extensive work on the Panzhihua and Chengde VTM deposits in China.
In parallel with DSO considerations, the following Phase 2 on site processing
options continue to be evaluated:
1. Updating the operating and capital cost section of the Company’s 2009
Definitive Feasibility Study on a primary vanadium operation; and
2. Ongoing test-work and piloting programs related to production of titanium
dioxide hydrolysate, vanadium pentoxide and iron oxide product utilising the
Neomet patented hydrometallurgical process.
TITANIUM AND VANADIUM MARKET COMMENTARY
The majority of titanium feedstocks (an annual market of US$17 Billion or
85% by value) are used to produce titanium dioxide (“TiO2”) pigment which
is then used as an additive in paints, plastics, paper and ink with the balance
(15%) used to produce titanium metal products. The current price for high
quality titanium dioxide pigment is US$3,400 per tonne on a cif basis to USA
(Source: Industrial Minerals 19 July 2018).
Pigment producers are facing a shortage of high-grade titanium feedstocks
including rutile and titanium slag following a decline in supply of both materials
from Australia, Canada and South Africa. The tightened supply of rutile largely
reflects a decrease in output from Iluka’s closed Murray Basin operation,
while availability, current prices and contracts are already being affected by
the announcement from Tronox Limited that it will remove around 20,000
tonnes of rutile and leucoxene from the market by end of this year. In addition,
the imminent closure of Sibelco’s Stradbroke Island mine will remove up to
NEOMETALS ANNUAL REPORT 2018
11
3Mtpa Pit Shell1Mtpa Pit ShellFor personal use only REVIEW OF OPERATIONS (CONTINUED)
35,000 tonnes of rutile from the market by 2020. This supply tightness has
triggered rutile price increases for the third quarter of 2018.
The price of rutile concentrate min 95% TiO2 bulk cif China rose to $950-1,100
per tonne on July 5 from $850-950 per tonne a week earlier. Bulk shipments of
rutile concentrate min 95% TiO2 for pigment fob Australia increased to $930-
1,020 per tonne on July 5 from $800-900 per tonne in the prior week.
Although chloride pigment producers are typically able to switch between rutile,
synthetic rutile and chloride slag, some could struggle to source sufficient
feedstock because chloride slag availability has also been reduced because of
major disruptions at Rio Tinto’s South African Richards Bay Minerals operation.
It is estimated that around 120,000-150,000 tonnes of chloride slag have been
removed from the market because of these disruptions. Rio Tinto has cut its
titanium slag production forecast for 2018 to 1.1-1.2 million tonnes from its
previous guidance of 1.1-1.3 million tonnes in April and 1.2-1.4 million tonnes
in February.
The majority of vanadium feedstocks (annual consumption of 88.6kt V or 91%
by volume) are used in steel production with the balance (8.9kt V or 9% by
volume) used to produce non-ferrous alloys and chemicals for energy storage.
The FOB China price for vanadium pentoxide (min 98%) has continued to rise in
response to tight supply conditions and reached US$18.50 – 19.00 per pound
or US$40,790 – 41,890 per tonne mid-July (source: Metal Bulletin 17 July 2018).
This represents a 25% increase since April. It is anticipated that prices will
continue their bull run with supplier inventories at low levels and traders unable
to restock at current prices. Recent offers by Chinese exporters have been
above US$20 per pound.
Figure 5
Titanium and
Vanadium Pricing
as at June 2018
)
5
O
2
V
b
l
/
$
S
U
i
(
e
d
x
o
t
n
e
P
m
u
d
a
n
a
V
i
$18
$16
$14
$12
$10
$8
$6
$4
$2
$0
Chinese Sulfate Ti
Pigment
7 August
Permanent closure of 89Ti/V
ore processing companies in
Sichuan by China State Council
Chinese V2O5
Flake
June
September December March
June
September December March
June
2016
2017
2018
$4500
$4000
$3500
$3000
$2500
$2000
$1500
$1000
$500
$0
i
T
O
2
(
U
S
$
/
t
C
F
I
)
12
NEOMETALS ANNUAL REPORT 2018
For personal use only
REVIEW OF OPERATIONS (CONTINUED)
Neometals
100% and
25% Net Profit
Interest through
Alphamet
Management
Pty Ltd
Neomet Processing Technology
Neometals, via its wholly owned Canadian subsidiary Alphamet
Management Pty Ltd, is responsible for managing the
commercialisation and development of the “Neomet Process”.
This patented (USA, Canada, Australia), environmentally
friendly process technology has broad application in the
recovery of a wide range of metal oxides from chloride leach
solutions, including titanium. The energy-efficient recovery
and regeneration of hydrochloric acid with minimal effluent is
an environmentally sustainable, competitive advantage over
conventional processing flowsheets.
All revenue received from the commercialisation of the technology is to be split
25:75 between Neometals and the owners of the technology. Neometals has a
Strategic Alliance with Sedgman Limited (a wholly owned subsidiary of CIMIC
Group Limited (ASX:CIM) to provide the platform for the commercialisation of
the Neomet technology.
The Neomet process can be applied to a range of different ‘feed’ materials and
of particular interest to Neometals is its amenability as an on-site processing
option for Barrambie and/or other titanium ores. Neometals is planning to
complete a pilot program in the first half of CY2019 utilising the Neomet
patented hydrometallurgical process.
Should the titanium hydrolysate chemical processing pilot test-work advance
sufficiently, Neometals will look to attract a titanium industry partner and licence
the Neomet Process to titanium and other relevant industries. The multi-purpose
plant housed in Neometals’ Montreal facility is currently dedicated to the
Company’s battery recycling trial and it is intended the equipment will then be
used for a customer trial with electric arc furnace (EAF) dust and then applied to
a high grade mineral concentrate from Barrambie.
NEOMETALS ANNUAL REPORT 2018
13
For personal use only REVIEW OF OPERATIONS (CONTINUED)
Technology
Business Unit
Neometals 100%
Commercialisation
Rights through
Urban Mining
Pty Ltd, 50%
Ownership in IP
Lithium Battery
Recycling Technology
Neometals is commercialising a technology to economically
recover high-value cobalt that can be re-cycled within the
battery manufacturing chain. Currently less than 5% of used
lithium-ion batteries are recycled as disposal is typically either
paid-for recycling or landfill.
During the Year, Neometals continued the construction of the pilot facility for
cobalt extraction from lithium cobalt (“LCO”) batteries (predominant cathode in
consumer electronics). The Company engaged leading lithium EPC engineers,
Primero Group Pty Ltd, to project manage the construction, commissioning and
operation of the 100kg/day LCO pilot plant program from their Montreal branch
to accelerate progress. The leaching section of the pilot plant has been water
commissioned and the critical path item is a new 50/t day commercial scale
beneficiation circuit (front end battery shredding), which is under construction in
the US and expected to be installed in the September quarter.
In parallel with the pilot construction and commissioning activities, process
flowsheet development for the extraction of multiple metallic elements from
lithium-nickel-manganese-cobalt (“NMC”) batteries (predominant cathode in
electric vehicle batteries) continued. The additional NMC product recovery and
purification process will be subsequently incorporated into the pilot plant post
completion of the LCO test work program.
Post the internal LCO and NMC testing phase on feedstocks sourced from
external aggregators, the pilot plant will then be used to batch test batteries
supplied by consumer electronics manufacturers and car makers.
14
NEOMETALS ANNUAL REPORT 2018
For personal use only REVIEW OF OPERATIONS (CONTINUED)
Figure 6
Battery Recycling
Indicative Timeline
Subject to the success of the test-work, it is the Company’s intention to proceed
with an Engineering Cost Study (±15% accuracy) to complete the technical
and economic evaluation of a decision to proceed with the construction of a
10t/day commercial plant. Neometals has internal financial resources with which
to fund evaluation, construction and commissioning of the commercial-scale
plant and is in preliminary discussions with several interested parties from the
lithium battery supply chain.
Pilot Plant
Montreal Canada
FEED Study
Commercial Plant*
Design/Procure
Commercial Plant*
Fabrication/Construct
10 months
* Subject to FID
October December February March
May
July
September October
2018
2019
NEOMETALS ANNUAL REPORT 2018
15
For personal use only REVIEW OF OPERATIONS (CONTINUED)
Corporate
Pictured above:
Neometals’ Alphamet
Management Pty Ltd
team in Montreal
FINANCES
Cash and term deposits on hand as of 30 June 2018 totalled A$30.4 million,
including $4.1 million in restricted use term deposits supporting performance
bonds and other contractual obligations.
Cash
and term
deposits
on hand as
of 30 June
totalled
A$30.4
million
CAPITAL MANAGEMENT
On 21 February 2018 the on-market buy-back of ordinary shares under
which the company was permitted to acquire up to a maximum of 5% of
the Company’s current issued ordinary shares (28,150,043 shares) expired.
During the FY18 a total of 5,371,209 shares were acquired under the
on-market buy back bringing the total acquired for the buy-back period
to 22,271,311 shares.
The total number of shares on issue as at 30 June 2018 was 543,532,473.
A special dividend of 1 cent per share unfranked was paid to the holders of
fully paid ordinary shares on 8 June 2018.
16
NEOMETALS ANNUAL REPORT 2018
For personal use only REVIEW OF OPERATIONS (CONTINUED)
Annual Mineral Resource and
Ore Reserve Statement
Barrambie Project Mineral Resource Estimate
As at April 2018
Classification
Tonnes (Mt)
TiO2 (%)
V2O5 (%)
Indicated
Inferred
Total
187.1
93.0
280.1
9.61
8.31
9.18
0.44
0.40
0.44
Reporting criteria: ≥10% TiO2 or ≥0.2% V2O5; small discrepancies may occur due
to rounding
Ore Reserves
Project
Category
(JORC, 2012)
Tonnage (Mt)
Barrambie
Probable
10.762
TiO2 (%)
25.18
V2O5 (%)
0.6
Fe2O3 (%)
42.5
Mt Edwards Nickel Mineral Resources Table for 1% Ni block cut-off
As at 30 June 2018
Classification
Tonnes (Kt)
Ni (%)
Indicated
Inferred
Total
2,580
4,805
7,395
2.0
1.5
1.7
Note: Small discrepancies may occur due to rounding
Mt Marion Lithium Project
Nickel (t)
51,600
72,075
123,340
(Neometals Ltd 13.8%, Mineral Resources Limited (MRL) 43.1%,
Ganfeng Lithium Co., Ltd (Ganfeng) 43.1% through Reed Industrial Minerals
Pty Ltd (RIM))
Mt Marion Mineral Resource for 0.5% Li2O cut-off
As at 30 June 2018
Classification
Tonnes (Mt)
Indicated
Inferred
Total
23.6
48.7
72.3
Li2O (%)
1.34
1.38
1.37
Fe (%)
1.06
1.09
1.08
Note: Small discrepancies may occur due to rounding
NEOMETALS ANNUAL REPORT 2018
17
For personal use only REVIEW OF OPERATIONS (CONTINUED)
Mt Marion Mineral Resource for 0.5% Li2O cut-off
As at 27 October 2016
Classification
Tonnes (Mt)
Indicated
Inferred
Total
28.9
48.9
77.8
Li2O (%)
1.35
1.38
1.37
Fe (%)
1.06
1.10
1.09
Note: Small discrepancies may occur due to rounding
CHANGES IN MINERAL RESOURCE SINCE 27 OCTOBER 2016
Mt Marion Mineral Resource for 0.5% Li2O cut-off
Classification
Indicated
Inferred
Total
Tonnes (Mt)
-5.3
-0.2
-5.5
Note: Small discrepancies may occur due to rounding
COMPLIANCE STATEMENT
The information in this report that relates to Mineral Resource Estimates and
Exploration Targets for the Barrambie Titanium Project and Mt Edwards Project
are extracted from the ASX Announcements:
17 April 2018
Updated Barrambie Mineral Resource Estimate
25 June 2018
Mt Edwards Project Mineral Resource Over 120,000 Nickel Tonnes
The Company confirms that it is not aware of any new information or data that
materially affects the information included in the original market announcements
and that all material assumptions and technical parameters underpinning
the estimates in the market announcements continue to apply and have not
materially changed. The Company confirms that the form and context in which
the Competent Persons’ findings are presented have not been materially
modified form the original market announcements.
The information in this report that relates to the Mt Marion Mineral Resource
estimate is based on information compiled by Mr Matthew Watson, a
Competent Person who is a Member of the Australasian Institute of Mining and
Metallurgy. Mr Watson has sufficient experience which is relevant to the style
of mineralisation and type of deposit under consideration and to the activity
to which he is undertaking to qualify as a Competent Person as defined in the
2012 Edition of the “Australasian Code for Reporting of Exploration Results,
Minerals Resources and Ore Reserves”. Matthew Watson is a full time employee
of Mineral Resources Ltd and consents to the inclusion in the report of the
matters based on this information in the form and context in which it appears.
18
NEOMETALS ANNUAL REPORT 2018
For personal use only DIRECTORS’
REPORT
The directors of Neometals Ltd submit their report for the
financial year ended 30 June 2018.
The names and particulars of the directors of the Company
during or since the end of the financial year are:
Current Directors
Steven Cole
Non-executive
Chairman
Steven Cole has over 40 years of professional, corporate and
business experience through senior legal consultancy, as
well as a range of executive management and non-executive
appointments.
His extensive boardroom and board sub-committee experience includes
ASX listed, statutory, proprietary and NFP organisations covering the industrial,
financial, educational, professional services, agribusiness, health and
resources sectors.
Steven’s professional qualifications include:
• Llb (hons)– University of Western Australia
• AICD Company Directors Diploma and Fellow;
• Wharton Business School – University of Pennsylvania –
Corporate Governance Program 2010
• Harvard – Corporate Governance Program 2015
Appointed: 24 July 2008
Special responsibilities: Chairman of each of the Nomination and
Remuneration Committees and Member of the Audit Committee.
Directorships of other listed companies: Non-executive Director
Matrix Composites and Engineering Ltd
NEOMETALS ANNUAL REPORT 2018
19
For personal use only DIRECTORS’ REPORT (CONTINUED)
David
J. Reed OAM
Non-executive
Director
Christopher
J. Reed
Managing
Director
David Reed is a Fellow of CPA Australia with over 45 years’
experience in stock broking and corporate management.
From 1985 to 1997 Mr. Reed was chairman of stock-broking firm
Eyres Reed Ltd until its sale to CIBC World Markets in 1997 at
which time he became Chairman of CIBC Australia,
a position he held until 2003.
Mr. Reed has served as chairman of several ASX listed mineral exploration
companies and served as Chairman of Neometals Ltd since inception in 2001
to 27 November 2015 when he was succeeded by Steven Cole. Mr. Reed is a
former chairman of the fund raising committee for the Australian Prospectors
and Miners Hall of Fame and secretary of the Amalgamated Prospectors and
Leaseholders Association and was a co-founder of the Diggers and Dealers
Forum in Kalgoorlie. Mr. Reed received an Order of Australia Medal in 2002 for
his service to the community.
Appointed: 20 December 2001
Special responsibilities: Deputy Chairman and Member of the Risk,
Nomination and Remuneration Committees
Directorships of other listed companies: Nil
Chris Reed is an accountant with over 26 years’ experience in
the resource industry including more than 10 years in corporate
administration and management. Chris served as Managing
Director of Reed Resources Ltd (now Neometals Ltd) from
September 2007 until May 2012 at which time he assumed the
role executive director.
Chris resumed the role as Managing Director from 1 October 2013. Mr. Reed
is a councilor of the Association of Mining and Exploration Companies having
served for 13 years,10 years as Vice-president.
Mr. Reed holds a Bachelor of Commerce from the University of Notre Dame
and a Graduate Certificate in Mineral Economics from the WA School of Mines.
He is a member of the AusIMM.
Appointed: 20 December 2001
Special responsibilities: CEO
Directorships of other listed companies: Nil
20
NEOMETALS ANNUAL REPORT 2018
For personal use only Dr. Natalia
Streltsova
Non-executive
Director
Douglas
Ritchie
Non-executive
Director
DIRECTORS’ REPORT (CONTINUED)
Natalia Streltsova is a PhD qualified chemical engineer with
over 26 years’ experience in the minerals industry, including over
10 years in senior technical and corporate roles with mining majors
– WMC, BHP and Vale.
Dr Streltsova has considerable international experience covering project
development and acquisitions in South America, Africa and the Former Soviet
Union. She is currently a Non-Executive Director of Western Areas Limited and
Parkway Minerals NL.
Appointed: 14 April 2016
Special responsibilities: Chairman of the Risk Committee and Member of
each of the Remuneration and Audit Committees.
Directorships of other listed companies: Parkway Minerals NL &
Western Areas Ltd
Douglas Ritchie has four decades experience working in the
mining industry, including as a member of Rio Tinto’s Executive
Committee, and the Group Executive responsible for China,
Doug’s expertise across the industry is extensive.
He has previously been a Director of Jinchuan Group International Resources
(HKSE), Coal & Allied Limited (ASX 50), Rossing Uranium Limited, Arrium Limited
and Chairman of Riversdale Mining Limited. He was also formerly Chairman of
the Coal Industry Advisory Board to the International Energy Agency, a Director
of the World Coal Association and a Director of the Queensland Resources
Council. Between 2013 and April 2016, Doug was Chairman of UniQuest, the
main commercialisation vehicle of the University of Queensland.
Doug is a Fellow of the Australian Institute of Mining and Metallurgy and a
Fellow of the Australian Institute of Company Directors.
Appointed: 14 April 2016
Special responsibilities: Chairman of the Audit Committee and Member of
each of the Nomination and Risk Committees.
Directorships of other listed companies: Nil
NEOMETALS ANNUAL REPORT 2018
21
For personal use only DIRECTORS’ REPORT (CONTINUED)
Jason
Carone
Chief Financial
Officer and
Company
Secretary
Company Secretary
Jason Carone is a Chartered Accountant with over 20 years’
experience in accounting and company administration in Australia
and South East Asia.
Mr. Carone holds a Bachelor of Commerce in Accounting and Business
Law from Curtin University and is a member of the Institute of Chartered
Accountants, and Chartered Secretaries Australia.
Appointed: 4 March 2009
REVIEW OF OPERATIONS
The consolidated profit after income tax for the year attributable to members
of Neometals Ltd was $20.2 million (2017: $4.7 million). A detailed review of the
Company’s operations during the financial year can be found on pages 2 to 15
of this Annual Financial Report.
CHANGES IN STATE OF AFFAIRS
During the financial year the Consolidated Entity’s primary focus centered
on advancing its advanced minerals projects. There have not been any other
significant changes in the affairs of the Consolidated Entity from the previous
year other than as disclosed in the Director’s Report.
PRINCIPAL ACTIVITIES
The Consolidated Entity’s principal activities during the year centred on
advancing its advanced minerals projects Mt Marion and Barrambie and
developing its technology business unit.
EVENTS AFTER THE REPORTING PERIOD
On 16 August 2018, the Company announced to the market the intention to
demerge Barrambie Titanium-Vanadium Project and associated non-lithium
technology assets, subject to shareholder/regulatory approvals and third party
consents.
FUTURE DEVELOPMENTS
The Consolidated Entity intends to continue its focus on disciplined evaluation
and development of its two core assets, the Mt Marion Lithium Project and
Barrambie Titanium project, and to develop its technology business units.
These core advanced minerals projects have large JORC-compliant Resource
bases, which when combined with their respective process flow sheets hold the
potential to develop into large, low-cost, long life advanced mineral operations.
22
NEOMETALS ANNUAL REPORT 2018
For personal use only DIRECTORS’ REPORT (CONTINUED)
NEOMETALS VISION, STRATEGY AND EXECUTION
Vision
Neometals’ vision is to combine innovative cost advantages and strong partners
to develop a portfolio of globally significant mineral resources into lower-risk,
long-life, high-margin operations to optimise stakeholder returns.
Strategy
Grow market cap from maximising returns from existing operations, increasing
margins via higher value (downstream) products and developing growth options.
Execution
The Company has established individual business plan objectives addressing
the building blocks for delivering on the strategic objectives.
ENVIRONMENTAL REGULATIONS
As required by section 299(1)(f) of the Corporations Act the Company confirms
that it has performed all of its environmental obligations in accordance with
applicable environmental regulations.
DIVIDENDS
In respect of the financial year ended 30 June 2018, a special dividend of 1 cent
per share unfranked was paid to the holders of fully paid ordinary shares on
8 June 2018.
INDEMNIFICATION OF OFFICERS AND AUDITORS
During the financial year the Company paid a premium in respect of a contract
insuring the directors and officers of the Company and of any related body
corporate against a liability incurred as a director or officer, to the extent
permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the financial year, except to the
extent permitted by law, indemnified or agreed to indemnify an officer or auditor
of the Group or of any related body corporate against a liability incurred as such
an officer or auditor.
UNISSUED SHARES UNDER OPTION
There were no unissued ordinary shares of the company, Neometals Ltd,
under option at the date of this report.
No shares of the Company were issued during or since the end of the financial
year as a result of the exercise of an option over the unissued shares of the
Company.
Please refer to the Remuneration Report at page 15 below for details of
Performance rights issued as part of KMP remuneration.
NEOMETALS ANNUAL REPORT 2018
23
For personal use only DIRECTORS’ REPORT (CONTINUED)
DIRECTORS’ SECURITY HOLDINGS
The following table sets out each director’s relevant interest in shares,
debentures, and rights or options in shares or debentures of the Company
or a related body corporate as at the date of this report:
Directors
S. Cole
C. Reed
D. Reed
D. Ritchie
N. Streltsova
Fully paid
Ordinary
Shares
Number
1,232,783
9,978,170
47,188,900
27,048
-
Share
Options
Number
Performance
rights
Number
-
-
-
-
-
163,948
2,409,074
-
39,348
66,396
DIRECTORS’ MEETINGS
The following table sets out the number of directors’ meetings (including
meetings of committees of directors) held during the financial year and the
number of meetings attended by each director (while they were a director or
committee member). During the financial year, 9 board meetings, 2 nomination
committee meeting, 5 remuneration committee meetings, 1 risk committee and
3 audit committee meetings were held.
Board of
Directors
Nomination
Committee
Remuneration
Committee
Risk
Committee
Audit
Committee
Directors
Held
Attended Held(1) Attended Held(1) Attended Held(2) Attended Held
Attended
S. Cole
C. Reed
D. Reed
N. Streltsova
D.Ritchie
9
9
9
9
9
9
9
9
9
9
2
n/a
2
n/a
2
2
n/a
2
n/a
2
5
n/a
5
5
5
n/a
4
5
n/a
n/a
n/a
n/a
1
1
1
n/a
n/a
1
1
1
3
n/a
n/a
3
3
3
n/a
n/a
3
3
Meeting numbers in the “Held” column are the number of meetings held whilst
the relevant director was a member of the board or committee.
(1) Excludes several informal meetings of the members of the Nomination and Remuneration
Committee to discuss matters including the establishment of executive KPIs for incentive
based remuneration and the TSR comparator group, board evaluation and board succession
planning.
(2) Excludes several informal meetings of the members of the Risk Committee and
management to discuss matters including the Company’s strategic direction and resultant
changes in risk exposure.
24
NEOMETALS ANNUAL REPORT 2018
For personal use only DIRECTORS’ REPORT (CONTINUED)
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of the court to bring proceedings on behalf of
the Company or intervene in any proceedings to which the Company is a party
for the purpose of taking responsibility on behalf of the Company for all or part
of those proceedings. The Company was not a party to any such proceedings
during the year.
Corporate Governance Statement
The Company is committed to high standards of corporate governance
designed to enable the Company to meet its performance objectives and better
manage its risks.
The Company has adopted a comprehensive governance framework in the
form of a formal corporate governance charter together with associated policies,
protocols and related instruments (together “Charter”).
The Company’s Charter is based on a template which has been professionally
verified to be complementary to and in alignment with the ASX Corporate
Governance Council Principles and Recommendations 3rd Edition 2014 (“ASX
CGC P&R”) in all material respects. The Charter also substantially addresses
the suggestions of good corporate governance mentioned in the “Commentary”
sections of the ASX CGC P&R.
The Charter was formally adopted by the board on 28 November 2014.
Prior to that date the Company’s corporate governance charter was
substantially reflective of the ASX Corporate Governance Council Principles
and Recommendations 2nd Edition.
The Board of Neometals is responsible for the corporate governance of the
company and its subsidiaries. The Board has governance oversight of all
matters relating to the strategic direction, corporate governance, policies,
practices, management and operations of Neometals with the aim of delivering
value to its Shareholders and respecting the legitimate interest of its other
valued stakeholders, including employees, suppliers and joint venture partners.
Under ASX Listing Rule 4.10.3, Neometals is required to provide in its annual
report details of where shareholders can obtain a copy of its corporate
governance statement, disclosing the extent to which the Company
has followed the ASX Corporate Governance Council Principles and
Recommendations in the reporting period. Neometals has published its
corporate governance statement on the Corporate section of its website:
www.neometals.com.au/reports/corporate-governance-statement.pdf
NEOMETALS ANNUAL REPORT 2018
25
For personal use only REMUNERATION REPORT (AUDITED)
KEY MANAGEMENT PERSONNEL
The following persons were deemed to be Key Management Personnel (“KMP”)
during or since the end of the financial year for the purpose of Section 300A of
the Corporations Act 2001 and unless otherwise stated were KMP for the entire
reporting period.
Non-executive Directors
• Steven Cole
Non-executive Director/Chairman
• David Reed
Non-executive Director/Deputy Chairman
• Natalia Streltsova Non-executive Director
• Douglas Ritchie Non-executive Director
Executive Directors
• Christopher Reed Managing Director and CEO
Other executives
• Jason Carone
Chief Financial Officer and Company Secretary
• Michael Tamlin
Chief Operating Officer
• Darren Townsend Chief Development Officer – Appointed 21 September 2017
REMUNERATION POLICY FOR
KEY MANAGEMENT PERSONNEL
Non-executive directors
The board’s policy is to remunerate Non-executive Directors at market
rates for comparable companies for time, commitment and responsibilities.
The remuneration committee on behalf of the board determines payments to
the Non-executive Directors and reviews their remuneration annually, based
on market practice, shareholder sentiment, board work load, company cashflow
capacity and corporate performance generally. Independent external advice
and/or benchmark comparisons are sought when required. The maximum
aggregate amount of fees that can be paid to Non-executive Directors is
$600,000 as approved by shareholders at the Annual General Meeting on
27 November 2015. Fees for Non-executive Directors are not linked to the
performance of the economic entity. However, to align Directors’ interests
with shareholder interests, the Directors are encouraged to hold shares in the
Company and invited to salary sacrifice fees for performance rights pursuant
to the company’s Performance Rights Plan (“PRP”).
General
The remuneration policy for employees is developed by the Remuneration
Committee taking into account market conditions and comparable salary levels
for companies of a similar size and operating in similar sectors.
26
NEOMETALS ANNUAL REPORT 2018
For personal use only REMUNERATION REPORT (CONTINUED)
The Company adopted a revised PRP for its staff, executive KMP and Non-
executive Directors in November 2017 and shareholders reapproved the issue
of securities under the plan in November 2017. The board believes that the
PRP will assist the Consolidated Entity in remunerating and providing ongoing
incentives to employees of the Group.
The rules of the PRP enable the Company to issue performance rights to eligible
personnel subject to performance and vesting conditions determined by the
Company. Each performance right entitles the holder, for nil cash consideration,
to one fully paid ordinary share in the Company for every performance right
offered, if the applicable performance and vesting conditions set for that holder
are satisfied.
During the financial year a total of 2,377,312 (2017: 1,096,599) performance
rights were offered to and accepted by KMP. Of this amount 2,210,516
performance rights are subject to relative and absolute Total Shareholder
Return (“TSR”) and other strategic hurdles, details of which can be found in
the “Service agreements – performance based remuneration” section below.
Testing undertaken for the period ended 30 June 2017 and 31 December 2017
resulted in 2,802,919 performance rights subject to the TSR criteria vesting.
The Group’s remuneration policy for executive KMP seeks to balance its
desire to attract, retain and motivate high quality personnel with the need to
ensure that remuneration incentivises them to pursue growth and success
of the Company without taking undue risks and without it being excessive
remuneration.
To align the interests of the executive with that of the company remuneration
packages for executive KMPs contain the following key elements:
a) Fixed Base Salary – salary, superannuation and non-monetary benefits;
b) Short Term Incentives – cash bonus incentives applied to a maximum
percentage of Fixed Base Salary and structured against relative satisfaction
(at the reasonable discretion of the board) of certain corporate and personally
related key performance indicators of the executive.
c) Long Term Incentives – the grant of performance rights in the Company,
with value capped to a maximum percentage of Fixed Base Salary, vesting
progressively while the executive remains employed, with the degree
of vesting structured against the Company’s relative and absolute TSR
performance against a comparator group of companies as well as other
strategic hurdles.
The Company’s remuneration is specifically designed to encourage loyalty and
longevity of employment as well as aligning the employee’s interests with those
of the Company and the creation of genuine long term sustainable value for
security holders.
NEOMETALS ANNUAL REPORT 2018
27
For personal use only REMUNERATION REPORT (CONTINUED)
All remuneration provided to KMP in the form of share based payments
are valued pursuant to AASB 2 Share-based Payment at fair value on grant
date and are expensed on a pro rata basis over the vesting period of the
relevant security.
Relationship between the remuneration policy and
company performance
The table below sets out summary information about the Consolidated Entity’s
earnings and movements in shareholder wealth for the five years to June 2018:
30 June
2018
$
30 June
2017
$
30 June
2016
$
30 June
2015
$
30 June
2014
$
Revenue(i)
-
-
-
419,526
7,800,372
Net profit/(loss) before tax
19,641,936
4,745,744
83,832,380
(10,314,405)
(14,573,782)
Net profit/(loss) after tax
20,210,541
4,963,444
84,606,280
(10,314,405)
(16,666,425)
Share price at start of year
Share price at end of year
Market capitalisation at year
end (undiluted)
Basic profit/(loss) per share
Diluted profit/(loss) per share
0.27
0.30
0.450
0.270
0.091
0.450
0.018
0.091
0.032
0.018
163,059,742
147,447,206
251,590,166
45,701,361
9,422,170
0.0373
0.0372
0.0085
0.0084
0.1568
0.1562
(0.0203)
(0.0203)
Nil
(0.0279)
(0.0293)
Nil
Dividends Paid
5,435,325
11,260,217
11,181,785
(i) Although the past 3 financial years have returned a net profit before tax there has been no
revenues from ordinary activities. The group has been profitable in these financial years from
the sell down of the investment held in RIM in 2016, the respective associate profits booked
from the project over the past 2 financial years and an impairment reversal within the current
year relating to the Barrambie project.
28
NEOMETALS ANNUAL REPORT 2018
For personal use only REMUNERATION REPORT (CONTINUED)
KEY MANAGEMENT PERSONNEL REMUNERATION
The KMP received the following amounts during the year as compensation for
their services as directors and executives of the Company and/or the Group.
Short-term
employee benefits
Salary &
fees
$
Bonus FY
17’18
$
Non-
Mone-
tary(2)
$
2018
Non-executive Directors
S. Cole
D. Reed
73,059
73,059
N. Streltsova
62,100
D. Ritchie
62,100
270,318
Executive directors
-
-
-
-
-
-
-
-
-
-
C. Reed
515,000
61,200
2,409
515,000
61,200
2,409
Other executives:
M. Tamlin
349,400
50,000
127,866
J. Carone
275,000
50,000
22,324
D. Townsend(i)
209,414
50,000
-
833,814
150,000
150,190
Total
1,619,132
211,200
152,599
Post-em-
ployment
benefits
Share
based payments
Super-
annuation
$
Other
$
Shares
$
Options
and rights
$
Total
$
% remuner-
ation linked
to perfor-
mance
-
-
-
-
-
-
-
-
-
-
-
6,941
6,941
5,900
5,900
25,682
25,000
25,000
25,000
25,000
15,909
65,909
116,591
-
-
-
-
-
-
-
-
-
-
-
50,000
130,000
-
80,000
12,000
80,000
12,000
80,000
74,000
370,000
159,374
762,983
159,374
762,983
67,803
620,069
56,503
428,827
32,271
307,594
156,577
1,356,490
389,951
2,489,473
-
-
-
-
-
29
-
19
25
27
-
-
(1) Commenced 13 November 2017
(2) Relates to fringe benefits received by key management personnel
NEOMETALS ANNUAL REPORT 2018
29
For personal use only REMUNERATION REPORT (CONTINUED)
Short-term
employee benefits
Salary &
fees
$
Bonus FY
16’17
$
Non-
Mone-
tary(1)
$
2017
Non-executive Directors
S. Cole
D. Reed
118,722
73,059
N. Streltsova
73,059
D. Ritchie
73,059
337,899
Executive directors
-
-
-
-
-
-
-
-
-
-
C. Reed
510,000
54,000
510,000
54,000
1,622
1,622
Other executives:
M. Tamlin
330,000
56,400
21,335
J. Carone
270,000
50,250
20,695
600,000
106,650
42,030
Total
1,447,899
160,650
43,652
Post-em-
ployment
benefits
Share
based payments
Super-
annuation
$
Shares
$
Options
and rights
$
Other
$
Total
$
% remuner-
ation linked
to perfor-
mance
-
-
-
-
-
-
-
-
-
-
-
11,278
6,941
6,941
6,941
32,101
30,000
30,000
30,000
30,000
60,000
122,101
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
130,000
80,000
80,000
80,000
370,000
127,292
722,914
127,292
722,914
117,972
555,707
45,628
416,573
163,600
972,280
290,892
2,065,194
-
-
-
-
-
25
-
31
23
-
-
(1) Relates to fringe benefits received by key management personnel
30
NEOMETALS ANNUAL REPORT 2018
For personal use only REMUNERATION REPORT (CONTINUED)
SERVICE AGREEMENTS –
PERFORMANCE BASED REMUNERATION
The KMP of the Company, other than non-executive directors, are employed
under service agreements. A summary of performance conditions for relevant
KMP are detailed below:
Name: Mr. J. Carone
Position: Chief Financial Officer/Company Secretary
Term: No defined term
Termination: 3 months notice period and 3 months termination payment
Incentive based remuneration
Short Term Incentive
Each financial year during the term of his service agreement the board, at its
sole discretion, may award the KMP a cash bonus up to 25% of the KMP’s
annual salary package ($300,000 inclusive of superannuation for 2017-18).
The basis for calculating the STI will be a range of criteria including both the
KMP’s personal performance and the Company’s financial performance/position
and share price. The STI for 2017-18 was set at a maximum of $75,000 of which
67% or $50,000 was agreed to be paid by management.
Long Term Incentive
Each financial year during the term of his service agreement the KMP is entitled
to receive performance rights granted under the Company’s Performance Rights
Plan. The number of performance rights to which the KMP may be granted is
based on the following calculation and vesting of the performance rights are
subject to further criteria which are also set out below.
Calculation of potential entitlement to performance rights
P =
33
100
X
S
VWAP
Where:
P
S
VWAP
is the potential performance rights entitlement
is the KMP’s annual salary package for the applicable period
is the 30 day volume weighted average price of ordinary shares
in Neometals Ltd for the period ended 30 June of the preceding
financial year.
NEOMETALS ANNUAL REPORT 2018
31
For personal use only REMUNERATION REPORT (CONTINUED)
Name: Mr. C. Reed
Position: Managing Director
Term: Expiry date of 30 June 2019
Termination notice period:
12 months by employee
Termination notice period:
6 months by executive
Incentive based remuneration
Short Term Incentive
Each financial year during the term of his service agreement the board,
at its sole discretion, may award the KMP a cash bonus of up to one third of
the KMP’s annual salary package ($540,000 inclusive of superannuation for
2017-18). The STI for 2017-18 was set at a maximum of $180,000 representing
approximately 33% of the annual base salary package of which 34% or $61,200
was acknowledged and agreed by the Board and Mr C Reed. The basis for
calculating the STI will be a range of criteria including both the KMP’s personal
performance and the Company’s financial performance/position and share
price.
Long Term Incentive
Each financial year during the term of his service agreement the KMP is entitled
to receive performance rights granted under the Company’s Performance
Rights Plan. The maximum number of performance rights to which the KMP
may be granted is based on the following calculation and vesting of the
performance rights are subject to further criteria which are also set out below,
as approved by shareholders.
Calculation of potential entitlement to performance rights
P =
50
100
X
S
VWAP
Where:
P
S
VWAP
is the potential performance rights entitlement
is the KMP’s annual salary package for the applicable period
is the 60 day volume weighted average price of ordinary shares
in Neometals Ltd for the period ended 30 June of the preceding
financial year.
32
NEOMETALS ANNUAL REPORT 2018
For personal use only REMUNERATION REPORT (CONTINUED)
Name: Mr. M. Tamlin
Position: Chief Operating Officer
Term: No defined term
Termination notice period:
6 months
Incentive based remuneration
Short Term Incentive
Each financial year during the term of his service agreement the board, at its
sole discretion, may award the KMP a cash bonus of up to 33% of the KMP’s
annual salary package ($374,400 inclusive of superannuation for 2017-18).
The STI for 2017-18 was set at a maximum of $123,552 representing
approximately 33% of the annual base salary package of which 40.5% or
$50,000 was acknowledged and agreed by the board and Mr M Tamlin.
The basis for calculating the STI will be a range of criteria including both
the KMP’s personal performance and the Company’s financial performance/
position and share price.
Long Term Incentive
Each financial year during the term of his service agreement the KMP is entitled
to receive performance rights granted under the Company’s Performance Rights
Plan. The maximum number of performance rights to which the KMP may be
granted is based on the following calculation and vesting of the performance
rights are subject to further criteria which are also set out below, as approved by
shareholders.
Calculation of potential entitlement to performance rights
P =
33
100
X
S
VWAP
Where:
P
S
VWAP
is the potential performance rights entitlement
is the KMP’s annual salary package for the applicable period
is the 30 day volume weighted average price of ordinary shares
in Neometals Ltd for the period ended 30 June of the preceding
financial year.
NEOMETALS ANNUAL REPORT 2018
33
For personal use only REMUNERATION REPORT (CONTINUED)
Name: Mr. D. Townsend
Position: Chief Development Officer
Term: No defined term
Termination notice period:
6 months
Incentive based remuneration
Short Term Incentive
Each financial year during the term of his service agreement the board, at its
sole discretion, may award the KMP a cash bonus of up to 33% of the KMP’s
annual salary package ($360,000 inclusive of superannuation for 2017-18).
The STI for 2017-18 was set at a maximum of $118,000 representing
approximately 33% of the annual base salary package of which $50,000 was
acknowledged and agreed by the CEO and Mr D Townsend. The basis for
calculating the STI will be a range of criteria including both the KMP’s personal
performance and the Company’s financial performance/position and share price.
Long Term Incentive
Each financial year during the term of his service agreement the KMP is entitled
to receive performance rights granted under the Company’s Performance Rights
Plan. The maximum number of performance rights to which the KMP may be
granted is based on the following calculation and vesting of the performance
rights are subject to further criteria which are also set out below, as approved
by shareholders.
Calculation of potential entitlement to performance rights
P =
33
100
X
S
VWAP
Where:
P
S
VWAP
Criteria
is the potential performance rights entitlement
is the KMP’s annual salary package for the applicable period
is the 30 day volume weighted average price of ordinary shares
in Neometals Ltd for the period ended 30 June of the preceding
financial year.
The grant of Performance Rights is designed to reward long term sustainable
business performance measured over a three year period with an opportunity for
the performance conditions to be re-measured six months later should they not
vest at the first vesting date. The KMP’s entitlement to the performance rights is
dependent on 3 criteria:
34
NEOMETALS ANNUAL REPORT 2018
For personal use only REMUNERATION REPORT (CONTINUED)
(a) Tranche 1 – Relative TSR
The performance conditions of 40% of Performance Rights will be measured
as at each vesting date by comparing the Company’s total shareholder
return (TSR) with that of a comparator group of resource companies over the
relevant period.
The Performance Rights will vest depending on the Company’s percentile
ranking within the comparator group on the relevant Vesting Date as follows:
• If the Company ranks below the 50th percentile, none of the Performance
Rights will vest.
• If the Company ranks at the 50th percentile, 50% of the Performance Rights
will vest.
• For each 1% ranking at or above the 51st percentile, an additional 2% of
the Performance Rights will vest, with 100% vesting where the Company
ranks at or above the 75th percentile.
(b) Tranche 2 – Absolute TSR
The performance conditions of 40% of Performance Rights will be measured
as at each vesting date by calculating the Company’s TSR calculated over
the period commencing on the Comparator Start Date and ending on the
relevant Vesting Date (Absolute TSR).
The Performance Rights will vest depending on the Company’s Absolute
TSR on the relevant Vesting Date as follows:
• If the Company’s Absolute TSR is less than 15%, none of the Performance
Rights will vest.
• If the Company’s Absolute TSR is 15%, 50% of the Performance Rights
will vest.
• For each additional 1% TSR above 15% Absolute TSR, an additional
10% of the Performance Rights will vest, with 100% vesting where the
Company’s Absolute TSR is at or above 20%.
(c) Tranche 3 – Business plan
The performance conditions of 20% of Performance Rights will be measured
as at each Vesting Date as follows:
10% will vest if the combined market capitalisation of Neometals and any
entity demerged from the Neometals Group and separately listed on the ASX
would meet the threshold for entry into the ASX/S&P 200 Index.
10% will vest if any two of the following have been achieved (as assessed
by the Board):
• an LiOH plant is under construction or in operation;
NEOMETALS ANNUAL REPORT 2018
35
For personal use only REMUNERATION REPORT (CONTINUED)
• a Barrambie/Neomet plant under construction/in operation;
• an Li-Battery recycling plant under construction/in operation;
• third party royalties received from the commercialisation of Neometals’
technology >A$5M in aggregate.
Performance rights granted to the KMP have a vesting period of 3 years from
grant date and will lapse on the KMP ceasing to be an employee of the Group
prior to the vesting date.
The Company provides the KMP with performance based incentives in order to
incentivise KMP to pursue strategies that are aligned with the overall business
strategy and the interests of the shareholders. Where deemed appropriate the
Company has set specific Key Performance Indicators as performance criteria
for staff that have a direct role/responsibility in achieving a specific outcome.
To ensure that KMP are also incentivised to pursue longer term strategies that
increase shareholder wealth a portion of the KMP’s remuneration is linked to
a “comparative TSR model” which links the level of the KMP remuneration
to the Company’s performance against a group of comparable ASX listed
entities, using Total Shareholder Return as the basis of comparison. KMP are
also issued with performance rights with service conditions as vesting criteria
which assist the company retain staff as well as aligning the interests of the
KMP with shareholders. The Company has deemed the issue of service based
performance rights as an appropriate form of remuneration due to the uncertain
nature of the Group’s business, that is, mineral exploration, mining and
developing new mineral processing technologies.
The comparator group adopted by the company for LTI granted in 2016-2017 is
as follows:
• Galaxy Resources Limited (ASX: GXY)
• Global X Lithium ETF (NYSE Arca: LIT)
• TNG Ltd (ASX: TNG)
• S&P ASX Small Resources Index
• Nemaska Lithium Inc. (TSX: NMX)
• Iluka Resources Limited (ASX: ILU)
• Argex Titanium Inc. (TSX: RGX)
• Pilbara Minerals Limited (ASX: PLS)
(ASXR: ASX)
• S&P ASX 300 (XKO: ASX)
• Orocobre Limited (ORE.ASX)
• Ganfeng Lithium (2460.SZ)
36
NEOMETALS ANNUAL REPORT 2018
For personal use only REMUNERATION REPORT (CONTINUED)
The comparator group adopted by the company for LTI granted in 2017-2018 is
as follows:
• Galaxy Resources Limited (ASX: GXY)
• Global X Lithium ETF (NYSE Arca: LIT)
• TNG Ltd (ASX: TNG)
• S&P ASX Small Resources Index
• Nemaska Lithium Inc. (TSX: NMX)
• Iluka Resources Limited (ASX: ILU)
• Argex Titanium Inc. (TSX: RGX)
• Pilbara Minerals Limited (ASX: PLS)
(ASXR: ASX)
• S&P ASX 300 (XKO: ASX)
• Orocobre Limited (ORE.ASX)
• Umicore Belgium (BSE: UMI)
The comparator group adopted by the company for LTI granted in 2018-2019 is
as follows:
• Galaxy Resources Limited (ASX: GXY)
• Global X Lithium ETF (NYSE Arca: LIT)
• TNG Ltd (ASX: TNG)
• S&P ASX Small Resources Index
• Nemaska Lithium Inc. (TSX: NMX)
• Iluka Resources Limited (ASX: ILU)
• Argex Titanium Inc. (TSX: RGX)
• Pilbara Minerals Limited (ASX: PLS)
(ASXR: ASX)
• S&P ASX 300 (XKO: ASX)
• Orocobre Limited (ORE.ASX)
• Umicore Belgium (BSE:UMI)
• Australian Vanadium Limited
(ASX:AVL)
The Company has selected the above group of companies as the comparator
group for the following reasons:
1) It represents a reasonable cross section of resource companies with
reasonably comparable market capitalisation, resource base and stage of
development to that of the Company
2) The group is primarily focused on developing industrial minerals projects.
The Company’s performance rights plan was approved by shareholders at the
2017 AGM.
NEOMETALS ANNUAL REPORT 2018
37
For personal use only REMUNERATION REPORT (CONTINUED)
PERFORMANCE RIGHTS ISSUED AS PART OF
KMP REMUNERATION
Performance Rights granted to key management personnel
The following tables summarises information relevant to the current financial
year in relation to the grant of performance rights to KMP as part of their
remuneration. Performance rights are issued by Neometals Ltd.
During the Financial Year
Grant date
No.
granted
No.
vested
Fair value at
grant date(2)
Earliest
exercise
date
Consideration
payable on
exercise
3/10/2017
3/10/2017
11/12/2017
11/12/2017
5/01/2018
5/01/2018
5/01/2018
370,012
444,015
952,474
444,015
112,700
27,048
27,048
2,377,312
-
-
-
-
-
-
-
-
93,243
31/12/2020
111,892
31/12/2020
320,984
31/12/2020
149,633
31/12/2020
50,000
30/06/2018
12,000
30/06/2018
12,000
30/06/2018
749,752
-
-
-
-
-
-
-
-
(1) The number of performance rights that will actually vest, if any, is determined by the
Company’s performance based on Neometals TSR compared to the comparative group of
companies over a 3 year period. Accordingly, at the date of this report 166,796 performance
rights had vested.
(2) These values have been calculated using the monte carlo valuation method.
(3) These Non-executive Directors elected to sacrifice Directors Fees for performance rights
pursuant to the company’s PRP.
Name
KMP:
J. Carone
M. Tamlin
C. Reed
D. Townsend
S. Cole(3)
N. Streltsova(3)
D. Ritchie(3)
Total
38
NEOMETALS ANNUAL REPORT 2018
For personal use only REMUNERATION REPORT (CONTINUED)
Details of performance rights held by KMP and of shares issued during the
financial year as a result of the vesting of performance rights:
Balance
at
01/07/17
No.
Grant
date
No.
Granted
No.
Fair value
of rights
at grant
date
$
Vested
during the
financial
year
No.
Forfeited/
lapsed
during the
financial
year
No.
Balance
at
30/06/18
No.
Ordinary
shares
issued on
exercise
of rights
No.
2018
KMP:
J. Carone(1)
314,995
03/10/17
370,012
149,419
C. Reed(1)
887,163
03/10/17
952,474
482,512
M. Tamlin(1)
455,160
11/12/17
444,015
179,304
D. Townsend(1)
N. Streltsova(2)
D. Ritchie(2)
S. Cole(2)
-
-
-
-
11/12/17
444,015
149,633
05/01/17
27,048
12,000
27,048
05/01/17
27,048
12,000
27,048
05/01/17
112,700
50,000
112,700
-
-
-
-
98,932
586,075
494,540
265,902
1,573,735
1,329,190
195,885
703,290
979,189
-
-
-
-
444,015
-
-
-
-
-
-
-
Total
1,657,318
2,377,312
1,034,868
166,796
560,719
3,307,115
2,802,919
(1) The number of performance rights that will actually vest, if any, is determined by the
Company’s performance based on Neometals TSR compared to the comparative group of
companies over the relevant 2-3 year period as set out in the section above.
(2) Under the Performance Rights Plan, Non-Executive Directors were invited to sacrifice part
of their fees for their services in exchange for performance rights.
Balance
at
01/07/16
No.
Grant
date
No.
Granted
No.
Fair value
of rights
at grant
date
$
Vested
during the
financial
year
No.
Forfeited/
lapsed
during the
financial
year
No.
Balance
at
30/06/17
No.
Ordinary
shares
issued on
exercise
of rights
No.
2017
KMP:
J. Carone(1)
593,472
14/09/16
216,063
56,176
494,540
C. Reed(1)
1,595,092
14/09/16
621,261
161,528
1,329,190
M. Tamlin(1)
1,175,074
14/09/16
259,275
67,412
979,189
Total
3,363,638
1,096,599
285,116
2,802,919
-
-
-
-
314,995
3,911,608
887,163
455,160
-
-
1,657,318
3,911,608
(1) The number of performance rights that will actually vest, if any, is determined by the Company’s
performance based on Neometals TSR compared to the comparative group of companies
over the relevant 2 year period as set out in the section above.
NEOMETALS ANNUAL REPORT 2018
39
For personal use only REMUNERATION REPORT (CONTINUED)
The performance rights granted entitle the grantee to one fully paid
ordinary share in Neometals Ltd for nil cash consideration on satisfaction
of the vesting criteria.
Use of remuneration consultants
During the year remuneration consultants were used in relation to the
company’s Performance Rights Plan. Services included tax considerations
and documentation review and updates totalling $3,750.
Loans to Directors and Executives
During the year, Mr. C Reed fully repaid his staff loan down to nil (2017:
$24,593). Loan interest charged for the period totalled $603 (2017: $1,880).
This is the end of the audited remuneration report.
Auditor’s Independence Declaration
The auditor’s independence declaration is included on page 45 of the
Annual Financial Report.
Signed in accordance with a resolution of directors made pursuant to
s.298(2) of the Corporations Act 2001.
On behalf of the directors of Neometals Ltd.
Mr. Chris Reed
Managing Director
West Perth, WA
26 September 2018
40
NEOMETALS ANNUAL REPORT 2018
For personal use only AUDIT REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the Members of
Neometals Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Neometals Ltd (the “Company”) and its subsidiaries (the
“Group”) which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies and
other explanatory information, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of the Company, would be in the same terms if given to the directors as
at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report for the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
NEOMETALS ANNUAL REPORT 2018
41
For personal use only AUDIT REPORT (CONTINUED)
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Carrying Value of equity accounted
associate
(Refer to Note 26 Investment in
Associates)
As at 30 June 2018 the company had
equity accounted investments in Reed
Industrial Minerals Pty Ltd and Hannans
Limited. The total carrying value of these
investments is $28,613,742.
Significant judgement is required in
assessing whether facts and circumstances
indicate that these investments are
recorded at an amount in excess of their
recoverable value and therefore an
impairment should be recognised.
Barrambie Project Impairment
Reversal
(Refer to Note 13 Exploration and
evaluation expenditure)
On 30 June 2018, the Group reversed a
previous impairment charge with respect to
the Barrambie exploration project for
$14.69 million.
The reversal of a previous impairment
charge requires significant judgement,
including determining if the facts and
circumstances that were present at the
time of the original impairment no longer
exist and determination of the recoverable
amount.
Our procedures included, but were not limited to:
• Obtaining an understanding of management’s
process for determining the recoverable
amount of the investment;
•
•
•
Assessing the consistency of the associate’s
accounting policies with those used by
Neometals;
Reviewing the reported results and applicable
ASX announcements of the associate, and
assessing any relevant adjustments, including
consideration of the appropriate treatment of
any non-recurring transactions recorded by
the investee’s during the period; and
Assessing the existence of impairment
triggers, and any resulting impairment.
We also assessed the appropriateness of the
disclosures in Notes 26 and 3 to the financial
statements.
Our procedures included, but were not limited to:
•
•
•
•
•
Reviewing and substantiating management’s
position for the previous impairment charge,
and the reasons why those conditions no
longer existed at 30 June 2018;
Reviewing the work of management’s expert
used to determine the recoverable amount of
the exploration project;
Assessing the competencies and objectivity of
managements expert;
Assessing the recoverable amount in light of
the board approved transaction that was
announced post year-end; and
Assessing other available information,
including the market price for vanadium,
which indicated that the conditions that
existed at the point of previous impairment no
longer existed.
We also assessed the appropriateness of the
disclosures in Notes 3 and 13 to the financial
statements.
42
NEOMETALS ANNUAL REPORT 2018
For personal use only AUDIT REPORT (CONTINUED)
Other Information
The directors are responsible for the other information. The other information comprises the
Directors’ Report and Review of Operations which we obtained prior to the date of this auditor’s
report, and also includes the following information which will be included in the Group’s annual report
(but does not include the financial report and our auditor’s report thereon): letter from the Chairman,
and additional stock exchange information, which is expected to be made available to us after that
date.
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.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above 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 that we 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.
When we read the letter from the Chairman, and additional stock exchange information, if we
conclude that there is a material misstatement therein, we are required to communicate the matter
to the directors and use our professional judgement to determine the appropriate action.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional 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
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
• 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.
NEOMETALS ANNUAL REPORT 2018
43
For personal use only AUDIT REPORT (CONTINUED)
•
•
Conclude on the appropriateness of the director’s 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’s audit. We
remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 40 of the Director’s Report for
the year ended 30 June 2018.
In our opinion, the Remuneration Report of Neometals Ltd for the year ended 30 June 2018 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.
DELOITTE TOUCHE TOHMATSU
Ian Skelton
Partner
Chartered Accountants
Perth, 26 September 2018
44
NEOMETALS ANNUAL REPORT 2018
For personal use only AUDITOR’S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Board of Directors
Neometals Ltd
Level 3, 1292 Hay Street
West Perth WA 6005
26 September 2018
Dear Board Members
Neometals Ltd
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Neometals Ltd.
As lead audit partner for the audit of the financial statements of Neometals Ltd for the year ended
30 June 2018, I declare that to the best of my knowledge and belief, there have been
no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Ian Skelton
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
NEOMETALS ANNUAL REPORT 2018
45
For personal use only DIRECTORS’ DECLARATION
The directors declare that:
(a) in the directors’ opinion, there are reasonable grounds to believe that the company
will be able to pay its debts as and when they become due and payable;
(b) the attached financial statements are in compliance with International Financial
Reporting Standards as stated in Note 2 to the financial statements;
(c) in the directors’ opinion, the attached financial statements and notes thereto are in
accordance with the Corporations Act 2001, including compliance with accounting
standards and giving a true and fair view of the financial position and performance
of the consolidated entity; and
(d) the directors have been given the declarations required by s.295A of the
Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to
s.295(5) of the Corporations Act 2001.
On behalf of the directors of Neometals Ltd,
Mr. Chris Reed
Managing Director
26 September 2018
46
NEOMETALS ANNUAL REPORT 2018
For personal use only CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
Continuing operations
Revenue from sale of goods
Cost of sales
Gross profit/(loss)
Other income
Employee expenses
Occupancy expenses
Administration expenses
Finance costs
Other expenses
Foreign exchange (loss)/gain
Impairment of related party loan
Impairment reversal
Profit on deconsolidation of subsidiary
Share of profit/(loss) of associate
Share of profit/(loss) of joint venture
Write-off of non-current assets
Profit before income tax
Income tax benefit
Profit for the year from continuing operations
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Net fair value gain on available-for-sale financial assets during
the year
Total comprehensive income/(loss) for the year
Earnings per share
From continuing and discontinued operations:
Basic (cents per share)
Diluted (cents per share)
Note
2018
$
2017
$
-
-
-
-
-
-
1,417,210
2,137,660
(3,815,040)
(2,995,416)
(663,214)
(494,019)
(3,284,845)
(3,376,018)
(62,599)
(2,340,733)
53,231
(1,677,554)
14,694,964
(97,874)
(770,343)
(80,063)
-
-
-
9,487,578
15,320,516
511,810
-
-
19,989
(1,409)
19,641,936
4,341,895
568,605
403,849
20,210,541
4,745,744
-
217,700
20,210,541
4,963,444
3.73
3.72
0.85
0.84
5
5
5
25
13
24
26
13
6
20
19
21
21
The consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
NEOMETALS ANNUAL REPORT 2018
47
For personal use only CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2018
Current assets
Cash and cash equivalents
Related party loan
Trade and other receivables
Other financial assets
Assets classified as held for sale
Total current assets
Non-current assets
Loans to joint ventures
Exploration and evaluation expenditure
Intangibles
Investments in joint ventures
Investment in associate
Other financial assets
Other assets
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Borrowings
Total current liabilities
Non-current liabilities
Provisions
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
2018
$
2017
$
31 (a)
26,342,414
42,129,157
11
12
10
25
13
26
12
14
15
16
17
16
17
18
19
20
4,104,458
448,960
252,181
-
878,542
-
31,148,013
43,007,699
-
8,433,162
31,148,013
51,440,861
-
1,665,938
31,506,853
12,515,296
461,328
284,490
1
1
28,613,742
13,226,310
4,536,000
4,626,000
609,638
955,689
66,683,251
97,831,264
1,225,740
1,177,288
-
2,403,028
2,807,526
-
2,807,526
5,210,554
609,638
234,717
33,162,390
84,603,251
1,044,574
1,100,250
11,278
2,156,102
3,562,808
15,573
3,578,381
5,734,483
92,620,710
78,868,768
154,101,518
155,367,391
7,094,532
6,851,933
(68,575,340)
(83,350,556)
92,620,710
78,868,768
This consolidated statement of financial position should be read in conjunction with the accompanying notes.
48
NEOMETALS ANNUAL REPORT 2018
For personal use only CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
Issued
Capital
$
Investment
revaluation
reserve
$
Other
equity
reserve
$
Share
based
payments
reserve
$
Accumulated
losses
$
Total
$
Balance at 01/07/16
160,047,735
801,937
300,349
5,295,914
(76,836,283)
89,609,652
Profit for the period
Other comprehensive income,
net of tax
Total comprehensive income
for the period
Recognition of share-based
payments (see note 18)
Recognition of convertible note
equity (see Note 18)
Recognition of shares issued
under performance rights plan
-
-
-
-
-
54,859
Recognition of share buy back
(4,727,942)
Issue of dividends
Share issue costs, net of tax
-
(7,261)
-
217,700
217,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,745,744
4,745,744
-
217,700
4,745,744
4,963,444
290,892
-
(54,859)
-
-
-
-
-
-
-
290,892
-
-
(4,727,942)
(11,260,017)
(11,260,017)
-
(7,261)
Balance at 30/06/17
155,367,391
1,019,637
300,349
5,531,947
(83,350,556)
78,868,768
Profit for the period
Other comprehensive income,
net of tax
Total comprehensive income
for the period
Recognition of share-based
payments (see note 18)
Recognition of convertible note
equity (see Note 18)
-
-
-
-
-
Recognition of shares issued
under performance rights plan
258,725
Recognition of share buy back
(1,524,598)
Issue of dividends
Share issue costs, net of tax
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,210,541
20,210,541
-
-
20,210,541
20,210,541
501,324
-
(258,725)
-
-
-
-
-
-
-
501,324
-
-
(1,524,598)
(5,435,325)
(5,435,325)
-
-
Balance at 30/06/18
154,101,518
1,019,637
300,349
5,774,546
(68,575,340)
92,620,710
This consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
NEOMETALS ANNUAL REPORT 2018
49
For personal use only CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
Cash flows from operating activities
Receipts from customers
Tax refunds
Payments to suppliers and employees
Note
2018
$
2017
$
-
-
763,008
358,354
(9,411,576)
(7,791,996)
Net cash used in operating activities
31 (c)
(8,648,568)
(7,433,642)
Cash flows from investing activities
Net cash outflow on disposal of subsidiary
Payments for property, plant & equipment
Payments for intellectual property
Payments for exploration and evaluation costs
Payments for acquisitions
Interest received
Investment in bonds
Net investment in equity instruments
Loans repaid from joint venture parties
Loans paid to joint venture parties
Net cash generated by/(used in) investing activities
Cash flows from financing activities
Share issue costs
Share buy-back
Repayment of borrowings
Amounts received from related parties
Amounts received from secured deposits
Dividends paid
Interest and other finance costs paid
Net cash used in financing activities
-
(1,000,000)
(796,864)
(207,055)
(1,947,634)
(2,500,000)
(122,318)
(158,049)
(694,410)
-
984,720
1,280,786
-
224,553
4,104,458
(264,620)
(11,837)
-
(11,615)
(8,576,543)
(149,437)
(9,546,991)
-
(7,261)
(1,541,335)
(4,728,247)
(25,379)
22,717
(10,954)
65,257
-
1,000,000
(5,435,325)
(11,260,017)
(60,000)
(97,646)
(7,039,322)
(15,038,868)
Net increase/(decrease) in cash and cash equivalents
(15,837,327)
(32,019,501)
Cash and cash equivalents at the beginning of the financial year
42,129,157
74,228,721
Effect of exchange rates on cash balances
50,584
(80,063)
Cash and cash equivalents at the end of the financial year
31 (a)
26,342,414
42,129,157
This consolidated statement of cash flows should be read in conjunction with the accompanying notes.
50
NEOMETALS ANNUAL REPORT 2018
For personal use only FINANCIAL STATEMENTS
CONTENTS
Index to Notes to the consolidated
financial statements
Note Contents
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
General information
Significant accounting policies
Critical accounting judgments and key sources of
estimation uncertainty
Parent entity disclosure
Profit/loss for the year continuing operations
Income taxes
Key management personnel compensation
Share based payments
Dividends on equity instruments
Assets classified as held for sale
Trade and other receivables
Other financial assets
Exploration and evaluation expenditure
Property, plant and equipment
Trade and other payables
Provisions
Borrowings
Issued capital
Reserves
Accumulated losses
Earnings per share
Commitments for expenditure
Leases
Deconsolidation of subsidiary
Joint arrangements
Investment in associates
Subsidiaries
Segment information
Related party disclosures
Auditors remuneration
Notes to the statement of cash flows
Financial instruments
33
Events after the reporting period
52
52
68
71
72
73
74
75
76
77
78
78
79
80
81
81
83
83
84
85
85
86
87
87
88
89
92
92
95
100
100
102
105
NEOMETALS ANNUAL REPORT 2018
51
For personal use only
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
1. General information
Neometals Ltd is a limited public company incorporated in Australia and listed on the Australian
Securities Exchange. The principal activities of the Consolidated Entity are mineral exploration.
Neometals Ltd is the ultimate parent.
Registered office and principal place of business
Level 3, 1292 Hay St, West Perth WA 6005
2. Significant accounting policies
Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance
with the Corporations Act 2001, Accounting Standards and Interpretations, and complies with
other requirements of the law. The financial statements comprise the consolidated financial
statements of the Consolidated Entity, comprising Neometals Ltd and its controlled entities.
For the purpose of preparing the financial statements the consolidated entity is a for-profit entity.
Accounting Standards include Australian Accounting Standards. Compliance with Australian
Accounting Standards ensures that the financial statements and notes of the Company and
the Group comply with International Financial Reporting Standards (“IFRS”).
The financial statements were authorised for issue by the directors of Neometals Ltd on
26 September 2018.
Basis of preparation
The accounting policies adopted are consistent with those adopted and disclosed in the
Consolidated Entity’s 2017 Annual Financial Report for the financial year ended 30 June 2017,
except for the impact of the Standards and Interpretations described below. These accounting
policies are consistent with Australian Accounting Standards and with IRFS.
The Group has adopted all of the new and revised Standards and Interpretations issued by
the Australian Accounting Standards Boards (“AASB”) that are relevant to its operations and
effective for the current reporting period beginning 1 July 2017.
The financial report has been prepared on the basis of historical cost except for the revaluation
of certain non-financial assets and financial instruments. Cost is based on the fair values of the
consideration given in exchange for assets. All amounts are presented in Australian dollars,
unless otherwise noted.
Standards and interpretations adopted in the current year
The Group has adopted all of the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board that are relevant to their operations and are effective for
the current financial reporting period beginning 1 July 2017.
52
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
The following new and revised Standards and Interpretations have been adopted in the
current period:
AASB 2015-3 ‘Amendments to Australian Accounting Standards arising from the Withdrawal
of AASB 1031 Materiality’.
The impact of the adoption of these Standards and Interpretations did not have a material
impact on the Group.
Standards and interpretations issued not yet effective
At the date of authorisation of the financial statements, the following Australian Accounting
Standards and Interpretations have been issued or amended but are not yet effective and have
not been adopted by the Group for the year ended 30 June 2018:
Standard
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
• AASB 9 ‘Financial Instruments’, and the relevant amending
1 January 2018
30 June 2019
standards (1)
• AASB 15 ‘Revenue from Contracts with Customers’, AASB
1 January 2018
30 June 2019
2014-5 ‘Amendments to Australian Accounting Standards arising
from AASB 15’, AASB 2015-8 ‘Amendments to
Australian Accounting Standards – Effective date of AASB 15’
• AASB 16 ‘Leases’
1 January 2019
30 June 2020
• AASB 2014-10 ‘Amendments to Australian Accounting Standards
1 January 2022
30 June 2023
– Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture and AASB 2015-10 Amendments to
Australian Accounting Standards – Effective Date of Amendments
to AASB 10 and AASB 128’
• AASB 2016-5 Amendments to Australian Accounting Standards
1 January 2018
30 June 2019
– Classification and Measurement of Share-based Payment
Transactions
Australian Accounting Standards and Interpretations that have recently been issued or amended
but are not yet mandatory, have not been early adopted by the Company for the annual reporting
period ended 30 June 2018. The Company’s assessment of the impact of these new or amended
Accounting Standards and Interpretations, most relevant to the Company, are set out below.
(i) AASB 9 Financial Instruments
AASB 9 (December 2014) is a new standard which replaces AASB 139.
This new version supersedes AASB 9 issued in December 2009
(as amended) and AASB 9 (issued in December 2010) and includes
NEOMETALS ANNUAL REPORT 2018
53
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
a model for classification and measurement, a single, forward-looking ‘expected loss’
impairment model and a substantially-reformed approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1 january 2018. However, the
Standard is available for early adoption. The own credit changes can be early adopted in
isolation without otherwise changing the accounting for financial instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for classification and measurement of
financial assets compared with the requirements of AASB 139. There are also some changes
made in relation to financial liabilities.
The assessment is ongoing. The preliminary result to date indicates a change in disclosure
with no material remeasurement impact at 1 July 2018.
(ii) AASB 15 Revenue from Contracts with Customers
The AASB has issued this new standard for the recognition of revenue. This standard is
applicable to annual reporting periods beginning on or after 1 January 2018. The standard
will replace AASB 118 which covers contracts for goods and services and AASB 111 which
covers construction contracts. In accordance with new standard revenue from contracts
with customers is based on the principle that revenue is recognised when control of goods
or services is transferred to the customer and provides a single, principles based five-
step model to be applied to all sales contracts. It replaces the separate models for goods,
services and construction contracts under the current standard. It also provides further
guidance on the measurement of sales on contracts which have discounts, rebates and
consignment inventories. During the year the company carried out a detailed review of the
current recognition criteria for revenue including payments made to customers against the
requirements of AASB 15 and is in the process of finalising this assessment.
(iii) AASB 16 Leases
The AASB has issued this new standard which eliminates the operating and finance lease
classifications for lessees currently accounted for under AASB 117 Leases. It instead requires
an entity to bring most leases onto
its Statement of Financial Position in a similar way to how existing finance leases are
treated under AASB 117. An entity will be required to recognise a lease liability and a right
of use asset in its balance sheet for most leases. There are some optional exemptions
for leases with a period of 12 months or less and for low value leases. Lessor accounting
remains largely unchanged from AASB 117. The impact of this adoption is currently in the
process of being assessed by the Company however, the impact has not yet been quantified.
The Company will adopt this standard from 1 July 2019.
54
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
Critical accounting judgments and key sources of estimation uncertainty
In the application of the Group’s accounting policies, management is required to make
judgments, estimates and assumptions about carrying values of assets and liabilities that
are not readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period or in the period of the revision and future periods if the revision affects
both current and future periods. Refer to Note 3 for a discussion of critical judgments in applying
the entity’s accounting policies, and key sources of estimation uncertainty.
Significant accounting policies
The following significant accounting policies have been adopted in the preparation and
presentation of the financial report:
a. Cash and cash equivalents
Cash comprises cash on hand and term deposits with a 30 day cancellation policy.
Cash equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
b. Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries,
annual leave, long service leave, and sick leave when it is probable that settlement will be
required and they are capable of being measured reliably.
Liabilities recognised in respect of short-term employee benefits, are measured at their
nominal values using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long term employee benefits are measured as the present
value of the estimated future cash outflows to be made by the Group in respect of services
provided by employees up to reporting date.
c. Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured
using the currency of the primary economic environment in which the entity operates
(‘the functional currency’). The consolidated financial statements are presented in
Australian dollar ($), which is Neometals Ltd’s functional and presentation currency.
NEOMETALS ANNUAL REPORT 2018
55
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange
rates at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange rates are generally recognised in
profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and
qualifying net investment hedges or are attributable to part of the net investment in a foreign
operation.
All other foreign exchange gains and losses are presented in the statement of profit or loss
on a net basis within other income or other expenses.
d. Financial instruments issued by the company
Debt and equity instruments
Debt and equity instruments are classified as either liabilities or as equity in accordance
with the substance of the contractual arrangement.
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at fair value through profit or
loss’ or other financial liabilities.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as at fair value through profit or loss where the financial
liability is either held for trading or it is designated as at fair value through profit or loss.
A financial liability is held for trading if:
• It has been incurred principally for the purpose of repurchasing in the near future; or
• It is a part of an identified portfolio of financial instruments that the Group manages
together and has a recent actual pattern of short-term profit-taking; or
• It is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading is designated as at fair value
through profit or loss upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or
• the financial liability forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance evaluated on a fair value basis, in accordance with
the Group’s documented risk management or investment strategy, and information about
the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and AASB
139 ‘Financial Instruments: Recognition and Measurement’ permits the entire combined
contract (asset or liability) to be designated as at fair value through profit or loss.
56
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant
gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss
incorporates any interest paid on the financial liability. Fair value is determined in the manner
described in Note 2 (r).
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of
transaction costs. Other financial liabilities are subsequently measured at amortised cost
using the effective interest method, with interest expense recognised on an effective yield
basis. The effective interest method is a method of calculating the amortised cost of a
financial liability and of allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future cash payments through the
expected life of the financial liability, or, where appropriate, a shorter period.
Transaction costs on the issue of equity instruments
Transaction costs arising on the issue of equity instruments are recognised directly in
equity as a reduction of the proceeds of the equity instruments to which the costs relate.
Transaction costs are the costs that are incurred directly in connection with the issue of
those equity instruments and which would not have been incurred had those instruments
not been issued.
Interest and dividends
Interest and dividends are classified as expenses or as distributions of profit consistent with
the balance sheet classification of the related debt or equity instruments or component parts
of compound instruments.
e. Goods and service tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax
(“GST”), except:
i) where the amount of GST incurred is not recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an asset or as part of an item of expense; or
ii) for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as
part of receivables or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component
of cash flows arising from investing and financing activities which is recoverable from, or
payable to, the taxation authority is classified as operating cash flows.
f. Non-current assets held for sale
Non-current assets and their disposal groups are classified as held for sale if their carrying
amount will be recovered principally through a sale transaction rather than continuing use.
NEOMETALS ANNUAL REPORT 2018
57
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
This condition is regarded as met only when the sale is highly probable and the
non-current asset (or disposal group) is available for immediate sale in its present condition.
Management must be committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of
the assets and liabilities of that subsidiary are classified as held for sale when the criteria
described above are met, regardless of whether the Group will retain a non-controlling
interest in its former subsidiary after the sale. Non-current assets (and disposal groups)
classified as held for sale are measured at the lower of their previous carrying amount and
fair value less cost to sell.
g. Impairment of assets
At each reporting date, the consolidated entity reviews the varying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets,
the consolidated entity estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which the estimates of future cash flows have not
been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than
its carrying amount, the varying amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in profit or loss immediately.
Where an impairment loss subsequently reverses, the varying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable amount, but
only to the extent that the increased varying amount does not exceed the varying amount
that would have been determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit
or loss immediately.
h. Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable
in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and
tax laws that have been enacted or substantively enacted by reporting date. Current tax for
current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid
(or refundable).
58
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
Deferred tax
Deferred tax is accounted for using the comprehensive balance sheet liability method
in respect of temporary differences arising from differences between the varying amount
of assets and liabilities in the financial statements and the corresponding tax base of
those items.
In principle, deferred tax liabilities are recognised for all taxable temporary differences.
Deferred tax assets are recognised to the extent that it is probable that sufficient taxable
amounts will be available against which deductible temporary differences or unused tax
losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not
recognised if the temporary differences giving rise to them arise from the initial recognition of
assets and liabilities (other than as a result of a business combination) which affects neither
taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised
in relation to taxable temporary differences arising from goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments
in subsidiaries, branches, associates and joint ventures except where the consolidated
entity is able to control the reversal of the temporary differences and it is probable that the
temporary differences will not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with these investments and interests are
only recognised to the extent that it is probable that there will be sufficient taxable profits
against which to utilise the benefits of the temporary differences and they are expected to
reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to
the period(s) when the asset and liability giving rise to them are realised or settled, based on
tax rates (and tax laws) that have been enacted or substantively enacted by reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the consolidated entity expects, at the reporting date,
to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the
same taxation authority and the Company/Consolidated Entity intends to settle its current tax
assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the profit and loss
statement, except when it relates to items credited or debited directly to equity, in which
case the deferred tax is also recognised directly in equity, or where it arises from the
initial accounting for a business combination, in which case it is taken into account in the
determination of goodwill or excess.
Tax consolidation
The Company and all its wholly-owned Australian resident entities are part of a tax-
consolidated group under Australian taxation law. Neometals Ltd is the head entity in the
tax-consolidated group. Income tax expense/benefit, deferred tax liabilities and deferred
NEOMETALS ANNUAL REPORT 2018
59
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
tax assets arising from temporary differences of the members of the tax consolidated group
are recognised in the separate financial statements of the members of the tax consolidated
group using a ‘group allocation’ approach based on the allocation specified in the tax funding
arrangement.
The tax funding arrangement requires a notional current and deferred tax calculation for each
entity as if it were a taxpayer in its own right, except that unrealised profits, distributions
made and received and capital gains and losses and similar items arising on transactions
within the tax consolidated group are treated as having no consequence. Current tax
liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of
the members of the tax consolidated group are recognised by the Company (as head entity
in the tax consolidated group).
Due to the existence of a tax funding arrangement between the entities in the tax
consolidated group, amounts are recognised as payable to or receivable by the Company
and each member of the group in relation to the tax contribution amounts paid or payable
between the parent and the other members of the tax consolidated group in accordance
with the arrangement.
Where the tax contribution amount recognised by each member of the tax consolidated
group for a particular period is different to the aggregate of the current tax liability or asset
and any deferred tax asset arising from the unused tax losses and tax credits in respect
of that period, the difference is recognised as a contribution from, or distribution to, equity
participants.
Research & Development Tax offset
In respect of Research and Development tax offsets, the Income tax approach (AASB 112)
of accounting has been utilised, where the tax benefit is presented within the tax line in the
Statement of Comprehensive Income.
i. Exploration and evaluation expenditure
Exploration and evaluation expenditures in relation to separate areas of interest are
capitalised in the year in which they are incurred and are carried at cost less accumulated
impairment losses where the following conditions are satisfied;
i) the rights to tenure of the area of interest are current; and
ii) at least one of the following conditions is also met:
• the exploration and evaluation expenditures are expected to be recouped through
successful development and exploration of the area of interest, or alternatively,
by its sale; or
• exploration and evaluation activities in the area of interest have not at the reporting date
reached a stage which permits a reasonable assessment of the existence or otherwise
of economically recoverable reserves, and active and significant operations in, or in
relation to, the area of interest are continuing.
60
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
Capitalised exploration costs for each area of interest (considered to be the cash generating
unit) are reviewed each reporting date to test whether an indication of impairment exists.
If any such indication exists, the recoverable amount of the capitalised exploration costs is
estimated to determine the extent of the impairment loss (if any). The recoverable amount
for capitalised exploration costs has been determined as the fair value less costs to sell by
reference to an active market. Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its recoverable amount, but
only to the extent that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the asset in
previous years.
Where a decision is made to proceed with development, accumulated expenditure is tested
for impairment and transferred to capitalised development and then amortised over the life of
the reserves associated with the area of interest once mining operations have commenced.
Development expenditure
Development expenditure is recognised at cost less any impairment losses. Where commercial
production in an area of interest has commenced, the associated costs are amortised over
the life of the reserves associated with the area of interest. Changes in factors such as
estimates of proved and probable reserves that effect unit-of-production calculations are
dealt with on a prospective basis.
j. Payables
Trade payables and other accounts payable are recognised when the Consolidated
Entity becomes obliged to make future payments resulting from the purchase of goods
and services.
k. Principles of consolidation
The consolidated financial statements are prepared by combining the financial statements of
all the entities that comprise the Consolidated Entity, being the Company (the parent entity)
and its subsidiaries as defined in Accounting Standard AASB 10 ‘Consolidated Financial
Statements’. A list of subsidiaries appears in Note 27 to the financial statements. Consistent
accounting policies are employed in the preparation and presentation of the consolidated
financial statements.
On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at
their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair
values of the identifiable net assets acquired is recognised as goodwill. If, after reassessment,
the fair value of the identifiable net assets acquired exceeds the cost of acquisition, the
excess is credited to profit and loss in the period of acquisition. The consolidated financial
statements include the information and results of each subsidiary from the date on which
the Company obtains control and until such time as the Company ceases to control such
entity. In preparing the consolidated financial statements, all inter-company balances and
transactions, and unrealised profits arising within the consolidated entity are eliminated in full.
NEOMETALS ANNUAL REPORT 2018
61
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
l. Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and impairment.
Cost includes expenditure that is directly attributable to the acquisition of the item.
In the event that settlement of all or part of the purchase consideration is deferred,
costs are determined by discounting the amounts payable in the future to their present
value as at the date of acquisition.
Depreciation is calculated on a diminishing value basis so as to write off the net cost or
other re-valued amount of each asset over its expected useful life to its estimated residual
value. The estimated useful lives, residual values and depreciation method are reviewed
at the end of each annual reporting period with the effect of any changes recognised on
a prospective basis.
The following estimated useful lives are used in the calculation of depreciation:
Furniture & Fittings
5-20 years
Plant and Equipment
2-10 years
Buildings
10-20 years
An item of property, plant and equipment is derecognised upon disposal when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or
loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in profit and loss.
m. Intangibles
Trademarks, licences and customer contracts
Separately acquired trademarks and licences are shown at historical cost. Trademarks,
licenses and customer contracts acquired in a business combination are recognised at fair
value at the acquisition date. They have a finite useful life and are subsequently carried at
cost less accumulated amortisation and impairment losses.
Research and development
Research expenditure is recognised as an expense as incurred. Development expenditure is
recognised as an asset as incurred. Research and development costs previously recognised
as an expense are not recognised as an asset in a subsequent period.
n. Provisions
Provisions are recognised when the consolidated entity has a present obligation, the future
sacrifice of economic benefits is probable, and the amount of the provision can be measured
reliably.
62
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at reporting date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the cash flows estimated
to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognised as an asset if it is virtually certain
that recovery will be received and the amount of the receivable can be measured reliably.
Provision for restoration and rehabilitation
A provision for restoration and rehabilitation is recognised when there is a present obligation
as a result of development, production, transportation or storage activities undertaken, it is
probable that an outflow of economic benefits will be required to settle the obligation, and the
amount of the provision can be measured reliably. The estimated future obligations include
the costs of restoring the affected areas.
The provision for future restoration costs is the best estimate of the present value of
the expenditure required to settle the restoration obligation at the reporting date. Future
restoration costs are reviewed annually and any changes in the estimate are reflected in
the present value of the restoration provision at each reporting date.
The initial estimate of the restoration and rehabilitation provision relating to development is
capitalised into the cost of the related asset and depreciated over the estimated remaining
life of the asset on a units of production basis. Changes in the estimate of the provision for
restoration and rehabilitation are treated in the same manner, except that the unwinding of
the effect of discounting on the provision is recognised as a finance cost rather than being
capitalised into the cost of the related asset.
Provision for onerous contract
Present obligations arising under onerous contracts are recognised and measured as
provisions. An onerous contract is considered to exist where the Group has a contract
under which the unavoidable costs of meeting the obligations under the contract exceed
the economic benefits expected to be received from the contract.
o. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Sale of goods
Revenue from the sale of goods is recognised when the consolidated entity has transferred
to the buyer the significant risks and rewards of ownership of the goods.
Dividend and interest revenue
Dividend revenue from investments is recognised when the shareholder’s right to receive the
payment has been established. Interest revenue is recognised on a time proportionate basis
that takes into account the effective yield on the financial asset.
NEOMETALS ANNUAL REPORT 2018
63
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
p. Interests in joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities, relating to the
arrangement. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require unanimous consent
of the parties sharing control.
When a group entity undertakes its activities under joint operations, the Group as a joint
operator recognises in relation to its interest in a joint operation:
• its assets, including its share of any assets held jointly;
• its liabilities, including its share of any liabilities incurred jointly;
• its revenue from the sale of its share of the output arising from the joint operation;
• its share of the revenue from the sale of the output by the joint operation; and
• its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in
a joint operation in accordance with the AASBs applicable to the particular assets, liabilities,
revenues and expenses.
When a group entity transacts with a joint operation in which a group entity is a joint operator
(such as a sale or contribution of assets), the Group is considered to be conducting the
transaction with the other parties to the joint operation, and gains and losses resulting from
the transactions are recognised in the Group’s consolidated financial statements only to the
extent of other parties’ interests in the joint operation.
When a group entity transacts with a joint operation in which a group entity is a joint operator
(such as a purchase of assets), the Group does not recognise its share of the gains and
losses until it resells those assets to a third party.
q. Share-based payments
Equity-settled share-based payments to employees and others providing services to the
Group are measured at fair value at the date of grant.
The fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Consolidated Entity’s
estimate of shares that will eventually vest, with a corresponding increase in equity.
Equity-settled share-based payments transactions with parties other than employees are
measured at the fair value of the goods or services received, except where the fair value
cannot be estimated reliably, in which case they are measured at the fair value of the equity
instruments granted, measured at the date the entity obtains the goods or the counter party
renders the service.
The fair value of performance rights are measured using a Monte Carlo Simulation.
64
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
r. Financial assets
Subsequent to initial recognition, investments in subsidiaries are measured at cost in the
Company’s financial statements. Other financial assets are classified into the following
specified categories: financial assets ‘at fair value through profit or loss’, ‘held-to-
maturity investments’, ‘available-for-sale’ financial assets, and ‘loans and receivables’.
The classification depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
Available-for-sale financial assets
Listed shares held by the Group that are traded in an active market are classified as available-
for-sale (AFS) and are stated at fair value. The Group also has investments in unlisted shares
that are not traded in an active market but that are also classified as AFS financial assets
and stated at fair value (because the directors consider that fair value can be reliably
measured). Gains and losses arising from changes in fair value are recognised in other
comprehensive income and accumulated in the investments revaluation reserve. Where
the investment is disposed of or is determined to be impaired, the cumulative gain or loss
previously accumulated in the investments revaluation reserve is reclassified to profit or loss.
Trade and other receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments
that are not quoted in an active market are classified as ‘trade and other receivables’.
Trade and other receivables are measured at amortised cost using the effective interest
method less impairment.
Interest income is recognised by applying the effective interest rate. The effective interest rate
is the rate that exactly discounts estimated future cash receipts through the expected life of
the debt instrument, or (where appropriate) a shorter period, to the net carrying amount on
initial recognition.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for
indicators of impairment at each reporting date. Financial assets are impaired where there
is objective evidence that as a result of one or more events that occurred after the initial
recognition of the financial asset the estimated future cash flows of the investment have been
impacted. For financial assets carried at amortised cost, the amount of the impairment is the
difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is uncollectible, it is written
off to profit and loss. Subsequent recoveries of amounts previously written off are credited as
income in the calculation of profit and loss. Changes in the carrying amount of the allowance
account are recognised in profit or loss.
NEOMETALS ANNUAL REPORT 2018
65
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
With the exception of available-for-sale equity instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent the carrying amount of the investment
at the date the impairment is reversed does not exceed what the amortised cost would
have been had the impairment not been recognised. In the case of available-for-sale equity
instruments, the reversal is recognised directly in equity.
s. Leased assets
Leases are classified as finance leases when the terms of the lease transfer substantially
all the risks and rewards incidental to ownership of the leased asset to the lessee. All other
leases are classified as operating leases.
Assets held under finance leases are initially recognised at their fair value or, if lower,
at amounts equal to the present value of the minimum lease payments, each determined at
the inception of the lease. The corresponding liability to the Lessor is included in the balance
sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged directly to profit and loss, unless they are directly attributable to
qualifying assets, in which case they are capitalised in accordance with the Group’s general
policy on borrowing costs.
Contingent rentals are recognised as expenses in the periods in which they are incurred.
Finance leased assets are amortised on a straight-line basis over the estimated useful life
of the asset.
Operating lease payments are recognised as an expense on a straight-line basis over the
least term, except where another systematic basis is more representative of the time pattern
in which economic benefits from the leased asset are consumed. Contingent rentals arising
under operating leases are recognised as an expense in the period in which they incurred.
t. Inventories
Work in progress and finished goods inventories are measured at the lower of cost and net
realisable value. Costs are assigned on a weighted average basis and comprise all costs
of purchase, costs of conversion and any other costs incurred in bringing inventories to
their present location and condition. Costs of conversion include costs relating directly
to production in addition to an apportionment of fixed and variable production overhead
expenses, and include costs such as depreciation and amortisation. Net realisable value
is the estimated selling price in the ordinary course of business less estimated costs of
completion and any estimated selling costs. Consumable stores inventory are measured at
the cost of acquisition.
66
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
u. Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence
is the power to participate in the financial and operating policy decisions of the investee but
is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint arrangement. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of associates or joint ventures are incorporated in these
consolidated financial statements using the equity method of accounting, except when the
investment, or a portion thereof, is classified as held for sale, in which case it is accounted
for in accordance with AASB 5. Under the equity method, an investment in an associate or
a joint venture is initially recognised in the consolidated statement of financial position at
cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other
comprehensive income of the associate or joint venture. When the Group’s share of losses of
an associate or a joint venture exceeds the Group’s interest in that associate or joint venture
(which includes any long-term interests that, in substance, form part of the Group’s net
investment in the associate or joint venture), the Group discontinues recognising its share
of further losses. Additional losses are recognised only to the extent that the Group has
incurred legal or constructive obligations or made payments on behalf of the associate or
joint venture.
An investment in an associate or a joint venture is accounted for using the equity method
from the date on which the investee becomes an associate or a joint venture. On acquisition
of the investment in an associate or a joint venture, any excess of the cost of the investment
over the Group’s share of the net fair value of the identifiable assets and liabilities of the
investee is recognised as goodwill, which is included within the carrying amount of the
investment. Any excess of the Group’s share of the net fair value of the identifiable assets and
liabilities over the cost of the investment, after reassessment, is recognised immediately in
profit or loss in the period in which the investment is acquired.
The requirements of AASB 139 are applied to determine whether it is necessary to recognise
any impairment loss with respect to the Group’s investment in an associate or a joint venture.
When necessary, the entire carrying amount of the investment (including goodwill) is tested
for impairment in accordance with AASB 136 Impairment of Assets as a single asset by
comparing its recoverable amount (higher of value in use and fair value less costs to sell) with
its carrying amount. Any impairment loss recognised forms part of the carrying amount of the
investment. Any reversal of that impairment loss is recognised in accordance with AASB 136
to the extent that the recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date when the investment
ceases to be an associate or a joint venture, or when the investment is classified as held
for sale. When the Group retains an interest in the former associate or joint venture and the
retained interest is a financial asset, the Group measures the retained interest at fair value at
that date and the fair value is regarded as its fair value on initial recognition in accordance
NEOMETALS ANNUAL REPORT 2018
67
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
2. Significant accounting policies (continued)
with AASB 139. The difference between the carrying amount of the associate or joint venture
at the date the equity method was discontinued, and the fair value of any retained interest
and any proceeds from disposing of a part interest in the associate or joint venture is
included in the determination of the gain or loss on disposal of the associate or joint venture.
In addition, the Group accounts for all amounts previously recognised in other comprehensive
income in relation to that associate or joint venture on the same basis as would be required
if that associate or joint venture had directly disposed of the related assets or liabilities.
Therefore, if a gain or loss previously recognised in other comprehensive income by that
associate or joint venture would be reclassified to profit or loss on the disposal of the
related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss
(as a reclassification adjustment) when the equity method is discontinued.
The Group continues to use the equity method when an investment in an associate
becomes an investment in a joint venture or an investment in a joint venture becomes an
investment in an associate. There is no re-measurement to fair value upon such changes
in ownership interests.
When the Group reduces its ownership interest in an associate or a joint venture but the
Group continues to use the equity method, the Group reclassifies to profit or loss the
proportion of the gain or loss that had previously been recognised in other comprehensive
income relating to that reduction in ownership interest if that gain or loss would be
reclassified to profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with an associate or a joint venture of the Group, profits and
losses resulting from the transactions with the associate or joint venture are recognised in the
Group’s consolidated financial statements only to the extent of interests in the associate or
joint venture that are not related to the Group.
3. Critical accounting judgments and key
sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in Note 2,
management is required to make judgments, estimates and assumptions about carrying values
of assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstance, the results of which form the basis of
making the judgments. Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current
and future periods.
68
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
3. Critical accounting judgments and key
sources of estimation uncertainty (continued)
3.1 Critical judgments in applying the entity’s accounting policies
The following are the critical judgments that management has made in the process of applying
the Group’s accounting policies and that have the most significant effect on the amounts
recognised in the financial statements.
a. Recovery of capitalised exploration evaluation and development expenditure
The Group capitalises exploration, evaluation and development expenditure incurred on
ongoing projects. The recoverability of this capitalised exploration expenditure is entirely
dependent upon returns from the successful development of mining operations or from
surpluses from the sale of the projects or the subsidiary companies that control the projects.
At the point that it is determined that any capitalised exploration expenditure is definitely
not recoverable, it is written off.
b. Share-based payments
Equity-settled share-based payments granted are measured at fair value at the date of grant.
The fair value of share options is measured by use of the Monte Carlo model and requires
substantial judgement. Management has made its best estimate for the effects of non-
transferability, exercise restrictions (including the probability of meeting market conditions
attached to the option), and behavioural considerations.
The fair value of performance rights issued during the period was made with reference to
the parent entity’s closing share price on the date of grant. Management has been required
to estimate the probability that the employee will meet the performance criteria determined
by the board and that the employee employed by the Group.
c. Joint arrangements
When determining the accounting treatment to apply to joint ventures and joint operations
management considers the factors which govern the relationship between itself and the
other party or parties involved in the joint commitment. Based on information such as legal
agreements and the structure of the vehicle under which the joint arrangement is executed
management determine whether it is a joint venture or a joint operation. With respect
to terms of agreements between two or more parties there is a risk that the parties may
interpret the terms of the agreement differently. Management continually review the facts and
circumstances under which these judgements are made and reassess whether the type of
joint arrangement in which it is involved has changed.
3.2 Key areas of estimation uncertainty
The following are key assumptions concerning the future, or other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year.
NEOMETALS ANNUAL REPORT 2018
69
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
3. Critical accounting judgments and key
sources of estimation uncertainty (continued)
a. Capitalised development and evaluation assets
Certain assumptions are required to be made in order to assess the recoverability of long-
lived assets. Key assumptions include future commodity prices, future cash flows, estimated
discount rate and estimates of Ore Reserves. Estimates of Ore Reserves are dependent
on various assumptions. Changes in these estimates could materially impact on actual ore
recovered, and could therefore affect estimates of future cash flows used in the assessment
of recoverable amounts. The carrying amount of exploration evaluation and development
assets which is included in the consolidated statement of financial position at 30 June 2018
is $31.5 million (2017: $12.5million).
The Group estimates its Mineral Resources and Reserves based on information assessed
by Competent Persons (as defined in the JORC code). In estimating the remaining life of
the mine for the purpose of amortisation and depreciation calculations, due regard is given,
not only to the amount of remaining Ore Reserves, but also to limitations which could arise
from the potential for changes in technology, demand, and other issues which are inherently
difficult to estimate over an extended timeframe.
b. Value of deferred tax assets
Deferred income tax assets, including those arising from un-utilised tax losses, require
management to assess the likelihood that the Group will generate sufficient taxable earnings
in future periods, in order to utilise recognised deferred income tax assets. Assumptions
about the generation of future taxable profits depend on management’s estimates of future
cash flows. These estimates of future taxable income are based on forecast cash flows
from operations (which are impacted by production and sales volumes, commodity prices,
reserves, operating costs, closure and rehabilitation costs, capital expenditure, dividends and
other capital management transactions) and judgement about the application of existing tax
laws in Australia. To the extent that future cash flows and taxable income differ significantly
from estimates, the ability of the Group to realise the net deferred income tax assets recorded
at the reporting date could be impacted.
In addition, future changes in tax laws in Australia could limit the ability of the Group to
obtain tax deductions in future periods. The carrying amount of deferred taxes included in
the consolidated statement of financial position at 30 June 2018 is Nil (2017: Nil).
c. Onerous Contract
The Company has an onerous contract which relates to a contract entered into by Barrambie
Gas Pty Ltd, a wholly owned subsidiary of the Company, for the Company’s Barrambie
Project. The contract with DBNGP (WA) Transmission Pty Ltd for gas transmission,
commenced on 1 July 2010. The provision in the accounts represents the present value of
the gas transmission obligations under the contract for gas transmission not expected to be
utilised or on sold.
The estimates for the remaining term is subject to Management’s judgement and could
change in future periods.
70
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
4. Parent entity disclosure
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Retained earnings
Reserves
Share based payments
Total equity
Financial Performance
Profit for the year
Other comprehensive income
Total comprehensive income
2018
$
2017
$
47,061,206
50,590,547
18,547,206
19,553,934
65,608,412
70,144,481
1,303,468
-
1,303,468
937,730
15,573
953,303
64,304,944
69,191,178
154,101,518
155,367,391
(95,871,470)
(92,008,509)
6,074,896
5,832,296
64,304,944
69,191,178
8,395,058
4,648,914
-
-
8,395,058
4,648,914
Guarantees entered into on behalf of subsidiaries(i)
4,000,000
4,000,000
(i) Neometals Energy Pty Ltd, a wholly owned subsidiary of the Company, is party to a gas transmission
agreement with DBNGP (WA) Transmission Pty Ltd. The parent entity has provided security for a bank
guarantee required under the contract for $4.0 million. Refer to Note 12 for details.
NEOMETALS ANNUAL REPORT 2018
71
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
5. Profit / (loss) for the year continuing operations
(a) Income
Income from operations consisted of the following items:
Revenue from the sale of goods
-
-
2018
$
2017
$
Other income:
Interest revenue
Other
926,376
490,834
1,421,398
716,262
1,417,210
2,137,660
(b) Profit/(loss) before income tax
Profit/(loss) before income tax has been arrived at after charging the
following expenses:
Cost of goods sold
-
-
(501,324)
(183,793)
(290,892)
(170,194)
(3,129,923)
(2,534,330)
(3,815,040)
(2,995,416)
(490)
(60,000)
(2,109)
(62,599)
(1,677,554)
(42,530)
-
(95,650)
(2,224)
(97,874)
(1,409)
(33,822)
Employee benefits expense:
Equity settled share-based payments
Defined contribution superannuation plans
Other employee benefits
Finance costs:
Borrowing costs
Facility fees
Interest expense
Impairment of non-current assets
Depreciation of non-current assets
72
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
6. Income taxes
(a) Income tax benefit recognised in profit or loss
2018
$
2017
$
Tax benefit comprises:
Current tax expense
Research and development claim
Deferred tax benefit relating to the origination and reversal of
temporary differences
Total tax benefit
The prima facie income tax expense on pre-tax accounting profit
from continuing operations reconciles to the income tax benefit in the
financial statements as follows:
Profit/(Loss) from continuing operations
Income tax calculated at 30%
Effect of income and expenses that are not deductible in determining
taxable profit
Utilisation of previously unrecognised tax losses
Non-assesable income – R&D credit
Non-deductible loan write-off
Refund of prior year R&D claim
Deferred tax expense recognised directly in other comprehensive income
Income tax expense/(benefit) recognised
Deferred tax assets recognised in other comprehensive income
Relating to available-for-sale financial assets
-
-
(568,605)
(310,549)
0
(568,605)
(93,300)
(403,849)
20,210,541
6,063,162
4,745,744
1,423,723
(8,519,077)
44,903
2,123,230
(2,462,708)
(170,581)
503,266
(568,605)
-
(568,605)
-
-
-
994,082
(310,549)
(93,300)
(403,849)
93,300
93,300
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian
corporate entities on taxable income under Australian tax law. There has been no change in the corporate
tax rate during the reporting period.
b. Deferred tax balances
Deferred tax balances are presented in the statement of financial position as follows:
Deferred tax liabilities
Deferred tax assets
Net deferred tax balance
2018
$
2017
$
(8,130,761)
(7,814,139)
8,130,761
7,814,139
-
-
NEOMETALS ANNUAL REPORT 2018
73
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
6. Income taxes (continued)
c. Deferred tax assets not brought to account
At 30 June 2018 the amount of unrecognised tax losses was (gross) $94,261,460
(June 2017: $86,647,181).
Tax Consolidation
Relevance of tax consolidation to the consolidated entity
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated
group and are therefore taxed as a single entity. The head entity within the tax-consolidated
group is Neometals Ltd. The members of the tax-consolidated group are identified at note 27.
Nature of tax funding arrangements and tax sharing agreements
Entities within the tax-consolidated group have entered into a tax funding arrangement and a
tax sharing agreement with the head entity. Under the terms of the tax funding arrangement,
Neometals Ltd and each of the entities in the tax consolidation group has agreed to pay a
tax equivalent payment to or from the head entity, based on the current tax liability or current
tax assets of the entity. Such amounts are reflected in amounts receivable from or payable to
each entity in the tax consolidated group, and are eliminated on consolidation. The tax sharing
agreement entered into between the members of the tax-consolidated group provides for the
determination of the allocation of income tax liabilities between the entities should the head
entity default on its payment obligations or if an entity should leave the tax-consolidated group.
The effect of the tax sharing agreement is that each member’s tax liability for tax payable by the
tax-consolidated group is limited to the amount payable to the head entity under the tax funding
arrangement.
7. Key management personnel compensation
Details of key management personnel compensation are provided on pages 26 to 40 of the
Directors’ Report.
The aggregate compensation made to key management personnel of the Group is set out below:
2018
$
2017
$
1,982,931
1,652,201
116,591
389,951
122,101
290,892
2,489,473
2,065,194
Short-term employee benefits
Post-employment benefits
Share-based payments
74
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
8. Share based payments
Neometals Ltd has an ownership based remuneration scheme for executives and employees.
Performance Rights Plan (“PRP”)
In accordance with the provisions of the PRP, as approved by shareholders at the Company’s
AGM on 24 November 2017, employees, Non-Executive Directors and consultants may be
offered performance rights at such times and on such terms as the board considers appropriate.
General terms of performance rights granted under the PRP:
• The performance rights will not be quoted on the ASX.
• Performance rights can only be granted to employees, Non-Executive Directors and
consultants of the Company.
• Performance rights are transferable to eligible nominees.
• Performance rights not exercised on or before the vesting date will lapse.
• All shares allotted upon the vesting of performance rights rank equally in all respects to
all previously issued shares.
• Performance rights confer no right to vote, attend meetings, participate in a distribution
of profit or a return of capital or another participating rights or entitlements on the grantee
unless and until the performance rights vest.
The following share-based payment arrangements in relation to performance rights were in
existence during the period:
Grant date
Number
Vesting
date/
Expiry date
Grant
date share
price
Probability
factor
Fair value
at grant
date
2018
Jason Carone
Chris Reed
Mike Tamlin
Jason Carone
Mike Tamlin
14/09/2016
216,063
31/12/2018
14/09/2016
621,261
31/12/2018
14/09/2016
259,275
31/12/2018
3/10/2017
370,012
31/12/2020
3/10/2017
444,015
31/12/2020
Staff and consultants
3/10/2017
400,000
30/06/2019
Chris Reed
11/12/2017
952,474
31/12/2020
Darren Townsend
11/12/2017
444,015
31/12/2020
Staff and consultants
11/12/2017
280,312
31/12/2020
Staff and consultants
11/12/2017
500,000
30/06/2019
Natalia Streltsova
5/01/2018
27,048
30/06/2018
5/01/2018
27,048
30/06/2018
5/01/2018
112,700
30/06/2018
Doug Ritchie
Steven Cole
Total
0.31
0.31
0.31
0.30
0.30
0.30
0.38
0.38
0.38
0.38
0.46
0.46
0.46
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
56,176
161,528
67,412
93,243
111,892
120,000
320,984
149,633
94,465
192,500
12,000
12,000
50,000
4,654,223
1,441,832
NEOMETALS ANNUAL REPORT 2018
75
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
8. Share based payments (continued)
The fair value of performance rights issued have been independently valued by a third party
using a Monte Carlo simulation to determine fair value. The total expense recognised for the
period arising from share-based payment transactions and accounted for as equity-settled
share-based payment transactions is $501,324 (2017: $290,892).
The following reconciles the outstanding performance rights granted at the beginning and
end of the financial year:
Balance at beginning of the financial year
Granted during the financial year as compensation
Vested during the financial year (i)
Lapsed during the financial year (ii)
Balance at the end of the financial year (iii)
2018
Performance
Rights No.
2017
Performance
Rights No.
4,460,237
3,557,624
7,275,246
1,096,599
(2,802,919)
(3,911,608)
(560,719)
-
4,654,223
4,460,237
(i)
2,802,919 shares in the Company were issued on vesting of performance rights (2017: 3,911,608).
(ii)
560,719 performance rights lapsed during the financial year (2017: nil).
(iii)
Subject to the satisfaction of certain retention and performance conditions 1,538,395 performance rights
vest at the end of the year (2017: 3,363,638)
9. Dividends on equity instruments
Declared and paid during the year:
Dividends paid on ordinary shares:
2018
$
2017
$
Special dividend for 2018: 1.0 cents per share paid on 8 June 2018
(2017: 2.0 cents)
5,435,325
11,260,217
The dividend franking account has a nil balance as at 30 June 2018 (2017: nil).
On 25 May 2018, the directors declared an unfranked dividend of 1 cent per share to the
holders of fully paid ordinary shares, paid to shareholders on 8 June 2018.
76
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
10. Assets classified as held for sale
Assets classified as held for sale (i)
Liabilities directly associated with assets classified as held for sale (i)
2018
$
-
-
2017
$
8,433,162
-
(i) In February 2017, the Company decided to divest its 13.8% shareholding in Reed Industrial Minerals Pty Ltd.
After commencement of the sale process the company is yet to receive a compliant offer from shareholders or
external third parties. The Company will continue to consider offers for the remaining stake if a reasonable offer
is received. Settlement for Reed Exploration Pty Ltd which relates to the prior year held for sale asset took place
during the financial year. Refer to note 24 for further information.
Amounts recognised in this note relate to Reed Industrial Minerals Pty Ltd, owner of the
Reed Industrial Minerals Pty Ltd Mt Marion Lithium Project for the 2017 financial year.
Classified as held for sale
Loan receivable
Investment in Reed Industrial Minerals Pty Ltd
Assets classified as held for sale
Trade and other payables
Liabilities directly associated with assets classified as held for sale
Net assets classified as held for sale
2018
$
2017
$
8,208,916
224,246
8,433,162
-
-
8,433,162
-
-
-
-
-
-
NEOMETALS ANNUAL REPORT 2018
77
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
11. Trade and other receivables
Current
Related party receivable(i)
Other receivables
Prepayments
Total
2018
$
2017
$
4,104,458
320,665
128,295
4,553,418
-
658,002
220,540
878,542
(i) Related party receivable relates to the amount loaned to associate Reed Industrial Minerals Pty Ltd.
The amount was repaid in full to Neometals in July 2018.
12. Other financial assets
Current
Available-for-sale investments carried at fair value
Total Current
Non-current
Available-for-sale investments carried at fair value
Barrambie Gas term deposit (i)
Rental bond term deposit
Total Non-current
Total
2018
$
2017
$
252,181
252,181
-
-
493,000
601,000
4,000,000
4,000,000
43,000
4,536,000
4,788,181
25,000
4,626,000
4,626,000
(i) Neometals Energy Pty Ltd, a wholly owned subsidiary of the Company, is a party to a gas transmission
agreement with DBNGP (WA) Transmission Pty Ltd (DBP) in relation to the Barrambie Project. As part of the
agreement the Group was required to provide security by way of a $4.0 million bank guarantee.
78
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
13. Exploration and evaluation expenditure
Consolidated
Capitalised exploration and
evaluation expenditure
$
Gross carrying amount
Balance at 1 July 2016
Transfer on deconsolidation of subsidiary
Additions
Balance at 1 July 2017
Transfer on deconsolidation of subsidiary
Acquisition(i)
Additions
Balance at 30 June 2018
Accumulated amortisation and impairment
Balance at 1 July 2016
Amortisation expense
Expenditure written off (iii)
Balance at 1 July 2017
Amortisation expense
Impairment reversal(ii)
Expenditure written off (iii)
Balance at 30 June 2018
Net book value
As at 30 June 2017
As at 30 June 2018
32,061,406
-
909,574
32,970,980
-
2,500,000
1,796,593
37,267,573
20,454,275
-
1,409
20,455,684
-
(14,694,964)
-
5,760,720
12,515,296
31,506,853
The recovery of exploration expenditure carried forward is dependent upon the discovery
of commercially viable mineral and other natural resource deposits, their development and
exploration, or alternatively their sale.
(i)
The Group acquired Mt Edwards Lithium Pty Ltd (MEL) during the year. Total cash consideration of $2,500,000
was paid to acquire the lithium and nickel rights and an exploration licence held within MEL. This has been
treated as an Asset Acquisition for accounting purposes as the company did not have active operations.
(ii) An impairment reversal in relation to the Barrambie Titanium/ Vanadium Project has been made during the year.
The market conditions that existed at 30 June 2012 when the impairment was made are no longer present.
The vanadium commodity price is approximately 3 times higher than existed in 2012. Accordingly, the
impairment that was recorded in 2012 has now been reversed.
(iii) The Group writes off any amounts that are allocated to surrendered tenements.
NEOMETALS ANNUAL REPORT 2018
79
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
14. Property, plant and equipment
Consolidated
Plant and equipment at cost
$
Gross carrying amount
Balance at 1 July 2016
Additions
Disposals
Transfers to property, plant and equipment
Impairment
Balance at 1 July 2017
Additions
Disposals
Transfers to PP&E
Written off
Balance at 30 June 2018
Accumulated depreciation
Balance at 1 July 2016
Disposals
Depreciation expense
Balance at 1 July 2017
Disposals and write offs
Depreciation expense
Balance at 30 June 2017
Net book value
As at 30 June 2017
As at 30 June 2018
80
NEOMETALS ANNUAL REPORT 2018
360,070
124,133
(934)
-
-
483,269
796,864
-
-
(65,881)
1,214,252
215,211
(481)
33,822
248,552
(32,518)
42,529
258,563
234,717
955,689
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
15. Trade and other payables
Trade payables
Accrued expenses
Other
2018
$
2017
$
504,948
690,207
30,585
466,814
569,833
7,927
1,225,740
1,044,574
The average credit period on purchases is 30 days. No interest is charged on the trade payables.
The Group has financial risk management policies in place to help ensure that all payables are
paid within the settlement terms.
16. Provisions
Current
Annual leave
Long service leave
Other (a)
Non-current
Other (a)
2018
$
2017
$
316,251
101,512
759,525
237,063
103,662
759,525
1,177,288
1,100,250
2,807,526
2,807,526
3,984,814
3,562,808
3,562,808
4,663,058
NEOMETALS ANNUAL REPORT 2018
81
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
16. Provisions (continued)
a. Detail of movement in other provisions
2018
Balance at 1 July 2017
Additional provisions recognized
Reductions arising from payments/other sacrifices of future economic benefits
Additions/(reductions) resulting from re-measurement or settlement without cost
Unwinding of discount and effect of changes in the discount rate
Balance at 30 June 2018
Comprised of:
Current provision
Non-current provision
Onerous Contracts (i)
$
4,322,333
-
(755,283)
-
-
3,567,050
759,525
2,807,526
3,567,051
(i) The onerous contract relates to a contract entered into by Neometals Energy Pty Ltd, a wholly owned subsidiary of
the Company, for the Company’s Barrambie Project. The contract with DBNGP (WA) Transmission Pty Ltd for gas
transmission, commenced on 1 July 2010. The provision in the accounts represents the present value of the remaining
gas transmission obligations under the contract for gas transmission not expected to be utilised or on sold.
2017
Balance at 1 July 2016
Additional provisions recognized
Reductions arising from payments/other sacrifices of future economic benefits
Additions/(reductions) resulting from re-measurement or settlement without cost
Unwinding of discount and effect of changes in the discount rate
Balance at 30 June 2017
Comprised of:
Current provision
Non-current provision
Onerous Contracts (i)
$
5,243,256
-
(833,432)
(87,491)
-
4,322,333
759,525
3,562,808
4,322,333
(i) The onerous contract relates to a contract entered into by Barrambie Gas Pty Ltd, a wholly owned subsidiary of
the Company, for the Company’s Barrambie Project. The contract with DBNGP (WA) Transmission Pty Ltd for gas
transmission, commenced on 1 July 2010. The provision in the accounts represents the present value of the remaining
gas transmission obligations under the contract for gas transmission not expected to be utilised or on sold.
82
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
17. Borrowings
Current – at amortised cost
Motor Vehicle Lease
Non-current – at amortised cost
Motor Vehicle Lease
18. Issued capital
2018
$
2017
$
-
-
-
-
11,278
11,278
15,573
15,573
2018
$
2017
$
543,532,473 fully paid ordinary shares (2017: 546,100,763)
154,101,518
155,367,391
Changes to the then Corporations Law abolished the authorised capital and par value concept
in relation to share capital from 1 July 1998. Therefore, the Company does not have a limited
amount of authorised capital and issued shares do not have a par value.
2018
2017
No.
$
No.
$
Fully paid ordinary shares
Balance at beginning of financial year
546,100,763
155,367,391
559,089,257
160,047,735
Issue of shares on conversion of convertible note
Share issue costs
-
-
-
-
-
-
-
(7,261)
Shares cancelled through share buy back
(5,371,209)
(1,524,598)
(16,900,102)
(4,727,942)
Other share based payments
2,802,919
258,725
3,911,608
54,859
Balance at the end of the financial year
543,532,473
154,101,518
546,100,763
155,367,391
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Share options
At balance date there were no share options in existence over ordinary shares (2017: nil).
NEOMETALS ANNUAL REPORT 2018
83
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
19. Reserves
The share-benefits reserve arises on the grant of share options and performance rights for
the provision of services by consultants and to executives and employees under the employee
share option plan, performance rights plan, employment contracts or as approved by
shareholders. Amounts are transferred out of the reserve and into issued capital when the
options are exercised or when shares are issued pursuant to the terms of the performance rights.
Further information about share-based payments to employees is provided in Note 8 to the
financial statements.
Share based payments reserve:
Balance at the beginning of the financial year
Increase/ (Decrease) in share based payments
Amounts transferred to share capital on exercise
Balance at the end of the financial year
Other reserve:
Balance at the beginning of the financial year
Balance at the end of the financial year
Investment revaluation reserve(i):
Balance at the beginning of the financial year
Investment revaluation reserve
Balance at the end of the financial year
Total Reserves
2018
$
2017
$
5,531,947
5,295,914
501,324
(258,725)
290,892
(54,859)
5,774,546
5,531,947
300,349
300,349
300,349
300,349
1,019,637
-
1,019,637
7,094,532
801,937
217,700
1,019,637
6,851,933
(i) The investments revaluation reserve represents the cumulative gains and losses arising on the revaluation
of available-for-sale financial assets that have been recognised in other comprehensive income.
84
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
20. Accumulated losses
2018
$
2017
$
Accumulated losses:
Balance at the beginning of the financial year
(83,350,556)
(76,836,283)
Net profit/(loss) attributable to members of the Company
20,210,541
4,745,744
Payment of dividends
Balance at the end of the financial year
(5,435,325)
(11,260,017)
(68,575,340)
(83,350,556)
21. Earnings per share
2018
Cents per share
2017
Cents per share
Basic earnings per share:
Continuing and discontinued operations
3.73
0.85
Diluted earnings per share:
Continuing and discontinued operations
3.72
0.84
Basic and diluted profit/(loss) per share
The profit/(loss) and weighted average number of ordinary shares used in the calculation
of basic and diluted profit/(loss) per share are as follows:
Profit/(loss) (a)
Continuing operations
Continuing and discontinued operations
Weighted average number of ordinary shares for the purpose of
basic profit/(loss) per share
Weighted average number of ordinary shares for the purpose of
diluted profit/(loss) per share
2018
$
2017
$
20,210,541
20,210,541
4,745,744
4,745,744
2018
No.
2017
No.
541,458,075
560,882,485
543,961,504
561,753,755
(a) Profit/(loss) used in the calculation of profit/(loss) per share reconciles to net loss in the consolidated
statement of comprehensive income.
NEOMETALS ANNUAL REPORT 2018
85
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
22. Commitments for expenditure
a. Exploration and evaluation expenditure commitments
The Consolidated Entity holds mineral exploration licences in order for it to undertake
its exploration and evaluation activities. To continue to hold tenure over these areas the
Group is required to undertake a minimum level of expenditure on or in relation to the leases.
Minimum expenditure commitments for the exploration and mining leases for the 2019
financial year are outlined in the table below.
Exploration expenditure commitments
Not longer than 1 year(i)
30 June 2018
$
30 June 2017
$
2,612,527
376,700
(i) Due to the nature of this expenditure, in that the expenditure commitments may be reduced by the
relinquishment of tenements, estimates for the commitment have not been forecast beyond June 2019.
However, should the Group continue to hold the tenements beyond this date additional expenditure
commitments would arise.
b. Lease commitments
Non-cancellable operating lease commitments are disclosed in Note 23 to the
financial statements.
c. Other
As referred to in Note 16 (i) to the accounts, Barrambie Gas Pty Ltd, a wholly owned
subsidiary of the Company, previously entered into a gas transmission agreement
with DBNGP (WA) Transmission Pty Ltd for the Barrambie Project. As part of the
agreement the Group was required to procure a “blocked” term deposit for $4.0 million
(30 June 2017: $4.0 million) as security a bank guarantee, which approximates the
present value of the Group’s commitment under the agreement. The obligations under
the gas transmission agreement commenced on 1 July 2010.
86
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
23. Leases
Operating leases:
Leasing arrangements
Operating leases relate to the lease of commercial premises in West Perth, Welshpool and
Canada and a photocopier. The lease agreement for the Company’s Canadian branch premises
was entered into on 1 May 2016 for a 60 month period expiring on 30 April 2021. The lease of a
photocopier is for a period of 48 months expiring in June 2022. The commitments are based on
the fixed monthly lease payment and a monthly estimate for copying charges. The commitments
are based on the fixed monthly lease payment.
Payments recognised as an expense
Minimum lease payments
Contingent rentals
Non-cancellable operating lease commitments
Not longer than 1 year
Longer than 1 year and not longer than 5 years
2018
$
2017
$
518,527
43,003
561,531
505,626
507,443
486,125
26,849
512,974
242,380
766,618
1,013,069
1,008,998
24. Deconsolidation of subsidiary
Deconsolidation of Reed Exploration Pty Ltd (REX)
On 26 September 2016, the Company divested its REX nickel projects by way of a sale
of the subsidiary to Hannans Limited. A binding share sale agreement was executed on
10 August 2016 and settlement of the transaction took place on 26 September 2016.
The table below details the profit recognised on the deconsolidation of REX:
Net assets of REX de-recognised on deconsolidation
Cash amount paid in relation to the transaction
Shares received in Hannans Limited on settlement
Profit on disposal
26 September 2016
$
(687,422)
(1,000,000)
11,175,000
9,487,578
NEOMETALS ANNUAL REPORT 2018
87
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
24. Deconsolidation of subsidiary (continued)
Reconciliation of REX net assets de-recognised on deconsolidation:
Current Assets
Non-current assets
Total Assets
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets
$
-
687,422
687,422
-
-
-
687,422
25. Joint arrangements
Name of operation
Principal activity
Reed Advanced Materials Pty Ltd(i)
Evaluation of lithium hydroxide
process
Interest
2018
%
70
2017
%
70
The Consolidated Entity’s interest in assets employed in the above joint ventures is
detailed below.
(i) Reed Advanced Materials Pty Ltd
On 6 October 2015 Neometals and PMI entered into a shareholders agreement for the
purposes of establishing and operating a joint venture arrangement through RAM to operate
a business of researching, designing and developing the capabilities and technology
relating to the processing of lithium hydroxide. Following the execution of the shareholders
agreement RAM was held 70:30 between Neometals and PMI.
88
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
25. Joint arrangements (continued)
Summarised financial information for the joint venture:
Carrying value of investment in the joint venture
Loan to joint venture (i)
2018
$
-
-
2017
$
-
1,665,938
Share of (profit)/loss of joint venture not recognised in profit or loss
(87,657)
398,945
Current assets
Non-current assets
Current liabilities
Non-current liabilities
184,537
308,345
(2,868)
174,183
183,629
(4,636)
(1,968,678)
(1,957,063)
(i) The loan to RAM totalling $1,677,554 was impaired in full during the year as no further work streams are
planned for the ELi technology at this point in time. The recoverability will be reviewed periodically in the future.
26. Investment in associate
(i) Reed Industrial Minerals Pty Ltd
Name of operation
Principal activity
Interest
30 June 2018
%
30 June 2017
%
Reed Industrial Minerals Pty Ltd
Mt Marion Lithium Project
13.8
13.8
The associate is accounted for using the equity method in this consolidated financial report.
NEOMETALS ANNUAL REPORT 2018
89
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
26. Investment in associate (continued)
Summarised financial information for the associate:
Carrying value of investment in the associate
Loan to associate
Share of profit/(loss) of associate recognised in profit or loss(i)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
30 June 2018
$
30 June 2017
$
15,856,197
4,104,458
15,631,951
117,050,100
78,907,700
224,246
8,208,916
-
45,914,000
69,607,000
(55,700,500)
(86,088,600)
(46,489,000)
(10,760,000)
93,768,300
18,672,400
(i) The equity accounted share of the associates profit/(loss) is adjusted against the carrying value of the investment
in the associate. The asset was classified as held for sale at 30 June 2017.
The Group’s share of the capital commitments made jointly with other partners relating
to its investment in RIM, is as follows:
Development expenditure commitments
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
(i) Hannans Limited
30 June 2018
$
30 June 2017
$
214,000
735,000
1,658,000
2,607,000
262,000
2,727,000
1,806,000
4,795,000
Name of operation
Hannans Limited
Principal activity
Interest
30 June 2018
%
30 June 2017
%
Exploration of nickel and lithium
35.7
42.2
The above associate is accounted for using the equity method in this consolidated
financial report.
90
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
26. Investment in associate (continued)
Summarised financial information for the associate:
Carrying value of investment in associate
12,757,545
13,226,310
Share of loss of associate recognised in profit or loss(i)
(311,435)
511,810
30 June 2018
$
30 June 2017
$
Current assets
Non-current assets
Current liabilities
Non-current liabilities
4,210,668
2,717,056
(139,415)
-
1,766,574
2,841,239
(457,634)
(121,885)
(i) The equity accounted share of the associate’s loss is credited against the carrying value of the
investment in the associate.
Shares held in associate are set out in the table below.
30 June 2018
30 June 2017
No.
$
No.
$
Shares held in Hannans prior to disposal of REX(i)
63,750,000
1,147,500
63,750,000
1,147,500
Consideration shares received on disposal of REX(i)
620,833,333
11,175,000
620,833,333
11,175,000
Close out of options(ii)
Net shares disposed(ii)
Share of profit in associate
25,250,000
392,000
25,250,000
392,000
(3,623,850)
(157,330)
N/A
200,375
-
N/A
-
511,810
Balance at the end of the period
706,209,483
12,757,545
709,833,333
13,226,310
(i) Shares have been valued at the market value on settlement date, 26 September 2016.
(ii) Shares valued at market rate on date of trade.
NEOMETALS ANNUAL REPORT 2018
91
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
27. Subsidiaries
Name of entity
Parent entity
Neometals Ltd
Subsidiaries
Australian Titanium Pty Ltd (formerly Australian Vanadium
Corporation (Holdings) Pty Ltd)
Alphamet Management Pty Ltd (formerly Australian
Vanadium Corporation (Investments) Pty Ltd)
Inneovation Pty Ltd (formerly Australian Vanadium
Exploration Pty Ltd)
Australia
Australia
Australia
Australia
Neometals Energy Pty Ltd (formerly Barrambie Gas Pty Ltd)
Australia
Neomaterials Pty Ltd (formerly GMK Administration Pty Ltd)
Australia
Neometals Investments Pty Ltd (formerly Gold Mines of
Kalgoorlie Pty Ltd)
Urban Mining Pty Ltd (formerly Mount Finnerty Pty Ltd)
Adamant Technologies Pty Ltd
Mt Edwards Lithium Pty Ltd
Australia
Australia
Australia
Australia
Ownership interest
Country of
incorporation
2018
%
2017
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
All of these companies are members of a tax consolidated group. Neometals Ltd is the head
entity of the tax consolidated group.
28. Segment information
Basis for segmentation
AASB 8 Operating Segments requires the presentation of information based on the components
of the entity that management regularly reviews for its operational decision making. This review
process is carried out by the Chief Operating Decision Maker (“CODM”) for the purpose of
allocating resources and assessing the performance of each segment. The amounts reported for
each operating segment is the same measure reviewed by the CODM in allocating resources and
assessing performance of that segment.
92
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
28. Segment information (continued)
For management purposes, the Group operates under three operating segments comprised
of the Group’s lithium, titanium/vanadium and ‘other segments’ which comprises other minor
exploration projects and mineral process technology businesses. The titanium/vanadium
operating segment is separately identified given it possess different competitive and operating
risks and meets the quantitative criteria as set out in the AASB 8. Previously the Group operated
under two reportable operating segments comprised of the Group’s titanium/vanadium and
‘other segments’ which comprises the Mount Marion lithium project and other minor exploration
projects. The ‘other segments’ category is the aggregation of all remaining operating segments
given sufficient reportable operating segments have been identified.
For the year ended 30 June 2018
Reportable operating segments
Revenue from external customers
Cost of sales
Gross profit/(loss)
Other income
Impairment reversal
Depreciation and amortisation
Total revenue
Total expense
Lithium
$
Titanium
$
Other
$
Unallocated
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,877,669
54
245,225
979,444
17,102,392
-
-
14,694,964
-
-
-
-
14,694,964
(42,530)
(42,530)
15,877,669
14,695,018
245,225
979,444
31,797,356
(1,864,557)
(1,185,875)
(320,047)
(8,784,941)
(12,155,420)
Profit/(loss) before tax
14,013,112
13,509,143
(74,822)
(7,805,497)
19,641,936
Consolidated profit/(loss) before tax
14,013,112
13,509,143
(74,822)
(7,805,497)
19,641,936
As at 30 June 2018
Reportable operating segments
Lithium
$
Titanium
$
Other
$
Unallocated
$
Total
$
Increase/(decrease) in segment assets
13,182,486
16,293,980
(342,730)
(15,905,723)
13,228,013
Decrease in classified as held for sale
-
-
-
-
-
Consolidated increase/(decrease) in
segment assets
13,182,486
16,293,980
(342,730)
(15,905,723)
13,228,013
Total segment assets
23,281,587
29,747,134
13,799,765
31,002,777
97,831,263
Assets classified as held for sale
-
-
-
-
-
Consolidated total assets
23,281,587
29,747,134
13,799,765
31,002,777
97,831,263
NEOMETALS ANNUAL REPORT 2018
93
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
28. Segment information (continued)
For the year ended 30 June 2017
Reportable operating segments
Revenue from external customers
Cost of sales
Gross profit/(loss)
Other income
Expenditure written off
Depreciation and amortisation
Total revenue
Total expense
Profit/(loss) before tax
Consolidated profit/(loss) before tax
As at 30 June 2017
Lithium
$
Titanium
$
Other
$
Unallocated
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,599,517
2,349,506
11,949,023
(1,409)
-
(1,409)
-
(32,888)
(32,888)
9,599,517
2,349,506
11,949,023
(957,978)
246,652
(6,457,656)
(7,168,982)
(957,978)
9,844,760
(4,141,038)
4,745,744
(957,978)
9,844,760
(4,141,038)
4,745,744
Reportable operating segments
Lithium
$
Titanium
$
Other
$
Unallocated
$
Total
$
Increase/(decrease) in segment assets
77,102
1,666,387
11,101,934
(32,375,654)
(19,530,231)
Decrease in classified as held for sale
-
-
-
-
-
Consolidated increase/(decrease) in
segment assets
77,102
1,666,387
11,101,934
(32,375,654)
(19,530,231)
Total segment assets
1,665,939
13,453,154
14,142,495
46,908,501
76,170,089
Assets classified as held for sale
8,433,162
-
-
-
8,433,162
Consolidated total assets
10,099,101
13,453,154
14,142,495
46,908,501
84,603,251
Geographical information
The Group operates in a single geographical area being Australia (country of domicile).
94
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
29. Related party disclosures
a. Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in
Note 27 to the financial statements.
b. Key management personnel remuneration
Details of Key Management Personnel remuneration are disclosed on pages 26 to 40
of the Directors’ Report.
c. Key management personnel equity holdings
Fully paid ordinary shares of Neometals Ltd
Balance at
01/07/17
No.
Balance on
appoint-
ment
No.
Received on
exercise of
performance
rights
No.
Net other
change
No.
Balance at
30/06/18
No.
Balance
held
nominally
No.
2018
Non-executive directors
S. Cole(i)
D. Reed
1,120,083
59,288,900
Executive directors
C. Reed
10,548,980
Other executives
J. Carone
M.Tamlin
Total
4,400,000
-
75,357,963
-
-
-
-
-
-
-
-
-
1,120,083
(12,100,000)
47,188,900
1,329,190
(1,900,000)
9,978,170
494,540
(3,244,540)
1,650,000
979,189
-
979,189
2,802,919
(17,244,540)
60,916,342
-
-
-
-
-
-
(i) Excludes shares issued subsequent to year end for performance rights that vested 30 June 2018.
NEOMETALS ANNUAL REPORT 2018
95
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
29. Related party disclosures (continued)
Balance at
01/07/16
No.
Balance on
appoint-
ment
No.
Received on
exercise of
performance
rights
No.
Net other
change
No.
Balance at
30/06/17
No.
Balance
held
nominally
No.
2017
Non-executive directors
S. Cole
D. Reed
1,120,083
63,221,259
Executive directors
C. Reed (i)
10,548,980
Other executives
J. Carone (i)
Total
695,584
75,585,906
-
-
-
-
-
-
-
-
-
1,120,083
(3,932,359)
59,288,900
-
11,170,241
3,911,608
(207,192)
4,400,000
3,911,608
(4,139,551)
75,979,224
-
-
-
-
-
(i) Excludes shares issued subsequent to year end for performance rights that vested 30 June 2017.
Share options of Neometals Ltd
No options were issued to related parties during the current period (2017: nil).
Performance rights of Neometals Ltd
In the current reporting period the Company granted 2,377,312 (2017: 1,096,599) performance
rights to executives and KMP pursuant to the Company’s Performance Rights Plan.
Further details of the employee share option plan and of share options and performance rights
granted are contained in Note 8 to the financial statements.
Performance Rights granted to related parties
The following tables summarises information relevant to the current financial year in relation to
the grant of performance rights to KMP as part of their remuneration. Performance rights are
issued by Neometals Ltd.
96
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
29. Related party disclosures (continued)
During the Financial Year
Grant
date
No.
granted
No.
Vested
Fair value at
grant date
Earliest
exercise date
Consideration
payable on
exercise
Name
KMP:
J. Carone(1)
C. Reed(1)
M. Tamlin(1)
3/10/2017
370,012
11/12/2017
952,474
3/10/2017
444,015
-
-
-
-
93,243
30/06/2020
320,984
30/06/2020
111,892
30/06/2020
320,984
30/06/2020
D. Townsend(1)
11/12/2017
444,015
S. Cole(2)
D. Ritchie(2)
5/01/2018
112,700
112,700
50,000
30/06/2018
5/01/2018
27,048
27,048
12,000
30/06/2018
N. Streltsovava(2)
5/01/2018
27,048
27,048
12,000
30/06/2018
Total
2,377,312
166,796
921,103
-
-
-
-
-
-
-
-
(1) The number of performance rights that will actually vest, if any, is determined by the Company’s performance
based on Neometals TSR compared to the comparative group of companies over the 2-3 year period as set out
in the relevant employee’s employment contract.
(2) At 30 June 2018 Non-Executive Directors became entitled to securities whose vesting conditions were the
subject to the rules of the Performance Rights Plan.
NEOMETALS ANNUAL REPORT 2018
97
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
29. Related party disclosures (continued)
Details of performance rights held by KMP and of shares issued during the financial year
as a result of the vesting of performance rights:
Fair value
of rights at
grant date
$
No.
Granted
Grant date
Vested
during the
financial
year
%
Forfeited/
lapsed
during the
financial
year
%
Ordinary
shares
issued on
exercise of
rights
$
KMP:
J. Carone(1)
09/10/2015
49,644
593,472
09/10/2015
133,429
1,595,092
21/01/2016
127,081
1,175,074
C. Reed(1)
M. Tamlin(1)
J. Carone(2)
C. Reed(2)
M. Tamlin(2)
J. Carone(2)
C. Reed(2)
M. Tamlin(2)
14/09/2016
14/09/2016
14/09/2016
3/10/2017
11/12/2017
3/10/2017
D. Townsend(2)
11/12/2017
S. Cole(3)
D. Ritchie(3)
5/01/2018
5/01/2018
N. Streltsova(3)
5/01/2018
56,176
161,528
67,412
93,243
320,984
111,892
320,984
50,000
12,000
12,000
-
-
-
-
-
-
-
-
-
-
98,932
494,540
265,902
1,329,190
195,885
979,189
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
216,063
621,261
259,275
370,012
952,474
444,015
444,015
112,700
112,700
27,048
27,048
27,048
27,048
Total
1,516,373
6,837,549
166,796
560,719
2,802,919
(1) The number of performance rights that will actually vest, if any, is determined by the Company’s performance
based on Neometals TSR compared to the comparative group of companies over the 2 or 3-year period as set
out in the employee’s employment contract. As a result of the testing of the Company’s performance over this
period 2,802,919 rights vested and shares were issued on 9 August 2017.
(2) The number of performance rights that will actually vest, if any, is determined by the Company’s performance
based on Neometals TSR compared to the comparative group of companies over the 2-year period as set out in
the relevant employee’s employment contract. At 30 June 2018 no employee had become entitled to securities
whose vesting conditions were the subject of the TSR criteria.
(3) Under the Performance Rights Plan, Non-Executive Directors were invited to sacrifice part of their fees for
their services in exchange for performance rights. At 30 June 2018 all performance rights have vested.
The performance rights granted entitle the grantee to one fully paid ordinary share in
Neometals Ltd for nil cash consideration on satisfaction of the vesting criteria.
98
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
29. Related party disclosures (continued)
d. Other transactions with key management personnel
2018
$
2017
$
603
603
(23,710)
(23,710)
1,880
1,880
(21,000)
(21,000)
The loss from operations includes the following items of
revenue and expense that resulted from transactions other
than compensation or equity holdings, with Key Management
Personnel or their related parties:
Interest income
Total recognised as income
Interest and fees expense
Total recognised as expenses
e. Transactions with other related parties
Other related parties include:
• The parent entity;
• Associates;
• Joint ventures in which the entity is a venturer;
• Subsidiaries;
• Key Management Personnel of the Group;
• Former Key Management Personnel; and
• Other related parties.
Transactions involving the parent entity
The directors elected for wholly-owned Australian entities within the Group to be taxed
as a single entity from 1 July 2003.
No other transactions occurred during the financial year between entities in the wholly
owned Group.
Transactions involving other related parties
During the year, Mr. C Reed fully repaid his staff loan down to nil (2017: $24,593).
Loan interest charged for the period totalled $603 (2017: $1,880).
f. Controlling entities
The ultimate parent entity of the Group is Neometals Ltd, a company incorporated
and domiciled in Australia.
NEOMETALS ANNUAL REPORT 2018
99
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
30. Auditors remuneration
Non-audit services
Details of the amounts paid or payable to the auditor for the audit and non-audit services
during the year are as follows:
Auditor (Deloitte Touche Tohmatsu)
Audit fees
Non-audit fees
2018
$
2017
$
91,000
-
91,000
84,945
-
84,945
The directors are satisfied that the provision of non-audit services, during the year, by the auditor
(or by another person or firm on the auditor’s behalf) is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
The directors are satisfied that the non-audit services provided did not compromise the external
auditor’s independence for the following reasons:
• all non-audit services are reviewed and approved by the directors prior to commencement
to ensure they do not adversely affect the integrity and objectivity of the auditor; and
• the nature of the services provided do not compromise the general principles relating to
auditor independence as set out in the Institute of Chartered Accountants in Australia and
CPA Australia’s Professional Statement F1: Professional Independence.
31. Notes to the statement of cash flows
a. Reconciliation of cash and cash equivalents
2018
$
2017
$
For the purposes of the cash flow statement, cash and cash equivalents
includes cash on hand and in banks and investments in money market
instruments, net of outstanding bank overdrafts. Cash and cash
equivalents at the end of the financial year as shown in the Cash Flow
Statement is reconciled to the related items in the statement of financial
position as follows:
Cash and cash equivalents
26,342,414
42,129,157
Cash and cash equivalents included in a disposal group
-
-
26,342,414
42,129,157
100
NEOMETALS ANNUAL REPORT 2018
For personal use only
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
31. Notes to the statement of cash flows (continued)
b. Funds not available for use
Restrictions exist on bank deposits with a total value of $4,000,000. Deposits are classified
as financial assets (see Note 12).
Of the $4,025,000 held in restricted bank deposits $4,000,000 is held as security in relation
to an unconditional performance bond issued by the National Australia Bank in favour of
the Minister for State Development and DBNGP (WA) Transmission Pty Ltd. In addition,
the Group has $25,000 on deposit as security for a rental bond relating to its leased
business premises.
c. Reconciliation of profit/(loss) for the period to net cash flows from operating activities
Profit/(loss) for the period
Profit on deconsolidation of subsidiary
Loan impairment
Impairment reversal
Profit on disposal of financial assets
Share of equity accounted entity’s (profit)/loss
2018
$
2017
$
20,210,541
4,745,744
-
(9,487,577)
1,677,554
(14,694,964)
(140,168)
(15,320,516)
-
-
(364,767)
(531,799)
Gain on sale of subsidiary presented as investing in cashflow
-
(1,000,000)
Fair value gains on available-for-sale investments
Interest received on investments
Costs of borrowing
Depreciation and amortisation of non-current assets
Equity settled share-based payment
Net foreign exchange loss/(gain)
Write off of non-current assets
(Increase)/decrease in assets:
Current receivables
Other
Increase/(decrease) in liabilities:
Current payables
Current borrowings
Provisions
(72,599)
(136,800)
(926,376)
(1,421,398)
62,599
42,530
501,324
(53,231)
-
472,016
13,768
268,476
(11,278)
(678,244)
97,874
32,888
290,892
80,063
1,409
130,752
75,916
11,166
(660)
42,655
Net Cash generated from/(used) in operating activities
(8,648,568)
(7,433,642)
NEOMETALS ANNUAL REPORT 2018
101
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
32. Financial instruments
a. Financial risk management objectives
The Consolidated Entity does not enter into or trade financial instruments, including
derivative financial instruments, for speculative purposes.
b. Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria
for recognition, the basis of measurement and the basis on which income and expenses
are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in Note 2 to the financial statements.
c. Interest rate risk
The following tables detail the Group’s exposure to interest rate risk:
Weighted
average
effective
interest
rate
%
2.46%
0.00%
2018
Financial assets:
Cash and cash equivalents
AUD
Cash and cash equivalents
USD
Barrambie Gas term deposit (i)
2.70%
Bond term deposits (i)
Cash deposits trust
Trade and other receivables
2.60%
2.65%
0.00%
Financial liabilities:
Trade payables
-
Maturity dates
Variable
interest
rate
%
Less than
1 year
$
1-5
years
$
More
than
5 years
$
Non
interest
bearing
$
Total
$
-
-
-
-
-
-
-
24,467,829
346,609
4,000,000
43,000
527,193
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,467,829
346,609
4,000,000
43,000
527,193
4,510,984
4,510,984
882,106
882,106
(i) The balances represent two term deposits that are restricted in their use and are classified in the current
reporting period other financial assets. Additional information on all other term deposits is provided at
Notes 12 and 30(b). The financial assets have contractual maturities of less than one year, however they are
classified as non-current in the statement of financial position as they are not accessible to the Group due to
restrictions placed on accessing the funds.
102
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
32. Financial instruments (continued)
Weighted
average
effective
interest
rate
%
2.07
0.03
2.70
2.00
4.20
-
2017
Financial assets:
Cash and cash equivalents
AUD
Cash and cash equivalents
USD
Barrambie Gas term deposit (i)
Bond term deposits (i)
Trade and other receivables
Financial liabilities:
Trade payables
Maturity dates
Variable
interest
rate
%
Less than
1 year
$
1-5
years
$
More
than
5years
$
Non
interest
bearing
$
Total
$
-
-
-
-
-
-
40,134,550
1,994,607
4,000,000
25,000
24,593
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
40,134,550
1,994,607
4,000,000
25,000
853,949
878,542
1,044,574
1,044,574
(i) The balances represent two term deposits that are restricted in their use and are classified in the current
reporting period other financial assets. Additional information on all other term deposits is provided at
Notes 12 and 30(b). The financial assets have contractual maturities of less than one year, however they are
classified as non-current in the statement of financial position as they are not accessible to the Group due to
restrictions placed on accessing the funds.
d. Credit risk management
Credit risk refers to the risk that counterparty will default on its contractual obligations
resulting in financial loss to the consolidated entity. The consolidated entity has adopted
a policy of only dealing with credit-worthy counterparties and obtaining sufficient collateral
where appropriate as a means of mitigating the risk of financial loss from defaults.
The consolidated entity exposure and the credit ratings of its counterparties are continuously
monitored and the aggregate value of transactions concluded is spread amongst approved
counterparties.
The consolidated entity does not have any significant credit risk exposure to any single
counterparty or any group of counterparties having similar characteristics other than the
Joint Venture. The credit risk on liquid funds is limited because the counterparties are banks
with high credit-ratings assigned by international credit-rating agencies.
NEOMETALS ANNUAL REPORT 2018
103
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
32. Financial instruments (continued)
e. Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors,
who have built an appropriate liquidity risk management framework for the management of
the Group’s short, medium and long-term funding and liquidity management requirements.
The Group manages liquidity risk by maintaining adequate reserves and banking facilities,
and by continuously monitoring forecast and actual cash flows and matching the maturity
profiles of financial assets and liabilities.
In addition to financial liabilities in note 15, the Company is required to meet minimum
spend commitments to maintain the tenure over the Company’s mineral exploration areas
as described in note 22.
f. Fair value
The carrying amount of financial assets and financial liabilities recorded in the financial
statements approximates their respective net fair values.
g. Commodity price risk
The Group is exposed commodity price risk. These commodity prices can be volatile and
are influenced by factors beyond the Group’s control. No hedging or derivative transactions
have been used to manage commodity price risk.
h. Capital management
The board’s policy is to endeavour to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of the business.
The Group sources any additional funding requirements from either debt or equity markets
depending on the market conditions at the time the funds are sourced and the purpose
for which the funds are to be used. The Group is not subject to externally imposed capital
requirements.
i.
Interest rate risk management
The Group is exposed to interest rate risk as the Group has funds on deposit as security
for the head office lease and the Barrambie Gas Pty Ltd onerous contract outlined at
Note 16. The Group’s financial borrowings (motor vehicle hire purchase lease) are not subject
to interest rate risk as the rate is fixed at time of entering into the financing agreement.
The sensitivity analysis below has been calculated based on the exposure to interest rates
at the end of the reporting period. A 50 basis point increase and decrease has been used
when reporting the interest rate risk and represents management’s assessment of the
potential change in interest rates.
If interest rates had been 50 basis points higher/lower and all other variables were held
constant, the Group’s profit for the year ended 30 June 2018 would decrease/increase by
$151,923 (2017: decrease/increase $230,771). This is mainly attributable to the Group’s
exposure to interest rates on the maturity of its term deposits.
104
NEOMETALS ANNUAL REPORT 2018
For personal use only NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
33. Events after the reporting period
On 16 August 2018, the Company announced to the market the intention to demerge
Barrambie Titanium-Vanadium Project and associated non-lithium technology assets,
subject to shareholder/regulatory approvals and third party consents.
NEOMETALS ANNUAL REPORT 2018
105
For personal use only ADDITIONAL SHAREHOLDER
INFORMATION
AS AT 30 SEPTEMBER 2018
Ordinary fully paid shares
Top Holders Snapshot:
Rank
Name
Units at
30 Sep 2018
% of
Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR DAVID JOHN REED
CITICORP NOMINEES PTY LIMITED
ZERO NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
TRUCKING NOMINEES PTY LTD
MR KENNETH JOSEPH HALL
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