New Look Vision Group Inc.
Annual Report 2021

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ANNUAL REPORT 2021 BCI Minerals Limited (ASX:BCI) is a Western Australian company that is developing a salt and potash business. B CONTENTS Our Business Chairman’s Report Managing Director’s Report Sustainability Corporate Governance Directors’ Report Remuneration Report Directors’ Declaration Annual Financial Report Independent Auditor’s Report Auditor’s Independence Declaration Additional ASX Information Mineral Resources and Ore Reserves Corporate Directory 2 9 10 13 24 26 33 41 42 69 73 74 75 76 1 OUR BUSINESS MARDIE SALT & POTASH PROJECT KARRATHA PORT HEDLAND ONSLOW IRON VALLEY MINE NEWMAN 0 50 100 BCI Minerals Limited (ASX:BCI) is a Western Australian company that is developing a salt and potash business supported by iron ore royalty earnings. Mardie Salt & Potash Project Key Project Features BCI is rapidly advancing its 100% owned Mardie Salt & Potash Project, a potential Tier 1 project located on the West Pilbara coast in the centre of Australia's key salt production region. Mardie will produce 5.35Mtpa of high-purity salt (>99.5% NaCl) and 140ktpa of sulphate of potash (SOP) (>52% K2O) via solar evaporation of seawater. Using an inexhaustible seawater resource and a production process driven mainly by natural solar and wind energy, Mardie is a sustainable opportunity to supply the salt and potash growth markets in Asia over many decades. Optimisation results of the Mardie Definitive Feasibility Study (DFS) were released in April 2021. A Final Investment Decision (FID) is targeted in Q4 2021 with main construction to follow. Input resource is an infinite supply of natural seawater which could continue for 100+ years. 1 2 Operating Life MINIMUM 60 YEARS1 Annual Production: SALT 5.35MT, SOP 140KT 99% of the energy requirement for the evaporation process is driven by natural solar and wind energy Iron Valley FY21 Highlights Iron Valley is a mine located in the Central Pilbara, which is being operated by Mineral Resources Limited ('MIN') under a royalty-type agreement. As at 30 June 2021, Iron Valley’s Mineral Resource was 173.3Mt at 58.0% Fe and its Ore Reserve was 68.3Mt at 58.2% Fe. Iron Valley commenced exports in October 2014 and is generating royalty-type earnings for BCI. It is a relatively simple Direct Shipping Ore (DSO) operation that produces both lump and fines, which are hauled to Port Hedland utilising road trains and exported via Utah Point. It has a potential mine life of around 10 years based on current ore reserves and the current production rate of approximately 6Mtpa. MIN operates the mine entirely at its cost and purchases Iron Valley product from BCI at a price linked to MIN’s realised sale price. BCI retains ownership of the tenements and certain statutory obligations, including payment of royalties. BCI's EBITDA from Iron Valley was a record A$69.5M in FY21. Mine Life APPROX. 10 YEARS 6.1MT iron ore shipped RECORD A$69.5M EBITDA; up 200% on previous full year record 3 VISION BCI’s Vision is to create shareholder value by becoming a globally significant supplier of chemical and agricultural feedstock products, produced in a sustainable and responsible manner. 4 VALUES Values form the backbone of our company culture and define how we aspire to do business every day. BCI’s key values are: People and Assets We look after each other’s wellbeing, value diversity of people and ideas, and protect our assets Integrity We are honest, respectful, transparent and respect the rule and spirit of our legal environment Accountability We embrace our responsibilities and hold ourselves to account Environment & Community We care about our communities and the environment where we operate Performance We have a can-do attitude and are committed to deliver shareholder value through innovative and high quality results Teamwork We contribute, collaborate, and lead by example with clear and open communication. 5 Iron Valley mine 6 YEAR IN REVIEW BCI FY21 HIGHLIGHTS $22.0 MILLION NPAT, up from $0.4M in FY20 $69.5 MILLION Record Iron Valley EBITDA, up 200% $79.4 MILLION Cash balance at 30/06/21 ZERO Debt $148.7 MILLION $47.9 MILLION Mardie contracts awarded in 2021 Equity raised from cornerstone investors $450 MILLION NAIF loan approved Mardie Optimised Feasibility Study completed Safety awareness campaign launched ZERO Lost Time Injuries (LTI) 6 YEARS Without a Lost Time Injury (LTI) EPA recommended Mardie Project approval Sustainability Committee formed Pilbara office opened Strong share price growth on enlarged capital base 7 “The Optimised Feasibility Study results reaffirmed to the Board that Mardie has all the attributes of a globally significant and multi- generational asset.” 8 CHAIRMAN’S REPORT This year we have taken significant steps to ensure sustainability is embedded across all BCI’s processes, with formation of a new Sustainability Committee chaired by Chris Salisbury. The sustainability section in this annual report provides further information on BCI’s sustainability focus. The Board of BCI approved inclusion in the project budget of expenditure to develop a clear, deliverable pathway to net zero carbon emissions for the Mardie project. Relying primarily on sun and wind to produce salts from an inexhaustible source of raw materials, Mardie is already “green” by nature, but this additional work will aim to reduce net emissions to zero, following full ramp up of production. While Mardie is our main focus, our Iron Valley royalty made an outstanding contribution to our company, with record cash flow generated this year. I would like to thank Iron Valley’s operator, Mineral Resources Limited, for its ongoing commitment to our relationship. I would also like to take this opportunity to thank BCI’s Managing Director, staff and Board for their significant expertise and effort over the past year. BCI’s shareholders continue to be extremely supportive, and the Company sincerely thanks you for this commitment, particularly the backing from existing major shareholders in the 2020 entitlement issue. The Board of BCI is pleased that BCI has been able to deliver share price growth on a larger capital base, and three consecutive years of positive net profit. We look forward to the year ahead, which we expect will mark the beginning of the next phase of BCI’s evolution toward becoming a globally significant mineral producer. Brian O’Donnell Non-Executive Chairman Dear stakeholders, I am pleased to present BCI’s Annual Report for the 2021 financial year – a year of substantial progress for our company. BCI has a well-defined strategy to become a significant supplier of industrial and agricultural minerals through the development of our Mardie Salt & Potash Project, located on the Pilbara Coast of Western Australia. This year we made significant headway in realising this goal, with the Optimised Feasibility Study (OFS) increasing the scale and significance of the project, and confirming that Mardie will be a world class, sustainable project - large scale, low-cost, and with a long operating life. Mardie will be the largest solar salt project in Australia, and the third largest globally, and will be the first Australian operation to produce both salt and sulphate of potash (SOP) from seawater. Our Mardie Project obtained strong support from Federal and State Governments, including via finance programs and statutory authorities. The Project was also endorsed by commercial banks, equity investors and independent technical experts during the year. We thank all of these parties for this strong support, which reflects the value and robustness of the detailed studies and approval work conducted over a four-year period, and the substantial progress we have made toward obtaining the approvals, tenure and funding arrangements we need to make Mardie a reality. Significantly, and following extensive due diligence, the Australian government’s Northern Australian Infrastructure Facility (NAIF) approved a A$450 million loan to the Mardie Project, representing more than a third of the overall Project funding requirement. The loan is the largest NAIF allocation to a Western Australian company to date and recognises the potential long term benefits the Project will bring to the region, including new multi-user export infrastructure, tax and royalty revenues, local jobs and contracts, and indigenous engagement. Several commercial banks and other credit providers have also conducted in-depth assessment of the Mardie Project, with independent technical experts verifying the findings of the OFS. We look forward to completing the capital raising (debt and equity) for the Project in coming months, so that we can commence main construction of the Project in early 2022. In preparation for the operational phase of the Project, we have broadened our skill set, with several senior executive appointments and the addition of two Board members this year - former Western Australia Premier and Treasurer, Mr Richard Court AC, and former Rio Tinto Iron Ore Chief Executive, Mr Chris Salisbury. Mr Court brings additional skills and contacts from his time as Australia’s Ambassador to Japan, while Mr Salisbury brings expertise in large-scale capital construction and operations, salt industry experience and sustainability. 9 MANAGING DIRECTOR’S REPORT Mardie site activities Enabling construction works have taken shape over the year with expansion of the accommodation village, the northern embankment trial nearing completion, construction of the southern trial pond commencing and the contract awarded for the primary seawater pump structure. These investigative works are an essential precursor to main construction to provide confidence about key assumptions, including materials availability, construction methodology, pond wall settlement, pumping rates, pond floor water retention, and cost and schedule assumptions. Contracts of approximately A$150 million have been awarded in 2021 to date for the Mardie Project and more than 180 expressions of interest have been registered on BCI’s procurement portal which highlights and prioritises indigenous, Pilbara and Western Australian businesses. The initial pond construction, seawater pump structure and accommodation village contracts were awarded to leading Western Australian companies, evidencing the effectiveness of BCI’s procurement process. Processing trials and offtake strategy Approximately 42 tonnes of raw salt was harvested from the small-scale trial ponds at Mardie and processed through the salt wash pilot plant at Nagrom’s facilities in Perth during the year with positive chemical grade results achieved. Kainite-Type Mixed Salt (KTMS) brine continues to be generated from which to produce sulphate of potash samples. The first of two SOP pilot campaigns of Mardie-grown KTMS have been completed at SRC’s laboratories in Canada. SOP product meeting market specifications has been produced and further optimisation work will be undertaken ahead of the second round of SOP piloting scheduled for late 2021. Outcomes from these programs will assist with flowsheet finalisation and generate additional samples for test work by potential offtake customers. Funding advanced Funding for the Mardie Project was significantly advanced with the Federal Government’s Northern Australia Infrastructure Facility (NAIF) approving a 15-year A$450 million loan for the Mardie Project in December 2020. The NAIF loan will sit alongside other debt tranches with a number of commercial banks and other lenders progressing through credit approval processes. In addition, BCI raised A$47.9 million of equity with strong support from its existing major shareholders in the first half of the 2021 financial year. The proceeds of the equity raising facilitated early enabling works at Mardie, including the expansion of the accommodation village, access road upgrades, improved communications, establishment of construction water supply and storage, installation of fuel storage facilities, and embankment trials. Dear stakeholders, Financial year 2021 has been a year of milestones with significant progress made towards the development of the Mardie Salt & Potash Project. BCI’s focus during the year was on completing the Optimised Feasibility Study and progressing the funding, approvals, tenure and offtake aspects of the Project. At the same time, BCI has undertaken enabling construction work at Mardie funded by the equity raised in September 2020 together with record Iron Valley royalties. Feasibility study optimisation Optimisation results of the Mardie Definitive Feasibility Study (DFS) were released on 21 April 2021, outlining improved project footprint and economics. Compared with the DFS announced on 1 July 2020, the optimisation delivered: • ~20% increase in salt production (from 4.4Mtpa to 5.35Mtpa) and SOP production (from 120ktpa to 140ktpa), • ~30% increase in annual EBITDA (from A$197 million to A$260 million), and • ~40% increase in Pre-tax Project NPV7 (from A$1,197 million to A$1,670 million). In addition, de-risking activities conducted during the optimisation phase (including additional geotechnical work, flowsheet and equipment design, process piloting and progress with funding) have increased confidence in Mardie estimates and value potential. The optimisation results confirm Mardie can become a Tier 1 asset categorised by its long life (minimum 60 years), top quartile scale, lowest quartile salt operating costs (after SOP by-product credits) and high-quality salt and SOP products. With attractive financial returns over many decades and future expansion potential from the new tenements, development of the Mardie Project should result in considerable long-term value and dividends being created for shareholders. Tenure and approvals progressed Important progress was made during the year regarding the approvals and tenure required for the development of Mardie. The Western Australian Environmental Protection Authority (EPA) recommended to the WA Minister for Environment that the Mardie Project can be implemented as proposed in the Environmental Review Document (ERD), subject to certain conditions. An access agreement with the pastoral leaseholder of Mardie Station was entered into during the year with the pastoralist providing consent to the grant of key Mining Act tenure required to construct and operate the Mardie Project. A temporary access agreement with the owners of the gas pipelines in the south of the Project has also been achieved and a permanent access agreement is well progressed. BCI continues to work closely with the Pilbara Ports Authority (PPA) and the Department of Planning, Lands and Heritage (DPLH) to finalise the tenure and agreements required to develop the Mardie Port facilities within the new Port of Cape Preston West. Main construction of the Project can only commence when BCI has received approval from the WA Minister for Environment as well as associated secondary approvals and when final tenure and funding have been secured. BCI anticipates all these to be in place by late 2021. 10 Strengthening and safeguarding our team The BCI Management Team has been bolstered in advance of the impending construction and operational phases of the Mardie Project with the appointments of Sam Bennett, Angela Glover and Jim Cooper during the financial year. Sam Bennett joined BCI as Project Director, responsible for contracting and construction activities at Mardie, Angela Glover was appointed Head of Corporate Affairs and is responsible for approvals and local engagement from BCI’s new Pilbara office and Jim Cooper commenced as General Manager Operations leveraging his extensive salt and operating knowledge and experience from his role as General Manager Dampier Salt (Rio Tinto). The health and safety of our workforce is integral to the sustainability of our business. To that end, an external health and safety audit undertaken during the year found that BCI’s Health and Safety Management System is compliant, that it comprehensively addresses current needs and that our site control and activity monitoring systems exceed industry practice in most cases. We also launched the Critical Control Awareness Campaign in 2021 which focused on BCI’s critical risks and fatality prevention. BCI has an excellent safety record and is highly focused on continuing to provide a safe working environment for its staff and contractors as site activities at the Mardie Project increase. There was a single recordable injury during the year, although there was no associated lost time with BCI now 6-years without a lost time injury (LTI). Record Iron Valley earnings The Iron Valley asset has become a more significant source of funding than anticipated with record results posted in the 2021 financial year driven by the sustained strength of iron ore prices. Iron Valley operator, Mineral Resources Limited (ASX:MIN), shipped 6.1Mt of iron ore from the mine, which generated revenue for BCI of A$160.2 million and a record full-year EBITDA of A$69.5 million, a three-fold increase on the previous record of A$23.1 million in the 2020 financial year. Consequently, the Company achieved net profit after tax of A$22.0 million, up substantially on the A$0.4 million in recorded in the 2020 financial year. Outlook With a cash balance of A$79.4 million at 30 June 2021, zero debt and ongoing Iron Valley royalty earnings, BCI is in a strong position to advance the Mardie Project to FID this year. In the interim, BCI intends to continue investing its cash reserves in the Project with construction of embankment trial walls currently underway. The objective for the balance of 2021 is to secure the remaining approvals, tenure, and full A$1.2 billion funding solution for the Mardie Project. That will allow main construction of the multi- generational Project to commence in early 2022. Alwyn Vorster Managing Director 11 With inexhaustible resources and natural energy at the heart of the business, BCI strives for sustainability in the communities and environment in which it operates and to deliver economic benefits for generations to come. 12 SUSTAINABILITY BCI’s Stakeholders Sustainability is a key value at BCI which is delivered through an inclusive and integrated approach to our project development and operations activities. Sustainability is achieved through establishing productive relationships with key stakeholders who underwrite our licence to operate. Sustainable Development Goals The United Nations Sustainable Development Goals (SDGs) are a roadmap for the betterment of society. BCI has prioritised 10 of the 17 SDG targets on which to focus to contribute to achieving these goals as outlined below. BCI’s stakeholders are entities or individuals that can reasonably be expected to be significantly affected by BCI’s activities or whose actions can reasonably be expected to impact BCI’s ability to successfully implement its strategies and objectives. BCI’s stakeholders include: • Local communities • Traditional Owners • Shareholders • Banks/Finance • Customers/Offtake partners • Regulatory authorities/ Government providers/Creditors • Analysts • Employees/Board/ Contractors/Unions • Environmental Groups • Industry participants and associations • Civil society • Media During the reporting period, BCI prepared and implemented its Stakeholder Engagement Management Plan (SEMP) for the Mardie Project. The SEMP provides practical guidance to ensure effective stakeholder engagement that is both consultative in nature and based on the reciprocal sharing of information on the Project, approvals and compliance with various legislative and project development requirements including other agreements with BCI stakeholders. BCI applied a materiality process to inform the scope and level of disclosures identified in this report. Material topics were selected by considering feedback from stakeholders, BCI’s leadership team, subject matter experts and an examination of industry benchmarks. Topics were evaluated and prioritised to ensure the Company’s purpose and strategic focus areas were considered and are covered in the following section of this report. Zero Hunger Mardie will produce high quality soil friendly SOP fertilizer to improve crop quality and yield Gender Equality BCI exceeds industry average benchmarks regarding gender diversity and strives for gender equality Affordable and Clean Energy 99% of project energy derived from natural sun and wind Decent Work and Economic Growth Creation of ~500 construction jobs and 200 ongoing jobs. Indigenous and local contracting prioritised Industry, Innovation and Infrastructure First Australian project to produce SOP from waste salt bitterns; Cyclone rated infrastructure; Sustainable production process Reduced Inequalities Project targets diverse local workforce and will make >$150M native title payments over project life Sustainable Cities and Communities Desalination plant for potable water; Natural sun and wind energy; Quality site accommodation with cultural theme Responsible Consumption and Production Produce salt as input for thousands of consumer goods and SOP fertiliser to increase quality and yield of crops Climate Action Displace energy and emissions intensive production processes used for hard rock salt and SOP production globally Life Below Water Monitor quality of seawater and protect all species where seawater is drawn from and dispersed into the ocean 13 FETY & S A E L P O E P 5. Provide a Safe Environment 1. Harness Renewable Resources E N V I R O N 2. Mitigate Climate Change M E N T & C L I M A T E Sustainability Principles 4. Promote Community Prosperity 3. Maximise Value, Minimise Waste C O M M U NITIES 1. HARNESS RENEWABLE RESOURCES 2. MITIGATE CLIMATE CHANGE Harness renewable natural resources to produce quality products to sustain and improve life on earth. BCI’s primary purpose is to harness renewable natural resources to produce quality products to sustain and improve life on earth. Salt and sulphate of potash (SOP) are the principal products harvested at Mardie. Salt is an essential chemical input for more than 10,000 products including glass, PVC, soaps and pharmaceuticals and is also used for water treatment, for de-icing and in the food industry while SOP is a high value, soil-friendly fertiliser that improves crop quality and yield. Seawater provides an inexhaustible feedstock for salt and SOP production and >99% of the energy used to drive the evaporation process is from clean, natural solar and wind sources. Contribute to climate change mitigation by displacing the energy and emissions intensive production processes used in industrial production globally. BCI recognises the essential role of industry in contributing to emissions reduction. The Paris Agreement’s goal is to limit global warming to well below 2, preferably 1.5 degrees Celsius compared to pre-industrial levels. BCI aims to contribute to climate change mitigation by displacing the energy and emissions intensive production processes used in industrial production globally. Emissions & Climate SALT Salt is an essential chemical input for more than 10,000 products including glass, PVC, soaps and pharmaceuticals and is also used for water treatment, for de-icing and in the food industry. More than 50% of global salt is produced by energy and emissions intensive rock salt mining (21% of global capacity) and solution mining (32% of global capacity). Mardie aims to displace this production with salt produced by solar evaporation of seawater, a process that emits 90% less CO2 than solution mining and 40% less CO2 than rock salt mining. 14 14 BCI SUSTAINABILITY PRINCIPLES | ENVIRONMENT AND CLIMATE Fertilizers are important for agricultural productivity and to reduce soil erosion as crops remove nutrients from the soil. Key nutrients including nitrogen, phosphorus, potassium and sulphur have no substitutes. Therefore, efforts to manufacture these chemicals in a less carbon-intensive manner have an important role to play in enhancing crop yield in the least greenhouse-gas intensive manner. Mardie will be an energy efficient SOP fertilizer producer using a flotation/schoenite process, whereas 50%4 of the global SOP market is supplied by producers using the energy intensive Mannheim process. Furthermore, Mardie’s location at port reduces freight haulage emissions, whereas all domestic peers and many global peers are landlocked and SOP requires trucking to markets. The Asia Pacific region is the largest consumer of salt, representing ~52% of global demand in 2020. Mardie’s portside location on the Pilbara Coast is ideally situated for the APAC market with freight haulage emissions reduced in comparison to landlocked international peers. Sustainability is central to Mardie’s production process with inexhaustible seawater the feedstock whereas rock salt mining, solution mining and the solar evaporation of inland salt lakes deplete finite natural resources. SOP Agriculture is an emissions intensive sector, responsible for more than 12% of global greenhouse gas emissions, with synthetic fertilisers contributing 2.5% of total greenhouse gas emissions through production and use1. In Australia, agriculture accounts for 13.4% of national emissions (2019)2, including 2% driven by fertiliser use (globally 1.5% through application)3. The Australian agricultural industry has a vision (Ag2030) to increase farming sector value from $61 billion to $100 billion by 2030 at a growth rate of 5.4% with greenhouse gas emissions forecast to increase by 12% over that period (2020 estimates)3 as farm production increases to support growing populations 1 2 3 4 2020_IFA_The_SDGs_and_Sustainable_Fertilizer_Production.pdf https://www.industry.gov.au/sites/default/files/April%202021/document/national-inventory-report-2019-volume-1.pdf https://www.industry.gov.au/sites/default/files/2020-12/australias-emissions-projections-2020.pdf Argus Media Limited (Dec 2020) 15 BCI SUSTAINABILITY PRINCIPLES | ENVIRONMENT AND CLIMATE Mardie Production Process 99% Sun and Wind Energy 7 Ocean Going Vessel (up to Capesize) 5 2.4km Jetty 6 Transhipper (12,000t) 3 Primary Salt Crystallisers (16km2) 4 Salt Wash Plant Inexhaustible Seawater Resource BCI SUSTAINABILITY PRINCIPLES | ENVIRONMENT AND CLIMATE Energy Use and Renewables The energy required to process 5.35Mtpa of salt and 140ktpa of SOP is approximately 107,500GWhpa. More than 99% of Mardie’s energy requirement relates to the evaporation process which is driven by natural sun and wind energy. The remaining 1% of energy demand, or 105GWhpa is largely associated with the SOP and salt processing plants, desalination plant and to a lesser extent with harvesting, haulage, and transhipping equipment. The Optimised Feasibility Study (OFS) energy assumptions involve an 18MW gas-fired central power plant and diesel-powered transfer pumps, village and fleet. The OFS case creates an estimated 76.6kt carbon dioxide (CO2) equivalent annually. BCI is developing a strategy to reduce emissions through the use of renewables, diesel substitution and created offsets. A Secondary Salt Crystallisers (6km2) B KTMS Crystallisers (5km2) C SOP Process Plant 2 Evaporation Ponds (88km2) 1 Main Seawater Pump Station (six pumps) 1717 BCI SUSTAINABILITY PRINCIPLES | ENVIRONMENT AND CLIMATE Water The Mardie Project includes the development of seawater intakes, bitterns disposal pipeline and outfall diffuser, trestle jetty export facility, dredge channel, causeway, drainage channels, and desalination (reverse osmosis) facilities. The presence of the causeway, concentrator and crystalliser ponds will result in changes to hydrological regimes, both tidal and overland. BCI has incorporated floodways and culverts into the causeway design, significant drainage corridors into the pond design, and has relocated the development envelopes inland to minimise impacts to tidal regimes within the intertidal zone. As a result the Project is predicted to be able to be developed without significant impacts to hydrological regimes. Unlike many resource projects, Mardie does not involve large scale dewatering, but rather the intake of 160GL of seawater annually, equivalent to 70,000 olympic-sized swimming pools. The evaporation ponds will be located on predominantly barren mudflats, the impermeable clay of the mudflats making ideal pond floors and the windswept, sunbaked habitat perfect conditions for evaporation. Biodiversity The Mardie Project will rely on solar evaporation of seawater to produce high purity salt and SOP product and as such the large-scale inundation of some habitats is unavoidable. Given the location of the Project, BCI has identified that environmental constraints should be the primary input into the design and commissioned initial Benthic Communities and Habitats (BCH) surveys to map the boundaries of significant BCH such as mangroves and algal mats. The Project design was then moved inland by several kilometres in some areas, to significantly reduce impact to mangrove habitat, and the majority of algal mat and coastal samphire habitat. These revisions and refinements included: • Reshaping the western pond walls to target lower-value BCH using detailed BCH mapping • Drainage corridors incorporated into the design between the pond walls to allow surface water flows to reach the marine environment • Reduction in the scale of the southern-most pond to minimise hydrological impacts to Peter’s Creek drainage • Siting proposed Pilbara Port Authority (PPA) infrastructure and the causeway crossing outside areas of significant BCH • The use of a trestle jetty to avoid impacts to offshore coastal processes and intertidal flows • The incorporation of a top-down jetty construction approach to reduce direct disturbance • The incorporation of a specific seawater intake design to reduce intake rates and avoid associated fauna entrapment • The incorporation of a multi-port bitterns outfall diffuser with pre-dilution to minimise water quality impacts • Using a desalination plant instead of groundwater bores • Using a transhipment method to minimise dredging volumes • Using a simple mechanical excavation dredging method instead of a typical cutter-suction dredge. 1818 Effluents & Waste The production process involves the discharge of bitterns into the marine environment on outgoing tides. The bitterns will be diluted prior to discharge by mixing with seawater and discharged through a multi-port diffuser to promote mixing. This discharge will result in unavoidable water quality impacts in the vicinity of the diffuser, however the discharge will be in accordance with industry best practice and forming part of environmental approval. The secondary processing of salt waste bitterns to produce SOP and planned future extraction of magnesium reduces the concentration and salinity of Mardie’s bitterns discharge compared with local salt-only producers. This secondary processing demonstrates BCI’s Sustainability Principle of maximising value and minimising waste, discussed in the following section. Mine Closure & Rehabilitation MARDIE The Mine Closure Plan for Mardie includes the following activities: • Decommission of the concentrator ponds including removing excessive hypersaline material, breaching external walls to restore water movement across the landscape and stabilising closure landforms • Remove hypersaline material from crystalliser ponds, cover and rehabilitate • Reinstating landscape drainage • Recover any hypersaline groundwater plumes, where present • Removal of all processing, conveying/stockpiling and miscellaneous infrastructure • Investigate and remediate sources of contamination • Rehabilitate roads, transport corridors and all other miscellaneous open areas not required by other parties • Remove safety hazards. The Mine Closure Plan has been submitted to the Department of Mines, Industry Regulation and Safety (DMIRS) for assessment and approval and will be reviewed and revised every three years. IRON VALLEY The Mine Closure Plan for Iron Valley includes the following activities: • Restoring the project area to a safe, stable and non- polluting sequence of landforms, capable of supporting native vegetation wherever possible and not posing any hazard to the pre-mining land use of pastoral management • Using waste rock (overburden and low-grade ore) to backfill the mine voids and reduce the formation of saline pit lakes • Contouring remaining above-ground landforms so that they are non-eroding and visually consistent with the surrounding landscape • Ripping and treating disturbed surfaces to encourage the re-establishment of native plant species and the return of endemic fauna • A research and monitoring program to ensure closure activities are successful in achieving the desired end-points The Mine Closure Plan for Iron Valley has been updated by BCI to accommodate the below water table mining of the asset. It has been approved by DMIRS and will be reviewed and revised every 3 years. Under the operating arrangements at Iron Valley, the current operator of the Iron Valley mine must comply with all rehabilitation obligations upon mine closure. 3. MAXIMISE VALUE, MINIMISE WASTE Extract value at every stage of production to maximise economic benefits, minimise waste and preserve ecological and heritage integrity. The circular economy is demonstrated by BCI’s sustainability goal to extract value at every stage of production to maximise economic benefits, minimise waste and preserve ecological and heritage integrity. A circular economy aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources, and designing waste out of the system. There are five existing solar salt operations on the Western Australian coast, but only Mardie will reprocess salt bitterns (waste) to produce SOP. This, together with Mardie’s recycling of brine from its salt wash plant, desalination plant and secondary crystallisers goes some way toward maximising economic benefits, minimising waste while at the same time preserving ecological integrity. In the Australian context Mardie is unique, not just for its coastal location, but because it will be the only SOP producer to use renewable, sustainable seawater as feedstock, whereas domestic peers are depleting finite resources by draining inland lakes and aquifers. Mardie will be also be the only domestic SOP producer to commercialise salt (whereas peers generate ~2.5Mtpa of waste salt on an equivalent SOP production rate). In that same vein of waste reduction, BCI is investigating the reprocessing of spent brine (bitterns) to produce magnesium and bromine, before recycling back into seawater. 19 Mardie will be a multi- generational asset benefiting multiple stakeholders. 20 4. PROMOTE COMMUNITY PROSPERITY Promote prosperity in our communities through work, support programs, government taxes and royalties and native title payments. Mardie will be a multi-generational asset for northern Australia, delivering new multi-user export infrastructure, tax and royalty revenues, local jobs and contracts, and indigenous engagement. This is the very essence of BCI’s sustainability principle to promote prosperity in our communities through work, support programs, government taxes and royalties, and native title payments. Local Communities BCI has cemented and expanded its Pilbara presence with the opening of its regional office in Karratha. Located in “The Quarter HQ” and fitted out by local contractors, the office will comfortably accommodate BCI’s initial local workforce with capacity for additional employees as main construction at Mardie commences. The official opening highlighted the strength of BCI’s community engagement and was attended by approximately 80 guests including government officials, Traditional Owners, local business owners, media, the BCI Board and staff. Procurement Practices The Department of Industry, Science, Energy and Resources (DISER) approved the Mardie Project Australian Industry Participation (AIP) Plan under section 18(1)(a) of the Australian Jobs Act (2013). BCI has implemented amendments to all relevant contracts to ensure the obligations set out in the AIP Plan are known and subsequently met. Of note is the cascading of obligations to Mardie Project contractors and sub-contractors, the priority hierarchy, requirement for a local engagement resource, implementation and use of a procurement portal and local price preference for contracts less than A$1M. BCI incorporates Aboriginal employment and contracting considerations as part of selection criteria in competitive tender processes. The engagement of aboriginal sub- contractors and individuals is appropriately weighted in the tender selection criteria to ensure contractors with aboriginal engagement strategies and a history of aboriginal sub- contractor engagement receive ranking points for having those processes in place. BCI will transparently report against AIP Plan compliance each year. In response to the requirements of the Modern Slavery Act 2018 (Cth), BCI will be releasing its inaugural Modern Slavery Statement by December 2021. The statement will outline the foundational steps BCI will take to identify key risks across our supply chain, operations and investments and undertake risk- based due diligence and preventative actions. BCI SUSTAINABILITY PRINCIPLES | COMMUNITIES Taxes & Royalties Mardie will deliver significant benefits to WA and Australia over its 60+ year life: > $8 BILLION Corporate taxes > $800 MILLION State royalties > $200 MILLION Native title payments Indigenous Peoples & Cultural Heritage BCI has comprehensive native title and heritage agreements in place with its two native title holder stakeholders, the Yaburara and Mardudhunera (YM) People via the Wirrawandi Aboriginal Corporation (WAC) and the Kuruma Mardudhunera (KM) People via the Robe River Kuruma Aboriginal Corporation (RRKAC). BCI recognises the deep connection that Traditional Owners have to the land associated with the Project and Mardie’s Indigenous Engagement Strategy (IES) seeks to document BCI’s collaborative approach to building relationships with Aboriginal stakeholders and intent to ensure informed decision making through regular consultation and proactive information sharing. In addition, the IES was also created to ensure that the Project is sensitive to Aboriginal heritage values and supportive of local communities. Heritage protocols set out how BCI engages with Traditional Owners to identify Aboriginal heritage sites and other heritage values; and ensures that those areas are protected and any impacts mitigated or agreed. Heritage surveys conducted by Traditional Owners have been completed across the Project footprint over the past three years and registered sites and other heritage places have been identified. Further heritage work is being conducted during 2021 over the proposed Port of Cape Preston West land and new optimised project areas. BCI has an established a “Ground Disturbance Permit” system that requires all ground disturbing works to be assessed and approved. As part of the system, all ground disturbing works are matched against agreed project footprints, relevant consents and any heritage and environmental management requirements. If the ground disturbing works are proposing to affect an Aboriginal Site, senior BCI management is required to review the status of all heritage consents, approvals and correspondence from Traditional Owners confirming their non- opposition to ensure that works are only undertaken with the support of the Traditional Owners and compliant with heritage legislation or avoided. The BCI Executive team attended cultural awareness training and rock art appreciation instruction on the Burrup Peninsula during March. A cultural awareness training program with the prescribed body corporate of the Traditional Owners of the Mardie Project will be rolled out for BCI employees and contractors over the course of the year. New directors were provided with a full policy induction and Board briefing sessions were conducted throughout the period on cultural heritage status and issues. 2121 BCI SUSTAINABILITY PRINCIPLES | PEOPLE & SAFETY 5. PROVIDE A SAFE ENVIRONMENT Provide a safe and diverse environment for employees, contractors, suppliers and customers. Coming home safely each day is a basic expectation and BCI is committed to providing a safe and diverse environment for its employees, contractors, suppliers and customers. Health, Safety & Wellbeing BCI is committed to zero harm. We have a strong safety record and are highly focused on continuing to provide a safe and healthy working environment for our employees and contractors as site activities at the Mardie Project increased by more than 150% in the reporting period. BCI recorded 1 Total Recordable Injury (TRI) for this year, and BCI has achieved 6 years without a Lost Time Injury (LTI)5. The early works phase of the Mardie Project has directed significant development in BCI’s formal risk workshop process and critical risk management. Construction risk assessment workshops have been undertaken with key stakeholders to identify the risks and treatment controls required for early works and are continuing in preparation for construction into FY22. A key highlight for BCI was the launch of the Critical Control Awareness Campaign which focused on BCI’s critical risks and fatality prevention. System development of the Health and Safety Management System was a major deliverable with the Health and Safety Management Standards (HSMS) and Critical Control Standards setting governance requirements. This year the INX InControl Health and Safety technology system was implemented which manages incidents, investigations, hazards, audits and inspections. Leading indicators promoting in field health and safety leadership included the development and implementation of leadership interactions with BCI’s executive members. Task based risk assessment tools, such as Take 5 and Job Hazard Analysis, were deployed for site based personnel and contractors. An external health and safety audit was conducted, towards the end of FY21, primarily focused on independently assessing current site activity and BCI’s HSMS against the Mines Safety and Inspection Act 1994, associated regulations and BCI Standards. The key highlights from the audit concluded the HSMS was compliant, well written, comprehensive and addressing current needs and site control and monitoring activities of contractors, was in most cases, exceeding industry practice. The health and wellbeing of BCI staff is of paramount importance and the following measures have been adopted: • Paramedics on site at all times, with a first aid room and equipped ambulance • Pre-employment medicals in place for employees and contractors • Flu Vaccinations available • Alcohol and drug testing conducted on Mardie site • Employee Assistance Program available to all employees. BCI’s pandemic preparedness was tested throughout FY21, with COVID-19 continuing to be a factor. The flexibility to respond to the WA Government health advice for BCI’s head office and Mardie site were key to ensuring the health and safety of our personnel. The continual review and update to BCI’s COVID-19 Management Plan and key controls included reviewing essential workers for site based travel, pre-entry COVID-19 declarations and temperature testing continued throughout the year. Outbreak periods included additional risk mitigations controls such as BCI taking part in the FIFO DETECT program prior to site entry. Working from home was a key requirement during lockdown periods and keeping our teams socially connect to one another was achieved. Diversity and Inclusion As stated in BCI’s People Policy, BCI has committed to: • promote and encourage a workforce culture of respect, diversity, inclusion and a workplace free from discrimination, bullying, victimisation, and harassment; and • Encourage diversity at all levels, regardless of age, gender, ethnicity, marital or family status, sexual orientation, race, cultural background, religious belief, or disability, recognising the benefit of diversity for Company performance and culture. In addition, during the reporting period, BCI also prepared and implemented a Diversity and Inclusion Standard and Plan, which further articulates BCI’s commitment towards fostering, promoting and establishing a culture of diversity and inclusion at every level of its corporate and site culture, including its relationship with stakeholders. Gender diversity is a feature of BCI’s workforce, with female employment of 42% in the Perth Head Office, 100% in the Pilbara Office and 11% at Mardie site in FY21. At senior executive level 33% of the group are female while at manager level and board level the proportions are 28% and 14% respectively. BCI is committed to ensuring that employees with similar skills, knowledge, qualifications, experience and performance are paid equally for the same or comparable work. BCI will remain focussed on pay equity and improving female representation at all levels. Our workforce is predominantly located in Perth, however once the Final Investment Decision is made with regard to the Mardie Project our recruitment will focus on Pilbara local and indigenous communities. As part of BCI’s Indigenous Engagement Strategy (IES), as positions become available at Mardie, BCI or its contractors will provide written notice to the Yaburara and Mardudhunera and Kuruma Marthudunera People through the Implementation Committees or alternate means as soon as is reasonably practicable prior to those positions becoming available. Employment BCI believes that people are the key to the success of the company and acknowledge that meaningful, long-term relationships with the local and Aboriginal communities in relation to the Project are fundamental to maintaining BCI’s licence to operate. BCI seeks to build lasting and sustainable relationships by engaging openly and transparently with community stakeholders to develop and implement programs that deliver mutual benefits across many areas including employment. Significant employment opportunities associated with Mardie Project: • 500 construction jobs • 220 ongoing operating jobs • Additional indirect jobs in the region. LTI defined as per AS1885 and DMIRS definition of lost time injury/diseases = work injury or permanent disability that results in an absence from work for at least one full day or shift any time or shift on which the injury occurred. 5 2222 BCI exceeds industry average benchmarks with gender diversity. 2323 CORPORATE GOVERNANCE BCI Minerals has adopted a Corporate Governance Framework which forms the basis of a comprehensive system of control and accountability for the administration of corporate governance, through its Board, its subcommittees and the executives. The BCI Board is committed to fostering an appropriate culture through administering the policies and procedures with openness and integrity, and pursuing the true spirit of corporate governance commensurate with the Company’s needs. To the extent they are applicable to the Company, the Board has adopted the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (4th edition). BCI’s Corporate Governance Statement is available on the corporate website together with the Company’s: • Code of Conduct • Charters • Policies The Company reviews its Corporate Governance Framework and policies annually to ensure it reflects any changes within the Company, or accepted principles and good practice. Corporate Governance Framework Board of Directors Project Review Committee Company Secretary/ General Counsel Remuneration and Nomination Committee* Audit and Risk Committee** Equity Funding Committee Sustainability Committee C h a r t e r s PRC Charter RNC Charter Board Charter ARC Charter EFC Protocol STC Charter Recommend and Oversee Policies: 6. People Policy & Remuneration Framework Recommend and Oversee Policies: 5. Share Trading Policy 10. Disclosure Policy 11. Shareholder Communications Policy Approve Policies: 1. Code of Conduct 2. Health and Safety Policy 3. Risk Management Policy 4. Environment and Community Policy 5. Share Trading Policy 6. People Policy 7. Privacy Policy 8. Whistleblower Policy 9. Anti-Bribery and Corruption Policy 10. Disclosure Policy 11. Shareholder Communications Policy Managing Director/ Chief Executive Officer Recommend and Oversee Policies: 1. Code of Conduct 3. Risk Management Policy Recommend and Oversee Policies: 2. Health and Safety Policy 4. Environment and Community Policy 6. People Policy (subset) 7. Privacy Policy 8. Whistleblower Policy 9. Antibribery and Corruption Policy P o l i c i e s P r o c e d u r e s G u d e i l i n e s >100 Guidelines and Procedures to Ensure Compliance with Policies Project Review Committee Remuneration and Nomination Committee Audit and Risk Committee Equity Funding Committee Sustainability Committee Garret Dixon Jenny Bloom Michael Blakiston Michael Blakiston Chris Salisbury Chris Salisbury Alwyn Vorster Garret Dixon Alwyn Vorster Brian O’Donnell Richard Court Jenny Bloom Richard Court Garret Dixon Chris Salisbury Alwyn Vorster Richard Court Alwyn Vorster Chair Members 24 5x5 Risk Matrix Almost Certain Likely Possible Unlikely Rare Insignificant 5 4 3 2 1 Minor 10 8 6 4 2 Consequence Medium Major Severe 15 12 9 6 3 20 16 12 8 4 25 20 15 10 5 d o o h i l e k i L Risk Management BCI manages its activities within budgets and operational and strategic plans. BCI acknowledges that there is risk associated with all business activity and the Board works with senior management to safeguard assets and to ensure that business risks are identified and appropriately managed. Licence to Operate BCI’s commitment to sustainable business practices are imbedded through our values and founded in the various legislative requirements, approvals held or to be held by BCI, and contractual rights and benefits granted to BCI under agreements with third parties. The Company aims to drive an effective risk management culture by establishing a process for regular review of business activities to objectively assess and identify risks in the conduct of the business, recording risks in a risk register and where appropriate, implement preventative and mitigating controls, to reduce residual risk. BCI’s risk profile is actively managed by undertaking: • Monthly Risk & Compliance Report prepared by BCI’s Risk Manager and reported to the Managing Director and Board • Regular review of the risk registers reported to the Audit & Risk Committee • Implement a quarterly risk identification exercise to be undertaken by management • Document all risks with a potentially high impact on a risk register which is reviewed by senior management on a monthly basis • Risk assessments are conducted for key business activities • Bi-annual review of the risk management activities by the Audit & Risk Committee • Quarterly oversight of sustainability related activity through the dedicated Sustainability Committee. BCI is committed to preserving its licence to operate and ensuring compliance with the licence to operate obligations relating to matters such as: • land access and native title • heritage protection • tenure compliance • environmental compliance • pastoral access • community engagement • stakeholder engagement • other legislative requirements relevant to BCI’s business and the Project. A culture of care and high-quality performance is the goal, with a target of zero material breaches of BCI policies and its licence to operate obligations. Monthly compliance reviews are carried out against BCI’s licence to operate with the obligation owner and any breaches are then reported in the Risk & Compliance Report which is then incorporated into the monthly Managing Director’s Report and reported to the Board. There were no material breaches of BCI’s licence to operate during the reporting period. 25 DIRECTORS’ REPORT The Directors present their report on the results of the Consolidated Entity (referred to hereafter as the Company) consisting of BCI Minerals Limited (“BCI”) and the entities it controlled at the end of, or during the year ended 30 June 2021. Principal Activity The principal activities of the Company during the course of the financial year were the development of assets in the Pilbara region of Western Australia, primarily focused on the Mardie Salt and Potash Project and Iron Valley Iron Ore Mine. There has been no significant change in the nature of the Company’s activities during the financial year. Directors The names of directors of the Company in office during the financial year and up to the date of this report are: Brian O’Donnell Chair (Non-Executive) Managing Director (Executive) Alwyn Vorster Jenny Bloom Director (Non-Executive) Michael Blakiston Director (Non-Executive) Director (Non-Executive) Garret Dixon Director (Non-Executive) Richard Court Director (Non-Executive) Chris Salisbury Mr Richard Court was appointed as a Director of the Company on 28 January 2021. Mr Chris Salisbury was appointed as a Director of the Company on 28 May 2021. 26 Directors’ Qualifications, Experience and Special Responsibilities Mr Brian O’Donnell B Com, FCA, MAICD Chair (Non-Executive) appointed October 2014 Period of office at August 2021 – 6 years and 10 months In addition to being Chair of BCI, Mr O’Donnell is Director, Finance and Investments for the Australian Capital Equity Pty Limited (ACE) group, which includes BCI’s largest shareholder, Wroxby Pty Ltd. He is a director of various ACE group companies, including companies active in the property, agricultural, financial services and investment sectors. Mr O’Donnell is a non-executive director of Bravo Holdco Pty Ltd (the holding company for Hive and Wellness Australia Pty Ltd - formerly Capilano Honey Limited), SocietyOne Holdings Pty Ltd, the West Australian Football Commission and The Guide Dog Foundation Pty Ltd (WA). He is a former director of Iron Ore Holdings Limited, Coates Group Holdings Pty Ltd, WesTrac Pty Ltd, Landis & Gyr AG, Fremantle Football Club Ltd and YMCA of Perth Inc. He is a Fellow of the Institute of Chartered Accountants and has 35 years’ experience in the finance and investment industry. Mr O’Donnell is a member of the Audit and Risk Committee. Mr Alwyn Vorster BSc (Hons) Geology, MSc (Mineral Economics) and MBA Managing Director appointed 22 September 2016 Period of office at August 2021 – 4 years and 11 months Mr Vorster commenced as Chief Executive Officer of BCI in May 2016 and was appointed as Managing Director in September 2016. He has more than 25 years’ experience with numerous large mining houses in technical and commercial management roles covering the total supply chain from mine to market for iron ore, coal and other minerals. Recent roles include Group Executive Mining at Australian Capital Equity Pty Limited (ACE), Chief Executive Officer of API Management and Managing Director of Iron Ore Holdings Ltd. Mr Vorster is a member of the Remuneration and Nomination Committee, Project Review Committee, and Sustainability Committee. Ms Jenny Bloom Grad. Dip Business Administration, GAICD Director (Non-Executive) appointed March 2017 Period of office at August 2021 – 4 years and 5 months Ms Bloom has an extensive business background with experience in the public and private sectors in Western Australia and Victoria. She was most recently the Deputy Chair and Member of the Waste Authority Western Australia for eight years and was a member of the Program and Risk Committee. She is a non-executive director of Breaking the Silence (Inc) and is a director of various private businesses. Ms Bloom previously held an elected position as a Councillor and Deputy Shire President for the Shire of Broome and as an independent director of a Broome based Aboriginal Corporation. Ms Bloom is Chair of the Remuneration and Nomination Committee. Mr Michael Blakiston B. Juris Director (Non-Executive) appointed March 2017 Period of office at August 2021 – 4 years and 5 months Mr Blakiston is a partner in Gilbert + Tobin’s Energy and Resources group. He has over 30 years’ experience across a range of jurisdictions. He advises in relation to asset acquisition and disposal, project structuring, joint ventures and strategic alliances, development agreements and project commercialisation, capital raisings and company merger and acquisitions. Mr Blakiston has served on numerous ASX listed companies and not-for-profit boards and is currently the Chair of Precision Opportunities Fund Ltd, a specialist small to medium cap fund. Mr Blakiston is the Chair of the Audit and Risk Committee. Mr Garret Dixon Director (Non-Executive) appointed 18 June 2020 Period of office at August 2021 – 1 year and 2 months Mr Dixon has over 40 years of industry experience in the areas of mining, construction, contracting, civil engineering and bulk commodity logistics. Until recently, Mr Dixon held the position of Executive Vice President and President Bauxite of NYSE listed Alcoa Corporation, where he was responsible for the global bauxite mining business including seven bauxite mines on various continents. His other experience includes positions as a Non-Executive Director of Watpac Limited, Managing Director at Gindalbie Metals Limited and Executive General Manager for Henry Walker Eltin (HWE). Mr Dixon is a member of the Remuneration and Nomination Committee and Chair of the Project Review Committee. Mr Richard Court Director (Non-Executive) appointed 28 January 2021 Period of office at August 2021 – 8 months Mr Court had served as Australia’s Ambassador to Japan from 2016 to 2020. He was also Premier and Treasurer of Western Australia from 1993 to 2001. His other previous corporate experience includes Chair of GRD Ltd, Chair of Iron Ore Holdings Ltd, Chair of National Hire Ltd, Chair of RISC Advisory Pty Ltd and Director of WesTrac Equipment Pty Ltd. During the year ended 30 June 2021, Mr Court was appointed as a member of the Audit and Risk Committee and the Sustainability Committee. Mr Chris Salisbury Director (Non-Executive) appointed 28 May 2021 Period of office at August 2021 – 4 months Mr Salisbury is a metallurgical engineer with more than 30 years of operational experience across a diverse range of commodities. From 2016 to 2020, he was Chief Executive at Rio Tinto Iron Ore responsible for optimising operations, developing and implementing the company’s climate change program and improving safety culture and operational performance of a team comprising ~20,000 employees and contractors, across a network of 16 mines, 4 ports and other significant infrastructure. In this role, he was also responsible for the management of Rio Tinto’s salt business (Dampier Salt) which has the capacity to produce 10Mt of industrial salt per annum from 3 operations. During the year ended 30 June 2021, Mr Salisbury was appointed as Chair of the Sustainability Committee and a member of the Project Review Committee. Company Secretary Ms Susan Park BCom, ACA, F Fin, FGIA; FCG; GAICD Joint Company Secretary appointed July 2018 Ms Park has over 24 years’ experience in the corporate finance industry and extensive experience in company secretarial and non-executive director roles with ASX, AIM and TSX listed companies. Ms Park is currently Company Secretary of several ASX listed companies. Mrs Stephanie Majteles LLB(Hons), GAICD Joint Company Secretary appointed 30 June 2021 Mrs Majteles has over 18 years’ experience in the projects and resources industries, with significant experience at both a top tier law firm and in-house at a large global resources company. 27 Meetings of Directors The number of meetings held during the year and the number of meetings attended by each director was as follows: Board Audit and Risk Committee1 Remuneration and Nomination Committee2 Project Review Committee3 Sustainability Committee4 Total Number of Meetings B O’Donnell A Vorster M Blakiston J Bloom G Dixon R Court5 C Salisbury6 Held Attended Held Attended Held Attended Held Attended Held Attended 11 11 11 11 11 5 2 11 11 11 11 10 5 2 4 - 4 - - - - 4 - 4 - - - - - - - 4 4 - - - - - 4 4 - - - 9 - - 9 - - - 9 - - 9 - - - - - - - - - - - - - - - - 1 Members of the Audit and Risk Committee during the financial year ended 30 June 2021 were M. Blakiston (Chair), B. O’Donnell (Member) and R. Court (Member) from date of appointment. 2 Members of the Remuneration and Nomination Committee during the financial year ended 30 June 2021 were J Bloom (Chair) and G. Dixon (Member). A. Vorster was also appointed to this committee as a member on 24 June 2021. 3 Members of the Project Review Committee during the financial year end 30 June 2021 were G. Dixon (Chair), A. Vorster (Member) and C. Salisbury (Member) from date of appointment. 4 The Board resolved to form a Sustainability Committee on 27 May 2021. Members of this committee are C. Salisbury (Chair), R. Court (Member) and A. Vorster (Member). There were no meetings of this committee held during the financial year ended 30 June 2021 5 R Court was appointed as an independent Non-executive Director of the Company on 28 January 2021. 6 C Salisbury was appointed as an independent Non-executive Director of the Company on 28 May 2021. Corporate Governance In recognising the need for high standards of corporate behaviour and accountability, the Directors of BCI Minerals Limited support and have adhered to the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. The Company’s detailed corporate governance policy statement can be found on the Company’s web site at www.bciminerals.com.au. Directors’ Interests and Benefits The relevant interest of each director in the shares, Performance Rights and options over shares issued by the Company at the date of this report is as follows: Director B O’Donnell A Vorster M Blakiston J Bloom G Dixon R Court C Salisbury Total Ordinary shares Performance Rights Share Rights Direct Indirect Direct Indirect Direct Indirect - - - 90,000 - - - 1,014,483 5,305,645 - - - 750,000 - - - - 295,313 5,304,209 168,750 168,750 - - - - 178,125 - - 90,000 7,070,128 168,750 5,946,397 - - - - - - - - - 855,798 - - - - - 855,798 Dividends No dividends have been declared in relation to the year ended 30 June 2021 (June 2020: Nil). Rounding of amounts The Company is of a kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. 28 Review of Operations BCI is an Australian-based company that is developing a salt and potash business supported by iron ore royalty earnings. Safety performance BCI places a high priority on facilitating a safe working environment for all staff and contractors. During the year ended 30 June 2021, one incident resulting in a Recordable Injury occurred and the Total Recordable Injury Rate (“TRI”) for the year was 1.0 (2020: 0.0). No lost time injuries (“LTIs”) were recorded for the year and the lost time injury frequency rate (“LTIFR”) was zero (June 2020: 0.0). Mineral Resources Limited is responsible for Occupational Health and Safety matters at Iron Valley and therefore BCI does not report safety performance for the Iron Valley site. Operations Mardie Salt & Potash Project During the financial year, BCI’s focus at the 100% owned Mardie Salt & Potash Project was on completing the Optimised Feasibility Study (‘OFS’) and progressing the funding, approvals, tenure and offtake aspects of the Project and progressing enabling works. Optimisation results of the Mardie Definitive Feasibility Study (‘DFS’) were released on 21 April 2021, outlining improved project footprint and economics. The optimisation delivers a ~20% increase in salt production (from 4.4Mtpa to 5.35Mtpa) and SOP production (from 120ktpa to 140ktpa), a ~30% increase in annual EBITDA (from A$197M to A$260M) and a ~40% increase in Pre- tax Project NPV7 (from A$1,197M to A$1,670M) compared to the DFS announced on 1 July 2020. In addition, de-risking activities conducted during the optimisation phase (including additional geotechnical work, flowsheet and equipment design, process piloting and progress with funding) have increased confidence in Mardie estimates and value potential. The optimisation results confirm Mardie can become a Tier 1 asset categorised by its long life (minimum 60 years), top quartile scale, lowest quartile salt operating costs (after SOP by-product credits) and high-quality salt and SOP products. With attractive financial returns over many decades and future expansion potential from the new tenements, development of the Mardie Project should result in considerable long-term value and dividends being created for shareholders. Project funding was significantly advanced during the year with the Federal Government’s Northern Australia Infrastructure Facility (‘NAIF’) approving a 15-year A$450M loan for the Mardie Project in December 2020. The NAIF loan will sit alongside other debt tranches with a number of commercial banks and other lenders progressing through credit approval processes. BCI raised A$47.9M of equity at an issue price of A$0.24 per share via a 1 for 2 accelerated non-renounceable Entitlement Offer in the first half of FY21. Strong support was received from BCI’s existing major shareholders, providing excellent endorsement for the Mardie Project and BCI’s development plans. The proceeds of the equity raising facilitated early construction works at Mardie, including the expansion of the accommodation village, access road upgrades, improved communications, establishment of construction water supply and storage, installation of fuel storage facilities, and an embankment wall trial. Important progress was made during the year with regard to the approvals and tenure required for the development of Mardie. The Western Australian Environmental Protection Authority (‘EPA’) recommended to the WA Minister for Environment that the Mardie Project can be implemented as proposed in the Environmental Review Document (‘ERD’), subject to certain conditions which are materially consistent with BCI’s designs, costings and implementation plans as outlined in its initial Definitive Feasibility Study. Following the completion of the final public appeals process, the Minister will consult with other WA Government departments before making a decision. Main construction of the Project can only commence when BCI has received the Ministerial approval as well as associated secondary approvals. BCI continues to work closely with the Pilbara Ports Authority (‘PPA’) and the Department of Planning, Lands and Heritage (‘DPLH’) to finalise the tenure and agreements required to develop the Mardie Port facilities within the new Port of Cape Preston West. Engagement with potential buyers of Mardie’s salt and SOP products continued over the course of the year with two additional non-binding Memoranda of Understanding (‘MOUs’) signed with Chinese chemical companies for up to 0.5Mtpa salt. 16 MOUs are now in place covering 100% of 3-year salt production and 80% of 3-year SOP production. BCI will aim to convert these non- binding MOUs to binding offtake contracts in support of financing milestones within the next 18 months. With key funding, approvals and tenure elements substantially advanced, BCI is targeting a Final Investment Decision for the Mardie Project in the second half of 2021. 29 Iron Valley Iron Ore Mine The Iron Valley Mine is operated by Mineral Resources Limited (“MIN”) under an ore purchase agreement with BCI. MIN operates the mine at its cost and purchases iron ore from BCI at the mine gate at a price linked to MIN’s received sales price. BCI is responsible for paying third party royalties and securing key approvals. During the March 2021 quarter, BCI completed payment of the $25M rebate as per the agreement between MIN and BCI announced during the prior year. The 40% rebate represents BCI’s contribution to the additional capital investment required for waste stripping and infrastructure upgrades at the Iron Valley mine that are expected to prolong the life of the mine and reduce operating costs. During the financial year MIN shipped 6.1 million wet metric tonnes (“M wmt”) (June 2020: 6.7 M wmt), which generated revenue for BCI of $160.2M (June 2020: $76.8M) and EBITDA of $69.5M (June 2020: $23.0M). Iron Valley Shipments (M wmt) Iron Valley EBITDA ($M) 8 6 4 2 0 FY16 FY17 FY18 FY19 FY20 FY21 70 60 50 40 30 20 10 0 FY16 FY17 FY18 FY19 FY20 FY21 Other Assets BCI has an interest in the Carnegie Potash Project, an SOP exploration project located approximately 220km north-east of Wiluna. BCI currently owns 30% in a joint venture with Kalium Lakes Limited (“KLL”) and has rights to earn up to a 50% interest. KLL, the joint venture manager, continues to focus on securing tenure and access to all required tenements. Environmental Regulation BCI is committed to minimising its environmental impact, with an appropriate focus on continuous monitoring of environmental matters and compliance with environmental regulations. BCI’s exploration, mining and development activities are the subject of various State and Commonwealth environmental regulations. Compliance with these environmental regulations is managed through the Environment and Social Management System (“ESMS”) and a series of other tools used to identify, analyse and control key risks associated with the environmental impact from the Company’s activities. A compliance program is implemented on an annual basis to ensure appropriate records are being maintained and periodic reviews (inspections and audits) are conducted to assess performance against regulatory conditions and the requirements of the ESMS. During the year, BCI submitted a number of reports and compliance statements to State regulatory bodies detailing BCI’s performance against granted approvals. This includes all Annual Environmental Reports and Annual Compliance Reports, which were all submitted on time and endorsed by the regulators. There have been no material breaches of the Company’s licences, permits and approvals during the financial year. 30 Review of Results Statement of profit or loss The Company’s profit after income tax for the financial year ended 30 June 2021 was $22.0M (June 2020: $0.4M) arising due to increased royalty returns realised from the Iron Valley Mine. The following table provides a summary of the Company’s statement of profit or loss: Revenue EBITDA Interest, tax, depreciation and amortisation Impairment of assets Net profit/(loss) after tax 30 June 2021 $M 30 June 2020 $M 160.5 28.9 (4.7) (2.2) 22.0 77.2 8.3 (2.9) (5.0) 0.4 The Company’s EBITDA for the financial year ended 30 June 2021 was $28.9M (June 2020: $8.3M), which incorporates a positive EBITDA from Iron Valley of $69.5M (June 2020: $23.0M) and increased investment in the Mardie project of $34.5M. The following table shows the EBITDA contribution for each segment of the Group: Iron Valley Gains from divestments Mardie Other Total EBITDA Statement of cash flows 30 June 2021 $M 30 June 2020 $M 69.5 - (34.5) (6.1) 28.9 23.0 10.2 (18.7) (6.2) 8.3 Cash and cash equivalents as at 30 June 2021 increased to $79.4M (June 2020: $41.5M) with the positive movement resulting from the $47.9M capital raising completed in the year, increased receipts from Iron Valley and inflows from divestment of assets. Statement of financial position Net assets increased to $172.7M (June 2020: $104.1M) primarily due to the increase in cash and receivables held by the Group from the capital raising completed and net profit achieved during the year. Dividends The Directors have not paid or declared any dividends since the commencement of the financial year ended 30 June 2021. (a) out of the profits for the year ended 30 June 2020 and retained earnings on fully paid ordinary shares (b) out of the profits for the year ended 30 June 2021 and retained earnings on fully paid ordinary shares. Corporate 2021 Nil Nil 2020 Nil Nil Annual General Meeting The Company’s annual general meeting was held in Perth on 26 November 2020. All ten resolutions considered at the meeting were passed. 31 Performance Rights and Share Rights As at the date of this report, there were 13,253,241 Performance Rights and 2,456,005 Share Rights on issue to Directors and Employees under the Performance Right Plan and Share Right Plan, both approved at the November 2019 AGM (30 June 2020: Performance Rights 11,000,000 and Share Rights 1,445,348). During the financial year, 2,805,000 performance rights vested while 2,695,000 performance rights lapsed. Subsequent to the year end, a total of 2,301,146 share rights vested. Refer to the Remuneration Report for further details of Performance Rights and Share Rights outstanding. No Performance Right or Share Right holder has any right to be provided with any other share issue of the Company by virtue of their Performance Rights or Share Rights holding. None of the Performance Rights or Share Rights are listed on the ASX. Shares issued as a result of conversion of performance rights and share rights During the financial year, 816,000 ordinary shares were issued following conversion of performance rights that vested during the year. Subsequent to year end, the Company has issued 361,337 ordinary shares following the conversion of share rights. Since the end of the financial year, the Company has not issued any ordinary shares following conversion of performance rights. Likely Developments and Expected Results The Company will continue enabling works at Mardie with a Final Investment Decision expected in the second half of 2021, triggering the finalisation of funding arrangements and the commencement of main construction. BCI expects ongoing revenue and EBITDA from Iron Valley during the 2022 financial year. The Company may also receive residual compensation and royalties following the divestment of assets last financial year. Significant Changes in State of Affairs There were no significant changes in the Company’s state of affairs not otherwise included in this report. Matters Subsequent to the Reporting Date Other than disclosed above, no matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in financial periods subsequent to the financial year ended 30 June 2021. Audit Independence and Non-Audit Services Auditor’s Independence Declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is attached to the independent auditor’s report and forms part of the Directors’ Report. Non-audit services For the year ended 30 June 2021 the Board of Directors is satisfied that the auditor, BDO Audit (WA) Pty Ltd, did not provide any non-audit services to the Company, as set out in Note 25 to the Financial Statements, that compromised the auditor independence requirements of the Corporations Act 2001. Signed in accordance with a resolution by the Directors. Brian O’Donnell Chairman Perth, Western Australia 19 August 2021 Alwyn Vorster Managing Director Perth, Western Australia 19 August 2021 32 REMUNERATION REPORT The Remuneration Report outlines the remuneration arrangements in place for Directors and other Key Management Personnel (“KMP”) of the Company in accordance with section 308 (3c) of the Corporations Act 2001. For the purpose of this report the KMP are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any directors of the Company. Directors B O’Donnell M Blakiston J Bloom G Dixon R Court Non-executive Chair Non-executive Director Non-executive Director Non-executive Director Non-executive Director (Appointed 28 January 2021) C Salisbury Non-executive Director (Appointed 28 May 2021) Executive Directors and Executives A Vorster S Hodge S Bennett Managing Director Chief Financial Officer Project Director (Appointed 16 November 2020) Remuneration and Nomination Committee The Remuneration and Nomination Committee (“RNC”) is a committee of the Board comprised of two independent Non- Executive Directors, being Ms Bloom (Chair) and Mr Dixon. On 1 July 2021, Mr Vorster was appointed to the committee. The role of the RNC is to assist the Board to fulfil its responsibilities with respect to employee and director remuneration, and board composition and diversity, by making recommendations to the Board on: • The Company’s People Policy which sets out the Company’s approach to Remuneration, Diversity and Privacy; • A Remuneration Framework which enables the Company to attract, retain and motivate high quality senior executives who create value for shareholders; and • The selection, composition, performance and appointment of members of the Board so that it is effective and able to operate in the best interests of shareholders. Remuneration Framework The Remuneration Framework of the Company aims to: • Reward employees fairly and responsibly in accordance with the Australian market; • Provide competitive performance based rewards that attract, retain and motivate employees; • Ensure incentives provide fair reward in line with company and individual performance to deliver on the current and long term strategic objectives; and • Ensure a level of equity and parity across BCI and alignment with BCI’s culture while providing opportunity to recognise expertise and individual performance. Non-Executive Director Remuneration Fees and payments to Non-Executive Directors reflect the demands which are made on, and the responsibilities of, the Directors and are reviewed annually by the Board. The Chairman is not present at any discussions relating to determination of his own remuneration. Directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $900,000 in aggregate and was approved by shareholders at the annual general meeting on 19 November 2014. This amount is separate from any specific tasks the directors or their related entities may take on for the Company. Fixed Remuneration Non-Executive Directors’ fixed remuneration comprise the following: • Cash remuneration; and • Superannuation. 33 Executive Remuneration The objective of the Company’s executive remuneration is to ensure reward for performance is market competitive and appropriate for the results delivered. The executive remuneration is aligned with achievement of strategic and project objectives and the creation of value for shareholders. The Board ensures that executive reward satisfies the following key criteria in line with appropriate corporate governance practices: • Competitiveness and reasonableness; • Acceptability to shareholders; • Performance linkage/alignment of executive compensation; • Transparency; and • Prudent capital management. Fixed Remuneration The components of executives’ fixed remuneration are determined individually and may include: • Base Salary; • Superannuation; and • Insurances, parking, professional development support and other benefits. Variable Remuneration Short-term Incentives Executives listed in this report may receive a short-term incentive (“STI”) of up to 50 - 70% of their annual fixed remuneration. The STI is an “at risk” component of remuneration and payment may, at the Board’s discretion, be in cash and/or equity. Measurement is based on performance against annually agreed key performance indicators (“KPIs”). These KPIs will typically be aligned to achievement of specific project and corporate objectives in relation to each financial year. For the 2021 financial year, the Board exercised its discretion to award an STI based on the KPIs achieved during the year. Executive KMP were in aggregate awarded an STI cash incentive of $242,326 (21% of their aggregate annual salary) with an additional award of Share Rights valued at $242,326 (21% of aggregate annual salary). The STI cash incentive is recorded as an expense incurred by the Company during the financial year ended 30 June 2021 with the cash payment to Executives occurring post year-end in the 2022 financial year. Subsequent to year end, a total of 249,677 share rights were granted to KMP under the approved Share Right Plan and a further 262,431 Share Rights may be granted subject to approval at the next AGM of the Group. Rights granted are subject to a vesting period over which the fair value of such rights will be expensed. For the 2020 financial year, the Board exercised its discretion to award an STI based on the KPIs achieved during year. Executives listed in this report were, in aggregate, awarded an STI cash incentive of $260,182 (21% of their aggregate annual salary) with an additional award of Share Rights valued at $261,000 (21% of aggregate annual salary). The STI cash incentive was recorded as an expense incurred by the Company during the financial year ended 30 June 2020 with the payment to Executives occurring during the 2021 financial year. Subsequent to the 2020 financial year end, a total of 1,654,543 Share Rights were granted to KMP under the approved Share Right Plan. Rights granted are subject to a vesting period over which the fair value of such rights will be expensed. Long-term Incentives Longer term incentive awards occur through the Performance Rights Plan (“PRP”) and the Share Rights Plan (“SRP”) which both form part of an “at risk” component of remuneration. Performance Rights generally have a vesting period longer than one year. Performance hurdles are primarily based on company share price and/or other relevant shareholder return measures. The PRP and SRP operate entirely at the discretion of the Company’s Board and may be terminated, suspended or amended at any time, or from time to time, in their entirety or in part in relation to any or all employees (except where contractual rights have been created). During the year ended 30 June 2021 the Company granted Performance Rights and Share Rights to Directors and Employees subject to the following performance and vesting conditions: Share Rights Performance Rights Test Date n/a Vesting Date 4 August 2021 1 July 2022 1 July 2023 Performance Period n/a 1 July 2020 to 1 July 2022 plus an additional 1 year tenure period. Vesting or Performance Conditions Vesting of the Share Rights is subject to the continuation of employment until 30 June 2021. Conversion Period Vested Share Rights must be converted on or before 4 August 2023. Shares issued upon conversion of the Share Rights are subject to a 12 month hold lock from the vesting date. 34 Performance conditions are: a) Total shareholder return (TSR) over the period (50% weighting): • Below 10% annual TSR, zero PRs vest. • From 10% up to 20% annual TSR, proportionate vesting of 0% to 100%. • 20% and above TSR, 100% vest. b) Relative TSR to peer group over the period (50% weighting): • Below 50th percentile, zero PRs vest. • Between 50th and 75th percentile, proportionate vesting from 50% to 100%. • Equal to or above 75th percentile, 100% vest. Vested Performance Rights must be converted on or before 30 June 2025. Shares issued upon conversion of Performance Rights are subject to a 12 month hold lock from vesting date. Subsequent to year end, a total of 868,188 Performance Rights were granted to KMP under the approved Performance Right Plan and 1,110,118 Performance Rights may be granted to Directors subject to approval at the next AGM of the Group. Rights granted are subject to a vesting period over which the fair value of such rights will be expensed. Use of Remuneration Consultants The Board and Remuneration Committee (“RNC”) reviews executive remuneration annually, including assessment of: • Individual and business performance measurement against both internal targets and appropriate external comparatives; and • General remuneration advice from both internal and independent external sources. In the relevant financial year, the Board engaged BDO Reward (WA) Pty Ltd (BDO) as an external remuneration consultant to provide a comprehensive benchmarking review of Board fees, Managing Director and Executive Remuneration. This review included an analysis of market remuneration in comparison to a relevant peer and competitor group and assistance with the development of company specific pay scales, including executive remuneration. BDO was paid or accrued $37,500 for these services. An agreed set of protocols were established to ensure that the remuneration recommendations would be free from undue influence by key management personnel. These protocols include requiring that the consultant not provide any information relating to the outcome of the engagement to the affected key management personnel. In addition, the consultant provided separate reports covering each element of the review, to ensure RNC discussion of recommendations could be made in the absence of the affected key management personnel. The Board was required to make inquiries of the consultant’s processes at the conclusion of the engagement to ensure that it is satisfied that any recommendations made have been free from undue influence. The Board is satisfied that these protocols were followed and as such there was no undue influence. Findings from the review were developed for implementation in FY22. Industry remuneration data has been sourced through Remsmart for the benchmarking of new positions and projected industry market movements. Share Trading Policy The trading of shares by all employees is subject to, and conditional upon, compliance with the Company’s share trading policy which is available on the Company’s website: www.bciminerals.com.au. Directors and employees may not engage in short-term or speculative trading of the Company’s securities and are prohibited from trading in financial products issued or created over, or in respect of the Company’s securities during a non-trading period. Service Agreements The remuneration and other terms of employment for executive KMP are covered in formal employment contracts. The key terms of their employment contracts, at the date of release of this report, are shown in the table below. Name Terms/Notice periods/Termination payment A Vorster (Managing Director) S Hodge (Chief Financial Officer) S Bennett (Project Director) Base salary inclusive of superannuation of $671,000 reviewed at intervals to be determined by the Company. Employment can be terminated at three months’ notice by Mr Vorster or by the Company. If the Company elects to terminate the employment agreement for reasons other than Mr Vorster’s gross misconduct or default, Mr Vorster will be entitled to a payment equal to six months’ total fixed remuneration. Certain agreed trigger events will lead to Mr Vorster having the option to terminate the contract and receive a payment equal to twelve months’ total fixed remuneration. Base salary inclusive of superannuation $359,889 reviewed at intervals to be determined by the Company. Employment can be terminated at twelve weeks’ notice by Mr Hodge or by the Company. Certain agreed trigger events will lead to Mr Hodge having the option to terminate the contract and receive a payment equal to six months’ total fixed remuneration. Base salary inclusive of superannuation $504,999 reviewed at intervals to be determined by the Company. Employment can be terminated at three months’ notice by Mr Bennett or by the Company. Certain agreed trigger events will lead to Mr Bennett having the option to terminate the contract and receive a payment equal to six months’ fixed remuneration 35 Remuneration of Directors and Key Management Personnel for the Year Ended 30 June 2021 The remuneration table below sets out the remuneration information for the directors and executives, which includes the managing director, who are considered to be KMP of the Company. Short Term Post Employment Share Based Payments Salary and fees $ Incentives(a) $ Other benefits(b) $ Super- annuation $ Performance & Share Rights(c) $ Termination Payment $ Total $ Performance Related (d) % - - - - - - - - - 150,381 85,932 85,932 93,305 25,500 7,177 448,227 959,535 526,760 6 6 6 6 0 0 5 44 33 29 9 33 29 141,750 73,973 73,973 80,456 23,288 6,554 399,994 - - - - - - - - - - - - - - - 7,027 7,027 7,643 2,212 623 8,631 4,932 4,932 5,206 - - 24,532 23,701 Directors B O’Donnell M Blakiston J Bloom G Dixon R Court(e) C Salisbury(f) Executives A Vorster S Hodge 499,300 134,018 313,836 65,028 A Chamberlain(g) 321,570 116,966 S Bennett(h) 285,725 - 16,399 12,443 9,343 5,214 25,000 25,000 22,917 14,583 284,818 110,453 81,309 133,366 685,471 29,226 - 334,748 1,420,431 316,012 43,399 87,500 505,806 133,366 2,506,514 TOTAL 1,820,425 316,012 43,399 112,032 529,507 133,366 2,954,741 (a) Short term incentives paid during the financial year relate to performance in the previous financial year. Please refer to section on short-term incentive payments above. (b) Other benefits include fuel, parking and insurances. Directors’ and Officers’ liability premiums have not been allocated to individual directors. (c) Share-based payments represent the accounting expense incurred by the Company for the stated financial period, reflecting the terms of the Performance Rights as valued using a Monte Carlo simulation and Share Rights valued using market pricing at time of issue. (d) Percentage performance related is the sum of short-term incentives and share based payments divided by total remuneration, reflecting the actual percentage of remuneration at risk for the year. Note that short-term incentives are reported in the year in which they are paid but relate to performance in previous reporting periods. (e) Appointed 28 January 2021. (f) Appointed 28 May 2021. (g) Resigned 31 May 2021. (h) Appointed 16 November 2020. 36 Remuneration of Directors and Key Management Personnel for the Year Ended 30 June 2020 The remuneration table below sets out the remuneration information for the directors and executives, which includes the managing director, who are considered to be KMP of the Company. Short Term Post Employment Share Based Payments Salary and fees $ Incentives(a) $ Other benefits(b) $ Super- annuation $ Performance Rights(c) $ Termination Payment $ Total $ Performance Related (d) % Directors B O’Donnell M Blakiston J Bloom G Dixon(e) Executives A Vorster S Hodge 132,527 82,192 69,863 - 284,582 - - - - - 512,387 119,832 321,897 63,931 A Chamberlain 354,492 43,362(f) - - - - - 13,395 13,346 8,394 9,223 7,808 6,637 - 23,668 21,003 21,003 21,003 1,188,776 227,125 35,135 63,009 TOTAL 1,473,358 227,125 35,135 86,677 - - - - - 46,775 16,839 18,710 82,324 82,324 - - - - - - - - - - 141,750 90,000 76,500 - 308,250 713,392 437,016 445,961 1,596,369 1,904,619 0 0 0 - 0 23 18 14 19 16 (a) Short term incentives paid during the financial year relate to performance in the previous financial year. Please refer to section on short-term incentive payments above. (b) Other benefits include fuel, parking and insurances. Directors’ and Officers’ liability premiums have not been allocated to individual directors. (c) Share-based payments represent the accounting expense incurred by the Company for the stated financial period, reflecting the terms of the Performance Rights as valued using a Monte Carlo simulation. (d) Percentage performance related is the sum of short-term incentives and share based payments divided by total remuneration, reflecting the actual percentage of remuneration at risk for the year. Note that short-term incentives are reported in the year in which they are paid but relate to performance in previous reporting periods. (e) Appointed 18 June 2020. (f) Appointed 31 January 2019 – STI amount prorated. 37 J Bloom G Dixon Executives A Vorster A Vorster A Vorster S Hodge S Hodge S Hodge Performance Rights on Issue The terms and conditions of Performance Rights granted to KMP affecting remuneration in the current or future reporting periods are set out in the following table. Grant date Date to vest Expiry date Risk free rate at grant date Value per right at grant date Number granted at grant date Value at grant date Number vested Number lapsed Directors B O’Donnell 26/11/2020 30/06/2023 30/06/2025 0.07% 0.128 295,313 37,800 M Blakiston 26/11/2020 30/06/2023 30/06/2025 0.07% 0.128 168,750 21,600 26/11/2020 30/06/2023 30/06/2025 0.07% 0.128 168,750 21,600 26/11/2020 30/06/2023 30/06/2025 0.07% 0.128 178,125 22,800 - - - - - - - - 27/11/2019 30/11/2020 30/11/2022 0.68% 0.0186 2,500,000 46,500 1,275,000 (1,225,000) 27/11/2019 30/11/2022 30/11/2024 0.68% 0.0398 2,500,000 99,500 26/11/2020 30/06/2023 30/06/2025 0.07% 0.128 1,529,209 195,739 - - - - 27/11/2019 30/11/2020 30/11/2022 0.68% 0.0186 900,000 16,740 459,000 (441,000) 27/11/2019 30/11/2022 30/11/2024 0.68% 0.0398 900,000 35,820 26/11/2020 30/06/2023 30/06/2025 0.07% 0.128 705,906 90,356 - - - - A Chamberlain* 27/11/2019 30/11/2020 30/11/2022 0.68% 0.0186 1,000,000 18,600 510,000 (490,000) A Chamberlain* 27/11/2019 30/11/2022 30/11/2024 0.68% 0.0398 1,000,000 39,800 A Chamberlain* 26/11/2020 30/06/2023 30/06/2025 0.07% 0.128 782,925 100,214 S Bennett 26/11/2020 30/06/2023 30/06/2025 0.07% 0.128 1,000,000 128,000 - - - (1,000,000) (782,925) - A Monte Carlo simulation is used to value all Performance Rights granted by the Company. The Monte Carlo valuation simulates the Company’s share price and depending on the hurdle, arrives at a value based on the number of Performance Rights that are likely to vest. The risk-free rate of the Performance Rights on the date granted is shown in the table above. Share Rights on Issue The terms and conditions of Share Rights granted to KMP affecting remuneration in the current or future reporting periods are set out in the following table. Grant date Test date Vesting date Final conversion date Value per right at grant date Number granted at grant date Value at grant date Number vested Number lapsed Executives A Vorster S Hodge 26/11/2020 02/08/2021 04/08/2021 04/08/2023 0.2550 855,798 218,228 855,798 31/07/2020 02/08/2021 04/08/2021 04/08/2023 0.1903 412,051 78,423 422,051 A Chamberlain* 31/07/2020 02/08/2021 30/09/2021 04/08/2023 0.1903 386,694 73,597 - * A. Chamberlain resigned on 31 May 2021. - - - 38 Equity Instrument Disclosures The interests of Directors and Executives in Shares at the end of the financial year 2021 are as follows: Balance at 1 July 2020 Acquired during year Performance Rights converted during year Disposed during the year Other changes Balance at 30 June 2021 Directors B O’Donnell M Blakiston J Bloom G Dixon R Court C Salisbury Executives A Vorster S Hodge A Chamberlain* 676,322 338,161 - - 60,000 30,000 - - - 5,305,645 462,000 - - 750,000 - - - - Total 6,503,967 1,118,161 - - - - - - - - 510,000 510,000 - - - - - - - - - - - - - - - - - - - - 1,014,483 - 90,000 - 750,000 - 5,305,645 462,000 510,000 8,132,128 The interests of Directors and Executives in Performance Rights at the end of the financial year are as follows. Directors B O’Donnell M Blakiston J Bloom G Dixon Executives A Vorster S Hodge A Chamberlain* S Bennett Total Balance at 1 July 2020 Granted as compensation Converted to shares Rights lapsed/ cancelled Balance at 30 June 2021 - - - - 295,313 168,750 168,750 178,125 5,000,000 1,529,209 1,800,000 2,000,000 705,906 782,925 - - - - - - - - - - 295,313 168,750 168,750 178,125 (1,225,000) 5,304,209 (441,000) 2,064,906 (510,000) (2,272,925) - - 1,000,000 - - 1,000,000 8,800,000 4,828,978 (510,000) (3,938,925) 9,180,053 The interests of Executives in Share Rights at the end of the financial year are as follows. Balance at 1 July 2020 Granted as compensation Converted to shares Rights lapsed/ cancelled Balance at 30 June 2021 Executives A Vorster S Hodge A Chamberlain* Total * A. Chamberlain resigned on 31 May 2021. - - - - 855,978 412,051 386,694 1,654,543 - - - - - - - - 855,978 412,051 386,694 1,654,543 39 Company Performance The table below shows key financial measures of company performance over the past five years. Continuing operations Revenue Net profit/(loss) after tax Basic earnings/(loss) per share Dividends paid per share $million $million Cents Cents Share price (last trade day of financial year) A$ 2021 2020 2019 2018 2017 160.2 22.0 4.02 - 0.55 77.3 0.4 0.09 - 0.17 54.8 12.9 3.26 - 0.18 33.4 (16.9) (4.29) - 0.14 64.0 7.1 2.2 - 0.14 Transactions with Key Management Personnel On 1 March 2017, Michael Blakiston was appointed as a Non-Executive Director of the Company. Mr Blakiston is a partner in the legal firm Gilbert + Tobin. During the current financial year, the Company made legal fee payments to Gilbert + Tobin of $720K (2020: $511K). All transactions were on normal commercial terms and conditions. Refer to Note 26 for further detail on Related Party transactions. Voting and Comments Made at the Company’s 2020 Annual General Meeting The Company received 99.57% of ‘yes’ votes cast on its remuneration report for the 2020 financial year. Other Information Insurance of officers During the financial period, the Company paid a premium in respect of a contract to insure the Directors and executives of the Company against a liability 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. No liability has arisen under this indemnity as at the date of this report. The Company has entered into indemnity deeds with each director and officer. Under the deeds, the Company indemnifies each director and officer to the maximum extent permitted by law against legal proceedings or claims made against or incurred by the directors or officers in connection with being a director or officer of the Company, or breach by the Company of its obligations under the deed. Independent Audit of Remuneration Report The Remuneration Report has been audited by BDO. Please see page 72 of this report for BDO’s report on the Remuneration Report. Signed in accordance with a resolution by the Directors. Brian O’Donnell Chairman Perth, Western Australia 19 August 2021 Alwyn Vorster Managing Director Perth, Western Australia 19 August 2021 40 DIRECTORS’ DECLARATION In the opinion of the Directors of BCI Minerals Limited: a. the financial statements comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and accompanying notes are in accordance with the Corporations Act 2001 including: i. giving a true and fair view of the financial position of the Consolidated Entity as at 30 June 2021 and of its performance for the financial year ended 30 June 2021; and ii. complying with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional reporting requirements. b. there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable. c. the Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001 (Cth). This declaration is made in accordance with a resolution of the Directors and is signed on their behalf by: Brian O’Donnell Chairman Perth, Western Australia 19 August 2021 41 ANNUAL FINANCIAL REPORT For the Year Ended 30 June 2021 www.bciminerals.com.au ABN 21 120 646 924 42 FINANCIAL STATEMENT CONTENTS 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 Notes to the consolidated financial statements Preface to the notes Note 1 – Revenue Note 2 – Expenses Note 3 – Impairment of Non-Financial Assets Note 4 – Income Taxes Note 5 – Cash and Cash Equivalents Note 6 – Trade and Other Receivables Note 7 – Property, Plant and Equipment Note 8 – Exploration and Evaluation Note 9 – Intangibles Note 10 – Leases Note 11 – Trade and Other Payables Note 12 – Provisions Note 13 – Capital risk management Note 14 – Contributed equity Note 15 – Reserves Note 16 – Accumulated Losses Note 17 – Earnings Per Share Note 18 – Financial Risk Management Note 19 – Subsidiaries Note 20 – Segment Information Note 21 – Commitments Note 22 – Contingent Liabilities and Assets Note 23 – Events Occurring after the Reporting Period Note 24 – Parent Entity Note 25 – Auditor’s Remuneration Note 26 – Related Party Transactions Note 27 – Share Based Payments Note 28 – Other Accounting Policies Independent Auditor’s Report Auditor’s Independence Declaration 44 45 46 47 48 48 50 50 51 52 54 55 55 57 57 58 59 59 60 60 61 61 61 62 63 63 64 64 64 65 65 65 66 68 69 73 43 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME BCI Minerals Limited and its controlled entities for the year ended 30 June 2021 Notes 2021 $000’s 2020 $000’s Revenue from continuing operations Sale of goods Other revenue Total revenue from continuing operations Cost of sales Administration expenses Project development and evaluation expenditure Loss on sale of asset Profit on sale of exploration tenements Impairment on sale of exploration and intangible assets Profit / (loss) before finance cost and income tax Finance costs Profit / (loss) before income tax Income tax benefit / (expense) Profit / (loss) after income tax from continuing operations attributable to owners of BCI Minerals Limited Basic earnings / (loss) per share from continuing operations Diluted earnings / (loss) per share from continuing operations 1 2 2 8,9 8,9 10 4 17 17 160,156 326 160,482 (93,630) (8,120) (34,487) - 22 (2,255) 22,012 (40) 21,972 - 21,972 Cents 4.02 4.01 76,793 466 77,259 (56,231) (6,432) (19,342) - 10,190 (5,030) 414 (37) 377 - 377 Cents 0.09 0.09 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 44 CONSOLIDATED STATEMENT OF FINANCIAL POSITION BCI Minerals Limited and its controlled entities as at 30 June 2021 Notes 2021 $000’s 2020 $000’s Current assets Cash and cash equivalents Short term investments Trade and other receivables Total current assets Non-current assets Receivables Property, plant and equipment Exploration and evaluation assets Intangibles Right of use assets Total non-current assets Total assets Current liabilities Trade and other payables Lease liability Provisions Total current liabilities Non-current liabilities Lease liability Provisions Total non-current liabilities Total liabilities Net assets Shareholders’ equity Contributed equity Reserves Accumulated losses Total shareholders’ equity 5 6 6 7 8 9 10 11 10 12 10 12 14 15 16 79,435 681 56,435 136,551 15,816 49,384 9,728 15,502 827 91,257 227,808 41,548 552 16,205 58,305 12,295 39,848 6,425 18,502 745 77,815 136,120 37,548 18,345 395 791 38,734 478 15,932 16,410 55,144 172,664 313,190 6,143 231 591 19,167 541 12,295 12,836 32,003 104,117 267,303 5,455 (146,669) (168,641) 172,664 104,117 The above consolidated statement of financial position should be read in conjunction with the accompanying notes 45 Total $000’s 103,612 377 377 - 128 104,117 21,972 21,972 45,872 - 703 172,664 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY BCI Minerals Limited and its controlled entities for the year ended 30 June 2021 Contributed equity $000’s Accumulated losses $000’s 267,212 (169,018) Reserves $000’s 5,418 Balance at 1 July 2019 Profit for the year Total comprehensive income - - Transactions with equity holders in their capacity as equity holders Performance Rights converted Share based payments 91 - 377 377 - - Balance at 30 June 2020 267,303 (168,641) Profit for the year Total comprehensive income - - Transactions with equity holders in their capacity as equity holders Shares issued net of transaction costs 45,872 Performance Rights converted Share based payments 15 - 21,972 21,972 - - - Balance at 30 June 2021 313,190 (146,669) - - (91) 128 5,455 - - - (15) 703 6,143 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 46 CONSOLIDATED STATEMENT OF CASH FLOWS BCI Minerals Limited and its controlled entities for the year ended 30 June 2021 Notes 2021 $000’s 2020 $000’s Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Income tax refund Net cash flows provided by / (used) in operating activities 5 Cash flows from investing activities Proceeds from disposal of exploration tenements Proceeds from disposal of plant and equipment Payments for short term investments Payments for plant and equipment Payments for exploration and evaluation assets Net cash flows from/ (used in) investing activities Cash flows from financing activities Proceeds from issue of shares net of costs Repayment of lease liabilities Net cash flows from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 5 120,822 (111,915) 320 0 9,227 0 301 (166) (14,185) (2,834) (16,884) 45,872 (327) 45,545 37,887 41,548 79,435 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 82,329 (78,412) 466 0 4,383 10,814 0 (189) (3,312) (3,850) 3,463 0 0 0 7,846 33,702 41,548 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BCI Minerals Limited and its controlled entities for the year ended 30 June 2021 Preface to the notes The notes include information which is required to understand the financial statements and is material and relevant to the operations and the financial position and performance of the Company. Information is considered relevant and material if: • The amount is significant due to its size or nature; • The amount is important in understanding the results of the Company; • It helps to explain the impact of significant changes in the Company’s business; or • It relates to an aspect of the Company’s operations that is important to its future performance. The notes are organised into the following sections: • Basis of preparation; • Key numbers; • Capital; • Risk management; • Group structure; • Unrecognised items; and • Other notes. BASIS OF PREPARATION Corporate information The financial statements for BCI Minerals Limited for the year ended 30 June 2021 were authorised for issue in accordance with a resolution of the Directors on 19 August 2021. BCI Minerals Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. BCI Minerals Limited and its subsidiaries together are referred to in these financial statements as the ‘Company’ or the ‘Consolidated Entity’. The principal activities of the Company during the financial year were the development of assets in the Pilbara region of Western Australia, including the Mardie Salt & Potash Project. The Company also receives revenue from the Iron Valley Iron Ore Mine under the terms of an Iron Ore Sale and Purchase Agreement. Basis of preparation The principal accounting policies adopted in the preparation of the financial statements are set out in the notes to the accounts. These policies have been consistently applied to all the financial years presented, unless otherwise stated. These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”), and the Corporations Act 2001. BCI Minerals Limited is a for-profit entity for the purpose of preparing the financial statements. The financial statements are presented in Australian dollars. The Company is of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, and in accordance with that Corporations Instrument amounts in the directors’ report and annual financial report are rounded off to the nearest thousand dollars, unless otherwise indicated. Compliance with IFRS The consolidated financial statements of BCI Minerals Limited comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial assets and cash flow hedges at fair value through other comprehensive income. 48 New, revised or amending Accounting Standards and Interpretations adopted New and amended standards adopted by the group There are no new or amended standards adopted by the group during the interim reporting period. Impact of standards issued but not yet applied by the entity There are no new standards yet to be applied by the Group. Changes in accounting policy, estimates disclosures, standards and interpretations Except for matters relating to the adoption of new Australian Accounting Standards referred to above, the accounting policies adopted and estimates made are consistent with those of the previous financial year. Foreign currency The financial statements are presented in Australian dollars which is the Company’s functional and presentation currency. Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Comparatives Where applicable, comparatives have been adjusted to conform with current year presentation. Key estimates and judgements In the process of applying the Company’s accounting policies, management has made a number of judgements and applied estimates of future events. Judgements and estimates which are material to the financial report are found in the following notes: Note 3: Impairment of non-financial assets Note 4: Income taxes Note 7: Property, plant and equipment Note 8: Exploration and evaluation Note 9: Intangibles Note 12: Provisions Note 27: Share based payments 49 KEY NUMBERS Note 1 – Revenue Sales – Iron Valley Net gain / (loss) on pricing changes Rebate – Iron Valley Sale of Goods Interest revenue Other income Total Accounting policy 2021 $000’s 184,659 (2,300) (22,203) 160,156 320 6 2020 $000’s 80,283 (700) (2,790) 76,793 466 0 160,482 77,259 Revenue is recognised if it meets the criteria outlined below. Sales – Iron Valley Revenue from contracts with customers for the sale of goods is recognised when persuasive evidence, usually in the form of an executed sales agreement, or an arrangement exists, indicating there has been a transfer of control to the customer, no further work or processing is required by the Company, the quantity and quality of the goods has been determined with reasonable accuracy, the price can be reasonably estimated, and collectability is reasonably assured. The Company receives revenue from Mineral Resources Limited (“MIN”) based on a mine gate sale agreement based on MIN’s realised price. The Company recognises revenue when the ore passes over the ships rail which is typically at the bill of lading. MIN send monthly shipping information on either a provisional basis at the date of shipment or the subsequent final pricing, which is typically once the vessel has arrived at its destination and quotation pricing has been determined. BCI recognises revenue on provisionally priced sales based on the estimated fair value of the total consideration, adjusted for any changes when pricing is finalised. Provisionally priced sales for which price finalisation is referenced to the relevant metal price index have an embedded commodity derivative. The embedded derivative is carried at fair value through profit or loss as part of trade receivables. The period between provisional pricing and final invoices is typically 30 to 90 days. As announced in the prior year, the Company entered into a rebate agreement with MIN to rebate 40% of net royalties to MIN, up to a total value of $25M. This value has been reached and the rebate no longer applies. Interest revenue Interest revenue is recognised on a time proportionate basis using the effective interest method. Note 2 – Expenses Amortisation of mine properties Royalties Cost of sales Employee benefits expense Depreciation and amortisation Share based payments Non-executive directors’ fees Occupancy related expenses Consultant and legal fees Other Administration expenses 50 2021 $000’s 3,006 90,624 93,630 2,593 1,967 703 510 237 993 1,117 8,120 2020 $000’s 2,493 53,738 56,231 3,112 872 128 390 414 454 1,062 6,432 Note 3 – Impairment of Non-Financial Assets Accounting policy Assets are reviewed for impairment at each reporting date or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which an asset’s carrying amount exceeds its recoverable amount. The valuation used by BCI to determine recoverable amount is the higher of an asset’s fair value less costs of disposal (“FVLCD”) and value in use (“VIU”). Accounting standards require that the valuation technique used be consistent with one of three commonly accepted approaches outlined below: • Level 1 Market - The market approach uses prices and other relevant information generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities, such as a business. Examples relevant to BCI include earnings multiples or JORC reserve/resource multiples; • Level 2 Cost - The cost approach reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost); and • Level 3 Income - The income approach converts future amounts (e.g. cash flows or income and expenses) to a single current (i.e. discounted) amount. When the income approach is used, the fair value measurement reflects current market expectations about those future amounts. Examples include Net Present Value (“NPV”) techniques. FVLCD is an NPV calculation which is consistent with the Level 3 income approach. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash flows from other assets or groups of assets (cash-generating units). An impairment loss is recognised for the amount by which an asset’s carrying amount exceeds its recoverable amount. Non-financial assets other than goodwill that have been impaired are reviewed for possible reversal of impairment at each reporting period. Impairment assessment The Company has completed its annual review of its assets for impairment. Based on these assessments, the Company has concluded that impairment of assets was not required, with the exception of impairment recognised on assets sold, refer to note 8 and 9 for further detail. Revenue assumptions Cash flow projections used to estimate recoverable amounts include assumptions on revenue. The assumptions used for revenue in impairment testing are summarised below: CFR 62% Fe iron ore price (USD/dmt, nominal) Years 1-5 Years 6-10 Years 11-20 Foreign exchange rate (AUD:USD, nominal) Years 1-5 Years 6-10 Years 11-20 Inflation (% per annum) USD inflation rate Key estimates and judgements 2021 2020 106-161 112-121 123-145 79-81 80-81 82-85 0.77-0.78 0.68-0.71 0.78 0.78 1.9 0.69 0.69 0.5 The recoverable amount of mine property, plant and equipment and intangible assets is estimated on the basis of the discounted value of future cash flows. The estimates of future cash flows are based on significant assumptions including: • estimates of the quantities of ore reserves and mineral resources for which there is a high degree of confidence of economic extraction and the timing of access to these reserves and resources; • future iron ore prices and exchange rates based on forecasts by a range of recognised economic forecasters as well as recent spot prices and rates; • production rates, production costs and capital expenditure based on approved budgets and projections including inflation factors; • the timing of when production will commence from projects for which royalties are payable to the Company; and • the asset specific discount rate applicable to the cash generating unit. 51 Note 4 – Income Taxes Current tax expense/(benefit) Current period Adjustments for prior periods Deferred tax expense/(benefit) Origination and reversal of temporary differences Equity deferred tax movement De-recognition of deferred tax assets Utilisation of carried forward tax losses now recognised Recognition of deferred tax asset on losses and temporary adjustments now realised Adjustments for prior periods Income tax (expense)/benefit reported in the Consolidated statement of profit or loss and other comprehensive income Reconciliation of effective tax rate Profit / (loss) before tax Income tax at the statutory rate of 30 per cent (2020: 30 per cent) Non-deductible expenses Other temporary differences derecognised Equity deferred tax movement Recognition of carried forward tax losses previously unrecognised Utilisation of carried forward tax losses now recognised Temporary differences derecognised Under/(over) provided in prior periods and other Income tax (expense)/benefit reported in the Consolidated statement of profit or loss and other comprehensive income 2021 $000’s 2020 $000’s - - - (1,387) (396) - 8,171 (6,388) - - - 21,972 6,591 213 (20) (396) 8,171 (8,171) (6,388) - - - - - (127) (80) 152 - - 55 - - 377 113 39 - (80) - - (127) 55 - Accounting policy The income tax expense on income for the financial year is the tax payable on the current financial period’s taxable income based on the national income tax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. 52 Significant judgement The Company is subject to income taxes in Australia. Significant judgement is required in determining the provisions for income taxes. There are certain transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination may be subject to change. The Company estimates its tax liabilities based on the Company’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. The Company recognises deferred tax assets relating to carried forward tax losses to the extent they can be utilised. The utilisation of the tax losses depends on the ability of the entities to generate sufficient future taxable profits. At 30 June 2021, the Company had unrecognised deferred tax assets relating to tax losses of $67.2M (2020: $73.9M). The Company has utilised all available R&D off-sets (2020 $1.48M). Deferred tax assets not recognised Temporary differences Income Tax losses Capital losses Deferred tax assets and liabilities Amounts recognised in Profit or Loss: Mine property, plant and development Provisions Intangibles Exploration Other items Amounts recognised directly in equity: Share issue costs in equity Temporary differences derecognised 2021 $000’s 2020 $000’s (2,439) (4,063) 67,215 73,902 - - Assets Liabilities Net 2021 $000’s 2020 $000’s 2021 $000’s 2020 $000’s 2021 $000’s 2020 $000’s - 962 - - - 177 - - 1,064 802 475 2,501 - 159 1,138 - (3,960) (3,535) (3,960) (3,535) - - (487) (493) - (900) (282) (484) 962 - (487) 571 177 (900) (282) 318 - - 475 159 (4,940) (5,201) (2,439) (4,063) 2,439 4,063 (1,138) 2,439 4,063 - - Tax assets/(liabilities) 2,501 1,138 (2,501) Movements in deferred tax assets At 1 July 2019 (Charged)/credited to profit or loss to (under)/over prior period At 30 June 2020 (Charged)/credited to profit or loss to (under)/over prior period At 30 June 2021 Provisions $000’s Share issue costs $000’s Mine property $000’s 113 64 177 160 (1) 159 785 316 962 475 - - - - - - - Temporary differences derecognised $000’s - - - - - - - Other $000’s 529 273 - 802 262 - 1,064 Total $000’s 802 336 - 1,138 1,363 2,501 53 Intangibles $000’s Mine property $000’s Exploration $000’s Other $000’s Temporary differences derecognised $000’s Total $000’s (2,409) (3,296) (591) (381) 5,875 (802) 1,509 (239) - - 309 - (103) (1,812) (336) - - - (900) (3,535) (282) (484) 4,063 (1,138) 900 (425) (205) - - (9) - (1,624) (1,363) - - (3,960) (487) (493) 2,439 (2,501) - - Movement in deferred tax liabilities At 1 July 2019 (Charged)/credited to profit or loss to (under)/over prior period At 30 June 2020 (Charged)/credited to profit or loss to (under)/over prior period At 30 June 2021 Note 5 – Cash and Cash Equivalents Cash at bank Cash on deposit Total Reconciliation of profit / (loss) after income tax to net cash flows from operating activities Net Profit / (loss) Depreciation and amortisation Impairment on sale of exploration and intangible assets Share based payments Gain on disposal of exploration tenements Gain on disposal of plant and equipment Other (Increase)/decrease in assets Trade and other receivables Increase/(decrease) in liabilities Trade and other payables Provisions Net cash inflow / (outflow) from operating activities 2021 $000’s 27,221 52,214 79,435 21,972 4,973 2,255 703 (22) 0 40 2020 $000’s 9,711 31,837 41,548 377 3,147 5,000 128 (10,161) (1) 30 (43,802) 5,805 22,630 478 9,227 (262) 320 4,383 Cash on deposit relates to 31-day term deposits held with financial institutions. See Note 18 – Financial risk management note for further details. Accounting policy For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. There are no non-cash investing or financing activities. 54 Note 6 – Trade and Other Receivables Current Trade receivables and prepayments Total current Non-current Other receivables Total non-current Total trade and other receivables 2021 $000’S 2020 $000’S 56,435 56,435 15,816 15,816 72,251 16,205 16,205 12,295 12,295 28,500 Due to the short-term nature of current receivables, their carrying amount is approximate to their fair value. As at 30 June 2021 no receivables were past due or impaired (2020: Nil). Other non-current receivables represent an estimate of the amount payable by the operator of the Iron Valley operation for fulfilment of rehabilitation obligations at the end of operations. Refer to Note 18 for information on the financial risk management policy of the Company. Accounting policy Trade receivables are amounts due from customers for commodities sold in the ordinary course of business. Trade Receivables that are Provisionally Priced Trade receivables that contain an embedded derivative relating to the provisional pricing of iron ore are measured at fair value. At each reporting date the provisional priced receivable is marked to market based on the forward selling price for the quotation period stipulated in the contract until the quotation period expires and the change in value is recognised in the profit or loss. Other Trade Receivables Trade receivables that do not contain an embedded derivative are measured at the amount of consideration that is unconditional. The Group holds trade receivables with the objective to collect the contractual cash flows and measures them at amortised cost. The Group applies the simplified impairment methodology permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Note 7 – Property, Plant and Equipment Mine Properties $000’s Plant and equipment $000’s Office furniture, equipment and IT $000’s Development $000’s Total $000’s Year ended 30 June 2020 Opening net book value 39,502 Additions Disposals Reclassification of assets Depreciation and amortisation expense Closing net book value At 30 June 2020 Cost Accumulated depreciation and amortisation Net carrying amount - - - (2,492) 37,010 51,658 (14,648) 37,010 140 2,979 (1) 5 (597) 2,526 3,853 (1,327) 2,526 41 335 - (5) (59) 312 957 (645) 312 - - - - - - - - - 39,683 3,314 (1) - (3,148) 39,848 56,468 (16,620) 39,848 55 Mine Properties $000’s Plant and equipment $000’s Office furniture, equipment and IT $000’s Development $000’s Total $000’s Year ended 30 June 2021 Opening net book value 37,010 2,526 Additions Disposals Reclassification of assets Depreciation and amortisation expense Closing net book value At 30 June 2021 Cost Accumulated depreciation and amortisation Net carrying amount Accounting policy - - - (3,006) 34,004 51,658 (17,654) 34,004 255 (4) - (1,464) 1,313 4,093 (2,780) 1,313 312 937 - (157) (175) 917 2,821 (1904) 917 - 12,993 - 157 13,150 39,848 14,185 (4) - (4,645) 49,384 13,150 71,722 - (22,338) 13,150 49,384 Mine Properties Once a mining project has been established as commercially viable and technically feasible, expenditure other than that on land, buildings, plant and equipment is transferred and capitalised as mine property. Mine property costs include past capitalised exploration and evaluation costs, pre-production development costs, development excavation, development studies and other subsurface and permanent installation expenditure pertaining to that area of interest. Mine property costs are accumulated in respect of each separate area of interest. Costs associated with commissioning new assets in the period before they are capable of operating in the manner intended by management, are capitalised. Mine property costs incurred after the commencement of production are capitalised to the extent they are expected to give rise to a future economic benefit. When an area of interest is abandoned, or the Directors decide that it is not commercial or technically feasible, any accumulated cost in respect of that area is written off in the financial period the decision is made. Each area of interest is reviewed at the end of each accounting period and accumulated costs written off to the profit or loss to the extent that they will not be recoverable in the future. Amortisation of mine property costs is charged on a unit of production basis over the life of economically recoverable reserves once production commences. Mine property assets are assessed for impairment if facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, mine property is allocated to cash-generating units to which the development activity relates. The cash generating unit shall not be larger than the area of interest. Plant and equipment Plant and equipment, including mechanical, electrical, field and computer equipment as well as furniture, fixtures and fittings, is stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis so as to write off the net cost of each asset over either its expected useful life of 2.5 to 5 years for furniture, computers and equipment, or the life of the mine for plant and equipment. Spare parts, stand-by equipment and servicing equipment is classified as property, plant and equipment if they are expected to be used during more than one period. Otherwise they are classified as inventory. Assets acquired as part of the early construction at the Mardie project site will be depreciated on a straight line basis over 2 to 3 years depending on the useful life of the assets. Development Development represents expenditure necessarily incurred during establishment and construction of a mining project that is in progress but yet to be complete. This expenditure includes the cost associated with studies and evaluation through to early construction cost of assets or infrastructure yet to be fully formed or ready for use. As tangible assets in the form of buildings or plant and equipment are completed, they will be transferred to the relevant classification and depreciated over their useful life. Other expenditure on project development that is not capitalised as plant or equipment will be capitalised as mine properties and amortised on a units of production basis over the expected life of the project. Key judgement – ore reserves and mineral resources Amortisation of mine property assets is based on the depletion of economically recoverable reserves. The rate of amortisation is re-assessed on a prospective basis when ore reserves are changed for the appropriate ore body in accordance with the JORC 2012 Guidelines. 56 Note 8 – Exploration and Evaluation Opening balance Carrying value of tenements sold Write down of tenements to recoverable value Exploration earn-in Exploration tenements acquisition Unsuccessful exploration expenditure derecognised Net carrying amount Accounting policy 2021 $000’s 6,425 (275) - - 3,578 - 9,728 2020 $000’s 2,575 - - 200 3,650 - 6,425 The Company accounts for exploration and evaluation activities as follows: Acquisition and Exploration earn-in Exploration and evaluation costs arising from acquisitions and earn-ins are carried forward where exploration and evaluation activities have not, at reporting date, reached a stage to allow a reasonable assessment of economically recoverable reserves otherwise they are written down to their recoverable amount. As announced during the prior year, the Group has secured rights to additional tenement areas adjacent to the Mardie Salt and Potash project tenement parcel. During the year ended 30 June 2021, the Group exercised its option to acquire the remaining northern tenement area for a cash cost of $2.5M plus duties and taxes. In addition, during the financial year the Group secured rights to a third tenement area adjacent to the Mardie project and acquired the additional tenement area via an asset transfer agreement with a value of $0.74M recognised for the exploration asset received. The additional tenement areas acquired during the year provide optionality for future layout optimisation and expansion of the Mardie project. Exploration and evaluation costs Costs arising from on-going exploration and evaluation activities are expensed as incurred. Disposal of tenements During the financial year, the Group disposed of iron ore tenements with a carrying value of $0.27M under normal terms and conditions. Key judgement – Capitalisation of exploration and evaluation expenditure The Company has capitalised acquired exploration and evaluation expenditure and earn-in expenditure on the basis that either it is expected to be recouped through future successful development (or alternatively sale) of the areas of interest concerned or on the basis that it is not yet possible to assess whether it will be recouped. The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Company decides to exploit the related lease itself, or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental rehabilitation obligations) and changes to commodity prices. BCI currently holds a 30% interest in the Carnegie Potash in a joint venture with ASX-listed potash development company, Kalium Lakes Limited (“KLL”), who is the joint venture manager. BCI has rights to earn up to a 50% interest through sole-funding the Pre-Feasibility Study and Feasibility Study phases. Note 9 – Intangibles Net carrying value of intangibles: Royalties Cape Preston East Port rights Net carrying amount The intangible assets were acquired through Iron Ore Holdings Limited as follows: 2021 $000’s 2020 $000’s 15,502 - 15,502 15,502 3,000 18,502 57 Royalties The Company holds royalties over the Koodaideri South and North Marillana Extension tenements. The assets have a finite life reflecting the underlying resource and will be amortised as the resource is depleted. Production has not commenced at either Koodaideri South or North Marillana and hence the assets remain unamortised. The Koodaideri South royalty asset has been tested for impairment with the recoverable amount assessed by reference to the FVLCD, in line the policy in note 3 and classified as level 3 under the fair value hierarchy. FVLCD was determined using an income approach based on the net present value of future cash flows projected over the estimated mine life of 32 years. The post-tax nominal discount rate used in determining FVLCD was 8.2%. Forecast iron ore price, foreign exchange and inflation assumptions used in the calculation of FVLCD are summarised in Note 3. The North Marillana Extension royalty asset has been tested for impairment with the recoverable amount assessed by reference to the FVLCD, in line with the policy in note 3 and classified as level 3 under the fair value hierarchy. FVLCD was determined using an income approach based on the net present value of future cash flows projected over the estimated mine life of 10 years. The post-tax nominal discount rate used in determining FVLCD was 8.2%. Forecast iron ore price, foreign exchange and inflation assumptions used in the calculation of FVLCD are summarised in Note 3. The recoverable amounts were determined to be in excess of carrying values, and there are no probable changes to key assumptions that would cause the asset to be impaired. Refer to Note 3 for details of the key estimates and judgements applied in determining the recoverable amount. Cape Preston East Port Rights As disclosed at Note 8 above, during the year the Group entered into an Asset Transfer Agreement whereby the Group received rights to certain tenements adjacent to the Mardie Project and in return, disposed of the intangible assets associated with the Cape Preston East Port. The net loss to the group arising from this transaction of $2.26M has been recognised in the statement of comprehensive income. Note 10 – Leases Lease liabilities have been measured at amounts equal to the net present value of remaining lease payments over the remaining term of the lease, discounted at the Group’s incremental borrowing rate. The weighted average interest rate applied was 4.7%. The discount rate used in calculating the carrying amount of lease liabilities considers the circumstances applicable over the underlying leased assets, in particular the lease value, the term and economic environment. Right of use assets were measured at amounts equal to the carrying value of their respective lease liabilities on the adoption date, adjusted for incentives, accruals and prepayments relating to the contractual agreement. Right of use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. There are no onerous lease contracts that would require adjustment to the right of use assets on the adoption date. Lease liabilities Lease liability at 30 June 2020 Additional lease contracts entered into during the period Add: Borrowing costs Less: Payments Lease liabilities as at 30 June 2021 Disclosure in Statement of Financial Position Current lease liability Non-current lease liability Total Lease liability Right of use assets at 30 June 2020 Additional right of use assets recognised Accumulated amortisation Right of use assets as at 30 June 2021 58 June 2021 $000’s June 2020 $000’s 772 408 40 (347) 873 395 478 873 745 409 (327) 827 - 962 37 (227) 772 231 541 772 964 (219) 745 Note 11 – Trade and Other Payables Current Trade payables and accruals Total Accounting policy 2021 $000’s 2020 $000’s 37,548 37,548 18,345 18,345 These amounts represent liabilities for goods and services provided to the Company and royalty obligations, prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. The Company has financial risk management policies in place to ensure that all payables are paid within the credit timeframe (refer to Note 18). Note 12 – Provisions Current Employee benefits Total current Non-current Rehabilitation Total non-current Total Movement in Provisions in 2021 Opening balance 1 July 2020 Additional provision recognised Changes in rehabilitation estimate Unwinding of discount (non-cash expense) Amounts used during the year Closing balance Accounting policy 2021 $000’s 2020 $000’s 791 791 15,932 15,932 16,723 Rehabilitation and site closure $000’s Employee benefits $000’s 12,295 600 3,377 144 (484) 15,932 591 200 - - - 591 591 12,295 12,295 12,886 Total $000’s 12,886 800 3,377 144 (484) 791 16,723 Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Employee benefits, salaries and annual leave Liabilities for salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in respect of employee’s services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Employee benefits – long service leave The liability for long service leave is recognised and measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. The obligations are presented as current liabilities in the Statement of Financial Position if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. 59 Rehabilitation The Company has obligations to dismantle and remove certain items of property, plant and equipment and to restore and rehabilitate the land on which they are situated. A provision is raised for the estimated cost of settling the rehabilitation and restoration obligations existing at reporting date, discounted to present value using an appropriate discount rate. When provisions for rehabilitation are initially recognised, the corresponding cost is capitalised as an asset within mine properties and amortised accordingly. Where rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure, costs are charged to the profit or loss in the period in which the work is undertaken. At each reporting date the rehabilitation liability is re-measured to account for any new disturbance, updated cost estimates, changes to the estimated lives of operations, new regulatory requirements and revisions to discount rates. Changes to the rehabilitation liability are added to or deducted from the related rehabilitation asset and amortised accordingly. Key estimate – Rehabilitation The Company’s accounting policy for the recognition of rehabilitation provisions requires significant estimates in determining the estimated cost for the rehabilitation of disturbed areas, removal of infrastructure and site closure at a point in the future. These uncertainties may result in future expenditure differing from the amounts currently provided. A provision is made for the estimated cost to rehabilitate the Iron Valley site, which is offset by a receivable from Mineral Resources Limited recognising the contractual requirement to rehabilitate the site. Note 13 – Capital risk management The Company’s objective when managing capital is to safeguard its ability to continue as a going concern so that it can continue to provide returns to shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company defines capital as equity and net debt. Net debt is defined as borrowings less cash and cash equivalents, and equity as the sum of share capital, reserves and accumulated losses/retained earnings. The Company had no debt as at the end of the financial year (2020: Nil). Note 14 – Contributed equity Share capital Ordinary shares - fully paid Movements in ordinary share capital Opening balance 2021 2020 Number $000’s Number $000’s 599,209,833 313,190 398,928,910 267,303 398,928,910 267,303 397,608,910 267,212 Issue of shares under Employee Performance Rights Plan 816,000 15 1,320,000 199,464,923 45,872 - 599,209,833 313,190 398,928,910 267,303 91 - Rights Issue Net of Costs Closing balance Accounting policy Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or options are recorded in equity as a deduction, net of tax, from the proceeds. Terms and conditions of ordinary shares Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and creditors are fully entitled to any proceeds of liquidations. 60 Note 15 – Reserves Share based payments reserve Balance as at 1 July Share based payments expense Issue of shares under Employee Performance Rights Plan Balance as at 30 June Financial assets at fair value through other comprehensive income Balance as at 1 July Balance as at 30 June Options exercised reserve Balance as at 1 July Balance as at 30 June Total reserves Nature and purpose of reserves 2021 $000’s 2020 $000’s 10,677 10,640 703 (15) 128 (91) 11,365 10,677 (9,009) (9,009) 3,787 3,787 6,143 (9,009) (9,009) 3,787 3,787 5,455 The share based payments reserve is used to recognise the fair value of options (not exercised), Performance Rights and equity- settled benefits issued in settlement of share issue costs. Changes in the fair value of investments such as equities measured at fair value through other comprehensive income, are recognised in other comprehensive income and accumulated in a separate reserve within equity. On adoption of AASB 9 Financial Instruments investments in listed shares previously classified as available-for-sale were reclassified as financial assets at fair value through other comprehensive income. The options exercised reserve is used to recognise the fair value of options exercised. Note 16 – Accumulated Losses Balance as at 1 July Net profit / (loss) Balance as at 30 June Note 17 – Earnings Per Share Earnings per share from continuing operations Profit / (loss) after income tax from continuing operations 2021 $000’s 2020 $000’s (168,641) (169,018) 21,972 377 (146,669) (168,641) 2021 $000’s 2020 $000’s 21,972 Number 377 Number Weighted average number of ordinary shares used in calculating basic earnings per share 546,393,720 398,712,517 Adjustments for calculation of diluted earnings per share: Vested Performance Rights outstanding at year end 1,989,000 - Weighted average number of ordinary shares used in calculating diluted earnings per share 548,382,720 398,712,517 Earnings per share attributable to the ordinary equity holders of the company Basic earnings / (loss) per share Diluted earnings / (loss) per share Accounting policy Cents 4.02 4.01 Cents 0.09 0.09 Basic earnings per share is calculated by dividing net profit after income tax attributable to equity holders of the Company by the weighted average number of ordinary shares on issue during the financial year. 61 Diluted earnings per share is calculated using net profit after income tax attributable to equity holders of the Company adjusted for the after-tax effect of dividends and interest associated with dilutive potential ordinary shares. The weighted average number of shares used is adjusted for the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. RISK MANAGEMENT Note 18 – Financial Risk Management The Company holds the following financial instruments: Financial assets Cash and cash equivalents Short term investments Trade and other receivables Financial liabilities Trade and other payables 2021 $000’s 2020 $000’s 79,435 681 72,251 152,367 37,548 37,548 41,548 553 28,500 70,601 18,345 18,345 Market (including foreign exchange, commodity price and interest rate risk), credit and liquidity risks arise in the normal course of the Company’s business. Primary responsibility for identification and control of financial risk rests with senior management under directives approved by the Board. a. Market risk i, Foreign exchange risk Foreign exchange risk arises from future commitments, assets and liabilities that are denominated in a currency that is not the functional currency in which they are measured. The Company is not exposed to foreign exchange risk on trade receivables. ii. Commodity price risk The Company’s revenue is exposed to commodity price fluctuations, specifically iron ore prices. The Company measures exposure to commodity price risk by monitoring and stress testing the Company’s forecast financial position to sustained periods of low iron ore prices on a regular basis. Trade receivables outstanding at year end are subject to potential changes in future iron ore prices. b. Credit risk Credit risk arises from cash and cash equivalents and deposits with financial institutions, and from receivables from customers for iron ore sales. For banks and financial institutions, only independently rated parties with a minimum rating of “A” are accepted in accordance with ratings guidelines of major global credit rating agencies. For customers, credit reference checks are undertaken. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Company’s maximum exposure to credit risk without taking account of the fair value of any collateral or other security obtained. The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised at the beginning of this note. The credit quality of financial assets that are neither past due nor impaired can be summarised as follows: • Cash and cash equivalents $79.4M (2020: $41.5M) held with banks with minimum long term external credit rating of AA-. • Short term investments $0.7M (2020: $0.5M) held with banks with a minimum long term external credit rating of AA- • Current trade and other receivables $56.4M (2020: $16.2M) due from existing customers are backed by an agreement with quarterly invoices paid within 5 working days. There has been no history of default in the past. • Non-current receivables $15.8M (2020: $12.3M) due from Mineral Resources Limited under a contractual arrangement as described in Note 6. No default is expected. c. Liquidity risk Prudent liquidity management involves the maintenance of sufficient cash and access to capital markets. It is the policy of the Board to ensure that the Company is able to meet its financial obligations and maintain the flexibility to pursue attractive investment opportunities through keeping committed credit lines available where possible, ensuring the Company has sufficient working capital and preserving the 15% share issue limit available to the Company under the ASX Listing Rules. Maturity analysis of financial assets and liabilities Financial liabilities comprise trade and other payables which have a maturity of less than six months and lease liabilities with a fixed payment commitment of up to 4 years. 62 GROUP STRUCTURE Note 19 – Subsidiaries The consolidated financial statements include the financial statements of BCI Minerals Limited and the subsidiaries listed in the following table. BC Iron Nullagine Pty Ltd BCI (SA) Pty Ltd BC Potash Pty Ltd BC Gold Pty Ltd BC Pilbara Iron Ore Pty Ltd PEL Iron Ore Pty Ltd Mardie Minerals Pty Ltd Iron Valley Pty Ltd Mal’s Ridge Pty Ltd Maitland River Pty Ltd BCI Exploration Pty Ltd Accounting policy Country of incorporation Functional currency 2021 % 2020 % Beneficial interest Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia AUD AUD AUD AUD AUD AUD AUD AUD AUD AUD AUD 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of BCI Minerals Limited as at 30 June 2021, and the results of all subsidiaries for the year then ended. Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Consolidated Entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of an asset transferred. Accounting policies of subsidiaries are consistent with the policies adopted by the Consolidated Entity. Note 20 – Segment Information 2021 Segment Information Segment revenue Sales revenue Other revenue Total Segment results EBITDA Interest revenue Finance costs Depreciation and amortisation Impairment of assets Iron Valley $000’s Mardie $000’s Buckland $000’s Other $000’s Consolidated $000’s 160,156 - 160,156 - - - - - - - 326 326 160,156 326 160,482 69,490 (34,419) (2,233) (6,173) 26,665 - - (3,006) - - - (1,547) - - - - - 320 (40) (420) - 320 (40) (4,973) - Profit / (loss) before income tax 66,484 (35,966) (2,233) (6,313) 21,972 Segment assets Segment liabilities 105,021 41,924 24,312 11,032 - - 98,475 2,188 227,808 55,144 63 2020 Segment Information Segment revenue Sales revenue Other revenue Total Segment results EBITDA Interest revenue Finance costs Depreciation and amortisation Impairment of assets Iron Valley $000’s Mardie $000’s Buckland $000’s Other $000’s Consolidated $000’s 76,793 - 76,793 - - - - - - - 466 466 22,968 (18,722) 9,950 (5,853) - - (2,493) - - - (577) - - - - (5,030) 4,920 - - 466 (37) (295) - (5,719) 63,425 3,144 76,793 466 77,259 8,343 466 (37) (3,365) (5,030) 377 136,120 32,003 Profit / (loss) before income tax 20,475 (19,299) Segment assets Segment liabilities 65,162 26,817 7,533 2,042 Management has determined that the Company has four reportable segments, being Iron Valley, Mardie, Buckland and Other (Corporate and other assets). Sales revenue comprises iron ore sales from a single location to a single customer in Australia. Accounting policy Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Company’s Board. Internal reporting is provided to the Board on a consolidated basis. UNRECOGNISED ITEMS Note 21 – Commitments The Company has two property leases and a lease for vehicles at the Mardie project site. Future lease commitments are now disclosed as per AASB 16 – Leases, refer to note 10 for further detail. Note 22 – Contingent Liabilities and Assets As at 30 June 2021, the Company has no contingent liabilities or assets other than additional cash payments it may receive in respect of the sale of the Buckland project and Kumina tenements disclosed in prior years. Note 23 – Events Occurring after the Reporting Period Other than disclosed above, no matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in financial periods subsequent to the year ended 30 June 2021. 64 OTHER NOTES Note 24 – Parent Entity The following details information related to the parent entity, BCI Minerals Limited, as at 30 June 2021. The information presented here has been prepared using accounting policies consistent with those presented in the notes to the accounts. 2021 $000’s 2020 $000’s Statement of Financial Position Current assets Total assets Current liabilities Total liabilities Shareholders’ equity Issued capital Reserves Accumulated losses Total shareholders’ equity Profit / (Loss) for the year Total comprehensive income / (loss) for the year Included in note 21 are commitments incurred by the parent entity relating to the lease of offices. Note 25 – Auditor’s Remuneration The auditor of BCI Minerals Limited is BDO Audit (WA) Pty Ltd. Amounts received or due and receivable by BDO Audit (WA) Pty Ltd for: Audit or review of financial reports for the Company Non-audit services – tax and remuneration advisory services Total Note 26 – Related Party Transactions a. Parent entity BCI Minerals Limited is the parent entity. b. Subsidiaries Interests in subsidiaries are set out in note 19. c. Key management personnel Disclosures relating to Key Management Personnel are set out in the Audited Remuneration Report. Short-term employee benefits Termination payments Share based payments Post-employment benefits Total d. Transactions with related parties Payment for services made to other related entities 78,787 188,806 1,757 67,217 313,190 6,271 (191,641) 127,820 (6,231) (6,231) 2021 $ 62,000 91,100 153,100 39,261 172,319 2,587 13,390 267,303 5,583 (193,155) 79,731 (7,898) (7,898) 2020 $ 61,000 20,350 81,350 2021 $ 2020 $ 2,179,836 1,735,618 133,366 529,507 112,032 - 82,324 86,677 2,954,741 1,904,619 2021 $ 2020 $ 1,338,221 1,133,863 65 On 1 March 2017, Michael Blakiston was appointed as a Non-Executive Director of the Company. Mr Blakiston is a partner in the legal firm Gilbert + Tobin. During the current financial year, the Company made legal fee payments to Gilbert + Tobin of $720K (2020: $511K). All transactions were on normal commercial terms and conditions. During the year, a company within the same consolidated group as Wroxby Pty Ltd, a substantial shareholder of the Company, provided the Company with rental premises for which payments were made in the amount of $618K (2020: $623K). All transactions were on normal terms and conditions. Note 27 – Share Based Payments During the current and prior financial years, the Company has provided share based payments to employees. An Employee Performance Right Plan was initially approved at the shareholder’s annual general meeting of 19 November 2010 and a revised Performance Right Plan and a Share Right Plan were approved at the Company’s annual general meeting held on 26 November 2019. Under the terms of these plans, the Board may offer Performance Rights or Share Rights at no more than nominal consideration to employees or directors (the latter subject to shareholder approval) based on a number of criteria, including contribution to the Company, period of employment, potential contribution to the Company in the future and other factors the Board considers relevant. These long-term incentives are provided to certain employees at the discretion of the Board to deliver long-term shareholder returns. Set out below is a summary of the Performance Rights granted by the Company during the financial year. Employee Performance Rights During the year the Company issued share based payments in the form of Performance Rights to directors and employees as per below. Refer to the Remuneration Report in the Directors’ Report for more information. 2021 – Performance Rights Grant date 26/11/2020 31/05/2021 *Source: www.asx.com.au Granted during the year Vesting date Fair value per right at grant date Share price on grant date* Expected dividends 7,152,888 30/06/2023 620,000 30/06/2023 $0.128 $0.285 $0.26 $0.40 0% 0% The fair value per Performance Right on grant date was determined as follows: Grant date Vesting date Grant date share price Volatility (per cent) Dividend yield (per cent) Risk free rate (per cent) 2020 – Performance Rights Grant date 27/11/2019 – Tranche 1 27/11/2019 – Tranche 2 *Source: www.asx.com.au 26/11/2020 Tranche 1 31/05/2021 Tranche 2 30/06/2023 30/06/2023 $0.26 60.0 0 0.07 $0.40 47.5 0 0.06 Granted during the year Vesting date 5,500,000 30/11/2020 5,500,000 30/11/2022 Fair value per right at grant date $0.0186 $0.0398 Share price on grant date* Expected dividends $0.18 $0.18 0% 0% The fair value per Performance Right on grant date was determined as follows: Grant date Vesting date Grant date share price Volatility (per cent) Dividend yield (per cent) Risk free rate (per cent) 66 27/11/2019 Tranche 1 27/11/2019 Tranche 2 30/11/2020 30/11/2022 $0.18 48.0 0 0.68 $0.18 60.1 0 0.68 Summary of Performance Rights on issue - - - - Vesting date 30/11/2020 30/11/2022 30/06/2023 Opening balance at 1 July 2020 Rights granted during the year Rights cancelled /lapsed during the year Rights converted to shares during the year Closing balance at 30 June 2021 Rights vested since 30 June 2021 5,500,000 5,500,000 - - (1,600,000) - 7,772,888 (1,276,835) - - 3,900,000 6,496,053 (2,695,000) (816,000) 1,989,000 Total 11,000,000 7,772,888 (5,571,835) (816,000) 12,385,053 Employee Share Rights During the year the Company issued share based payments in the form of Share Rights to employees as per below. Refer to the Remuneration Report in the Directors’ Report for more information. 2021 – Share Rights Grant date 31/07/2020 26/11//2020 *Source: www.asx.com.au Granted during the year Vesting date Fair value per right at grant date Share price on grant date* Expected dividends 1,445,348 04/08/2021 855,798 04/08/2021 $0.190 $0.255 $0.190 $0.255 0% 0% The fair value per Share Right on grant date was determined as follows: Grant date Vesting date Grant date share price Volatility (per cent) Dividend yield (per cent) Risk free rate (per cent) Summary of Share Rights on issue 31/07/2020 Tranche 1 26/11/2020 Tranche 2 04/08/2021 04/08/2021 $0.190 $0.255 60.0 0 0.07 60.0 0 0.07 Vesting date 04/08/2021 Total Opening balance at 1 July 2020 Rights granted during the year Rights cancelled /lapsed during the year Rights converted to shares during the year Closing balance at 30 June 2021 Rights vested since 30 June 2021 - - 2,301,146 2,301,146 - - - - 2,301,146 2,301,146 2,301,146 2,301,146 a. Expenses arising from share-based payment transactions Total expenses arising from share based payments recognised during the financial period as part of employee benefits expense were as follows. Where Performance Rights are forfeited or cancelled due to a non-market vesting condition not being satisfied, the previously recognised cumulative share based payment expense is reversed. Director benefits Employee benefits Total Accounting policy 2021 $ 529,507 173,603 703,110 2020 $ 82,324 45,675 127,999 The fair value of share based payments granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options or Performance Rights. A Monte Carlo simulation is used to value Performance Rights. The Monte Carlo calculation simulates the Company’s share price and depending on the hurdle arrives at a value based on the number of Performance Rights that are likely to vest. The employee benefit expense recognised each period takes into account the most recent estimate of the options and Performance Rights. The impact of revision to original estimates, if any, is recognised in the profit or loss with a corresponding adjustment to equity. 67 Key estimate: Share-based payment valuation The value of share-based payments to financiers is measured by reference to the difference between the nominal value and net present value of the finance facility provided. The net present value is determined based upon a market comparable discount rate applicable to similar size companies within the mining sector. A Monte Carlo simulation has been used to value Performance Rights. The Monte Carlo calculation simulates the returns of the Company in relation to the peer group and arrives at a value based on the number of Performance Rights that are likely to vest. Note 28 – Other Accounting Policies Summary of other significant accounting policies Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, except where the GST incurred is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item. Receivables and payables are stated inclusive of the amount of GST receivable or payable, where an invoice has been issued. The net amount of GST recoverable from, or payable to, the taxation authority is included within receivables or payables in the statement of financial position. The GST component of cash flows arising from investing and financing activities, which is recoverable from or payable to the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from or payable to the taxation authority. Fair value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is based on the presumption that the transaction takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market. The principal or most advantageous market must be accessible to, or by, the Company. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest. The fair value measurement of a non-financial asset takes into account the market participant’s ability to generate economic benefits by using the asset at its highest and best use or by selling it to another market participant that would use the asset at its highest and best use. In measuring fair value, the Company uses valuation techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Tax consolidation legislation BCI Minerals Limited and its wholly owned Australian controlled entities have entered into the tax consolidation legislation. On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which, limits the joint and several liability of the wholly owned entities in the case of a default by the head entity, BCI Minerals Limited. The entities entered into a tax funding agreement under which the wholly owned entities fully compensate BCI Minerals Limited for any current tax payable assumed and are compensated by BCI Minerals Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to BCI Minerals Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial statements. The amounts receivable or payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which where appropriate, is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables. New, revised or amending Accounting Standards and Interpretations adopted There are no new accounting standards, amendment of standards or interpretations that are yet to be implemented by the Group. 68 INDEPENDENT AUDITOR’S REPORT Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia INDEPENDENT AUDITOR'S REPORT To the members of BCI Minerals Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of BCI Minerals Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2021, 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 report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 52 69 Carrying Value of Intangible Assets Key audit matter How the matter was addressed in our audit At 30 June 2021, we note that the carrying values Our procedures included, but were not limited to the of Intangible Assets are significant to the financial following: statements, as disclosed in Note 9. An annual impairment test is required for Intangible Assets not being amortised under the Australian Accounting Standards. The assessment of the carrying values of Intangible Assets requires management to make significant accounting judgements and estimates to determine whether the assets require impairment. Due to the significance of the estimates and assumptions in these assessments, we have identified this as a key audit matter. Refer to Note 3 and Note 9 for detailed disclosures, which include the related accounting policies and critical accounting judgements and estimates. • • • • • • Analysing management’s key assumptions used in the discounted cash flow models against external data and market information to determine their reasonableness; Challenging the appropriateness of management’s discount rates used in the discounted cash flow models in conjunction with our internal valuation experts; Challenging assumptions in relation to the timing of future cash flows; Testing the mathematical accuracy of the discounted cash flow models; Performing sensitivity analysis on key assumptions to determine if there would be a significant change to the carrying value of the assets; and Assessing the adequacy of the Groups’ disclosure in respect of impairment assessment assumptions as disclosed in Note 3 and Note 9 of the financial report. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and the auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the mineral resources and ore reserves 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 express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. 70 53 If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the mineral resources and ore reserves information, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter appropriately brought to the attention of users for whom our report is prepared. 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. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our auditor’s report. 54 71 Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 10 to 18 of the directors’ report for the year ended 30 June 2021. In our opinion, the Remuneration Report of BCI Minerals Limited, for the year ended 30 June 2021, 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. BDO Audit (WA) Pty Ltd Phillip Murdoch Director Perth, 19 August 2021 72 55 AUDITOR’S INDEPENDENCE DECLARATION Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au 38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF BCI MINERALS LIMITED As lead auditor of BCI Minerals Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of BCI Minerals Limited and the entities it controlled during the period. Phillip Murdoch Director BDO Audit (WA) Pty Ltd Perth, 19 August 2021 BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 56 73 ADDITIONAL ASX INFORMATION (as at 4 October 2021) Substantial Shareholders Substantial shareholders as disclosed in substantial notices given to the Company are as follows: Shareholder Wroxby Pty Ltd Sandon Capital Pty Ltd Distribution of Shareholdings Shares held % of issued capital 236,750,238 36,277,729 39.49 6.05 Size of shareholding Number of holders Number of shares % of issued capital 1-1,000 1,001-5,000 5,001-10,000 10,001 – 100,000 100,001 and over Total 1,364 2,354 1,076 1,952 403 7,149 621,920 6,498,171 8,476,778 64,784,629 519,189,672 599,571,170 0.10 1.08 1.41 10.81 86.59 100.00 Unmarketable Parcels There were 1,599 members holding less than a marketable parcel of shares in the Company at $0.380 per share. Twenty Largest Shareholders # Shareholder 1 2 3 4 5 6 7 8 9 WROXBY PTY LIMITED RYDER CAPITAL MANAGEMENT PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED NORFOLK ENCHANTS PTY LTD ONE MANAGED INVT FUNDS LTD CITICORP NOMINEES PTY LIMITED ONE FUND SERVICES LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED MINERALOGY PTY LTD 10 ONE MANAGED INVT FUNDS LTD <1 A/C> 11 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 12 MR ALWYN PETRUS VORSTER 13 MR DENNIS JONATHAN KAR QUE LUM 14 MS KAREN ANNE DAVIES + MR BRUCE DONALD MACLEAN 15 16 HEAGRA PTY LIMITED BNP PARIBAS NOMINEES PTY LTD 17 MR RICHARD CHENG SHIH KOO + MS CINDY BEE HAR KOO 18 NATIONAL NOMINEES LIMITED 19 BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD 20 PERTH CAPITAL PTY LTD Total Voting Rights All issued shares carry voting rights on a one for one basis. Unlisted Securities Security type Performance rights Share rights 74 Shares held % of issued capital 236,750,238 39.49 24,373,512 23,298,816 18,333,276 18,157,751 13,232,791 11,098,555 8,227,525 6,090,000 6,000,000 5,718,987 5,305,645 4,034,407 3,275,868 3,045,000 2,307,117 2,105,380 1,776,380 1,768,815 1,650,000 4.07 3.89 3.06 3.03 2.21 1.85 1.37 1.02 1.00 0.95 0.88 0.67 0.55 0.51 0.38 0.35 0.30 0.30 0.28 396,550,063 66.14 Number Number of holders 13,253,241 2,456,005 11 8 MINERAL RESOURCES AND ORE RESERVES BCI’s Mineral Resources and Ore Reserves are at the Iron Valley iron ore mine. The Iron Valley tenements are 100% owned by BCI and are being operated by Mineral Resources Limited (MIN) under a royalty-type agreement. MIN operates the mine at its cost and purchases Iron Valley product from BCI at a price linked to MIN’s realised sale price. Estimates for Iron Valley as at 30 June 2021 are set out below, with a comparison to 30 June 2020 figures. Mineral Resources reduced by 8.7Mt during the year due to mining depletion offset by stockpile build-up. Ore Reserves reduced by 14.0Mt due to production shipments, stockpile adjustments and re-optimisation based on updated price and cost assumptions. Iron Valley Mineral Resource Estimate (100% BCI, subject to iron ore sale agreement with MIN) Classification Measured – In-situ Measured – Stockpiles Indicated – In-situ Inferred – In-situ Total at 30 June 2021 Total at 30 June 2020 Cut-off (% Fe) Tonnes (Mt) 50 50 50 50 50 50 76.5 3.4 67.3 26.1 173.3 182.0 Fe (%) 57.7 55.3 58.6 57.8 58.0 58.0 CaFe (%) 62.7 59.8 63.1 61.3 62.6 62.6 SiO2 (%) 5.2 8.1 5.1 6.6 5.4 5.5 Al2O3 (%) 3.2 4.0 3.2 3.9 3.3 3.3 P (%) 0.19 0.20 0.17 0.14 0.17 0.17 Iron Valley Ore Reserve Estimate (100% BCI, subject to iron ore sale agreement with MIN) Classification Proved – In-situ Proved – Stockpiles Probable – In-situ Total at 30 June 2021 Total at 30 June 2020 Cut-off (% Fe) Tonnes (Mt) 54 54 54 54 54 46.2 2.2 19.9 68.3 82.3 Fe (%) 58.1 55.8 58.7 58.2 58.2 CaFe (%) 63.1 60.2 63.3 63.1 63.0 SiO2 (%) 4.7 8.1 4.9 4.9 4.9 Al2O3 (%) 3.2 3.7 3.1 3.2 3.1 P (%) 0.19 0.15 0.16 0.18 0.18 Notes: • Tonnages are dry metric tonnes and have been rounded. Any small differences in totals are due to rounding. • CaFe% is calcined Fe% calculated using the following formula: Fe% / (100% - LOI%) * 100. • Stockpiles have been converted to dry tonnes based on a 5.5% moisture content. • Stockpiles include 0.8Mt of post-process lump and fines products and 1.4Mt of pre-process ore. LOI (%) 7.9 7.4 7.1 5.6 7.3 7.3 LOI (%) 7.9 6.8 7.3 7.7 7.6 Mineral Resources and Ore Reserves Governance Iron Valley Mineral Resource and Ore Reserve estimates are completed by or under the guidance of a suitably qualified MIN or independent Competent Person in accordance with JORC (2012) guidelines. BCI is satisfied with the procedures MIN has advised it has in place for Mineral Resource and Ore Reserve estimation. BCI personnel have also reviewed the documentation and are comfortable with the methodologies used by MIN. The Mineral Resource and Ore Reserves statement included in the Annual Report is reviewed and approved by a suitably qualified Competent Person prior to its inclusion. Competent Person’s Statements The information in this report that relates to the Mineral Resource estimate at Iron Valley is based on, and fairly represents, information that has been compiled by Mr Matthew Watson, who is a full-time employee of Mineral Resources Limited and a Member of the Australasian Institute of Mining and Metallurgy. Mr Watson has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Watson consents to the inclusion in this report on the matters based on his information in the form and context in which they appear. The information in this report that relates to the Ore Reserve estimate at Iron Valley is based on, and fairly represents, information that has been compiled by Mr John Kirk, who is a full-time employee of Mineral Resources Limited and a Member of the Australasian Institute of Mining and Metallurgy. Mr Kirk has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Kirk consents to the inclusion in this report on the matters based on his information in the form and context in which they appear. The Mineral Resources and Ore Reserves statement in this report has been approved by Mr John Kirk, who is a full-time employee of Mineral Resources Limited and a Member of the Australasian Institute of Mining and Metallurgy. Mr Kirk consents to the inclusion in this report of the Mineral Resources and Ore Reserves statement in the form and context in which it appears. 75 CORPORATE DIRECTORY BCI Minerals Limited ABN 21 120 646 924 Annual General Meeting The 2021 Annual General Meeting of BCI Minerals Limited will be held at 2pm (AWST) on Thursday 25 November 2021 at the offices of BDO, 38 Station Street, Subiaco, Western Australia. Details of the business of the meeting will be provided in the Notice of Meeting. Copies of the Chairman’s and Managing Director’s speeches will be available on the Company’s website. Financial Calendar* September 2021 quarter report: Annual General Meeting: Half-year results: *Timing of events is subject to change 26 October 2021 25 November 2021 25 February 2022 Registered Office and Principal Place of Business Level 1, 1 Altona Street West Perth, Western Australia 6005, Australia Telephone: +61 (08) 6311 3400 Facsimile: +61 (08) 6311 3449 Website: www.bciminerals.com.au info@bciminerals.com.au Email: Postal Address GPO Box 2811 Perth, Western Australia 6001, Australia Executive Directors Alwyn Vorster – Managing Director Non-executive Directors Brian O’Donnell – Chairman Michael Blakiston Jenny Bloom Richard Court Garret Dixon Chris Salisbury Joint Company Secretaries Susan Park Stephanie Majteles Share Registry Investors seeking information about their shareholdings should contact the company’s share registry: Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace Perth, Western Australia 6000 Postal address: GPO Box 2975, Melbourne Victoria 3001 Telephone: 1300 850 505 (within Australia) +61 3 9415 4000 (outside Australia) (03) 9473 2500 (within Australia) +61 3 9473 2500 (outside Australia) web.queries@computershare.com.au www.investorcentre.com/contact Facsimile: Email: Website: The share registry can assist with queries on share transfers, dividend payments and changes of name, address or bank account details. For security reasons you will need your Security Reference Number (SRN) or Holder Identification Number (HIN) when communicating with the share registry. Australian Securities Exchange Listing BCI Minerals Limited securities are listed on the Australian Securities Exchange (ASX) under the code BCI. 76 Level 1, 1 Altona Street, West Perth, Western Australia 6005, Australia GPO Box 2811, Perth, WA 6001 Telephone: +61 (08) 6311 3400 Facsimile: +61 (08) 6311 3449 Email: info@bciminerals.com.au www.bciminerals.com.au ABN 21 120 646 924 

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