QEM LIMITED
ACN 167 966 770
ANNUAL FINANCIAL REPORT
For the year ended 30 June 2022
QEM LIMITED
CONTENTS
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Schedule of Mineral Tenements
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3
19
20
21
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QEM Limited
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QEM LIMITED
CORPORATE DIRECTORY
DIRECTORS
John Foley
Gavin Loyden
David Fitch
Daniel Harris
John Henderson
SECRETARY
David Palumbo
REGISTERED OFFICE
Level 8
216 St Georges Terrace
Perth WA 6000
Ph: +61 8 9481 0389
Fax: +61 8 9463 6103
HEAD OFFICE
Level 6
50 Appel St
Surfers Paradise Q 4217
Australia
Ph: +61 7 5646 9553
Email: info@qldem.com.au
Website: www.qldem.com.au
AUDITORS
Hall Chadwick WA Audit Pty Ltd
283 Rokeby Road
SUBIACO WA 6008
SHARE REGISTRY
Automic Registry Services
Level 2, 267 St Georges Terrace
PERTH WA 6000
Phone (within Australia):
Phone (outside Australia):
1300 288 664
+61 2 9698 5414
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QEM LIMITED
DIRECTORS’ REPORT
Your Directors present their report on QEM Limited (referred hereafter as “the Company”) for the
financial year ended 30 June 2022.
Directors
The names of the Directors of the Company in office during the financial year and up to the date of
this report are:
- John Foley (Non-Executive Chairman)
- Gavin Loyden (Managing Director)
- David Fitch (Non-Executive Director)
- Daniel Harris (Non-Executive Director)
- John Henderson (Non-Executive Director, appointed 20 October 2021)
Unless noted above, all directors have been in office since the start of the financial year to the date of
this report.
Company Secretary
David Palumbo
Details of the company secretary’s experience are set out below under ‘Information on Directors’.
Principal Activities
The principal activity of the Company during the financial year was exploration at the Julia Creek oil
shale and vanadium project.
Operating Results
Loss after income tax for the financial year was $2,827,142 (2021: $1,390,411).
Financial Position
The net assets of the Company at 30 June 2022 are $1,820,506 (2021: net assets of $1,136,592). The
Company’s working capital, being current assets less current liabilities is $1,102,424 at 30 June 2022
(2021: working capital of $1,136,592).
Dividends Paid or Recommended
No dividends were paid during the year and no recommendation is made as to dividends.
Significant Changes in State of Affairs
Other than those disclosed in this annual report, there were no significant changes in the state of
affairs of the Company that occurred during the financial year.
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QEM LIMITED
DIRECTORS’ REPORT
Review of Operations
FULL YEAR FY2022 REVIEW
FULL YEAR FY2022 REVIEW OF
OF OPERATIONS:
Extraction and Processing Route Tests
OPERATIONS:
On 11 August 2021, the Company announced the
Oil & Vanadium Pilot Plant
QEM made significant progress on the development of its oil shale and vanadium pilot plant through
FY2022, which culminated in successful commissioning and sustained operation. The pilot plant has
been designed to validate the Company’s proprietary oil extraction and vanadium separation
process, ahead of commercial demonstration of both the vanadium and oil components.
On 9 July 2021, the hazard and operability (HAZOP) study on the pilot plant was completed at the
Melbourne headquarters of HRL Technology Group Pty Ltd (“HRL Technology”), where the pilot plant
was later installed and operated. The plant was certified and approved by ASME-U on 26 October
2021. The plant was subsequently fabricated by specialist manufacturer, AMAR, and was delivered
to Australia on 3 April 2022. The pilot plant is based at the Melbourne headquarters of HRL
Technology.
From commissioning, the plant is scheduled to be operational for a period of up to six months, with
full-scale advanced testing and proceeding as planned. The first batch of results was released post-
FY2022 on 9 August 2022, with the tests highlighting high oil and vanadium extraction rates at a
much larger scale than previously possible.
During early pilot tests, vanadium recovery of 71.5% was achieved on shale ash leached by acid for
four hours. Additionally, oil yields were 142% of that reported under a Modified Fischer Assay
(MFA). The increase in oil yield was made possible with the use of QEM’s innovative hydrogen-based
solvent extraction process.
Subsequent pilot runs will concentrate on optimising yields of both vanadium and oil and
progressively improve and maximise the extraction processes. This will in turn lead to the
development of a Process Flow Sheet. QEM’s primary focus is the extraction of the critical mineral,
vanadium, and oil, but the Company will also integrate metallurgy work to investigate high-purity
alumina (HPA) production potential, after a resource estimate announced on 7 April 2022 at the Julia
Creek project identified a material volume of aluminium, which is also designated as a critical mineral
by the Australian Government.
The installation and commissioning of the bench scale pilot plant at HRL’s Melbourne headquarters during FY22.
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QEM LIMITED
DIRECTORS’ REPORT
Townsville Vanadium Multi-user Facility
QEM’s pilot plant will provide feedstock for the multi-user vanadium processing facility in
Townsville, which will be built and fully funded by the Queensland Government.
This demonstration scale facility is designed to support smaller mining companies to cost effectively
test their processing technologies without having to fund their own standalone facility.
QEM is a founding member of the Queensland Vanadium Consortium, which worked with the State
Government leading up to its November 2021 announcement of the provision of over $10 million in
funding to build a Townsville based facility.
Sites are currently under consideration in Townsville and QEM as a founding member of the
Queensland Vanadium Consortium (QVC) has been contributing to the development of the vanadium
multi-user facility.
The Queensland State Government will develop this project over the coming 12 months with
significant positive benefits for QEM.
Renewable Power Generation Optimisation Studies
In tandem with developing the Company’s flagship Julia Creek vanadium and oil project, QEM made
substantial strides during the year in progressing associated renewable power generation potential
at the project. This is for providing renewable power to the Project.
On 9 July 2021, with subsequent related additional information released on 19 July 2021, QEM
announced an update of assessment work being undertaken by DNV Australia (“DNV)” into power
generation opportunities to underpin the mining operations on site at the Julia Creek vanadium and
oil project. DNV’s preliminary assessment indicated that wind power and a complementary solar
farm could be considered as conceptually feasible sources of power generation at the Julia Creek
project.
DNV recommended further solar farm and wind farm optimisation studies, including on-site stations
to monitor long-term wind speed and solar resources to provide enhanced confirmation of the initial
encouraging results and determine the most suitable solution for the Julia Creek project.
Subsequently, on 11 November 2021, QEM formally engaged global engineering consultant GHD for
renewable power generation optimisation and advanced studies at the Julia Creek project.
GHD commenced overseeing the purchase and installation of on-site stations, including a 160m high
Met Mast to monitor long-term wind speed and solar resources to provide enhanced confirmation of
the initial encouraging results from studies completed by DNV.
On 10 June 2022, QEM issued a Connection Enquiry Information Request to understand
CopperString’s position regarding potential connection points to QEM’s infrastructure. On 22 June
2022 CopperString responded to the Company’s enquiry, which detailed an initial proposal to
determine the connection point’s maximum export into the grid and maximum load requirement
from the grid. The positive response will give rise to more technical discussions over the coming
months.
CopperString 2.0 is a proposed $1.7 billion, 1,500km high voltage transmission project, between
Townsville and the North West Minerals Province (NWMP) and will run through the western portion
of QEM’s Julia Creek vanadium and oil shale project, ideal conditions for efficient access to the
National electricity grid (NEM), as a consumer and/or an exporter of surplus QEM project power.
The Queensland government is yet to make a final decision regarding the Copperstring 2.0 project.
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DIRECTORS’ REPORT
Environmental Permitting and Studies
Environmental studies were undertaken during the 2022 fiscal year, for the purpose of progressing
the Julia Creek vanadium and oil project. Important environment permitting and studies culminated
in an Ecological Assessment Report, which will form a crucial component of the Pre-Feasibility Study
for the Julia Creek project.
On 27 October 2021, QEM engaged specialist environmental consultant Epic Environmental Pty Ltd
(“Epic Environmental”) for the provision of an environmental permitting pathway and assistance
with related approvals.
Epic Environmental’s scope of works includes leading the development of an Environmental Impact
Statement, undertaking environmental baseline studies at Julia Creek, coordinating environmental
approval applications, an Initial Advice Statement to obtain Coordinated Project status and Major
Project application, as well as establishing a Progressive Rehabilitation and Closure Plan.
Epic Environmental completed the on-site ecological field survey on 24 March 2022, established
fauna traps and began the Environmental Impact Statement work program.
In early June 2022, EPIC Environmental completed the Ecological Assessment Report, which included
a proposed pipeline corridor to the Flinders River.
Epic Environmental will continue to progress important project development initiatives over
FY2023, including coordinating environmental approval applications.
Drilling Program
On 23 November 2021, QEM Ltd successfully completed its planned 2021 exploration drilling
program at the Julia Creek project.
The program was designed with two purposes in mind, the first to provide a greater volume of
research material, approximately 1500 kgs total sample for the pilot plant testing and the second to
provide further definition to the mineral JORC Resource and Petroleum Resources, and to expand the
current Indicated area to the west and north-west.
Wizard Drilling conducted the campaign, overseen by the Measured Group. Six (4C) holes were
drilled for a total of 417m of drilling, completed with 99.4 m of 100mm diameter core obtained from
the target Toolebuc Formation. All holes were geophysically logged by Weatherford Services and
despatched to Mitra PTS in Gladstone, Queensland.
Resource Upgrade
Following the drilling campaign in November 2021, an independent geology and resource estimate
report was undertaken by Measured Group Pty Ltd.
On 7 April 2022, QEM released the results of this report which detailed and revealed a significant
upgrade in the confidence of the oil resource at the Company’s flagship Julia Creek Project, as well as
an increase in the size and grade of the Julia Creek vanadium deposit, which was already one of the
largest single vanadium deposits in the world.
The report detailed a current estimated Mineral Resource at the Julia Creek project of 2,850 million
tonnes (Mt) vanadium bearing ore at an average V205 content of 0.31%.
The previous Mineral Resource estimate, which was released to the ASX on 14 October 2019,
consisted of 2,760Mt vanadium bearing ore at an average V205 content of 0.30%. Crucially, the
updated Mineral Resource encompasses an Indicated vanadium JORC Resource of 360Mt and
2,490Mt in the Inferred category. The previous Mineral Resource estimate had an Indicated
vanadium JORC Resource 220Mt and 2,540Mt in the Inferred category.
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DIRECTORS’ REPORT
Utilising a 90% recovery factor, a 3C oil shale Resource estimate of 626 million barrels (MMBBL was
reached. Additionally, a maiden 2C oil shale estimate of 71 MMBBL was identified, which is a resource
class of greater confidence compared to a 3C estimate.
Furthermore, an average of 2.43% of aluminium was identified in the Resource estimate, which the
Company believes warrants further investigation. QEM is currently undertaking vanadium and oil
shale testing in its bench scale pilot plant and can incorporate assessment of high-purity alumina
(HPA) extraction without deviating from its planned testing schedule or incurring significant
additional costs.
Survey and Monitoring
Throughout the June 2022 quarter QEM conducted several survey and monitoring initiatives to
advance the Julia Creek vanadium and oil shale project.
QEM partnered with National Drones to complete an entire topographic survey of QEM’s 250 square
kilometre tenement. The resultant imagery from the two-week survey has been utilised to baseline
the current environmental condition of the tenement and the topographic data will be initially used
to conduct a flood modelling study.
Additionally, geotechnical drill and soil samples were completed at the end of April 2022, in
preparation of the installation of QEM’s meteorological mast.
Wind speed (soDAR) and solar measuring equipment was placed on site and commissioned on 17
May 2022 by Fulcrum 3D. The soDAR and solar equipment is used to measure and record solar
radiance, wind speed and other technical data required for wind and solar farm design.
Significant work on the 160-metre meteorological mast was also carried out during the June 2022
quarter. During that quarter, footings and concrete blocks were poured and various components of
the met mast were delivered to site, with the met mast fully installed and commissioned post quarter.
The met mast is fitted with anemometers and other instruments to measure wind speed and other
weather conditions. It will collect information for 12 to 18 months to support the wind farm
feasibility studies. The soDAR and solar monitoring equipment, as well as the met mast, will play a
key part in the optimisation studies into renewable energy generation to potentially power the
Company's critical minerals project.
Capital Raisings
On 4 August 2021, QEM announced the completion of a ~$2 million placement to institutional,
professional and sophisticated investors at $0.15 per share. Together with existing cash reserves, the
proceeds of the raise sufficiently funded the Company through the first phase of oil and vanadium
pilot plant development and operation at HRL Laboratories in Melbourne, as well as the next round
of wind and solar power studies. The placement received strong support from existing QEM
shareholders, including non-executive director and largest shareholder David Fitch, who subscribed
for $580,000.
On 4 May 2022, QEM announced it had successfully completed an oversubscribed $2.4m placement
to institutional, professional, and sophisticated investors at 20.5 cents per share. The funds raised, in
addition to QEM’s existing cash reserves, were applied towards the vanadium and oil shale pilot plant
testing program and to continue PFS studies. The placement received strong support from existing
shareholders including non-executive director and major shareholder David Fitch, who subscribed
for approximately $710,000 to maintain his 29% shareholding.
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DIRECTORS’ REPORT
Community Relations
Positive awareness of QEM’s activities and commitment to the Julia Creek community continued to
grow during the 2022 financial year across various local and state government bodies, as well as the
broader resources sector.
On 8 December 2021, QEM sponsored the launch of the Gold Coast branch of WIMARQ (Women In
Mining And Resources Queensland) to bring together women in the resources industry. On 10 March
2022, QEM hosted a financial literacy workshop for the WIMARQ Gold Coast branch.
The Company was also a major sponsor of the 2022 Julia Creek Dirt n Dust Festival, with naming
rights for the QEM Mount Isa Convoy to the Creek, focused on the theme of inviting people to “Have
a “Yack in the Outback”, acknowledging the impact that events such as COVID, flood and drought have
had on the community not only physically but mentally.
QEM continued to support the local St Vinnies’ Chapter in the lead up to the 2022 St Vinnies’ CEO
Sleepout. On 23 June 2022, Managing Director Gavin Loyden participated in his second Vinnies CEO
Sleepout on the Gold Coast, raising $7,636 and awareness to support Vinnies’ homelessness services.
Also on 23 June 2022, QEM proudly sponsored the “Investing in Women in Resources Networking
Breakfast” organised by the Women in Mining and Resources Queensland (WIMARQ) Gold Coast
Chapter and supported by the Queensland Resources Council.
QEM also sponsored the local junior and senior rugby leagues in Julia Creek. Additionally, the
Company proactively held numerous meetings with the McKinlay Shire Council, landholders and
other relevant stakeholders to update and receive feedback on QEM’s Julia Creek Project.
Comprehensive weekly updates are emailed to QEM’s landholders, and the McKinlay Shire Council
distributes the monthly QEM newsletters to its broad regional email database. This financial year,
QEM also took up a premises in the main street of Julia Creek, which includes an office, executive
accommodation and a large shed. The community’s feedback has been highly supportive to date.
QEM continued to increase the positive impact it has in its local communities during FY2022.
Board Appointment
On 20 October 2021, QEM appointed John Henderson to the Company’s Board of Directors as a Non-
executive Director. Mr Henderson has over 40 years’ experience in major and mega project
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DIRECTORS’ REPORT
development, which includes executive roles with oil and mining multinationals, as well as mid-tier
and start-up energy companies.
His extensive project management experience and expertise across the mining and energy sectors
includes senior managerial roles at Rio Tinto and the BHP Billiton Mitsubishi Alliance. Among his
achievements, Mr Henderson developed Rio Tinto’s unconventional energy project portfolio in
Mozambique.
Government Relations
Throughout FY2022, QEM continued its engagement with the relevant Queensland State Government
Departments who will be key stakeholders in the successful development of the Julia Creek project.
QEM issued the Office of the Coordinator General (OCG) a draft of the Initial Advice Statement (IAS)
in the December 2021 quarter. The IAS is the initial step towards obtaining a Coordinated Project
Declaration.
During the June 2022 quarter, QEM attended a follow up meeting with the OCG. QEM was informed
that the OCG issued the Initial Advice Statement to other Queensland Government Departments to
obtain feedback.
The feedback received has helped QEM to refine the studies and work to be performed to obtain a
Coordinated Project Declaration. Additionally, during the June 2022 quarter QEM issued an
Expression of Interest to the Department of Regional Development, Manufacturing and Water for an
allocation of four gigalitres of water from the Flinders River.
ESG
On 31 March 2022, QEM announced it had engaged Socialsuite to assist in streamlining, monitoring,
and disclosing the Company’s ESG progress and initiatives. QEM released its initial baseline
Environment, Social and Governance (ESG) report to the market.
QEM published its quarterly ESG report for Q4 FY2022 with disclosures on 21 core metrics set by the
World Economic Forum in its standardised and globally recognised Stakeholder Capitalism Metrics
ESG framework.
Highlights throughout the quarter included reporting on environmental management activities such
as aerial drone surveys, baseline ecology and habitat assessments, as well as improved disclosures
on stakeholder mapping and consultation – ensuring hard to reach stakeholders and groups are
identified and included in community engagement activities.
Post-FY22, QEM provided its first quarterly ESG baseline comparison report, which compares
progress on ESG initiatives on a quarterly basis. Via quarterly ESG reporting, QEM aims to increase
the transparency of overall reporting to keep ESG goals on track, and to be able to communicate
progress to internal and external stakeholders, including potential investors.
Throughout FY22, QEM participated in the consultation process for Everledger's pilot project to
create a digital certification for critical minerals throughout the supply chain, from extraction to
processing and export to global markets.
COVID-19
QEM is pleased to report that it experienced no material COVID-19 impacts on its operations during
the 2022 financial year. The Company is maintaining adherence to Government directives to ensure
it does its part to mitigate the risk of an outbreak.
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DIRECTORS’ REPORT
Information on Directors
John Joseph Foley – Non-Executive Chairman
B.D., LL.B., B.L. (Dub), KHS., F.A.I.C.D. Barrister-at-Law
Background
Graduating in law from the University of Sydney in 1969, John was admitted to practice as a barrister
in New South Wales in 1971. He was subsequently admitted to practice in the jurisdictions of Victoria,
ACT, the High Court of Australia and Ireland. He graduated with the post graduate degree of
Barrister-at-Law from Trinity College Dublin and was called to the Irish Bar and admitted as a
Member of the Honourable Society of King's Inns in Dublin. John spent two years as a lecturer in law
at Macquarie University Sydney and has practiced as a Barrister for 40 years.
He is also currently a director of two public companies listed on the ASX, namely Citigold Corporation
Limited (ASX: CTO) and Hudson Investment Group Limited (ASX:HGL). John was a founding director
of the Australian Gold Council, the industry body. He is a long standing member and fellow of the
Australian Institute of Company Directors and he is listed in Who's Who in Business in Australia.
John has wide-ranging experience in the resources, financial and investment related industries, with
extensive business experience in Australia and overseas. His leadership roles have covered a broad
scope of senior positions, and his commercial and legal background will provide further depth,
knowledge and experience to any enterprise.
John has a large network of connections with people in government, industry and the Investment
community. As a professional advocate he has represented industry bodies before various
Commissions, Tribunals and Courts and has extensive experience
in negotiations and
representations with both State and Federal Governments.
Interest in securities
884,299 Ordinary Shares
600,000 Options exercisable at $0.345 on or before 12 August 2025
Directorships held in other listed entities in the past three years
Citigold Corporation Limited (current)
Hudson Investment Group Limited (current)
Gavin Loyden – Managing Director
M.A.I.C.D
Background
Gavin Loyden is the Founder and Managing Director of QEM Limited, having identified and acquired
the significant dual commodity resource at Julia Creek. Mr Loyden is responsible for QEM’s early
capitalisation, initial exploration program and project development. He has over a decade of
experience in the mining industry.
Prior to founding QEM, Mr Loyden assisted a range of companies from early stage development
through to international stock market listings. He has extensive experience in the structuring of
capital raising proposals for both private and public companies, executive selection, and Corporate
Governance. Mr Loyden is a member of the Australian Institute of Company Directors.
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DIRECTORS’ REPORT
Interest in securities
20,649,808 Ordinary Shares
2,000,000 Options exercisable at $0.345 on or before 12 August 2025
Directorships held in other listed entities in the past three years
None
David Fitch – Non-Executive Director
B.Com. B.Juris., GAICD
Background
Mr. Fitch was previously the Chief Operating Officer and joint major shareholder of the Fitch Group
– a group of companies with assets in excess of $250 million spread across the commercial,
residential, manufacturing, retail and hotel industries.
He has extensive experience in strategic planning, commercial negotiations, business operations and
asset management, with a particular focus on greenfield development sites for the commercial /
retail sectors and residential development.
He is also actively involved as director of BioCentral Laboratories Ltd, a company producing
advanced products for the firefighting industry, in addition to dust suppressants for mining and road
construction. Mr. Fitch is also the largest shareholder of QEM.
Interest in securities
36,172,439 Ordinary Shares
1,000,000 Options exercisable at $0.345 on or before 12 August 2025
Directorships held in other listed entities in the past three years
None
Daniel Clifford Harris – Non-Executive Director
B.Sc (Chem Eng)
Background
Daniel is a seasoned and highly experienced mining executive and director. He has most recently held
the role of interim CEO and managing director of ASX listed Atlas Iron, a mid-sized, independent
Australian iron ore mining company with operations in the Northern Pilbara of Western Australia.
Daniel has been involved in all aspects of the vanadium industry for over 37 years and held both COO
and CEO positions in Atlantic Ltd. The company's subsidiary, Midwest Vanadium, owned a +$500
million-dollar production plant and vanadium mine in Western Australia. As COO, Daniel was tasked
with the start-up of the newly constructed vanadium plant and brought it into commercial operation.
Daniel is also the former Vice President of EVRAZ Plc, Vanadium assets responsible for their global
vanadium business. EVRAZ plc is a £4.2 billion publicly traded steel, mining and vanadium business
with operations in the Russian Federation, Ukraine, Europe, USA, Canada and South Africa. EVRAZ
consolidated vanadium business produced and marketed approximately one third of the world's
vanadium supply, with annual turnover, in excess of $600 million dollars.
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DIRECTORS’ REPORT
Prior to EVRAZ, Daniel held numerous positions with Strategic Minerals Corporation. Throughout his
30 years with the company, he advanced his career from junior engineer, through to CFO and CEO
roles within the group and was responsible for increasing the capacity of the Hot Springs Project by
50%.
Daniel is a non-executive director on the Board of Australian Vanadium Ltd, a Perth based vanadium
company now finalizing a DFS for their Gabanintha vanadium project. Additionally, Daniel is an
Executive Director and member of the board of U. S. Vanadium, Ltd, a US based vanadium producer
of high purity vanadium oxides and chemicals.
Daniel also acts as a technical executive consultant to GSA Environmental in the UK, a process
engineering company that is well credentialed in the vanadium and oil industries. GSA is the UK's
leading technology company for extraction and recovery of metals from ashes, minerals, refinery
residues, spent catalyst and industrial by-products.
Daniel brings a wealth of experience, in all aspects of mining and project development and will assist
QEM in creating a world class project in Queensland, Australia.
Interest in securities
600,000 Options exercisable at $0.345 on or before 12 August 2025
Directorships held in other listed entities in the past three years
Australian Vanadium Limited (current)
Flinders Mines Limited (current)
Atlas Iron Limited
Paladin Energy Ltd
John Henderson – Non-Executive Director – appointed 20 October 2021
Background
John is a Non-Executive Director, Advisory Board Member, Director and project development
specialist with 40 years industry experience in the mining, oil & gas and energy sectors. He has
deep, experience-based understanding of major project development processes and governance.
Since 2016, John has been a minority shareholder of Siecap Pty Ltd, which provides project
management advisory and consultancy services to mining, petroleum and energy clients. His
executive career has included senior project development and delivery assignments for multi-
national energy, resource and petroleum companies including BHP, Rio Tinto and Mobil, as well as
large engineering consulting and construction companies. In 2011 he founded Inkwazi Energy, a
boutique advisory firm that has provided advisory and strategic consulting to governments and
agencies in developing nations.
Interest in securities
135,000 Ordinary Shares
600,000 Options exercisable at $0.345 on or before 12 August 2025
Directorships held in other listed entities in the past three years
None
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DIRECTORS’ REPORT
COMPANY SECRETARY
David Palumbo
Mr Palumbo is a Chartered Accountant and a graduate of the Australian Institute of Company
Directors with over fifteen years’ experience in company secretarial, accounting and financial
reporting of ASX listed and unlisted companies, including five years as an external auditor. Mr
Palumbo is an employee of Mining Corporate and provides corporate advisory, financial management
and corporate compliance services. He has acted as Company Secretary for numerous ASX listed
companies, assisted with multiple ASX IPO’s and currently serves on the Board of Krakatoa Resources
Limited, Albion Resources Limited and Rubix Resources Limited.
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each director of QEM Limited and for
the executives receiving the highest remuneration.
1. Employment Agreements
On 28 May 2021, Gavin Loyden’s Remuneration package was reviewed by the board and it was
deemed appropriate to increase his remuneration package to $275,000 per annum plus
superannuation effective from 1 July 2021. Previously, on 27 April 2021, Gavin Loyden entered into
an executive employment agreement with the Company. Under the terms of the agreement, Mr
Loyden’s annual salary was $200,000 plus superannuation. Either party may terminate this
Agreement by providing written notice to the other party by providing three (3) months’ prior notice.
Gavin Loyden was previously employed by the Company until his resignation on 16 July 2018. Mr
Loyden’s previous annual salary was $186,000 plus superannuation with a (3) month termination
notice.
Appointments of non-executive directors are formalised in the form of service agreements between
themselves and the Company at a rate of $30,000 per annum. Their engagements have no fixed term
but cease on their resignation or removal as a director in accordance with the Corporations Act. Mr
John Henderson was appointed as a non-executive director on 20 October 2021. His agreement is
consistent with other non-executive directors and his remuneration has been awarded on a pro-rata
basis since his appointment.
2. Remuneration policy
The Company’s remuneration policy has been designed to align director and executive objectives with
shareholder and business objectives by providing a fixed remuneration component and offering
specific long-term incentives based on key performance areas affecting the Company’s financial
results. The board believes the remuneration policy to be appropriate and effective in its ability to
attract and retain the best executives and directors to run and manage the Company, as well as create
goal congruence between directors, executives and shareholders.
The board’s policy for determining the nature and amount of remuneration for board members and
senior executives of the Company is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and
other senior executives, was developed by the board;
All executives receive a base salary (which is based on factors such as length of service and
experience), superannuation and are entitled to the issue of share options. The remuneration
committee reviews executive packages annually by reference to the Company’s performance,
executive performance and comparable information from industry sectors.
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The performance of executives is measured against criteria agreed annually with each executive and
is based predominantly on the forecast growth of the Company’s shareholders’ value. The board may,
however, exercise its discretion in relation to approving incentives, bonuses and options, and can
recommend changes to the committee’s recommendations. Any changes must be justified by reference
to measurable performance criteria. The policy is designed to attract the highest calibre of executives
and reward them for performance that results in long-term growth in shareholder wealth.
Executives are also entitled to participate in the employee share and option arrangements.
Any executive director, who is an Australian resident for tax purposes, receives a superannuation
guarantee contribution required by the government, which was 10%. No other retirement benefits
are paid.
All remuneration paid to directors and executives is valued at the cost to the Company and expensed,
or capitalised to exploration expenditure if appropriate. Options, if given to directors and executives
in lieu of remuneration, are valued using the Black-Scholes methodology.
The board policy is to remunerate non-executive directors at market rates for time, commitment and
responsibilities. The remuneration committee determines payments to the non-executive directors
and reviews their remuneration annually, based on market practice, duties and accountability.
Independent external advice is sought when required. The maximum aggregate amount of fees that
can be paid to non-executive directors is subject to approval by shareholders at the Annual General
Meeting. Fees for non-executive directors are not linked to the performance of the Company. However,
to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in
the Company.
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3. Options issued as part of remuneration for the year ended 30 June 2022
Nil
4. Details of remuneration for the year ended 30 June 2022:
The remuneration for each key management personnel of the Company during the period was as
follows:
2022
Short-term
Benefits
Post-
employment
Benefits
Other
Long-term
Benefits
Share based
Payments
Total
Perfor-
mance
Related
% of
Options as
Remunera
tion
Key Management
Person
Cash, salary &
commissions
$
Super-
annuation
$
Other
Equity Options
$
$
$
$
%
%
Directors
John Foley
David Fitch
Daniel Harris
Gavin Loyden
John Henderson
30,000
30,000
30,000
275,000
21,300
386,300
-
3,000
-
27,500
2,105
32,605
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
33,000
30,000
302,500
23,405
418,905
-
-
-
-
-
2021
Short-term
Benefits
Post-
employment
Benefits
Other
Long-term
Benefits
Share based
Payments
Total
Perfor-
mance
Related
% of
Options as
Remunera
tion
Key Management
Person
Cash, salary &
commissions
$
Super-
annuation
$
Other
Equity
Options
$
$
$
$
%
%
Directors
John Foley
David Fitch
Daniel Harris
Gavin Loyden
30,000
30,000
30,000
200,000
290,000
-
2,850
-
19,000
21,850
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
32,850
30,000
219,000
311,850
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
QEM Limited
15
QEM LIMITED
DIRECTORS’ REPORT
5. Equity holdings of key management personnel
Ordinary Shares
Number of ordinary shares held by key management personnel during the financial year ended 30
June 2022 was as follows:
30 June 2022
Balance at beginning of
year
Directors
John Foley
David Fitch
Daniel Harris
Gavin Loyden
John Henderson
884,299
27,992,500
-
20,613,336
-
49,490,135
Net
change
other
-
4,668,932
-
27,777
135,000
4,831,709
Balance at end of
year
884,299
32,661,432
-
20,641,113
135,000
54,321,844
6. Other Key Management Personnel Transactions
During the year ended 30 June 2022, the Company paid consulting fees to Daniel Harris totalling
$70,000 (2021: $60,000). The Company also incurred fees of $716,921 plus GST, to Siecap Pty Ltd
for the financial year ended 30 June 2022 under the project management agreement announced to
ASX on 20 April 2021. Siecap Pty Ltd is an entity in which John Henderson is a minority shareholder
and maintains an advisory role.
On 3 June 2022, the Company entered into a rental agreement with CL Fitch Pty Ltd, a related party
entity of David Fitch for a premises in Julia Creek. The rental agreement is for a term of 12 months
and is rented to the Company for $30,000 per annum. The Company paid CL Fitch Pty Ltd $2,250 in
relation to this agreement in financial year 2022.
The Company incurred no other transactions with related parties.
“End of Remuneration Report (Audited)”
After Balance Date Events
On 12 August 2022 the Company issued 3,463,415 fully-paid ordinary shares to David Fitch at $0.205
per share to raise $710,000. The shares were placed as part of the 4 May 2022 capital raise and were
issued after receiving shareholder approval at the general meeting held on 12 August 2022.
The Company issued 5,000,000 options to KMP and employees exercisable at $0.345 expiring on 12
August 2025 after approval obtaining shareholder approval at the 12 August 2022 general meeting.
No other matters or circumstances have arisen since the end of the financial period 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 future financial years.
Future Developments
QEM Limited
16
QEM LIMITED
DIRECTORS’ REPORT
Likely developments in the operations of the Company and the expected results of those operations
in future financial years have not been included in this report as the inclusion of such information is
likely to result in unreasonable prejudice to the Company.
Meetings of Directors
During the financial year, 5 meetings of directors were held. Attendances by each director during the
period were as follows:
Directors’ Meetings
Number eligible to attend
5
5
5
5
4
Number attended
5
5
5
5
4
John Foley
David Fitch
Daniel Harris
Gavin Loyden
John Henderson
Environmental Issues
The Company is not aware of any breaches in relation to environmental matters.
Options
At the date of this report, there were 5,250,000 unissued ordinary shares of the Company under
option.
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene
in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf
of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Indemnifying of Officers
During the year the Company paid premiums in respect of a contract insuring all the directors and
officers of the Company against liabilities, past, present and future.
In accordance with normal commercial practice, the disclosure of the total amount of premiums
under and the nature of the liabilities covered by the insurance contract is prohibited by a
confidentiality clause in the contract.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the
Directors support, and adhere to, good corporate governance practices. Refer to the Company’s
Corporate Governance Statement at www.qldem.com.au.
Non-Audit Services
QEM Limited
17
QEM LIMITED
DIRECTORS’ REPORT
There were no fees paid or payable to the external auditors for non-audit services provided during
the year ended 30 June 2022.
Auditor’s Declaration of Independence
The auditor’s independence declaration for the year ended 30 June 2022 has been received and is
included within the financial statements.
Signed in accordance with a resolution of directors.
Gavin Loyden
Managing Director
21 September 2022
QEM Limited
18
To the Board of Directors
AUDITOR’S
CORPORATIONS ACT 2001
INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
As lead audit director for the audit of the financial statements of QEM Limited for the financial year ended 30
June 2022, I declare that to the best of my knowledge and belief, there have been no contraventions of:
•
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours Faithfully,
HALL CHADWICK WA AUDIT PTY LTD
D M BELL CA
Director
Dated this 21st day of September 2022
Perth, Western Australia
QEM LIMITED
STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Revenue
Corporate and compliance expenses
Investor relations and marketing expenses
Travelling expenses
Employee benefits expense
Exploration expenditure
Share based payments expense
Depreciation expense
Other expenses
Loss from continuing operations before income
tax benefit
Income tax expense
Loss from continuing operations after income tax
benefit
Note
2
12
2022
2021
$
$
256,769
(248,746)
(120,673)
(55,285)
(273,717)
(2,132,103)
-
(81,996)
(171,391)
339,327
(209,377)
(106,217)
(20,063)
(634,467)
(552,198)
(17,084)
(66,821)
(123,511)
(2,827,142)
-
(1,390,411)
-
3
(2,827,142)
(1,390,411)
Other comprehensive income, net of tax
-
-
Total comprehensive loss attributable to Members of
the parent entity
(2,827,142)
(1,390,411)
Basic and diluted loss per share (cents)
4
(2.51)
(1.39)
The accompanying notes form part of these financial statements.
QEM Limited
20
QEM LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
Right of Use Asset
Total Current Assets
Non Current Asset
Other Assets
Right of Use Asset
Plant and Equipment
Total Non Current Asset
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Lease Liabilities
Provisions
Total Current Liabilities
Non Current Liabilities
Lease Liabilities
Non Current Liabilities
Total Liabilities
Net Assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total Equity
2022
$
2021
$
Note
5
6
7
9
7
9
10
8
9
9
11
12
1,425,475
184,925
77,530
91,828
1,779,758
19,450
122,437
716,877
858,764
2,638,522
518,648
94,651
64,035
677,334
140,682
140,682
818,016
1,326,474
35,738
32,402
22,274
1,416,888
-
-
-
-
1,416,888
229,019
24,172
27,105
280,296
-
-
280,296
1,820,506
1,136,592
11,448,721
17,084
(9,645,299)
1,820,506
7,937,665
17,084
(6,818,157)
1,136,592
The accompanying notes form part of these financial statements.
QEM Limited
21
QEM LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Issued Capital Reserves
$
$
Accumulated
losses
$
Total
$
Balance at 1 July 2020
7,937,665
-
(5,427,746)
2,509,919
Issue of shares (net)
Loss after income tax expense for the year
Options issued during the period
Other comprehensive income for the year,
net of tax
Balance at 30 June 2021
Issue of shares (net)
Loss after income tax expense for the year
Options issued during the period
Other comprehensive income for the year,
net of tax
Balance at 30 June 2022
-
-
-
-
-
17,084
-
(1,390,411)
-
-
(1,390,411)
17,084
-
7,937,665
-
17,084
-
(6,818,157)
-
1,136,592
3,511,056
-
-
-
-
-
-
(2,827,142)
-
3,511,056
(2,827,142)
-
-
11,448,721
-
17,084
-
(9,645,299)
-
1,820,506
The accompanying notes form part of these financial statements.
QEM Limited
22
QEM LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
Cash Flows from Operating Activities
Payments for exploration and evaluation
Payments to suppliers and employees
Interest received
Grants received
Net Cash (Outflow) from Operating Activities
Note
15
Cash Flows from Investing Activities
Payments for plant and equipment
Net Cash (Outflow) from Operating Activities
Cash Flows from Financing Activities
Lease repayments
Payments for capital raising costs
Proceeds from issued capital
Net Cash Inflow from Financing Activities
Net Increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
5
2022
$
2021
$
(2,117,253)
(809,110)
1,663
256,497
(2,668,203)
(684,503)
(684,503)
(59,799)
(184,394)
3,695,900
3,451,707
99,001
1,326,474
1,425,475
(1,071,290)
(509,673)
7,456
331,416
(1,242,089)
-
-
(69,034)
-
-
(69,034)
(1,311,123)
2,637,597
1,326,474
The accompanying notes form part of these financial statements.
QEM Limited
23
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
1.
Statement of Significant Accounting Policies
These financial statements and notes represent those of QEM Limited (the “Company”). QEM Limited
is a listed public Company, incorporated and domiciled in Australia. The financial statements were
authorised for issue on
September 2022 by the directors of the Company.
Basis of Preparation
21
The financial report is a general purpose financial report that has been prepared in accordance with
Interpretations, other
Australian Accounting Standards,
authoritative pronouncements of the Australian Accounting Standards Board and the Corporations
Act 2001.
including Australian Accounting
Australian Accounting Standards set out accounting policies that the AASB has concluded would
result in a financial report containing relevant and reliable information about transactions, events
and conditions to which they apply. Compliance with Australian Accounting Standards ensures that
the financial statements and notes also comply with International Financial Reporting Standards as
issued by the IASB. Material accounting policies adopted in the preparation of this financial report
are presented below. They have been consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historical costs modified
by the revaluation of selected financial assets for which the fair value basis of accounting has been
applied. All amounts are presented in Australian dollars unless otherwise stated.
Going Concern
The financial report has been prepared on the going concern basis which contemplates the continuity
of normal business activity, the realisation of assets and the settlement of liabilities in the ordinary
course of business.
For the financial year ended 30 June 2022 the Company incurred a loss of $2,827,142 (2021:
$1,390,411). The ability of the Company to continue as a going concern is principally dependent on
the Company raising capital. These conditions indicate a material uncertainty that may cast
significant doubt about the ability of the Company to continue as a going concern.
The directors have prepared a cash flow forecast, which indicates that the Company will have
sufficient cash flows to meet all commitments and working capital requirements for the 12 month
period from the date of signing this financial report.
Based on the cash flow forecasts and other factors referred to above, the Directors are satisfied that
the going concern basis of preparation is appropriate. In particular, given the Company’s history of
raising capital to date, the directors are confident of the Company’s ability to raise additional funds
as and when they are required. This is evidenced by the the Company raising $3,511,056 (net of
costs) during the financial period, and an additional $710,000 subsequent to year end (refer Note
20).
Should the Company be unable to continue as a going concern it may be required to realise its assets
and extinguish its liabilities other than in the normal course of business and at amounts different to
those stated in the financial statements. The financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or to the amount and
QEM Limited
24
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
classification of liabilities that might result should the Company be unable to continue as a going
concern and meet its debts as and when they fall due.
Accounting Policies
The following is a summary of the material accounting policies adopted by the Company in the
preparation of the financial report.
a)
Income Tax
The income tax expense (revenue) for the period comprises current income tax expense (income)
and deferred tax expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income
calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date.
Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to
(recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the period as well unused tax losses. Current and deferred income tax expense
(income) is charged or credited directly to equity instead of the profit or loss when the tax relates to
items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred
tax assets also result where amounts have been fully expensed but future tax deductions are
available. No deferred income tax will be recognised from the initial recognition of an asset or
liability, excluding a business combination, where there is no effect on accounting or taxable profit
or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates enacted or substantively
enacted at reporting date. Their measurement also reflects the manner in which management
expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to
the extent that it is probable that future taxable profit will be available against which the benefits of
the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the
reversal of the temporary difference can be controlled and it is not probable that the reversal will
occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of
set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur
QEM Limited
25
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
in future periods in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
b)
Leases
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the Company’s incremental borrowing rate. Lease payments comprise of fixed payments less any
lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the
exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The
variable lease payments that do not depend on an index or a rate are expensed in the period in which
they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are remeasured if there is a change in the following: future lease payments arising from a
change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and
termination penalties. When a lease liability is remeasured, an adjustment is made to the
corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset
is fully written down.
Exploration and evaluation expenditure
c)
Exploration and evaluation expenditure, including the costs of acquiring tenements, are expensed as
incurred.
Expensing exploration and evaluation expenditure as incurred is irrespective of whether or not the
Board believes expenditure could be recouped from either a successful development and commercial
exploitation or sale of the respective assets.
d)
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are
included as part of the initial measurement, except for financial assets at fair value through profit or
loss. Such assets are subsequently measured at either amortised cost or fair value depending on their
classification. Classification is determined based on both the business model within which such
assets are held and the contractual cash flow characteristics of the financial asset unless, an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's
carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income
are classified as financial assets at fair value through profit or loss. Typically, such financial assets
will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-
term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial
recognition where permitted. Fair value movements are recognised in profit or loss.
QEM Limited
26
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which
the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to
classify them as such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets
which are either measured at amortised cost or fair value through other comprehensive income. The
measurement of the loss allowance depends upon the consolidated entity's assessment at the end of
each reporting period as to whether the financial instrument's credit risk has increased significantly
since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a
12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The
amount of expected credit loss recognised is measured on the basis of the probability weighted
present value of anticipated cash shortfalls over the life of the instrument discounted at the original
effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance
is recognised within other comprehensive income. In all other cases, the loss allowance is recognised
in profit or loss.
e)
Impairment of Assets
At the end of each reporting date, the Company assesses whether there is any indication that an asset
may be impaired. The assessment will include the consideration of external and internal sources of
information including dividends received from subsidiaries, associate or jointly controlled entities
deemed to be out of pre-acquisition profits. If such an indication exists, the recoverable amount of
the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to
the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed. Impairment testing is performed annually for intangible assets with indefinite lives. Where
it is not possible to estimate the recoverable amount of an individual asset, the Company estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
f)
Employee Benefits
Provision is made for the company’s liability for employee benefits arising from services rendered
by employees to balance date. Employee benefits that are expected to be settled within a 12 month
period have been measured at the amounts expected to be paid when the liability is settled, plus
related on-costs. Employee benefits payable later than 12 months have been measured at the present
value of the estimated future cash outflows to be made for those benefits.
Equity-settled compensation
The Company operates equity-settled share-based payment employee share and option schemes.
The fair value of the equity to which employees become entitled is measured at grant date and
recognised as an expense over the vesting period, with a corresponding increase to an equity account.
The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained
QEM Limited
27
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
using a Black –Scholes pricing model which incorporates all market vesting conditions. The number
of shares and options expected to vest is reviewed and adjusted at the end of each reporting date
such that the amount recognised for services received as consideration for the equity instruments
granted shall be based on the number of equity instruments that eventually vest.
g)
Provisions
Provisions are recognised when the Company has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result and that outflow can
be reliably measured.
h)
Cash and Cash Equivalents
Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments
which are readily convertible to known amounts of cash and which are subject to an insignificant risk
of change in value. Bank overdrafts also form part of cash equivalents for the purpose of the
statement of cash flows and are presented within current liabilities on the balance sheet.
i)
Borrowing Costs
All borrowing costs are recognised as expense in the period in which they are incurred.
j)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST
component of investing and financing activities, which are disclosed as operating cash flows.
k)
Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-
recurring basis, depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a
liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing
market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing
information is used to determine fair value. Adjustments to market values may be made having
regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities
that are not traded in an active market are determined using one or more valuation techniques. These
valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset
or liability (ie the market with the greatest volume and level of activity for the asset or liability) or,
in the absence of such a market, the most advantageous market available to the entity at the end of
the reporting period (ie the market that maximises the receipts from the sale of the asset or
QEM Limited
28
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
minimises the payments made to transfer the liability, after taking into account transaction costs and
transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant's
ability to use the asset in its highest and best use or to sell it to another market participant that would
use the asset in its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-
based payment arrangements) may be valued, where there is no observable market price in relation
to the transfer of such financial instruments, by reference to observable market information where
such instruments are held as assets. Where this information is not available, other valuation
techniques are adopted and, where significant, are detailed in the respective note to the financial
statements.
Valuation techniques
In the absence of an active market for an identical asset or liability, the Group selects and uses one or
more valuation techniques to measure the fair value of the asset or liability, The Group selects a
valuation technique that is appropriate in the circumstances and for which sufficient data is available
to measure fair value. The availability of sufficient and relevant data primarily depends on the
specific characteristics of the asset or liability being measured. The valuation techniques selected by
the Group are consistent with one or more of the following valuation approaches:
Market approach: valuation techniques that use prices and other relevant information generated by
market transactions for identical or similar assets or liabilities.
Income approach: valuation techniques that convert estimated future cash flows or income and
expenses into a single discounted present value.
Cost approach: valuation techniques that reflect the current replacement cost of an asset at its
current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would
use when pricing the asset or liability, including assumptions about risks. When selecting a valuation
technique, the Group gives priority to those techniques that maximise the use of observable inputs
and minimise the use of unobservable inputs. Inputs that are developed using market data (such as
publicly available information on actual transactions) and reflect the assumptions that buyers and
sellers would generally use when pricing the asset or liability are considered observable, whereas
inputs for which market data is not available and therefore are developed using the best information
available about such assumptions are considered unobservable.
Fair value hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which
categorises fair value measurements into one of three possible levels based on the lowest level that
an input that is significant to the measurement can be categorised into as follows:
Level 1
Measurements based on quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date. Measurements based on inputs other
than quoted prices included in Level 1 that are observable for the asset or liability, either directly or
indirectly.
QEM Limited
29
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Level 2
Measurements based on inputs other than quoted prices included in Level 1 that are observable for
the asset or liability, either directly or indirectly
Level 3
Measurements based on unobservable inputs for the asset or liability. The fair values of assets and
liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable
market data. If all significant inputs required to measure fair value are observable, the asset or
liability is included in Level 2. If one or more significant inputs are not based on observable market
data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following
circumstances:
(i)
if a market that was previously considered active (Level 1) became inactive (Level 2 or Level
3) or vice versa; or
if significant inputs that were previously unobservable (Level 3) became observable (Level
2) or vice versa.
(ii)
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair
value hierarchy (i.e. transfers into and out of each level of the fair value hierarchy) on the date the
event or change in circumstances occurred.
l)
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-
current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the Company's normal operating cycle; it is held primarily for the purpose of trading; it
is expected to be realised within 12 months after the reporting period; or the asset is cash or cash
equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months
after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Company's normal
operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months
after the reporting period; or there is no unconditional right to defer the settlement of the liability
for at least 12 months after the reporting period. All other liabilities are classified as non-current.
m)
Revenue
Interest revenue is recognised using the effective interest method.
n)
Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgments incorporated into the financial report based on
historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data, obtained both
externally and within the Company.
QEM Limited
30
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Share-based payment transactions
The Company measures the cost of equity-settled transactions with employees and consultants by
reference to the fair value of the equity instruments at the date at which they are granted. The fair
value is determined by using either the Binomial or Black-Scholes model taking into account the
terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying
amounts of assets and liabilities within the next annual reporting period but may impact profit or
loss and equity.
o)
Property, Plant, and Equipment
Land and buildings are shown at fair value, based on periodic, at least every 3 years, valuations by
external independent valuers, less subsequent depreciation and impairment for buildings. The
valuations are undertaken more frequently if there is a material change in the fair value relative to
the carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against
the gross carrying amount of the asset and the net amount is restated to the revalued amount of the
asset. Increases in the carrying amounts arising on revaluation of land and buildings are credited in
other comprehensive income through to the revaluation surplus reserve in equity. Any revaluation
decrements are initially taken in other comprehensive income through to the revaluation surplus
reserve to the extent of any previous revaluation surplus of the same asset. Thereafter the
decrements are taken to profit or loss.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property,
plant and equipment (excluding land) over their expected useful lives as follows:
Plant and equipment
3-10 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate,
at each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated
useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future
economic benefit to the Company. Gains and losses between the carrying amount and the disposal
proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of
is transferred directly to retained profits.
p)
Accounting Standards that are mandatorily effective for the current reporting year
The Company has adopted all of the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for
an accounting period that begins on or after 1 January 2021.
The Directors have determined that there is no material impact from new and revised Accounting
Standards and Interpretations on the Company and, therefore, no material change is necessary to
Company accounting policies.
QEM Limited
31
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
At the date of authorisation of the financial statements, the Company has not applied the new and
revised Australian Accounting Standards, Interpretations and amendments that have been issued but
are not yet effective. Based on a preliminary review of the standards and amendments, the Directors
do not anticipate a material change to the Company’s accounting policies, however further analysis
will be performed when the relevant standards are effective.
2.
Revenue
Interest received
Research and development grant
Other grants
2022
$
2021
$
272
256,497
-
256,769
7,911
281,416
50,000
339,327
3.
Income tax benefit/(expense)
Net loss before tax
The prima facie tax payable on profit from ordinary activities before
income tax is reconciled to the income tax expense as follows:
Income tax benefit on above at 25% (2021: 30%)
Increase/(decrease) in income tax due to the tax effect of:
Non-deductile expenses
Non-assessable income
Research and development incentive
Tax losses not recognised/(utilised)
(2,827,142)
(1,390,411)
(706,786)
(417,123)
6,694
-
(64,124)
764,216
1,191
(15,000)
(84,425)
515,357
Income tax reported in the statement of comprehensive income
-
-
4.
Earnings per share
2022
Cents per
Share
2021
Cents per
Share
Basic/diluted loss per share
(2.51)
(1.39)
The loss and weighted average number of ordinary shares used in
this calculation of basic/diluted loss per share are as follows:
Loss from continuing operations
Weighted average number of ordinary shares for the purposes
of basic/ diluted loss per share
5.
Cash and cash equivalents
Cash at bank
QEM Limited
2022
$
2021
$
(2,827,142)
(1,390,411)
Number
Number
112,667,441
100,000,000
2022
$
2021
$
1,425,475
1,326,474
32
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
6.
Trade and other receivables
Current
GST receivable
Interest receivable
2022
$
184,925
-
184,925
2021
$
34,348
1,390
35,738
As at 30 June 2022, current trade and other receivables do not contain amounts which are past due
and not impaired. It is expected that these amounts will be received when due.
7.
Other assets
Current
Prepayments
Non-current
Other Assets
8.
Trade and other payables
Current
Trade payables and accruals
9.
Leases
a) Right-of-use asset
Balance at the beginning of the year
Additions
Depreciation
Balance at the end of the year
Current
Non-Current
Total
2022
$
77,530
77,530
19,450
19,450
2022
$
2021
$
32,402
32,402
-
-
2021
$
518,648
229,019
2022
$
2021
$
22,274
267,517
(75,526)
214,265
91,828
122,437
214,265
89,095
-
(66,821)
22,274
22,274
-
22,274
QEM Limited
33
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
b) Lease liabilities
Office lease
Current
Non-Current
Total
235,333
24,172
94,651
140,682
235,333
24,172
-
24,172
On 1 November 2021, the Company extended its office lease at 50 Appel Street, Surfers Paradise,
Queensland. The lease extension runs for a further 3 years ceasing on 21 October 2024.
10.
Plant and equipment
2022
$
2021
$
Equipment at cost
Equipment – accumulated depreciation
Plant at cost
Plant – accumulated depreciation
Plant and equipment
Opening balance
Additions
Disposals
Depreciation
28,200
(1,679)
695,147
(4,791)
716,877
-
723,347
-
(6,470)
716,877
-
-
-
-
-
-
-
-
-
-
During the year, the Company finalised the development and commissioned the vanadium and oil
shale pilot plant on 25 May 2022.
QEM Limited
34
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Issued capital
11.
Issued and paid up capital
(a)
121,630,162 (2021: 100,000,000) Ordinary
Shares
2022
$
2021
$
11,448,721
7,937,665
(b) Movement in
ordinary shares on issue
Balance at beginning of period
Shares issued during the year:
Issue of ordinary shares – 10
August 2021 (i)
Issue of ordinary shares – 29
September 2021 (ii)
Issue of ordinary shares 4
May 2022 (iii)
Capital raising costs
Balance at end of period
2022
Number
100,000,000
2022
$
7,937,665
2021
Number
100,000,000
2021
$
7,937,665
9,556,666
1,433,500
3,866,667
580,000
8,206,829
-
121,630,162
1,682,400
(184,844)
11,448,721
-
-
-
-
-
100,000,000
-
7,937,665
(i)
(ii)
(iii)
On 10 August 2021, the Company issued 9,556,666 shares at $0.15 to raise $1,433,500
before costs.
On 29 September 2021, the Company issued 3,866,667 shares at $0.15 to raise $580,000
before costs.
On 4 May 2022, the Company issued 8,206,829 shares at $0.205 to raise $1,682,400
before costs.
As part of the raising, an additional 3,463,415 shares were placed to David Fitch (which
were subject to shareholder approval) at $0.205 to raise $710,000. These shares were
approved subsequent to year end. See note 20.
Terms and conditions of contributed equity
(c)
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the
Company, to participate in proceeds from the sale of all surplus assets in proportion to the number of
and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person
or by proxy, at a meeting of the Company.
QEM Limited
35
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Capital Management
(d)
The Company’s objectives when managing capital are to safeguard their ability to continue as a going
concern, so that they may continue to provide returns for shareholders and benefits for other
stakeholders. The Company’s capital includes ordinary share capital and financial liabilities, supported
by financial assets. There are no externally imposed capital requirements.
Due to the nature of the Company’s activities, being mineral exploration, the Company does not have
ready access to credit facilities, with the primary source of funding being equity raisings. Therefore,
the focus of the Company’s capital risk management is the current working capital position against the
requirements of the Company to meet exploration programmes and corporate overheads. The
Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating
requirements, with a view to initiating appropriate capital raisings as required.
The net working capital position of the Company at 30 June 2022 was a surplus of $1,102,424 (2021:
$1,136,592) and the net increase in cash held during the year was $99,001 (2021: decrease of
$1,311,123).
12.
Reserves
2022
$
2021
$
Share based payment reserve
17,084
17,084
Share based payment reserve
Reserve at the beginning of the year
Options issued – 19 March 2021
Reserve at end of year
Options
17,084
-
17,084
-
17,084
17,084
There were no options issued in the financial year ended 30 June 2022. 250,000 options were issued
to employees as part of their remuneration in FY21. Details of the options granted to employees are
detailed below:
Grant
Date/entitlem
ent
Number of
Instruments
Grant Date Expiry Date
Exercis
e Price
Employee
options
250,000 19/03/2021 31/03/2023
$0.20
Fair value
per
instrument
$
0.068
Value $
17,084
QEM Limited
36
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Employee options issued during the period were calculated using the Black-scholes option pricing
model with the following inputs:
Expected volatility (%)
Risk free interest rate (%)
Weighted average expected life of options
(years)
Expected dividends
Option exercise price ($)
Share price at grant date ($)
Fair value of option ($)
13.
Auditors’ remuneration
Options granted
Range
100%
0.09%
2.03
Nil
$0.20
$0.15
$0.068
2022
$
2021
$
Amounts, received or due and receivable by auditors for:
- audit or review services
18,500
17,500
14.
Key Management Personnel (KMP) and Related Party Transactions
Key Management Personnel
(a)
Refer to the remuneration report contained in the directors’ report for details of the remuneration
paid or payable to each member of the Company’s KMP for the financial year ended 30 June 2022.
The totals of remuneration paid to KMP of the Company during the year are as follows:
Short term
Post-employment
386,300
32,605
418,905
290,000
21,850
311,850
Other transactions
(b)
During the year ended 30 June 2022, the Company paid consulting fees to Daniel Harris totalling
$70,000 (2021: $60,000). The Company also incurred fees of $716,921 plus GST, to Siecap Pty Ltd for
the financial year ended 30 June 2022 under the project management agreement announced to ASX on
20 April 2021. Siecap Pty Ltd is an entity in which John Henderson is a minority shareholder and
maintains an advisory role.
On 3 June 2022, the Company entered into a rental agreement with CL Fitch Pty Ltd, a related party
entity of David Fitch for a premises in Julia Creek. The rental agreement is for a term of 12 months and
is rented to the Company for $30,000 per annum. The Company paid CL Fitch Pty Ltd $2,250 in relation
to this agreement in financial year 2022.
The Company incurred no other transactions with related parties.
QEM Limited
37
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
15.
Cash Flow Information
(a) Reconciliation of Cash Flow from Operations with Loss
after Income Tax
Loss after income tax
Non cash flows:
Finance cost on right of use asset
Depreciation on right of use asset
Depreciation on plant and equipment
Share based payments
Changes in assets and liabilities:
- (increase)/decrease in trade and other receivables
- (increase)/decrease in other assets
- increase/(decrease) in trade and other payables
2022
$
2021
$
(2,827,142)
(1,390,411)
2,651
75,526
6,470
-
3,358
66,821
-
17,084
(84,242)
(61,578)
220,112
(2,668,203)
(9,570)
(79)
70,708
(1,242,089)
(b) Non Cash Investing & Financing Activities
There were no non-cash investing or financing activities during the year.
16.
Contingent liabilities and contingent assets
It is the opinion of directors of the Company that there were no contingent assets or liabilities.
17.
Financial reporting by segments
The Company has identified its operating segments based on the internal reports that are used by the
Board (the chief operating decision makers) in assessing performance and in determining the
allocation of resources.
The operating segments are identified by the Board based on the phase of operation within the mining
industry. For management purposes, the Company has organised its operations into two reportable
segments on the basis of stage of development as follows:
Development assets; and
Exploration and evaluation assets, which includes assets that are associated with the
determination and assessment of the existence of commercial economic reserves.
The Board as a whole will regularly review the identified segments in order to allocate resources to
the segment and to assess its performance.
During the year ended 30 June 2022, the Group had no development assets. The Board considers that
it has only operated in one segment, being mineral exploration.
The Group is domiciled in Australia. All revenue from external customers are only generated from
Australia. No revenues were derived from a single external customer.
QEM Limited
38
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
18.
Financial risk management
Overview
The Company has exposure to the following risks from their use of financial instruments:
credit risk
liquidity risk
market risk
This note presents information about the Company’s exposure to each of the above risks, their
objectives, policies and processes for measuring and managing risk.
The Board of Directors has overall responsibility for the establishment and oversight of the risk
management framework. Management monitors and manages the financial risks relating to the
operations of the Company through regular reviews of the risks.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Company’s
receivables from customers and investment securities.
Trade and other receivables
As the Company has just started operations, it does not have trade receivables and therefore is not
exposed to credit risk in relation to trade receivables.
Exposure to credit risk
The carrying amount of the Company’s financial assets represents the maximum credit exposure.
The Company’s maximum exposure to credit risk at the reporting date was:
Financial assets
Cash and cash equivalents – AAA rated counterparties
Receivables – other
2022
$
1,425,475
184,925
1,610,400
2021
$
1,326,474
35,738
1,362,212
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they
fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
The Company manages liquidity risk by maintaining adequate reserves by continuously monitoring
forecast and actual cash flows. Typically the Company ensures that it has sufficient cash on demand
to meet expected operational expenses for a period of 60 days, including the servicing of financial
obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be
predicted, such as natural disasters.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates
and equity prices will affect the Company’s income or the value of its holdings of financial
instruments. The Company is not currently exposed to any material interest rate risk.
QEM Limited
39
QEM LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Interest rate risk sensitivity analysis
The Company does not have any material exposure to interest rate risk as there were no external
borrowings at 30 June 2022 (2021: nil). Any borrowings were intercompany related and unsecured
and interest free and therefore there is no exposure to interest rate risk associated with these
amounts. Interest bearing assets are all short term liquid assets and the only interest rate risk is the
effect on interest income by movements in the interest rate. There is no other material interest rate
risk.
Fair value of financial instruments
The Directors consider that the carrying amount of financial assets and financial liabilities recorded
in the financial statements approximates their fair value. There are no financial assets or liabilities
which are required to be measured at fair value on a recurring basis.
19.
Commitments
Exploration commitments
In order to maintain current rights of tenure to exploration tenements, the Company is required to
perform minimum exploration requirements specified by the Queensland Governments Department
of Natural Resource and Mines. These obligations are not provided for in the financial report.
Minimum Work Requirements
No later than 12 months
Between 1 and 5 years
Capital commitments
2022
$
290,000
600,000
890,000
2021
$
244,000
890,000
1,134,000
2018
$
319,000
457,000
776,000
On 28 March 2022, Company agreed to purchase Wind Monitoring Mast from Fulcrum 3D for a total
of $396,281. The terms of the arrangement meant 50% of the balance, being $198,140, was due on
completion/commissioning of the Wind Mast, which is expected Q1 FY23.
20.
Events Subsequent to Period End
On 12 August 2022 the Company issued 3,463,415 fully-paid ordinary shares to David Fitch at
$0.205 per share to raise $710,000. The shares were placed as part of the 4 May 2022 capital raise
and were issued after receiving shareholder approval at the general meeting held on 12 August
2022.
The Company issued 5,000,000 options to key management personnel and employees exercisable
at $0.345 expiring on 12 August 2025 after obtaining shareholder approval at the 12 August 2022
general meeting.
No other matters or circumstances have arisen since the end of the financial period, 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 future financial years.
QEM Limited
40
QEM LIMITED
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2022
The directors of the Company declare that:
1. the financial statements and notes are in accordance with the Corporations Act 2001 and:
a) comply with Accounting Standards and the Corporations Regulations 2001; and
b) give a true and fair view of the Company’s financial position as at 30 June 2022 and its
performance for the year ended on that date; and
c) are in accordance with International Financial Reporting Standards, as stated in note 1 to the
financial statements; and
2. the Managing Director and Company Secretary have each declared that:
a) the financial records of the Company for the financial year have been properly maintained in
accordance with section 286 of the Corporations Act 2001;
b) the financial statements and notes for the financial year comply with the Accounting
Standards; and
c) the financial statements and notes for the financial year give a true and fair view;
3.
in the directors’ opinion there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they become due and payable.
This declaration is signed in accordance with a resolution of the Board of Directors.
Gavin Loyden
Managing Director
21 September 2022
QEM Limited
41
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF QEM LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of QEM Limited (“the Company”), which comprises the statement of
financial position as at 30 June 2022, the statement of profit or loss and other comprehensive income, the
statement of changes in equity and the statement of cash flows for the year then ended, and notes to the
financial statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion:
a.
the accompanying financial report of the Company is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Company’s financial position as at 30 June 2022 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards as disclosed in Note
1.
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 Company in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our
audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Company incurred a net loss of
$2,827,142 during the year ended 30 June 2022. As stated in Note 1, these events or conditions, along with
other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt
on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
Key audit matter
How our audit addressed the key audit matter
Exploration Expenditure
During the year, the Company incurred
Our procedures included, amongst others:
exploration expenses of $2,132,103.
Exploration expenditure is a key audit matter
due to the significance to the Company’s
loss and other
statement of profit or
comprehensive income.
• Testing exploration expenditure
the year by
evaluating a sample of recorded expenditure
for
consistency to underlying records, the Company’s
for
accounting policy and the requirements of AASB 6
Exploration for and Evaluation of Mineral Resources;
and
• Assessing
the Company’s
rights
to
tenure by
corroborating to government registries.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Company’s annual report for the year ended 30 June 2022, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the
directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Company’s ability 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 Company or to cease operations, or has
no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
•
•
•
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2022.
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with s 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.
Auditor’s Opinion
In our opinion, the Remuneration Report of the Company, for the year ended 30 June 2022, complies with
section 300A of the Corporations Act 2001.
HALL CHADWICK WA AUDIT PTY LTD
D M BELL CA
Director
Dated this 21st day of September 2022
Perth, Western Australia
QEM LIMITED
ASX INFORMATION
The following additional information is required by the ASX Limited in respect of listed public
companies and was applicable at 12 September 2022.
1.
Shareholder and Option holder information
a.
Number of Shareholders and Option Holders
Shares
As at 12 September 2022, there were 1,401 shareholders holding 125,093,577 fully paid
ordinary shares.
Options
As at 12 September 2022, there are 5 option holders holding 5,000,000 unlisted options
exercisable at $0.345 on or before 12 August 2025, and 1 option holder holding 250,000
unlisted options exercisable at $0.20 expiring 31 March 2023.
b.
Distribution of Equity Securities
Fully paid ordinary shares
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Number (as at 12 September 2022)
Shareholders
Ordinary Shares
36
454
311
492
108
1,401
6,268
1,506,563
2,446,572
17,430,035
103,704,139
125,093,577
As at 12 September 2022 there were no number of shareholdings that were held in less than
marketable parcels.
c.
The names of substantial shareholders listed in the company’s register as at 12 September
2022 are:
Shareholder
Ordinary Shares
David Fitch
Gavin & Tracey Loyden
36,172,439
20,649,808
%Held of Total
Ordinary Shares
28.92%
16.51%
d.
Voting Rights
The voting rights attached to the ordinary shares are as follows:
Each ordinary share is entitled to one vote when a poll is called, otherwise each member
present at a meeting or by proxy has one vote on a show of hands.
QEM Limited
46
QEM LIMITED
ASX INFORMATION
e.
20 Largest Shareholders as at 12 September 2022 — Ordinary Shares
Name
David Fitch Group
Gavin Loyden Group
STONE GROUP PTY LTD
EVOLUTION HUB PTY LTD
SKIPTRAK PTY LTD
1.
2.
3.
4.
5.
6. ML FITCH NOMINEES PTY LTD
8.
7. MR MICHAEL MYLES FORD &
MRS ELIZABETH FORD
CITYMETRO PTY LTD
CRAV PTY LTD
9.
10. CG DAVIES INVESTMENTS PTY LTD
11. DAVGOE INVESTMENTS PTY LTD
12. MT DAVIES INVESTMENTS PTY LTD
13. ZARMAD PTY LTD
14.
SUPERHERO SECURITIES LIMITED
15. NETWEALTH INVESTMENTS LIMITED
16. TALOR PTY LTD
17. VALFAST PTY LTD
18. MFSF SUPER PTY LTD
19. MR MAXWELL WALTER ELLIOT
20. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
Number of
Ordinary
Fully Paid
Shares Held
36,172,439
20,649,808
4,257,156
3,138,436
2,886,438
2,188,816
% Held of
Issued
Ordinary
Capital
28.92%
16.51%
3.40%
2.51%
2.31%
1.75%
1,705,310
1.36%
1,618,185
1.29%
1,500,000
1.20%
1,473,118
1.18%
1,473,118
1.18%
1,473,118
1.18%
1,267,854
1.01%
1,183,749
0.95%
1,033,369
0.83%
1,000,000
884,299
715,000
0.80%
0.71%
0.57%
566,733
550,725
0.45%
0.44%
74,805,781 68.28%
2.
3.
4.
The name of the company secretary is David Palumbo.
The address of the principal registered office in Australia is:
Level 8, 216 St Georges Terrace Perth WA 6000
Registers of securities are held at the following address:
Automic Registry Services, Level 2, 267 St Georges Terrace, PERTH WA 6000
5.
Stock Exchange Listing:
QEM Limited
47
QEM LIMITED
ASX INFORMATION
Quotation has been granted for all the ordinary shares of the company on all Member
Exchanges of the ASX Limited.
6.
Restricted Securities:
The Company currently has no restricted securities held in Escrow.
QEM Limited
48
QEM LIMITED
SCHEDULE OF MINERAL TENEMENTS
Project
Tenement
Interest held by
QEM Limited
Julia Creek
Julia Creek
Julia Creek
Julia Creek
EPM 25662
EPM 25681
EPM 26429
EPM 27057
100%
100%
100%
100%
QEM Limited
49