Annual Report 2022
Contents
Corporate Directory ................................................................................................................................ ii
Review of Operations ............................................................................................................................. iii
Environmental, Social and Governance Framework .............................................................................. xii
Mineral Resources Statement............................................................................................................... xiii
Corporate Governance .......................................................................................................................... xiv
Financial Statements .............................................................................................................................. xv
ASX Additional Information .................................................................................................................. 58
i
Corporate Directory
Directors
John Young (Non-Executive Chairman)
Registered and business address
Unit 6, 94 Rokeby Road
Jeremy Robinson (Managing Director)
Subiaco WA 6008
Shaun Hardcastle (Non-Executive Director)
Australia
Cameron Henry (Non-Executive Director)
Telephone: +61 8 6383 6593
Website: www.rarex.com.au
Auditors
SW Audit
Level 25, 108 St Georges Terrace
Perth, Western Australia 6000
Share registry
Automic Registry Services
126 Phillip Street
Sydney, New South Wales 2000
Telephone: 1300 288 664
Company secretary
Oonagh Malone
Securities exchange
Australian Securities Exchange (ASX)
Code:
REE
Home office:
Perth
Country of incorporation and domicile
Australia
ii
Review of Operations
The Board is pleased to provide a review of operations across the Company’s asset portfolio for the
financial year 2022 and to date.
Cummins Range Rare Earths Project
RareX Limited (ASX: REE) is a Perth-based rare earths company committed to becoming a near- term
producer of neodymium and praseodymium (NdPr). RareX’s focus is on developing rare earths
deposits in Australia, including the flag-ship Cummins Range Rare Earths – Phosphate Project.
NdPr is a core enabler of decarbonisation of our society and enables low carbon technologies,
especially in the electric mobility sector, robotics solutions and renewable energy, e.g. the wind energy
sector. NdPr is the key raw material for manufacturing rare earth powered permanent magnet NdFeB
electric motors, the heart of the next industrial revolution the Electrification of our Society.
RareX’s focus is on developing rare earths deposits in Australia, including the Cummins Range Rare
Earths Phosphate Project in the East Kimberley region of Western Australia. RareX is committed to
developing a sustainable, ethical, transparent and secure low carbon rare earth supply chain solution
for the global electric mobility market and NdFeB permanent motor downstream ecosystem.
2021 Mineral Resource Upgrade
On 19 July 2021, the Company announced a substantial resource upgrade for Cummins Range, having
incorporated the results of the successful 2020 drill program. The Cummins Range Mineral Resource
has grown significantly both in size and quality, firmly establishing the deposit as a high-quality
development opportunity in a Tier-1 mining jurisdiction.
The resource has increased on the back of the quality work undertaken by the RareX technical team,
with the increase stemming both from drilling results from 2020 and correct specific gravity
measurements taken from the current expansionary drill program.
The overall 46% increase in the deposit is accompanied by a significant high-grade component and the
announcement of a maiden Indicated resource of 11.1 million tonnes at 1.34% TREO + 0.17% Nb2O5
(0.5% TREO cut-off) and 4.9 million tonnes at 2.11% + 0.23% Nb2O5 (1.0% TREO cut-off) marking a
significant increase in the quality of the resource as well.
Table 1: Cummins Range JORC Resource at 0.5% TREO and 1.0% TREO Cut Off grade
0.5% Cut Off
Indicated
Inferred
Total
Tonnes Mt
11.1
7.7
18.8
TREO %
1.34
0.88
1.15
NdPr %
0.27
0.18
0.23
Nb₂O5 %
0.17
0.11
0.14
HREO ppm
830
540
711
1.0% Cut Off
Tonnes Mt
TREO %
NdPr %
Nb₂O5 %
HREO ppm
Indicated
Inferred
Total
4.9
1.6
6.5
2.11
1.60
1.98
0.41
0.31
0.38
0.23
0.16
0.21
1,150
800
1,060
iii
2021 and 2022 Drill Programs
In July 2021, the Company announced the commencement of a significant diamond drilling and
reverse circulation (RC) program at Cummins Range. The success of the 2021 program enabled the
Company to estimate an Exploration Target (see below) which is in addition to and located below the
current Resource. It also gave the Company the confidence to commence its largest drill campaign to
date with up to three rigs on site, commencing in April 2022, which has continued to produce
spectacular high-grade grade results.
Hole CDX0007 was the first assayed diamond drill-hole at Cummins Range in 40 years and was drilled
into an area where a displacement fault had been interpreted. This interpretation has now been
supported by the hole intersecting a 77m wide breccia zone that has assayed 61.4m at 1% TREO (Total
Rare Earth Oxides) and 0.3% Nb2O5. The lower 34.6m of this breccia is in fresh rock with common
disseminations of monazite grading at 34.6m at 1.3% TREO and 0.4% Nb2O5, including 3.6m at 2.5%
TREO and 0.7% Nb2O5.
Drill hole CDX0004 assayed a whopping 102.97m at 1.6% TREO with 0.3% NdPr and 0.4% Nb2O5. This
hole was drilled into an area that was previously interpreted by previous explorers to be an area where
rare earth minerals have been upgraded through weathering processes. Instead, the hole has passed
through a wide breccia zone which sits in the hanging wall position of the Main Fault. This breccia zone
has consistent wide intervals of 1% to 2% TREO and strong niobium mineralisation as shown in by
other drilling into this zone.
Outstanding assays continued to be received with multiple intercepts above the current Resource
grade:
• CDX0012 – 16.5m at 2% TREO with 0.4% NdPr and 0.1% Nb2O5and 50g/t Ag including, 3m at
6% TREO with 1% NdPr and 0.1% Nb2O5and 25g/t Ag
• CDX0010 – 15m at 1.8% TREO with 0.4% NdPr and 0.1% Nb2O5and 102g/t Ag, including 11m
at 2.3% TREO with 0.4% NdPr and 0.1% Nb2O5and 138g/t Ag
• CDX006 – 13m at 1.8% TREO with 0.3% NdPr and 0.1% Nb2O5including 8.6m at 2.5% TREO with
0.4% NdPr and 0.1% Nb2O5
• CDX0013 – 26m at 2.3% TREO with 0.5% NdPr and 0.3% Nb2O5including 2.8m at 6.6% TREO
with 1.2% NdPr and 0.8% Nb2O5
• CDX0018 – 21.9m at 1.7% TREO including 6.4m at 3.5% TREO
• CDX0019 – 27m at 1.81% TREO including 5.6m at 4.81% TREO
These results have extended the mineralisation in the primary zone beyond 200m down-dip.
Drill-hole CDX0013 (26m at 2.3% TREO) was drilled 50m to the west of CDX0012 and is the
westernmost hole drilled at the best orientation to test the deposit, suggesting the primary
mineralisation remains open to the north-west.
Two holes contain exceptional silver grades of up to 138g/t Ag and CDX0017 reporting 5.9m at 1.5%
TREO and 222g/t Ag.
Diamond hole CDX0015 intersected significant primary phosphate mineralization in the “Northern
Phosphate Zone”, with a spectacular intercept of 71m at 15% Nb2O5from 71.5m down-hole. The grade
compares well to other operating mines of this type, in the range of 5% Nb2O5to 15% Nb2O5. Previous
drilling in the northern area intersected wide zones of supergene mineralisation, demonstrating the
iv
potential scale of the system, with intriguingly high NdPr and HREO content for the rare earths
contained in this zone.
One of the final holes of the 2021 program, deeper hole CDX0016 intersected multiple stacked lenses,
all with massive to disseminated rare earths as monazite comprising a cumulative total of 51m grading
2.5% TREO.
The 2022 drilling of CDX0020 drilled down-dip from CDX0016 and intersected strong mineralisation
250m down dip from hole CDX0016 which adds considerably to the scale of the Project with a
confirmed 450m of mineralisation down dip from surface. Deeper rare earths zones were also
intersected including at end of hole. Wide high-grade phosphate was also drilled in "phoscorite" units.
The 2022 growth drilling program confirmed the potential scale and significance of Cummins Range
for both rare earths and phosphate with an extensive mineral system emerging. The latest results
received include:
• CDX0020 - 384.4m at 4% Nb2O5and 0.3% TREO and multiple high-grade rare earths
intersections cumulatively 43m at 1.7% TREO including 11.6m at 1.9% TREO
• CDX0022 - 455.6m at 5% Nb2O5and 0.5% TREO and multiple high-grade rare earths
intersections cumulatively 100.4m at 1.9% TREO including 17m at 2.4% TREO
• CDX0027 - 326.4m at 4% Nb2O5and 0.4% TREO with multiple high-grade rare earths
intersections cumulatively 60.5m at 1.8% TREO including of 6.2m at 4.2% TREO
The 2022 drill program has now completed on site and the exploration team look forward to all assays
being received over the coming months.
Figure 1. Section showing drill results for CDX0027 and CDX0022. Location of section shown on Figure 2.
v
Figure 2. Drill hole locations of 2022 drill program. Showing TREO % mineralisation and location of drill Section ‘C’ – “C”.
Maiden Exploration Target
In February 2022, the Company announced its maiden Exploration Target of 23Mt at 1.6% TREO to
41Mt at 2.4% TREO, which is in addition to and located below the current Indicated and Inferred
Mineral Resource within the Main Rare Earths Zone. The Company is excited to continue its drilling
programs to test this target.
The potential quantity and grade of the Exploration Target is conceptual in nature, and there has been
insufficient exploration to estimate a Mineral Resource and it is uncertain if further exploration will
result in the estimation of a Mineral Resource.
Cummins Range Scoping Study
The Company is making considerable progress on early-stage approvals work for the development of
the Cummins Range Project including flora and fauna surveys, water bore monitoring and community
engagement. In September 2022, the Company released a positive Scoping Study (Study) which
demonstrates a potentially viable project and has given the Board of RareX the confidence to approve
the commencement of a Pre-Feasibility Study (PFS). Key metrics of the Study are set out below.
Cautionary statement
The Scoping Study referred to in this release was completed to determine the viability of a combined mine, beneficiation, and hydrometallurgical processing
plan in the Wyndham East Kimberly region of Western Australia, using rare earth deposits at Cummins Range to produce rare earth products. It is a preliminary
technical and economic study of the potential viability of the Project.
The Scoping Study referred to in this release is based on low-level technical and economic assessments and is insufficient to support an estimation of Ore
Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be
realised. Further evaluation work and appropriate studies are required before RareX will be in a position to estimate any ore reserves or to provide any assurance
of an economic development case. This scoping study is an order of magnitude technical and economical assessment and is partially supported by Inferred
Mineral Resources1.
The Study is based on the material assumptions outlined below. These include assumptions about the availability of funding. While RareX considers all of the
material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct of that the range of outcomes indicated by the
Study will be achieved. To achieve the range of outcomes indicated in the Study, funding of approximately AU$430m will likely be required. Investors should
note that there is no certainty that RareX will be able to raise that amount of funding when needed. It is also possible that such funding may only be available
on terms that may be dilutive or otherwise affect the value of RareX’s existing shares. It is also possible that RareX could pursue other value realisation strategies
such as a sale, partial sale or joint venture of the Project. If it does, this could materially reduce RareX’s proportionate ownership of the Project. The Study
includes appropriate assessment of realistically assumed modifying factors together with other relevant operational factors.
The Study is based on indicated resources 85% and inferred resources 15%, which underpin the production target disclosed in the Study. There is a low level of
geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of
indicated mineral resources or that the production target itself will be realised.
1 ASX Announcement 19 July 2021: RareX delivers major resource upgrade at Cummins Range Rare Earths Project.
vi
Table 2: Key Project Metrics
Financial
Total Capital Expenditure
Discount Rate (pre-tax, nom)
NPV8
IRR (pre-tax, nom)
Payback
LOM EBITDA
Products
MREC Product (dry)
Phosphate Concentrate Produced (dry)
Phosphoric Acid Produced
Capex split2F2
Cummins Range Mine Site and Beneficiation
Wyndham Port Refinery Facility
Opex
Cash Costs
By-Product Credit
Cash Costs (after credit)
Product price
Basket price (ex Sc2O3)
MREC Price (FOB)
Phosphate Price inc. REO Credit (FOB)
Phosphoric Acid Price (FOB)
Note:
TREO = Total Rare Earth Oxides
MREC = Mixed Rare Earth Carbonate
REO = Rare Earth Oxide
LoM = Life of Mine
Metallurgical Testwork
Units
AU$ million
%
AU$ million
%
Yrs
AU$ billion
Units
Ktpa
Ktpa
Ktpa
Units
AU$ million
AU$ million
Units
AU$/kg TREO in MREC
AU$/kg TREO in MREC
AU$/kg TREO in MREC
Units
US$/t
US$/t
US$/t
US$/t
Value
430
8.0 %
633
29 %
2.8
1.9
Volume
8.9
128.8
13.5
Value
200
229
Value
26.63F3
(20.5)4F4
6.15F5
Value
29,310
13,580
405
926
Subsequent to the end of the quarter, the Company reported on the progress of the various
metallurgical testwork that is underway on the Cummins Range material.
Flotation Results
To investigate the potential of phosphate minerals recovery, a sighter flotation program was
undertaken at Auralia Metallurgy in Perth.
The primary goal of this metallurgical testing program was to demonstrate that a high grade,
commercially viable phosphate mineral concentrate could be produced using a simple flotation
process.
2 Beneficiation and Refinery capital costs include non-process infrastructure owner’s costs, indirect costs and a nominal 20% contingency to
direct costs.
3 Total LoM C1 cash cost: AU$1.6b by total TREO produced in the MREC product: 60.6kt
4 Total revenue of phosphate mineral concentrate (inc RE credit) and phosphoric acid: US$832 by total TREO produced in MREC product:
60.6kt.
5 Cash costs per kg TREO in MREC less by-product credit per kg TREO in MREC.
vii
The sighter testwork program was centred on the production of a phosphate mineral concentrate,
with testwork undertaken on two composite samples collected from the Cummins Range Project,
namely:
1. CDX0015 Phosphate Zone Fresh Composite
2. CDX0015 Phosphate Zone Regolith Composite
Both composite samples were subjected to a flotation test with the same circuit configuration, i.e., 3-
stage rougher flotation followed by 2-stage cleaner flotation. A summary of the flotation testwork
results are shown in Table 3.
Table 3: Flotation Results Summary
Product
Rougher
Concentrate
Cleaner
Concentrate
FINAL
Head Grade
CDX0015 Fresh
P2O5
CDX0015 Regolith
P2O5
Grade %
Recovery %
Grade %
Recovery %
31.0
39.1
13.4
94.4
80.3
-
23.8
34.1
12.8
94.3
85.7
-
As demonstrated in the table above, excellent results were achieved from the testwork program,
exceeding the primary goal of producing a phosphate mineral concentrate of greater than the
benchmark 31% P2O5 grade. The P2O5 grade in the cleaner concentrate was 39% and 34% for the
CDX0015 Fresh Composite and CDX0015 Regolith Composite respectively. The P2O5 recoveries were
also promising for both samples. These results have further demonstrated the potential of producing
a premium phosphate mineral concentrate co-product from the Cummins Range deposit.
Following these initial positive flotation results, the next phase of the phosphate mineral beneficiation
testwork will focus on grind size optimisation, further gangue suppression, flotation conditions and
circuit configuration optimisation to ensure the technical and economic feasibility of the beneficiation
flowsheet.
Ore Sorting Program
Sighter ore sorting testwork was performed on a composite collected from the primary zone of the
Cummins Range deposit at TOMRA Sorting Solution in NSW. The composite was crushed to a P100
grind size passing 30mm and screened at 10mm to prepare the feed for the ore sorting testwork.
This work was aimed at assessing the amenability of the Cummins Range material to ore sorting and
producing a high TREO product fraction with as-high-as-possible TREO recovery by way of high-density
REE-bearing inclusion product ejection.
The sorter used for this testwork was TOMRA’s COM Tertiary XRT (X-Ray Transmission). To set up/train
the sorter and to parameterise the software, images were taken of the samples while samples were
exposed to high energy X-rays. The X-ray sensor signal depends on atomic density and material
thickness and gives information on the inner composition of the particles. By combining two energy
levels simultaneously, it is possible to differentiate particles by their atomic densities.
viii
Figure 3: TOMRA COM Tertiary Sorter
Based on changes in the X-ray intensity, the images were mapped and classified as either high atomic
density (blue and black) or low atomic density (red) using proprietary TOMRA Sorting image processing
software, and the sorting-task algorithms specific for the Cummins Range ore were developed.
The +10-30mm material was fed through the trained ore sorter with a single pass to sort into the
product (REE-bearing ore) and waste. A summary of the ore sort results is included in Table 4.
Table 4: Ore Sort Results Summary
Element
Feed, Calculated Assay
Ore Sort Waste
Ore Sort Product
Kg
134.00
64.00
70.00
Mass
TREO + Y
% Distribution
Grade (%)
% Distribution
100%
48%
52%
2.18
0.34
3.87
100%
7%
93%
As shown in the table above, 93% of the total rare earths in the feed material was successfully
maintained in the Ore Sort Product while rejecting 48% of the mass as waste. This is a very encouraging
result, demonstrating the amenability of the Cummins Range material to ore sorting technology. The
results have shown excellent potential to significantly reduce the plant size and transport
requirements from mine to the beneficiation plant while maintaining the rare earth product tonnage
through the inclusion of an ore sorting circuit to reject the gangue minerals upfront.
Given these positive results, further ore sorting testwork will be undertaken to improve on the current
results and optimise the ore sort circuit. This next phase of testwork will be carried out at both a batch
scale and at a larger scale using representative samples from the deposit.
ix
NSW Joint-Venture Copper Gold Projects
In January 2020, RareX entered into a binding Memorandum of Understanding (MoU) with Kincora
Copper (Kincora) whereby Kincora paid a non-refundable option payment of C$25,000 to RareX for a
six week exclusive option period. Following completion of its due diligence activities, Kincora
subsequently exercised the option and paid RareX an additional C$150,000 and issued RareX with
14.95 million shares in Kincora. As a result of the agreement, RareX transferred a 65% interest in its
NSW tenements to Kincora with RareX retaining a 35% free carried interest until such time as a positive
scoping study or preliminary economic assessment is delivered, following which industry standard JV
dilution mechanisms will apply.
During the year, Kincora reported significant gold-bearing intervals at Trundle Park including assay
results for hole TRDD022, which returned significant broad mineralised intervals, strongly indicating
proximity to the core of a large porphyry intrusive system and providing vectors for recently
commenced follow-up drilling. TRDD022 intersected 162m at 0.24g/t gold and 0.04% copper from
670m, including 46m at 0.54g/t gold and 0.08% copper from 684m, and 18m at 0.75g/t gold and 0.09%
copper from 712m. TRDD026, the follow up scissor hole to TRDD022 was also drilled and intersected
broad zones of porphyry-style intrusions, with assay results currently pending.
Assay results for TRDD014W1, a wedge drilling off previous hole TRDD014, returned significant higher
gold grade skarn intervals and broad intervals of porphyry style intrusions at the Trundle Park
prospect:
• 42m at 0.42 g/t gold and 0.12% copper from 358m, including 10m at 1.13 g/t gold and 0.32%
copper from 382m;
• 48m at 0.19 g/t gold and 0.03% copper from 458m;
• 122m at 0.16g/t gold and 0.03% copper from 596m;
• 10m at 0.21g/t gold and 0.06% copper from 750m; and
• 16m at 0.11g/t gold and 0.07% copper from 860m.
For the first time at the Trundle Park prospect, hole TRDD028 has intersected broad porphyry style
intrusions from near surface (to 467m), with the targeted deeper intrusive body also intersected
(assay results pending). Assay results for TRDD022 (162m at 0.24 g/t gold and 0.04% copper, including
18m at 0.75 g/t gold and 0.09% copper), TRDD014/W1 and TRDD028 have provided further confidence
of proximity to the core of a large porphyry intrusive system, vectors for follow up drilling and support
the working model of a vertically extensive mineralised intrusive system that has both open pit and
underground target potential.
Ongoing drilling identified three zones of mineralised skarns in hole TRDD029 confirming this hole as
an important new geological discovery along the southern extension zone at Trundle Park. Cumulative
gold and copper mineralisation across 196m returned in three skarn zones in TRDD029, including:
• Upper Skarn: 36m @ 0.68 g/t gold and 0.29% copper; and
• Middle Skarn: 129m @ 0.17 gold and 0.12% copper, including 34m @ 0.38g/t gold and 0.30%
copper.
Kincora reported assay results for TRDD030 returning cumulative gold and copper mineralisation
across 164m in three skarn zones:
Localised higher-grade intervals of up to 1.68g/t gold and 3.61% copper;
•
• Middle Skarn: 29m at 0.54 g/t gold and 0.22% copper, including 5m at 1.46g/t gold and 0.56%
copper; and
x
•
Lower Skarn: 22m at 0.51 g/t gold.
Kincora reported results of re-assaying on TRDD032 at the Trundle Project with highlights being:
• Highest grade primary mineralisation interval ever drilled at the Trundle Project from only the
fourth hole (TRDD032) at the emerging Southern Extension Zone (SEZ) discovery within the
Trundle Park prospect;
• Duplicate assays undertaken to confirm the metal tenor from the zone which hosts a probably
porphyry vein with chalcopyrite-pyrite-quartz; and
• 2m at 19.9 g/t gold and 2.43% copper – original assay 12.6 g/t gold and 2.32% copper – within
a broader zone containing 34m at 1.45 g/t gold and 0.25% copper.
At the Fairholme Project, Kincora reported that a successful air-core program has converted two
anomalies into highly prospective targets and extended the mineralised system strike at the Gateway
target to over 1.6km and fully open to the south. The second phase Kincora drilling program has
returned anomalous gold and copper results in all nine holes, including grades of up to 3.35g/t gold.
A 900m additional mineralised footprint strike has been confirmed by air-core drilling (and open), with
noteworthy results along the most southern trend:
• 10m at 1 g/t gold and 0.34% copper (hole FHAC008)
• 30m at 0.17% copper and 0.12g/t gold (FHAC011)
At the Driftway C target, all three holes returned broad anomalous end of hole copper with a highlight
being 18m at 0.11% copper (hole FHAC020).
At the Anomaly 2 target, drilling intersected intrusion related anomalous copper with results of:
• 20m at 0.11% copper (hole FHAC003)
• 6m at 0.13% copper (FHAC001)
The Fairholme Project hosts a number of large mineralised systems across a 16km strike located
adjacent and on strike from Evolution Mining’s flagship Cowal mine and wider regional exploration
portfolio.
Kincora have advised that follow up air-core and diamond drilling is being planned to expand the open
near surface footprints and evaluate the untested potential for underlying porphyry gold-copper
related systems at shallow to moderate depths.
Byro East & Orange East Projects
During the year, RareX made the strategic decision to spin-out and IPO its non-core Byro East Nickel-
Copper-PGE Project (Byro East) and Orange East Gold Project (Orange East) into a new ASX-listed
company, Cosmos Exploraton.
RareX and Cosmos signed a Demerger Implementation Deed (DID) on 23 August 2021 to give effect to
the proposed spin-out. Pursuant to the DID, RareX transferred to Cosmos 100% of its legal and
beneficial interest in the Byro East tenements and 75% of its legal and beneficial interest in the Orange
East tenements (Sale Assets), with RareX retaining a 25% interest to be free-carried until completion
of a Bankable Feasibility Study.
RareX will retain exposure to the upside potential of the Sale Assets through its direct equity holding
in the ASX-listed Cosmos Exploration Ltd (ASX: CX1), allowing it to focus on the development and
exploration of its flagship Cummins Range Project.
xi
Environmental, Social and Governance Framework
In September 2021, RareX announced the establishment of its Environmental, Social & Governance
(ESG) Framework as part of its sustainable ESG-integrated project development approach.
The Company’s ESG Framework adopts the World Economic Forum (WEF) Framework guidelines to
support its journey from exploration to operational mining activities to ensure that it has a leading
approach in place from inception as it advances its flagship Cummins Range Rare Earths Project in the
Kimberley region of WA towards the next stage of development.
RareX believes it has an important role to play in sustainably supplying critical and rare earth metals
that are crucial for the decarbonisation of the global economy, such as electric vehicles and wind
turbines, as well as advanced technical applications for telecommunications and military purposes as
part of sustainable supply chains.
The RareX ESG Framework will help to ensure that it can develop Cummins Range in a responsible and
balanced manner, with due regard for safety, corporate governance, the environment, Indigenous
relationships, community and stakeholder engagement and other critical elements of the ESG matrix.
xii
Mineral Resources Statement
The following information is provided in accordance with Listing Rule 5.21 and as at 30 June 2022.
Mineral Resource Estimation Governance Statement
RareX Limited ensures that the Mineral Resource Estimates are subject to appropriate levels of
governance and internal controls. The Mineral Resource Estimates have been generated by
independent external consultants and internal employees who are experienced in best practices in
modelling and estimation methods. Where applicable, the consultants have also undertaken review
of the quality and suitability of the underlying information used to generate the resource estimations.
The Mineral Resource estimates follow standard industry methodology using geological interpretation
and assay results from samples won through drilling. RareX Limited reports its Mineral Resources in
accordance with the “Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves” (the JORC Code) (2012 Edition). Competent Persons named by the Company qualify as
Competent Persons as defined in the JORC Code.
Mineral Resource for Cummins Range Project, Western Australia
The tables below sets out the Mineral Resources as at 30 June 2021 (estimated in October 2019) and
as at 30 June 2022 (estimated in July 2021) for the Cummins Range Project, Western Australia. The
Company confirms that the change in the Resource Estimates between 30 June 2021 and 30 June 2022
are the consequence of additional drilling undertaken.
Effective
Date
Cut-off
(TREO)
Category
Tonnes
(Mt)
TREO
NdPr
Nb2O5
HREO
30 June
2021
30 June
2022
30 June
2022
0.5%
Inferred
13.0
1.13%
n/a
n/a
n/a
0.5%
Indicated
11.1
1.34%
0.27%
0.17%
830 ppm
0.5%
Inferred
7.7
0.88%
0.18%
0.11%
540 ppm
0.5%
Total
18.8
1.15%
0.23%
0.14%
711 ppm
1.0%
Indicated
1.0%
Inferred
1.0%
Total
4.9
1.6
6.5
2.11%
0.41%
0.23%
1,150 ppm
1.60%
0.31%
0.16%
800 ppm
1.98%
0.38%
0.21%
1,060 ppm
xiii
Competent Person Statements
The exploration results for Cummins Range in this report were reported by the Company in accordance with
listing rule 5.7. The Company confirms it is not aware of any new information or data that materially affects the
information included in the previous announcements.
The mineral resource estimate in this report were reported by the Company in accordance with listing rule 5.8
on 15 October 2019 and updated on 26 May 2020 (resource at 30 June 2020 and 30 June 2021), and 19 July 2021
(current resource). The Company confirms it is not aware of any new information or data that materially affects
the information included in the previous announcements and that all material assumptions and technical
parameters underpinning the estimates in the previous announcement continue to apply and have not
materially changed.
The exploration results for NSW Gold-Copper Projects as set out in this report were reported by Kincora Copper
in accordance with listing rule 5.7. The Company confirms it is not aware of any new information or data that
materially affects the information included in the previous announcements.
Corporate Governance
RareX Limited’s Corporate Governance Statement for FY2022 is available on the Company’s
website www.rarex.com.au
xiv
Financial Statements
FY2022
1
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
DIRECTORS’ REPORT
The Board of Directors has pleasure in presenting its report on the consolidated entity consisting of RareX Limited (Company
or RareX) and the entities (Group or Consolidated Entity) it controlled at the end of, or during, the year ended 30 June 2022.
1.
Directors
The names and details of the Company’s Directors in office at any time during the year to 30 June 2022 and until the date of
this report are as follows. Directors were in office for the entire period unless otherwise stated.
Mr John Young, B.AppSc(Geology), MAusIMM
Non-Executive Chairman – Appointed 18 February 2020
Mr Young has a Bachelor of Applied Science (Geology) and is a member of AusIMM. Mr Young is a highly experienced
geologist who has worked on exploration and production projects encompassing gold, uranium and specialty metals,
including tungsten, molybdenum, tantalum and lithium. Mr Young’s corporate experience includes appointments as Chief
Executive Officer of Marenica Energy Limited and CEO and Director of Thor Mining PLC. Mr Young was Exploration Manager
of Pilbara Minerals Ltd (ASX: PLS) from June 2014 until August 2015, appointed Technical Director in September 2015 and
transitioned to Non-Executive Director in July 2017 until his resignation on 20 April 2018. Mr Young was also the Managing
Director of Bardoc Gold Limited (ASX: BDC) from May 2017 to April 2019 and remains a Non-Executive Director. Mr Young is
also a Non-Executive Director of AIM listed Mosman Oil and Gas Ltd and Trek Metals Ltd (ASX: TKM), and Non-Executive
Chairman of Green Technology Metals Limited (ASX: GT1).
Mr Jeremy Robinson, BComm
Managing Director – Appointed 27 September 2019
Mr Robinson is an experienced mining executive having held senior roles at multiple junior and mid-tier mining and
exploration companies. Mr Robinson holds a Bachelor of Commerce from the University of Western Australia majoring in
Corporate Finance, Investment Finance and Marketing. He is also currently a Non-Executive Director of Cosmos Exploration
Limited (ASX: C1X).
Mr Shaun Hardcastle, LLB, BA
Non-Executive Director – Appointed 1 December 2017
Mr Hardcastle has over 15 years’ experience as a corporate lawyer and extensive experience in corporate governance, risk
management and compliance. He has been involved in a broad range of cross-border and domestic transactions including
IPOs, capital raisings, joint ventures, corporate restructuring, project finance and asset/equity sales and acquisitions. Mr
Hardcastle has practiced law both in Australia and overseas and is a partner at Hamilton Locke. Mr Hardcastle is currently a
Non-Executive Director of ASX listed Cygnus Gold Limited (ASX: CY5). Mr Hardcastle was also previously Non-Executive
Director of Schrole Group Ltd (ASX:SCL) until 18 May 2021; Arizona Lithium Limited (ASX: AZL) until 14 July 2020 and Bunji
Corporation Limited (ASX: BCL) until 28 April 2020.
Mr Cameron Henry,
Non-Executive Director - Appointed 2 June 2020
Mr Henry is the founding Managing Director of engineering firm, Primero Group Limited, where he has led the Company’s
strategic and operational direction resulting in its successful listing on the ASX in 2018 and rapid growth globally and its
ultimate takeover by NRW Holdings in February 2021. Mr Henry has over 20 years of industry experience in the development
and delivery of minerals processing, energy and infrastructure projects across Australia, Indonesia, North and South America.
Mr Henry has been a member of the Australian Institute of Company Directors since 2013 and was previously non-executive
director of Titan Minerals Limited (ASX: TTM) until 15 July 2019. He is currently a Non-Executive Director of Green Technology
Metals Limited (ASX: GT1).
2.
Company Secretary
Ms Oonagh Malone – Appointed 1 February 2018
Ms Malone is a principal of a corporate advisory firm which provides company secretarial and administrative services. Ms
Malone has over 10 years’ experience in administrative and company secretarial roles for listed companies and is a member
of the Governance Institute of Australia. Ms Malone currently acts as company secretary for ASX-listed Caprice Resources
Limited, Carbine Resources Limited, Aston Minerals Limited, Riversgold Ltd, Benz Mining Corp and African Gold Limited. Ms
Malone is a non-executive director of Peak Minerals Ltd.
2
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
DIRECTORS’ REPORT
3.
Principal Activities
The principal activities during the year of the entities within the consolidated entity were mineral exploration.
4.
Review of financial performance
The net consolidated loss from continuing operations for the year ended 30 June 2022, after income tax, amounted to
$11,225,184 (2021: $5,387,175).
During the year ended 30 June 2022, total expenses amounted to $14,477,574 (2021: $6,046,377). Unrestricted cash and
cash equivalents amounted to $8,232,977 as at 30 June 2022 (30 June 2021: $4,477,985).
5.
Dividends
No dividend has been declared or paid by the Company since the end of the previous financial year and the Directors do not
at present recommend a dividend.
6.
Review of Operations
During the year, some of the key highlights for the Company are as follows:
•
Completed 9 diamond drill holes (3,274m) and a 7,654m Reverse Circulation drilling program at the Cummins Range
Rare Earths Project which returned spectacular wide, high-grade intercepts.
• Upgraded the current mineral resource at Cummins Range and an exploration target.
•
Significant work has been conducted in testing the financial viability and scale of a proposed facility. Progress has
been made in developing flora and fauna surveys, water bore drilling and scoping study works.
There has been continued exploration and assaying the Trundle Gold-Copper joint venture project with promising
results across the 164m skarn zones.
The demerger of Cosmos Exploration Ltd was completed with the spin-out of the nickel-copper (Byro East) and gold
(Orange East) projects leaving the Company to focus on its core business of rare earth minerals exploration.
Completed a $10m (before costs) issue of approximately 111m shares at an issue price of $0.09 per share to
sophisticated and institutional investors including management.
Strengthened the corporate management team with the additions of a dedicated Head of Corporate Development
and Projects Manager.
•
•
•
•
7.
Likely Developments and Expected Results
Other than as referred to in this report, further information as to likely developments in the operations of the Company and
likely results of those operations in future financial years would, in the opinion of the Directors, be speculative.
8.
Significant Changes in the State of Affairs
There have been no significant changes in the state of affairs during the financial year ending 30 June 2022, other than as
follows:
•
Completion of the following share placements:
-
-
-
$10,000,000 (before costs) via the issue of 111,111,111 ordinary shares at an issue price of $0.09 per share;
$650,000 (before costs) via the issue of 7,222,222 ordinary shares at an issue price of $0.09 per share; and
$406,250 (before costs) via the issue of 16,250,000 ordinary shares at an issue price of $0.025 per share.
9.
Significant Events After Balance Date
Subsequent to 30 June 2022, there have been no significant events with the exception of the below:
•
Following the exercise of 15,000,000 unquoted options (exercisable at $0.025 each and expiring 27 September 2022)
utilising the cashless exercise facility, the Company issued 9,460,038 shares to Managing Director, Jeremy Robinson.
3
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
10.
Indemnity and Insurance for Group Officers and Auditor
DIRECTORS’ REPORT
To the extent permitted by law, the Company indemnifies every person who is or has been:
•
•
an Officer against any liability to any person (other than the Company or a related entity) incurred while acting in
that capacity and in good faith; and
an Officer or auditor of the Company, against costs and expenses incurred by that person in that capacity in
successfully defending legal proceedings and ancillary matters.
The Company has in respect of any person who is or has been a director or officer of the Company paid a premium in respect
of a contract insuring all directors and officers against a liability. The Company maintains insurance policies for the benefit
of the relevant director or officer for the term of their appointment and for a period of seven years after retirement or
resignation.
The Company has entered into a Deed of Indemnity, Access and Insurance with each of its Directors and the Company
Secretary. Under the Deeds of Indemnity, Access and Insurance the Company will indemnify each officer to the extent
permitted by the Corporations Act against any liability arising as a result of the officer acting as an officer of the Company.
The Deeds of Indemnity, Access and Insurance also provide for the right to access Board papers and other Company records.
To the extent permitted by law, the Company has agreed to indemnify its auditor SW Audit, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has
been made to indemnify either SW Audit Pty during, or since the end of, the financial year.
11.
Remuneration Report – Audited
This report details the nature and amount of remuneration for each Director of RareX Limited and the Group and for the
executives receiving the highest remuneration in accordance with the requirements of Section 300A of the Corporations Act
2001 and its Regulations. The information provided in this remuneration report has been audited as required by Section
308(3C) of the Act. This remuneration report forms a part of the Directors’ Report.
For the purposes of this report Key Management Personnel (KMP) of the Group are defined as those persons having authority
and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or
indirectly, including any director (whether executive or otherwise) of the parent company.
Remuneration Policy
The remuneration policy of RareX Limited 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. The Board of
RareX Limited 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 consolidated entity, as well as align interests of directors, executives and
shareholders.
The Board believes that shares are an effective remuneration tool which preserves the cash reserves of the Company whilst
providing valuable remuneration. During the year ended 30 June 2022, no options (2021: Nil) and no performance rights
(2021: 30,000,000) were issued to key management personnel of the Company.
The Board’s policy for determining the nature and amount of remuneration for board members and senior executives of the
consolidated entity is as follows:
•
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives,
was developed and approved by the Board.
• All executives receive a base salary (which is based on factors such as length of service and experience).
•
The Board reviews executive packages annually by reference to the consolidated entity’s performance, executive
performance and comparable information from industry sectors.
All remuneration paid to directors and executives is valued at the cost to the Company and is expensed over the appropriate
vesting period. Shares issued under the Employee Share Plan are valued using the Black Scholes methodology.
4
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
11.
Remuneration Report – Audited (continued)
Non-Executive Directors
DIRECTORS’ REPORT
The Board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The
Board 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. Currently there is a maximum aggregate sum of $200,000 per annum, which is to be divided
between the non-executive directors in the proportions agreed between them or, failing agreement, equally.
Company performance, shareholder wealth and director and executive remuneration
Shares have been issued to directors and executives to encourage the alignment of personal and shareholder interests in
prior years. Options have been issued to directors to encourage the alignment of personal and shareholder interests in the
current year.
Executive and non-executive directors, other key management personnel and other senior employees have been granted
ordinary shares and options. The recipients of shares and options are responsible for growing the Company and increasing
shareholder value. If they achieve this goal the value of the shares and options granted to them will also increase. Therefore,
the shares and options provide an incentive to the recipients to remain with the Company and to continue to work to enhance
the Company's value.
There is no policy in place which limits exposure to risk in relation to those securities in the Company which constitute an
element of directors’ remuneration and which are linked to satisfaction of Company performance conditions.
The table below sets out summary information about the consolidated entity’s earnings and movements in shareholder
wealth for the five years to 30 June 2022:
Consolidated Entity:
Revenue
Net loss before tax
Net loss after tax
Share price at end of year
Basic loss per share
Diluted loss per share
30-Jun-22
30-Jun-21
30-Jun-20
30-Jun-19
$3,252,390
($11,225,184)
($11,225,184)
5.3 cents
(2.32 cents)
(2.32 cents)
$659,202
($5,387,175)
($5,387,175)
7.2 cents
(1.33 cents)
(1.33 cents)
$2,642,553
($6,687,791)
($6,687,791)
9.2 cents
(2.48 cents)
(2.48 cents)
$725,440
($2,209,009)
($2,209,009)
0.1 cents1
(0.06 cents)1
(0.06 cents)1
30-Jun-18
$495,640
($1,276,041)
($1,276,041)
0.4 cents1
(0.04 cents)1
(0.04 cents)1
Note: No dividends have been declared or paid since the Company was listed.
1 The share price at end of year and basic and diluted loss per share for the years ended 30 June 2019 and prior are disclosed in the above table on a pre-
consolidated basis. On 2 August 2019 the shareholders of the Company approved the consolidation of the Company’s capital on a 1 for 25 basis.
Key Management Personnel Remuneration Policy
The remuneration structure for key management personnel, as determined by the Board, is based on a number of factors,
including length of service, particular experience of the individual concerned and their role within the organisation.
5
2022
Total
$
316,186
1,114,192
305,348
300,769
168,231
RareX Limited ABN: 65 105 578 756 and controlled entities
DIRECTORS’ REPORT
11.
Remuneration Report – Audited (continued)
Key Management Personnel Remuneration:
Remuneration for the year ended 30 June 2022
Key
Management
Person
J Young
J Robinson
S Hardcastle
C Henry
O Malone
Short-term benefits
Salary or Fees
Paid or
Payable
$
70,417
270,000
59,579
50,000
48,000
497,996
Consulting
Fees
$
Non
Monetary
Benefits
$
-
-
-
-
-
-
-
1,446
-
-
-
1,446
Remuneration for the year ended 30 June 2021
Key
Management
Person
J Young
J Robinson
S Hardcastle
C Henry
O Malone
Short-term benefits
Salary or Fees
Paid or
Payable
$
Consulting
Fees
$
Non
Monetary
Benefits
$
Long Term
benefits
Long Service
Leave
$
50,417
225,833
43,915
42,237
40,500
402,902
-
-
-
-
-
-
-
580
-
-
-
580
Long Term
benefits
Long Service
Leave
Post-
employment
benefits
Superannuation
Long term
incentives
Share-based
payments
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
23,568
-
5,000
-
245,769
819,178
245,769
245,769
120,231
28,568
1,676,716
2,204,726
Post-
employment
benefits
Superannuation
Long term
incentives
Share-based
payments
Total
$
$
$
-
20,030
-
4,013
-
24,043
10,649
35,494
10,649
10,649
21,160
88,601
61,066
281,937
54,564
56,899
61,660
516,126
Shares
During the year, no ordinary shares were issued in relation to the settlement of outstanding invoices for fees owed to key
management personnel (2021: nil).
Options
No options were issued to directors and key management personnel as part of their remuneration during the year ended 30
June 2022 (2021: nil). No options were exercised or forfeited during the year by current Directors or key management
personnel.
6
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
11.
Remuneration Report – Audited (continued)
DIRECTORS’ REPORT
Performance Rights
No performance rights were issued to directors and key management personnel during the year ended 30 June 2022.
The following performance rights were issued to directors and key management personnel as part of their remuneration
during the year ended 30 June 2022 (2021: 30,000,000).
Director
Class
Grant date
No. of
performance
rights
Fair value per
performance
right
Total fair value of
performance
rights issued
A
B
C
A
B
C
A
B
C
A
B
C
A
B
C
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
5/2/2021
5/2/2021
5/2/2021
J Young
J Robinson
S Hardcastle
C Henry
O Malone
Total
($)
0.078200
0.073800
0.070300
0.078200
0.073800
0.070300
0.078200
0.073800
0.070300
0.078200
0.073800
0.070300
0.112400
0.106100
0.101100
1,500,000
1,500,000
1,500,000
4,500,000
5,000,000
5,000,000
5,000,000
15,000,000
1,500,000
1,500,000
1,500,000
4,500,000
1,500,000
1,500,000
1,500,000
4,500,000
500,000
500,000
500,000
1,500,000
30,000,000
($)
117,300
110,700
105,450
333,450
391,000
369,000
351,500
1,111,500
117,300
110,700
105,450
333,450
117,300
110,700
105,450
333,450
56,200
53,050
50,550
159,800
2,271,650
Expense to
Statement of
Profit or Loss for
the year1
($)
113,558
77,608
54,603
245,769
378,502
258,676
182,000
819,178
113,558
77,608
54,603
245,769
113,558
77,608
54,603
245,769
48,760
42,658
28,813
120,231
1,676,716
1 Performance rights are expensed on a straight-line basis over the vesting period.
462,000,000
The Board considers that the performance rights are a cost effective and efficient reward for the Company to make to
appropriately incentivise the continued performance of the management, and are consistent with the strategic goals and
targets of the Company.
No performance rights vested during the year (2021: nil). The remaining performance rights (shown below on a post-
consolidated basis) held by Directors and key management personnel will vest on meeting the following performance
conditions before the expiry date:
Class
Vesting Condition - vesting will occur:
A
B
C
20 Day VWAP of $0.20 and 12 months continuous service within 3 years from the date of issue
20 Day VWAP of $0.25 and 18 months continuous service within 3 years from the date of issue
20 Day VWAP of $0.30 and 24 months continuous service within 3 years from the date of issue
Number
12,000,000
12,000,000
12,000,000
7
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
11.
Remuneration Report – Audited (continued)
DIRECTORS’ REPORT
The movement during the reporting period in the number of ordinary shares of RareX Limited held directly, indirectly or
beneficially, by each specified director and each specified executive, including their personally related entities is as follows:
(i)
SHARES – 30 June 2022
Held at 1 July 2021
Acquired
Disposed
Other
Director
J Young
J Robinson
S Hardcastle
C Henry
Company Secretary
O Malone
3,004,000
9,300,000
2,108,823
1,577,000
580,588
11,236,411
(ii) SHARES – 30 June 2021
-
-
-
-
-
-
-
-
-
-
-
-
Held at 30 June 2022
or date of
resignation
-
-
-
-
-
-
6,337,333
13,161,111
2,664,379
3,779,222
580,588
26,552,633
Held at 1 July 2020
Acquired
Disposed
Other
Director
J Young
J Robinson
S Hardcastle
C Henry
Company Secretary
O Malone
397,000
8,550,000
1,708,823
-
580,588
11,236,411
2,607,000
750,000
400,000
1,557,000
-
5,314,000
-
-
-
-
-
-
Held at 30 June
2021 or date of
resignation
3,004,000
9,300,000
2,108,823
1,557,000
580,588
16,550,411
-
-
-
-
-
-
The movement during the reporting period in the number of options over ordinary shares of RareX Limited held directly,
indirectly or beneficially, by each specified director and each specified executive, including their personally related entities is
as follows:
(iii) OPTIONS – 30 June 2022
Held at 1 July
2021
Granted
Exercised
Director
J Young
J Robinson
S Hardcastle
C Henry
Company Secretary
O Malone
6,000,000
17,750,000
3,000,000
6,000,000
-
32,750,000
-
-
-
-
-
-
Expired/
Forfeited/
Other
Held at 30 June
2022 or date of
resignation
-
(2,750,000)
-
-
6,000,000
15,000,000
3,000,000
6,000,000
-
(2,750,000)
-
30,000,000
-
-
-
-
-
-
8
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
DIRECTORS’ REPORT
11.
Remuneration Report – Audited (continued)
(iv) OPTIONS – 30 June 2021
Held at 1 July 2020
Granted
Exercised
Director
J Young
J Robinson
S Hardcastle
C Henry
Company Secretary
O Malone
6,000,000
17,750,000
3,800,000
6,000,000
-
33,550,000
-
-
-
-
-
-
Expired/
Forfeited/
Other
Held at 30 June
2021 or date of
resignation
-
-
-
-
-
-
-
-
(800,000)
-
6,000,000
17,750,000
3,000,000
6,000,000
-
(800,000)
-
32,750,000
The movement during the reporting period in the number of performance rights of RareX Limited held directly, indirectly or
beneficially, by each specified director and each specified executive, including their personally related entities is as follows:
(v) PERFORMANCE RIGHTS – 30 June 2022
Held at 1 July 2021
Granted
Converted
Expired/
Forfeited/
Other
Held at 30 June
2022
Vested
Director
J Young
J Robinson
S Hardcastle
C Henry
Company Secretary
O Malone
4,500,000
15,000,000
5,250,000
4,500,000
1,500,000
30,750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(750,000)
-
4,500,000
15,000,000
4,500,000
4,500,000
-
(750,000)
1,500,000
30,000,000
(vi) PERFORMANCE RIGHTS – 30 June 2021
Held at 1 July 2020
Granted
Converted
Expired/
Forfeited/
Other
Held at 30 June
2021
Vested
Director
J Young
J Robinson
S Hardcastle
C Henry
D Scoggin3
4,500,000
15,000,000
5,250,000
4,500,000
1,500,000
30,750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,500,000
15,000,000
5,250,000
4,500,000
1,500,000
30,750,000
1 On 2 August 2019 the shareholders of the Company approved the consolidation of the Company’s capital on a 1 for 25 basis.
2 S Patrizi resigned as a director on 18 February 2020.
3 D Scoggin resigned as a director on 27 September 2019.
4 Pre-consolidation basis.
-
-
-
-
-
-
-
-
-
-
-
-
9
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
11.
Remuneration Report – Audited (continued)
DIRECTORS’ REPORT
Details of share-based payments in existence during the year ended 30 June 2022 are disclosed in this Directors’ Report and
Notes 21, 29 and 30 to the Annual Financial Statements.
Contracts with Directors and Key Management Personnel
A summary of contracts entered into with Executives is set out below:
Executive
Term of Agreement
Base salary per annum including any
superannuation*
(Non-performance based)
Termination Conditions
Elements of remuneration related to
performance issued during the year
Mr Jeremy Robinson
Ongoing until terminated in accordance with the agreement
$293,568 (ie: $270,000 plus statutory superannuation)
3 months notice by either party
• 5,000,000 performance rights expiring 26 May 2024 and 20 day VWAP of
$0.20 and 12 months continuous service.
• 5,000,000 performance rights expiring 26 May 2024 and 20 day VWAP of
$0.25 and 18 months continuous service.
• 5,000,000 performance rights expiring 26 May 2024 and 20 day VWAP of
$0.30 and 24 months continuous service.
* Base salary as reviewed during the year and is the position as at 30 June 2022; salaries are reviewed annually.
[END OF REMUNERATION REPORT]
12.
Auditor Independence and Non-Audit Services
The Group’s current auditor, SW Audit (formerly Walker Wayland WA Audit Pty Ltd), did not perform any services in addition
to its statutory audit services (2021: nil).
13.
Auditor’s Independence Declaration
The auditor’s independence declaration for the reporting period ended 30 June 2022 has been received and can be found on
page 12.
14.
Share Options
At the date of this report 66,000,000 options (2021: 97,250,000) to acquire ordinary shares in RareX Limited were on issue.
Type of Options
Unquoted options
Unquoted director options vesting on 20 day VWAP exceeding $0.10
Unquoted director options vesting on 20 day VWAP exceeding $0.15
Unquoted director options vesting on 20 day VWAP exceeding $0.20
Unquoted employee options vesting on 20 day VWAP exceeding $0.10
Unquoted employee options vesting on 20 day VWAP exceeding $0.15
Unquoted employee options vesting on 20 day VWAP exceeding $0.20
Unquoted director options vesting on 20 day VWAP exceeding $0.10
Unquoted director options vesting on 20 day VWAP exceeding $0.15
Unquoted director options vesting on 20 day VWAP exceeding $0.20
Unquoted options
Unquoted options
Unquoted options
Expiry date
Exercise price
11/10/22
12/12/22
12/12/22
12/12/22
12/12/22
12/12/22
12/12/22
22/12/22
22/12/22
22/12/22
30/11/23
31/12/23
31/12/23
$0.085
$0.0607
$0.0607
$0.0607
$0.0607
$0.0607
$0.0607
$0.0607
$0.0607
$0.0607
$0.15
$0.15
$0.15
Number
28,500,000
1,000,000
1,000,000
2,000,000
1,500,000
1,500,000
1,500,000
4,000,000
4,000,000
4,000,000
10,000,000
5,000,000
2,000,000
10
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
14.
Share Options (continued)
DIRECTORS’ REPORT
Share-based payments and options issued to directors, consultants and eligible employees, are disclosed in this Directors’
Report and Notes 21, 29 and 30 to the Annual Financial Statement.
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related
body corporate.
15.
Directors’ Meetings
The number of meetings of Directors (including meetings of committees of directors) held during the year ended 30 June
2022 and the number of meetings attended by each director was as follows:
Director
Directors’ Meetings Eligible to Attend
Directors’ Meetings Attended
J Young
J Robinson
S Hardcastle
C Henry
16.
Risk Management
4
4
4
4
4
4
4
4
The Company takes a proactive approach to risk management including monitoring actual performance against budgets and
forecast and monitoring investment performance. The Board is responsible for ensuring that risks, and also opportunities,
are identified on a timely basis and that the consolidated entity’s objectives and activities are aligned with the risks and
opportunities identified by the Board.
17.
Environmental Regulations and Performance
The Company is required to carry out the exploration and evaluation of its mining tenements in accordance with various
State Government Acts and Regulations.
In regard to environmental considerations, the Company is required to obtain approval from various State regulatory
authorities before any exploration requiring ground disturbance, is carried out. It is normally a condition of such regulatory
approval that any area of ground disturbed during the Company’s activities is rehabilitated in accordance with various
guidelines. There have been no significant breaches of these guidelines.
This report is made in accordance with a resolution of the Directors.
Jeremy Robinson
Managing Director
Dated 30 September 2022
11
Take the lead
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF RAREX LIMITED
As lead auditor, I declare that, to the best of my knowledge and belief, during the year ended 30 June 2022 there
have been:
i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit, and
ii. no contraventions of any applicable code of professional conduct in relation to the audit.
SW Audit (formerly ShineWing Australia)
Chartered Accountants
Richard Gregson
Partner
Perth, 30 September 2022
Brisbane
Level 15
240 Queen Street
Brisbane QLD 4000
T + 61 7 3085 0888
Melbourne
Level 10
530 Collins Street
Melbourne VIC 3000
T + 61 3 8635 1800
Perth
Level 25
108 St Georges Terrace
Perth WA 6000
T + 61 8 6184 5980
Sydney
Level 7, Aurora Place
88 Phillip Street
Sydney NSW 2000
T + 61 2 8059 6800
SW Audit ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards
Legislation. SW Audit is an independent member of ShineWing International Limited.
sw-au.com
12
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Income
Other income
Gain on sale of investments
Fair value increase in financial assets
Gain on disposal of subsidiary
Profit from sale of tenements
Total income
Expenses
Administration expenses
Consultants and management expenses
Depreciation and amortisation
Financial costs
Legal expenses
Share-based payment expense
Exploration expenses
Acquisition of tenements
Foreign exchange (loss)/ gain
Impairment
Fair value decrease in financial assets
Share of loss from associate
Exploration and evaluation expensed
Total expenses
Loss before income tax
Income tax expense
Consolidated
Notes
2022
$
2021 (Restated)
$
4(a)
4(b)
4(c)
5(a)
5(b)
8(a)
8(b)
30
7
6
15
4(c)
5(a)
13
918,001
-
-
334,389
2,000,000
56,726
382,976
219,500
-
-
3,252,390
659,202
(1,301,175)
(1,497,927)
(120,860)
(22,507)
(76,000)
(2,157,619)
(5,784,066)
-
(996)
-
(2,542,787)
(468,605)
(505,032)
(797,441)
(728,715)
(48,863)
(7,664)
(38,010)
(797,448)
(2,291,409)
(1,335,613)
(1,203)
(11)
-
-
-
(14,477,574)
(6,046,377)
(11,225,184)
(5,387,175)
9
-
-
Loss attributable to the owners of RareX Limited
(11,225,184)
(5,387,175)
Other comprehensive loss
Foreign currency translation reserve
-
-
(2,534)
1,059
Total comprehensive loss attributable to owners of the parent
(11,227,718)
(5,386,116)
Loss per share
- basic and diluted
10
(2.32) cents
(1.33) cents
The accompanying notes form part of these financial statements.
13
RareX Limited ABN: 65 105 578 756 and controlled entity
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2022
2022
Consolidated
Notes
2022
$
2021 (Restated)
$
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-current Assets
Exploration and evaluation costs
Financial assets at fair value
Investment in associate
Plant and equipment
Right of use asset
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Lease liability
Total Current Liabilities
Non-current Liabilities
Lease liability
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
11
12
13
14
15
16
17
18
19
19
20
21
8,232,977
502,311
8,735,288
-
1,114,832
1,531,394
139,737
305,090
3,091,053
4,477,985
227,303
4,705,288
505,032
3,657,619
-
114,431
380,630
4,657,712
11,826,341
9,363,000
1,790,180
148,035
83,011
2,021,226
240,121
240,121
2,261,347
9,564,994
668,948
73,226
71,220
813,394
314,060
314,060
1,127,454
8,235,546
45,715,177
8,574,917
(44,725,100)
9,564,994
35,315,630
6,419,832
(33,499,916)
8,235,546
14
RareX Limited ABN: 65 105 578 756 and controlled entity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE
2022
Notes
Contributed equity
Options reserve
Share- based
payment
reserve
At 1 July 2021 (Restated)
Currency translation differences
Total comprehensive income for
the year, net of tax
Issue of share capital – cash
Transaction costs on share issues
Share-based payment expense
Shares issued on exercise of
options
At 30 June 2022
34
20
20
30
20
$
$
$
35,315,630
6,163,712
257,083
-
-
10,650,000
(656,703)
-
406,250
-
-
-
-
-
-
-
-
-
-
2,157,619
-
2022
Foreign
currency
translation
reserve
$
(963)
(2,534)
-
-
-
-
-
45,715,177
6,163,712
2,414,702
(3,497)
(44,725,100)
29,605,193
-
-
6,510,150
6,949
34
20
At 1 July 2020
Currency translation differences
Total comprehensive income for
the year, net of tax (Restated)
Issue of share capital – cash
Issue of share capital – equity
settled transactions
Transaction costs on share issues
(Restated)
Share-based payment expense
(Restated)
Fair value consideration for
acquisition of subsidiary
At 30 June 2021 (Restated)
The accompanying notes form part of these financial statements.
30, 34
20, 34
20
34
110,405
500,000
(1,417,067)
35,315,630
4,775,912
-
83,840
-
(2,022)
1,059
-
-
-
874,000
-
-
-
-
513,800
173,243
-
-
-
-
-
-
-
-
(28,112,741)
-
(5,387,175)
-
-
-
-
-
6,163,712
257,083
(963)
(33,499,916)
Accumulated losses
Total equity
$
(33,499,916)
-
$
8,235,546
(2,534)
(11,225,184)
(11,225,184)
-
-
-
-
10,650,000
(656,703)
2,157,619
406,250
9,564,994
6,350,182
1,059
(5,387,175)
6,510,150
6,949
(543,067)
797,448
500,000
8,235,546
15
RareX Limited ABN: 65 105 578 756 and controlled entity
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2022
CASH FLOWS USED IN OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Interest paid
Proceeds from research and development tax incentives
Other income
NET CASH FLOWS USED IN OPERATING ACTIVITIES
CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES
Payments for acquisition of investments
Payments for property, plant and equipment
Payments for acquisition of tenements
Proceeds from sale of investments
Refund/(payment) of security deposits
Cash disposed on loss of control of subsidiary
NET CASH FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue
Proceeds from exercise of options
Share issue transaction costs
Payment of finance lease liability
NET CASH FLOWS FROM FINANCING ACTIVITIES
2022
Consolidated
Notes
2022
$
2021
$
(7,204,037)
2,119
(22,507)
703,870
41,572
(6,478,983)
-
(57,985)
-
-
10,000
(2,796)
(50,781)
10,610,000
406,250
(656,703)
(74,785)
10,284,762
(3,472,147)
9,841
(7,664)
-
48,305
(3,421,665)
(1,757,309)
(104,353)
(664,936)
1,091,107
(26,942)
-
(1,462,433)
5,950,000
560,150
(552,234)
(20,891)
5,937,025
22
14
14
20
20
NET INCREASE IN CASH AND CASH EQUIVALENTS
3,754,998
1,052,927
Cash and cash equivalents at beginning of year
Effect of movement in exchange rate
4,477,985
(6)
3,425,058
-
CASH AND CASH EQUIVALENTS AT END OF YEAR
11
8,232,977
4,477,985
The accompanying notes form part of these financial statements.
16
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
1.
CORPORATE INFORMATION
The financial statements of RareX Limited (the Company or the Group) for the year ended 30 June 2022 were
recognised for issue in accordance with a resolution of the directors on 30th September 2022. RareX Limited is a
for profit entity. RareX Limited (the parent) is a company limited by shares, incorporated in Australia, and whose
shares are publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the consolidated entity are described in the Directors’
Report.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. The financial
statements include separate financial statements for RareX Limited as an individual entity and the consolidated
entity consisting of RareX Limited and its controlled entities.
(a)
Basis of preparation
These general purpose financial statements have been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board. These financial statements have also been prepared on a historical cost basis, except
for available-for-sale investments, which have been measured at fair value. These financial statements are
presented in Australian dollars.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has
concluded would result in financial statements containing relevant and reliable information about transactions,
events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and
notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the
preparation of the consolidated financial statements are presented below and have been consistently applied
unless stated otherwise.
Going concern
As at 30 June 2022, the Group had working capital of $6,714,062 (2021: $3,891,894) and returned a loss
attributable to owners of $11,225,184 (2021: $5,387,175). The ability of the Group to continue as a going concern
is dependent upon the future successful raising of the necessary funding through equity and/or debt and the
successful exploitation of the Group’s tenements.
The Directors believe it is appropriate to prepare the financial statements on a going concern basis because the
Directors have appropriate plans to raise additional funds if required.
These financial statements have been prepared on the basis that the Group can meet its commitments as and
when they fall due and can therefore continue normal business activities and the recognised of its assets and
settlement of its liabilities can occur in the ordinary course of business.
In the event the Group is not able to achieve the above requirements, there is material uncertainty whether the
Group will continue as a going concern and realise its assets and extinguish its liabilities in the normal course of
business and at the amounts stated in its financial report.
(b)
Statement of Compliance
These financial statements comply with Australian Accounting Standards and International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board.
These financial statements are general purpose financial statements which have been prepared in accordance with
the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the
law.
(c)
New accounting standards and interpretations
The Group has adopted all of the new and revised Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board that are mandatory for the current reporting period. The adoption of these
17
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
new and revised Accounting Standards and Interpretations has not resulted in a significant or material change to
the consolidated entity’s accounting policies.
Future effects of the implementation of these standards will depend on future details.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted by the Group.
New accounting Standards issued but not yet effective
A number of new standards, amendments to standards and interpretations issued by the AASB which are not yet
mandatorily applicable to the Company have not been applied in preparing these consolidated financial
statements. The Company has not elected to adopt any new Accounting Standards or Interpretations prior to their
applicable date of implementation.
There are no standards that are not yet effective and that would be expected to have a material impact on the
Company in the current or future reporting periods and on foreseeable future transactions.
(d)
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiary as at 30
June 2022. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed
of during the year are included in the statement of comprehensive income from the date the Group gains control
until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the
parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having
a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on
consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction.
(e)
Investment in joint operations
A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement
have rights to the assets, and obligations for the liabilities, relating to the arrangement.
Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent of the parties sharing control. The considerations made in
determining significant influence or joint control are similar to those necessary to determine control over
subsidiaries. The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint
operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.
The Group can elect to contribute to ongoing exploration costs in proportion to its interests or dilute (a farm-out
arrangement). If contributions are made during the reporting period, they are accounted for as exploration
expenditure. Once the joint arrangement partner had earned its interest, the Company recovers expenditure
equivalent to the other joint arrangement partner’s interest.
The Group does not record any expenditure made by the farminee on its account. It also does not recognise any
gain or loss on its exploration and evaluation farm-out arrangements. Any cash consideration received directly
from the farminee is credited against costs previously incurred in relation to the whole interest.
When the Group, acting as an operator, receives reimbursement of direct costs recharged to the joint operation,
such recharges represent reimbursements of costs that the operator incurred as an agent for the joint operation
and therefore have no effect on profit or loss.
18
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In many cases, the Group also incurs certain general overhead expenses in carrying out activities on behalf of the
joint operation. As these costs can often not be specifically identified, joint operation agreements allow the
operator to recover the general overhead expenses incurred by charging an overhead fee that is based on a fixed
percentage of the total costs incurred for the year, often in the form of a management fee. Although the purpose
of this recharge is very similar to the reimbursement of direct costs, the Group is not acting as an agent in this case.
Therefore, the general overhead expenses and the overhead fee are recognised in profit or loss as an expense and
income, respectively.
(f)
Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred in a business
combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair value
of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree
and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each
business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at
the proportionate share of the acquiree’s identifiable net assets. Acquisition related costs are expensed as incurred.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group’s
operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or
liability will recognised in accordance with AASB 139 either in profit or loss or in other comprehensive income. If
the contingent consideration is classified as equity, it shall not be remeasured.
(g)
Segment reporting
Management has assessed that the Group’s reportable business segments under the quantitative criteria set out
in AASB 8 Segment Reporting and has determined that no additional operating segments disclosures are required.
AASB 8 requires the ‘management approach’ to the identification, measurement and disclosure of operating
segments. The ‘management approach’ requires that operating segments be identified on the basis of internal
reports that are regularly reviewed by the entity’s chief operating decision maker, for the purpose of allocating
resources and assessing performance. This could also include the identification of operating segments which sell
primarily or exclusively to other internal operating segments.
In its adoption of the ‘management approach’ to segment reporting, the Group has identified that it continues to
operate as a gold, copper and base metals explorer and developer, in a single reportable business segment, under
one segment manager, in one geographical location being Australia, consistent with the prior year. The information
disclosed in the financial statements is the same information recognised internally by the chief operating decision
maker. Accordingly, no additional quantitative or qualitative disclosures are required
(h)
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and short-term deposits
with an original maturity of not more than 3 months that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above. The consolidated entity does not have any bank overdraft facilities.
Where the Company calls cash in advance from its joint venture partners, the cash recognised as an asset with an
offsetting liability for the amount of expenses not yet incurred on the relevant joint venture project at balance
date. The liability is then released to the profit and loss as the expenditure is incurred.
19
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.
(i)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Trade and other receivables
Trade receivables are generally paid on 30-day settlement terms and are recognised and carried at original invoice
amount less an allowance for impairment. Trade receivables are non-interest bearing.
Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be
uncollectible are written off when identified. An impairment provision would be recognised when legal notice has
been sent and a reply not received within 30 days.
(j)
Investments and other financial assets
Investments and financial assets in the scope of AASB 9 Financial Instruments are recognised as either financial
assets at fair value through profit and loss or amortised cost. The classification depends on the purpose for which
the investments were acquired. Designation is re-evaluated at each financial year end, but there are restrictions
on reclassifying to other categories.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair
value through profit and loss, directly attributable transaction costs.
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.
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.
(i)
Recognition and Derecognition
All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the
consolidated entity commits to purchase the asset. Regular way purchases or sales are purchases or sales of
financial assets under contracts that require delivery of the assets within the period established generally by
regulation or convention in the market place. Financial assets are recognised when the right to receive cash flows
from the financial assets has expired or when the entity transfers substantially all the risks and rewards of the
financial assets. If the entity neither retains nor transfers substantially all of the risks and rewards, it derecognises
the asset if it has transferred control of the assets.
(ii)
Financial assets measured at amortised cost
Loans and receivables including loan notes are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Such assets are carried at the transaction price minus principal repayments
and minus any allowance for impairment or collectability. Gains and losses are recognised in profit or loss when
the loans and receivables are recognised or impaired. Loans and receivables are included with receivables in
current assets in the statement of financial position, except for those with maturities greater than 12 months after
balance date, which are classified as non-current. Loans and receivables with maturities greater than 12 months
are carried at amortised cost using the effective interest rate method.
(iii)
Financial assets carried at cost
Investments are initially measured at fair value, net of transaction costs. Subsequent to initial recognition,
investments in subsidiaries are measured at cost in the Group’s financial statements. If there is objective evidence
that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value
(because its fair value cannot be reliably measured), the amount of the loss is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market
rate of return for a similar financial asset.
20
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.
(k)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Plant and Equipment
Plant and equipment is stated at historical cost less depreciation and any accumulated impairment losses. Historical
cost includes expenditure that is directly attributable to the acquisition of these items.
Subsequent costs are included in the asset’s carrying amount recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the consolidated entity and
the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of
comprehensive income during the financial period in which they are incurred.
Depreciation is calculated using the straight line and diminishing value methods to allocate the cost of the specific
assets over their estimated useful lives. The expected useful lives are detailed in Note 16.
The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at
each financial year end
(i)
Impairment
The carrying values of plant and equipment are reviewed for impairment at each reporting date, with the
recoverable amount being estimated when events or changes in circumstances indicate that the carrying value
may be impaired.
The directors have determined that items of plant and equipment do not generate independent cash inflows and
that the business of the consolidated entity is, in its entirety, a cash-generating unit. The recoverable amount of
plant and equipment is thus determined to be its fair value less costs to sell.
An impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable
amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and
equipment, impairment losses are recognised in the statement of comprehensive income as an expense.
(ii)
Derecognition and disposal
An item of plant and equipment recognised upon disposal or when no further future economic benefits are
expected from its use.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included
in the statement of comprehensive income. When revalued assets are sold, it is consolidated entity policy to
transfer the amounts included in other reserves in respect of those assets to retained earnings.
(l)
Right of use assets
A right of use asset is recognised at the commencement date of a lease. The right of use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at
or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and
removing the underlying asset, and restoring the site or asset.
Right of use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right of use assets are
subject to impairment or adjusted for any remeasurement of lease liabilities.
The Group has elected not to recognised a right of use asset and corresponding lease liability for short-term leases
with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to
Consolidated Statement of Profit or Loss and Other Comprehensive Income as incurred.
21
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m)
Trade and other payables
Trade payables and other payables are carried at the transaction price minus principal repayments. They represent
liabilities for goods and services provided to the consolidated entity prior to the end of the financial year that are
unpaid and arise when the consolidated entity becomes obliged to make future payments in respect of the
purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of
recognition.
(n)
Provisions and employee benefits
Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation.
When the consolidated entity expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the statement of comprehensive income net of any
reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle
the present obligation at the reporting date using a discounted cash flow methodology. The risks specific to the
provision are factored into the cash flows and as such a risk-free corporate bond rate relative to the expected life
of the provision is used as a discount rate. If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability.
The increase in the provision resulting from the passage of time is recognised in finance costs.
(o)
Lease liabilities
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 Group’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 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.
(p)
Employee leave benefits
(i)
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled with 12
months of the reporting date are recognised in respect of employees’ services up to the reporting date. Liabilities
for annual leave expected to be settled within 12 months of the reporting date are recognised in the current
provision for the employee benefits. They are measured at the amounts expected to be paid when the liabilities
are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at
the rates paid or payable. For annual leave, expected future payments are discounted using market yields at the
reporting date on national government bonds with terms to maturity and currencies that match, as closely as
possible, the estimated future cash outflows.
22
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(ii)
Long Service Leave
The liability for long service leave is recognised and measured as the present value of expected future payments
to be made in respect of services provided by employees up to the reporting date. Consideration is given to
expected future wage and salary levels, experience of employee departures, and periods of service. Expected
future payments are discounted using market yields at the reporting date on corporate bonds with terms to
maturity and currencies that match, as closely as possible, the estimated future cash outflows.
(q)
Share-based payment transactions
Equity settled transactions
The consolidated entity provides benefits to its directors, employees and consultants in the form of share-based
payments, whereby directors and employees render services in exchange for options to acquire shares, rights over
shares (equity-settled transactions) and shares issued pursuant to the Company’s Employee Share and Loan Plan
(“Plan”). The consolidated entity has also issued ordinary shares and unlisted options as consideration to vendors
for the acquisition of exploration licenses and drilling services.
The cost of these equity-settled transactions is measured by reference to the fair value to the Company of the
equity instruments at the date at which they were granted in the case of options and shares issued under the Plan
for directors, employees and consultants; and the closing share price on, or just before, either the date of entering
into, or executing, an exploration license purchase agreement in the case of options and shares issued to tenement
vendors as consideration for the settlement price. The fair value of the unlisted options and shares issued under
the Plan is determined using the Black-Scholes model, taking into account the terms and conditions upon which
the options were granted.
The cost of equity-settled transactions are recognised as an expense, together with a corresponding increase in
equity over the period in which the vesting and/or service conditions are fulfilled (the vesting period), ending on
the date on which the relevant directors and employees become fully entitled to the options (the vesting date) or
shares issued under the Plan.
At each subsequent reporting date until vesting, the cumulative charge to the statement of comprehensive income
reflects:
(i)
(ii)
the grant date fair value of the options and shares issued under the Plan;
the current best estimate of the number of options and shares issued under the Plan that will ultimately
vest, taking into account such factors as the likelihood of employee turnover during the vesting period
and the likelihood of vesting conditions being met, based on best available information at balance da
the extent to which the vesting period has expired.
(iii)
The charge to the statement of comprehensive income for the period is the cumulative amount as calculated above
less the amounts already charged in previous periods. There is a corresponding entry to equity.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had
not been modified. An additional expense is recognised for any modification that increases the total fair value of
the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of
modification.
If an equity-settled award is cancelled, it is treated as if it has vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately. However, if a new award is substituted for the
cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new
award are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options and shares issued under the Plan is reflected as additional share
dilution in the computation of diluted earnings per share.
(r)
Issued Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
23
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.
(s)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it
is probable that the economic benefits will flow to the consolidated entity and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognised:
(i)
Rendering of Services
Where the work performed in relation to a joint venture or other contract outcome can be reliably measured:
-
right to receive compensation for the services provided and the stage of completion can be reliably
measured. Stage of completion is measured by reference to the labour hours performed to date as a
percentage of total estimated labour hours in relation to a joint venture or for each contract. Where it is
probable that a loss will arise in relation to a joint venture or from a contract, the excess of total costs over
revenue is recognised as an expense immediately.
Where the contract outcome cannot be reliably measured:
-
revenue is recognised only to the extent that the costs that have been incurred are recoverable.
Unearned revenue is recognised in respect of progress billings and advances on exploration contracts in progress,
received in advance, or not represented by work done or reimbursable expenditure incurred, under joint venture
arrangements. Such revenue is recognised and brought to account over time as it is earned.
(ii)
Interest revenue
Revenue is recognised as interest accrued using the effective interest method. This is a method of calculating the
amortised costs of a financial asset and allocating the interest revenue over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset to the net carrying amount of the financial asset.
(iii)
Research and development
Research and development tax offset income compensates the Group for expenses incurred and is recognised in
profit or loss as other income in the period in which the research and development grant application is lodged.
All revenue is stated net of Goods and Services Tax (“GST”).
(t)
Income tax and other taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and
tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets,
liabilities and their carrying amounts for financial statements purposes.
Deferred income tax are recognised for all deductible temporary differences, carry-forward of unused tax credits
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences and the carry-forward of unused tax credits and unused tax loss can be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Tax consolidation legislation
RareX Limited and its wholly-owned Australian controlled entity formed a tax consolidated group on 1 July 2008.
However, they continue to account for their own current and deferred tax amounts. The consolidated entity has
24
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
applied the stand alone taxpayer approach in determining the appropriate amount of current taxes and deferred
taxes to allocate to members of the tax consolidated group. The current and deferred tax amounts are measured
in a systematic manner that is consistent with the broad principles in AASB 112 Income Taxes.
In addition to its own current and deferred tax amounts, RareX also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities
in the tax consolidated group.
Members of the tax consolidated group have not entered into a tax funding agreement and as no current tax assets
or liabilities or deferred tax assets are recognised in relation to tax losses or unused tax credits, no contributions
or distributions are required to be made under AASB Int 1052 Tax Consolidation Accounting.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
-
when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
-
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is
classified as part of operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to the
taxation authority.
(u)
Earnings per share
Basic earnings per share is calculated as profit attributable to members of the parent, adjusted to exclude any costs
of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number
of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as profit attributable to members of the parent, adjusted for:
-
-
-
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that are
recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive
potential ordinary shares, adjusted for any bonus element.
(v)
Exploration Expenditure
Exploration and evaluation costs are accumulated and accounted for separately on an area of interest basis. An
area of interest is represented by an exploration project, which may include multiple tenements within a single
geographic region.
For each area of interest, the Company makes an election regarding its treatment of exploration and evaluation
expenditure (including the costs of tenement acquisitions) and whether it will be charged to the income statement
as incurred, under the expense category “exploration expenditure” (or other appropriate expense category), or
capitalised as an exploration and evaluation asset, or a combination thereof.
25
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
An exploration and evaluation asset can only be recognised in relation to an area of interest if the following
conditions are satisfied:
a)
the rights to tenure of the area of interest are current; and
b) at least one of the following conditions is also met:
(i)
(ii)
the exploration and evaluation expenditures are expected to be recouped through successful
development and exploitation of the area of interest, or alternatively, by its sale; and
exploration and evaluation activities in the area of interest have not at the end of the reporting
period reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in, or in relation to, the
area of interest are continuing.
Capitalised exploration and evaluation expenditures are recorded as an exploration asset at cost less impairment
charges. All capitalised exploration and evaluation expenditure are monitored for indicators of impairment. Where
an impairment indicator is identified, an assessment is performed for each area of interest to which the exploration
and evaluation expenditure is attributed. To the extent that capitalised expenditure is not expected to be recovered
it is charged to the income statement.
(w)
Financial Liabilities and Equity Instruments Issued by the Consolidated Entity
(i)
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual agreement.
(ii)
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received,
net of direct issue costs.
(iii) Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at fair value through profit and loss’ or ‘other
financial liabilities’.
(iv) Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method,
with interest recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financially liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability, or (where
appropriate) a shorter period, to the net carrying amount on initial recognition.
26
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
3.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Directors evaluate estimates and judgements incorporated into the financial statements 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.
Key estimates and judgements
(i)
Impairment – general
The Company assesses impairment at the end of each reporting period by evaluation of conditions and events
specific to the Company that may be indicative of impairment triggers. Recoverable amounts of relevant
assets are reassessed using value-in-use calculations, which incorporate various key assumptions.
(ii) Options and share-based payment transaction
The Consolidated Entity measures the cost of equity-settled transactions by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined using a Black-Scholes
or Monte Carlo model, using the assumptions and inputs detailed in Note 30.
(iii) Tenement acquisition costs
The Directors have elected to expense certain tenement acquisition costs in relation to the Cummins Range
Rare Earths Project as disclosed in note 6.
4.
INCOME
(a) Other Income
Interest received
Research and Development Grant
Refund of stamp duty
Australian Government cash flow boost
(b) Gain on sale of investments
Gain on sale of 3,500,000 Kincora Copper Ltd (ASX: KCC) shares
Gain on sale of 200,000 Canada Rare Earth Corp (TSXV: LL.V) shares
(c) Fair value net (decrease)/increase in financial assets
Shares in Kincora Copper Ltd (TSXV: KCC.V)
Shares in Canada Rare Earth Corp (TSXV: LL.V)
Consolidated
2022
$
2021
$
1,905
703,870
170,677
41,549
918,001
-
-
-
8,421
-
-
48,305
56,726
373,879
9,097
382,976
(1,003,102)
(1,539,685)
(2,542,787)
(1,105,405)
1,324,905
219,500
27
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
5.
(a) GAIN/(LOSS) ON DISPOSAL OF SUBSIDIARY
Cosmos Exploration Ltd (“Cosmos") was divested from the Group during the year ended 30 June 2022. RareX
received $315,000 cash in settlement of the loan balance and 10 million shares in the separated Cosmos company.
The 10 million shares are valued at the issue price of $0.20 per share has been recognised as an investment from
1 December 2021. Rarex holds 28.57% of the issued share capital and, per AASB 128 Investments in Associates,
is classified as an associate as it holds more than 20% of the voting rights. Consequently, the investment in Cosmos
has been accounted for under an equity accounting basis and the financial statements recognises Rarex’s share of
Cosmos’s post divestment loss of $468,605.
The gain on the disposal of Cosmos is calculated as follows:
Net gain on disposal
$
334,389
On 30 November 2021, the Entity disposed of its 100% interest in Cosmos. Cosmos contributed $434,966 loss to
the Group’s consolidated profit from ordinary activities during the period.
The Balance Sheet of Cosmos at disposal is as follows:
Cash and cash equivalents
Trade and other receivables
Total assets
Trade and other payables
Loans
Provisions
IPO share application funds received
Total liabilities
Net assets/(liabilities)
(b) PROFIT/(LOSS) FROM SALE OF TENEMENTS
Shares at fair value (10 million Cosmos shares @ $0.20)
$
5,069,211
35,176
5,104,387
345,661
315,354
8,390
4,769,371
5,438,776
(334,389)
$
2,000,000
As the Group had previously expensed its exploration expenditure on the tenements spun out to Cosmos and had
no capitalised exploration and expenditure asset for these tenements, the fair value of the entire consideration
received of 10 million Cosmos shares has been brought to account as a profit from the sale of the tenements. On
disposal of its subsidiary Cosmos, RareX sold six of its tenements relating to the Orange East and Byro East projects
to Cosmos and consideration was received in shares.
28
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
6.
ACQUISITION OF TENEMENTS
In the prior year, the Directors elected to expense the following costs in relation to the acquisition of the Cummins
Range Rare Earths Project to the Consolidated Statement of Profit or Loss and Other Comprehensive Income:
Consideration – cash
Consideration – fair value of RareX Ltd shares issued
Stamp duty
7.
EXPLORATION EXPENSES
2022
$
Consolidated
2021
$
500,000
500,000
335,613
1,335,613
-
-
-
-
During the year, the Directors elected to expense the following costs in relation to the exploration activities of the
Group to the Consolidated Statement of Profit or Loss and Other Comprehensive Income:
Balance at the beginning of the year
Exploration expenditure incurred
Exploration expenditure expensed
Balance at the end of the year
Consolidated
2022
$
-
5,784,066
(5,784,066)
-
2021
$
-
2,291,409
(2,291,409)
-
The Directors have elected to expense exploration expenditure for all areas of interest of the Group (Note 2(v)).
8.
OTHER EXPENSES
(a) Consultants and management expense
Consultants
Directors’ fees - executive
Directors' fees – non-executive
Salary and on costs
Company secretarial fees
Less: Expenditure allocated to exploration and evaluation
(b) Depreciation and amortisation included in income statement
Depreciation of plant & equipment
Depreciation of motor vehicles
Depreciation of right of use assets
Consolidated
2022
$
2021
$
362,645
225,833
169,996
1,186,574
48,000
(495,121)
1,497,927
20,681
11,998
88,181
120,860
235,522
225,833
136,569
408,381
40,500
(318,090)
728,715
15,663
7,659
25,541
48,863
29
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
9.
INCOME TAX
(a)
Income tax expense
The major components of income tax expense are:
Statement of profit or loss and other comprehensive income
Current income tax
Current income tax charge/(benefit)
Adjustments in respect of current income tax of previous years
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax expense/(benefit) reported in statement of profit
or loss and other comprehensive income
(b)
(c)
Amounts charged or credited directly to equity
Deferred income tax related to items charged or credited
directly to equity
Unrealised loss on available-for-sale financial assets
Income tax benefit reported in equity
Numerical reconciliation of accounting profit to tax expense
A reconciliation between tax expense and the accounting
profit before income tax multiplied by the consolidated
entity's applicable income tax rate is as follows:
Accounting loss before income tax
At the consolidated entity's statutory income tax rate of 25%
(2021: 27.5%)
Non-deductible items
Non-assessable income
Share-based payments
Unrealised loss on investments
Impairment
Fringe benefits tax
Capital raising expenditure
Increase in unrecognised deferred tax assets
(d)
Current tax assets and liabilities
Current tax liability
(e)
Recognised deferred tax assets and liabilities
Consolidated
2022
$
2021
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,225,184)
(5,387,175)
(2,806,296)
(1,481,473)
2,964
-
539,405
77,036
-
2,354
(82,530)
2,267,067
-
1,312
(13,284)
219,298
(60,363)
367,294
-
(56,025)
1,023,241
-
Consolidated
2022
$
2021
$
-
-
The Group has not recognised any deferred tax assets or liabilities during the year (2021: Nil).
30
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
9.
INCOME TAX (continued)
(f)
Tax losses
The Group has Australian revenue tax losses for which no deferred tax recognized is recognised on the statement
of financial position of $30,151,312 (2021: $21,330,951) which are available indefinitely for offset against future
taxable income subject to continuing to meet the relevant statutory tests.
The Group has no Australian capital tax losses available (2021: nil).
(g)
Unrecognised temporary differences
As at 30 June 2022, the Group has other temporary differences (excluding tax differences relating to tax losses) for
which no deferred tax recognized is recognised in the statement of financial position of $164,536 (2021: $131,018).
None of these unrecognised temporary differences relate to investments in subsidiaries, associates or joint
ventures.
(h)
Tax consolidation
Members of the tax consolidated group and the tax sharing agreement
RareX Limited and its 100% owned Australian resident subsidiary were both subsidiaries in a tax-consolidated group
with Geoinformatics Exploration Australia Pty Ltd as the head entity until 2 July 2007. A new tax-consolidated
group was formed on 1 July 2008 with RareX Limited as Head Entity. Members of the new tax-consolidated group
have not yet entered into a tax sharing agreement.
10.
EARNINGS PER SHARE
The following reflects the income used in the basic and diluted earnings per share computations.
(a)
(b)
Earnings used in calculating earnings per share
For basic and diluted earnings per share
Loss from continuing operations after tax for the year
Weighted average number of shares
Weighted average number of shares used in calculation of
basic earnings per share
Weighted average number of shares used in calculation of
diluted earnings per share
(c)
Earnings per share
Basic loss per share
Diluted loss per share
11.
CASH AND CASH EQUIVALENTS
Cash at bank
Consolidated
2022
$
2021
$
(11,225,184)
(5,387,175)
484,402,945
406,315,446
484,402,945
406,315,446
(2.32 cents)
(2.32 cents)
(1.33 cents)
(1.33 cents)
Consolidated
2022
$
8,232,977
8,232,977
2021
$
4,477,985
4,477,985
31
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
12.
TRADE AND OTHER RECEIVABLES
Trade debtors
Sundry debtors
Security and tenement deposits
Accrued income
GST input tax refundable
Prepayments
Consolidated
2022
$
2021
$
15,843
41,280
114,442
-
241,284
89,462
502,311
-
8,968
124,442
214
71,742
21,937
227,303
Fair value and credit risk
Due to the short term nature of the receivables, their carrying value is assumed to approximate their fair value.
GST input tax refundable is receivable from the Commonwealth of Australia and is therefore viewed as having low
credit risk. Accrued income is receivable from National Australia Bank and is therefore viewed as having low credit
risk.
13.
EXPLORATION AND EVALUATION ASSETS
Cummins Range Rare Earths Project
Opening balance
Tenement acquisition costs
Acquisition of Cummins Range Pty Ltd
Stamp duty on acquisition of tenement
Less: Acquisition of costs expensed
Hong Kong Gold Project
Opening balance
Movement for the year
Moroccan Cobalt Project
Opening balance
Capitalised exploration costs
Less: Impairment
Consolidated
2022
$
-
-
-
-
-
-
505,032
(505,032)
-
-
-
-
-
-
2021
$
1,151,014
-
-
184,599
(1,335,613)
-
505,032
-
505,032
-
-
-
-
505,032
During the period, the Company purchased, for $1, the 70% interest in the Hong Kong Gold Project it had previously
sold to Pacton Gold Inc in 2018 resulting in the Group now having a 100% ownership and control of the Hong Kong
Gold Project (which is an unincorporated tenement holding). In accordance with the Group’s accounting policy,
the Directors have decided to fully expense the acquisition cost of the 30% interest in the Hong Kong Gold Project
which it had carried forward since 2018 cost.
32
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
14.
FINANCIAL ASSETS AT FAIR VALUE
Financial assets at fair value through profit or loss
Non-Current
Shares in listed corporations, at fair value
- Kincora Copper Ltd (TSXV: KCC.V)(4,983,333 shares2; 2021: 4,983,333)1
- Canada Rare Earth Corp (TSXV: LL.V) (24,579,658 shares; 2021: 24,579,658)3
shares)1
Investment in Atlas Management Sarl (20% interest) (Note 25(c))
Less: Impairment
Consolidated
2022
$
2021
$
280,435
834,397
507,084
(507,084)
1,114,832
1,283,537
2,374,082
507,084
(507,084)
3,657,619
Impairment expense in Statement of Profit or Loss and Other Comprehensive Income
Impairment of Moroccan VAT receivable
-
-
11
11
1 The market value of the shares in Kincora Copper Ltd as at 30 June 2021 is based on a closing price of Kincora Copper Ltd shares
of CAD0.05 (2021: CAD0.24 pre-consolidation) and an exchange rate of 1AUD = 0.8885CAD (2021: 0. 9318CAD).
Kincora Copper Ltd consolidated its share capital on a 1 for 3 basis. Therefore, the 14,950,000 shares held at 30 June 2020 were
consolidated into 4,983,333 post-consolidation shares).
3 The market value of the shares in Canada Rare Earth Corp as at 30 June 2022 is based on a closing price of Canada Rare Earth
Corp shares of CAD0.03 and an exchange rate of 1AUD = 0. 8885CAD.
During the year, cash outflows in relation to financial assets acquired were:
3,500,000 shares in Kincora Copper Ltd (ASX: KCC) shares
24,779,658 shares in Canada Rare Earth Corp (TSXV: LL.V)
Payments for acquisition of investments
During the year, cash inflows in relation to financial assets disposed of were:
3,500,000 shares in Kincora Copper Ltd (ASX: KCC) shares
200,000 shares in Canada Rare Earth Corp (TSXV: LL.V)
Proceeds from sale of investments
15.
INVESTMENT IN ASSOCIATE
Consolidated
2022
$
2021
$
-
-
-
-
-
-
700,000
1,057,309
1,757,309
1,073,879
17,228
1,091,107
In accordance with AASB 128, the Group has recognised its initial investment in Cosmos Exploration Ltd less its
share of Cosmos’ post divestment loss. At disposal of subsidiary, RareX have sold their six tenements to Cosmos
and consideration was received by shares.
Cosmos Exploration Ltd (10,000,000 shares) (Note 5(b))
Less : Share of Cosmos’ post divestment loss for the period
Consolidated
2022
$
2,000,000
(468,606)
1,531,394
2021
$
-
-
-
As part of the divestment of Cosmos, it was agreed that RareX would retain a 25% interest in the Orange East Project
(EL 8442) which is free carried until completion of a bankable feasibility study.
33
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
15.
INVESTMENT IN ASSOCIATE (continued)
Interests in associates are accounted for using the equity method of accounting. Information relating to associates
that are material to the consolidated entity are set out below:
Name
Cosmos Exploration Ltd
Nature of
investment
Country of
incorporation
% Equity interest
2021
2022
Investment $
2022
2021
Ordinary shares
Australia
28
100
1
1
Summarised financial information
Summarised statement of financial position
Current Assets
Cash and cash equivalents
Trade and other receivables
Non-current Assets
Exploration and evaluation costs
Total Assets
Current Liabilities
Trade and other payables
Provisions
Loans and borrowings
Total Liabilities
Net Assets
Summarised statement of profit or loss and other comprehensive income
Interest revenue
RareX loan forgiveness
Accounting, audit and corporate fees
Directors' fees, salaries, superannuation, and consulting costs
Exploration expenditure expensed
Share based payment expensed
Other expenses
Profit before income tax
Income tax expense
Profit after income tax
Other comprehensive income
Total comprehensive loss net of tax
Reconciliation of the consolidated entity's carrying amount
Opening carrying amount
Initial recognition of investment in Cosmos
Share of loss after income tax
Closing carrying amount
Commitments
Minimum exploration commitments
Within one year
One to five years
Cosmos Exploration Ltd has no contingent liabilities.
Cosmos Exploration Ltd
2022
$
2021
$
3,335,875
226,223
2,000,000
5,562,098
314,723
11,974
-
326,697
5,235,401
3,909
322,453
(337,103)
(187,656)
(1,026,622)
(328,105)
(87,075)
(1,640,199)
-
(1,640,199)
-
(1,640,199)
-
2,000,000
(468,606)
1,531,394
452,128
3,131,200
3,583,328
1
2,796
-
2,797
16,269
2,387
126,017
144,673
(141,876)
-
-
-
-
(97,002)
-
(44,875)
(141,877)
-
(141,877)
-
(141,877)
-
-
-
-
-
-
34
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
16.
PLANT AND EQUIPMENT
Consolidated
2022
$
2021
$
Original Cost
Computer Equipment
At 1 July
Additions
Disposals
At 30 June
Plant and Equipment
At 1 July
Additions
Disposals
At 30 June
Motor Vehicles
At 1 July
Additions
Disposals
At 30 June
Total Property, Plant and Equipment
At 1 July
Additions
Disposals
At 30 June
Accumulated Depreciation
Computer Equipment
At 1 July
Depreciation charge for year
Accumulated depreciation on disposals
At 30 June
Plant and Equipment
At 1 July
Depreciation charge for year
Accumulated depreciation on disposals
At 30 June
Motor Vehicles
At 1 July
Depreciation charge for year
Accumulated depreciation on disposals
At 30 June
Total Accumulated Depreciation
At 1 July
Depreciation charge for year
Accumulated depreciation on disposals
At 30 June
Total Plant and Equipment
Original cost
Accumulated depreciation
Net carrying amount
27,592
11,073
-
38,665
66,800
46,912
-
113,712
59,989
-
-
59,989
154,381
57,985
-
212,366
18,931
4,977
-
23,908
13,360
15,704
-
29,064
7,659
11,998
-
19,657
39,950
32,679
-
72,629
212,366
(72,629)
139,737
16,628
10,964
-
27,592
66,800
-
-
66,800
-
59,989
-
59,989
83,428
70,953
-
154,381
16,628
2,303
-
18,931
-
13,360
-
13,360
-
7,659
-
7,659
16,628
23,322
-
39,950
154,381
(39,950)
114,431
35
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
16.
PLANT AND EQUIPMENT (continued)
(i) The useful life of the assets was estimated as follows:
Sundry equipment:
Computer equipment:
Motor vehicles:
Furniture and Fittings:
Library:
Leasehold improvements:
5 to 15 years
2- 4 years
5 to 8 years
5 to 15 years
7 years
Over the remainder of the lease term up to 2 years
(ii) No assets have been pledged as security for borrowings.
17.
RIGHT OF USE ASSET
Land and buildings - right-of-use
Opening balance
Additions
Depreciation
Consolidated
2022
$
2021
$
380,630
-
(75,540)
305,090
-
406,171
(25,541)
380,630
Additions to the right-of-use assets during the year were $406,171 (2021: nil). The consolidated entity leases land
and buildings for its offices and warehouse under agreements of between four to five years with options to extend.
The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.
18.
TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Estimated stamp duty accrued on Cummins Range acquisition
Notes
(i) – (ii)
Consolidated
2022
$
1,548,666
241,514
-
1,790,180
2021
$
269,394
228,877
170,677
668,948
Terms and conditions:
(i) Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.
(ii) Trade payables are non-interest bearing and are normally settled on 30 day terms.
36
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
19.
LEASE LIABILITIES
Current liability
Non-current liability
Maturity
Within 1 year
1-2 years
2-5 years
Over 5 years
Opening balance
Initial recognition of new leases
Interest
Principal
Consolidated
2022
$
83,011
240,121
323,132
83,011
92,235
147,886
-
323,132
385,280
-
22,507
(84,655)
323,132
2021
$
71,220
314,060
385,280
71,220
92,235
221,825
-
385,280
-
406,171
6,939
(27,830)
385,280
The consolidated entity leases land and buildings for its offices and warehouse under agreements of between four
to five years with options to extend. The leases have various escalation clauses. On renewal, the terms of the leases
are renegotiated.
20.
ISSUED CAPITAL
Ordinary shares
Consolidated
2022
$
2021
$
45,715,177
35,315,630
Notes
(a)
(a) Ordinary shares
Issued and fully paid ordinary shares carry one vote per share and carry the right to dividends. Unless stated
otherwise, references to shares, options and performance rights in these financial statements are on a post-
consolidation basis.
Movement in ordinary shares on issue
As at 1 July
Add:
acquisition
Shares issued on exercise of options
Fair value of shares issued for part
consideration
of
for
Cummins Range Rare Earths Project
Issue of shares to Directors1
Shares issued via placement
Shares issued – placement - Directors
Fair value of equity settled transaction
Shares issued via placement
Fair value of shares issued to consultant
Transactions costs on share issues
Consolidated
2022
2021
No. of shares
$
No. of shares
$
435,343,204
16,250,000
35,315,630 354,652,568
13,150,000
406,250
29,605,193
560,150
7,462,687
500,000
7,222,222
111,111,111
650,000
10,000,000
4,000,000
29,100,000
900,000
277,949
25,000,000
800,000
-
45,715,177 435,343,204
200,000
2,910,000
90,000
33,354
2,750,000
84,000
(1,417,067)
35,315,630
Less:
As at 30 June
1 Of the $650,000 of shares issued to the Directors, $610,000 was received by the 30 June 2022. The remaining $40,000 was received on the 1
July 2022.
-
569,926,537
(656,703)
37
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
20.
ISSUED CAPITAL (continued)
(b) Capital Risk Management
When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to
maintain appropriate returns to shareholders and benefits for other stakeholders. Management also aims to
maintain a capital structure that ensures an appropriate cost of capital available for the entity.
In order to maintain or adjust the capital structure, the entity may adjust the number of dividends paid to
shareholders, return capital to shareholders, issue new shares, enter into joint ventures or sell assets.
The entity does not have a defined share buy-back plan.
No dividends were paid in the year ended 30 June 2022 and no dividends are expected to be paid in the 2021/22
financial year.
The consolidated entity is not subject to any externally imposed capital requirements.
Management reviews management accounts on a monthly basis and actual expenditures against budget on a
monthly basis.
21.
RESERVES
Options reserve
Share-based payment reserve
Foreign currency translation reserve
(a) Movement in reserves
Options reserve
Balance at beginning of the financial year
Consideration received from issue of options
Fair value of options issued
Balance at end of financial year
Share-based payment reserve
Balance at beginning of the financial year
Fair value of performance rights issued
Balance at end of financial year
Foreign currency translation reserve
Balance at beginning of the financial year
Currency translation differences
Balance at end of financial year
(b) Nature and purpose of reserves
Consolidated
2022
$
6,163,712
2,414,702
(3,497)
8,574,917
2021
$
6,163,712
257,083
(963)
6,419,832
6,163,712
-
-
6,163,712
257,083
2,157,619
2,414,702
(963)
(2,534)
(3,497)
4,775,912
-
1,387,800
6,163,712
83,840
173,243
257,083
(2,022)
1,059
(963)
The options reserve records the fair value of share options issued, using the Black-Scholes option pricing model, to
the Company's directors, employees, consultants and brokers as well as the vendors of drilling services and
tenements.
The share-based payments reserve records the value of performance rights issued to the Company's directors.
The foreign currency translation reserve is used to recognise exchange differences arising from the translation of
the financial statements of foreign operations to Australian dollars.
38
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
21.
RESERVES (CONTINUED)
(c) Movement in options
Expiry
date of
options
27/09/21
27/09/22
27/09/22
27/09/22
11/10/22
12/12/22
12/12/22
12/12/22
12/12/22
12/12/22
11/10/22
11/10/22
22/12/22
22/12/22
22/12/22
11/10/22
11/10/22
22/12/22
22/12/22
22/12/22
11/10/22
30/11/23
31/12/23
31/12/23
Notes
Exercise
price
On issue at
1 July 2021
Granted
Exercised
Cancelled/
expired/
forfeited
On issue at
30 June
2022
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)
(xvii)
(xviii)
(xix)
(xx)
(xxi)
(xxii)
(xxiii)
(xxiv)
$0.0250
$0.0250
$0.0250
$0.0250
$0.0850
$0.0607
$0.0607
$0.0607
$0.0607
$0.0607
$0.0607
$0.0850
$0.0607
$0.0607
$0.0607
$0.0850
$0.0850
$0.0607
$0.0607
$0.0607
$0.0850
$0.1500
$0.1500
$0.1500
16,250,000
5,000,000
5,000,000
5,000,000
16,000,000
1,000,000
1,000,000
2,000,000
1,500,000
1,500,000
1,500,000
3,000,000
2,000,000
2,000,000
2,000,000
1,250,000
1,250,000
2,000,000
2,000,000
2,000,000
7,000,000
10,000,000
5,000,000
2,000,000
97, 250,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(16,250,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(16,250,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
5,000,000
5,000,000
16,000,000
1,000,000
1,000,000
2,000,000
1,500,000
1,500,000
1,500,000
3,000,000
2,000,000
2,000,000
2,000,000
1,250,000
1,250,000
2,000,000
2,000,000
2,000,000
7,000,000
10,000,000
5,000,000
2,000,000
81,000,000
(v)
(ii)
(iv)
(vi)
(iii)
(vii)
(viii)
All options granted have been valued according to the Black Scholes model.
Issued to the vendors of Cummins Range Pty Ltd in September 2019.
(i)
Issued to J Robinson (Executive Director) in September 2019; vesting on 6 months employment and 20 day VWAP
exceeding $0.05.
Issued to J Robinson (Executive Director) in September 2019; vesting on 6 months employment and 20 day VWAP
exceeding $0.10.
Issued to J Robinson (Executive Director) in September 2019; vesting on 6 months employment and 20 day VWAP
exceeding $0.15.
Issued to a consultant in October 2019.
Issued to S Hardcastle and S Patrizi (Non-Executive Directors) in December 2019; vesting on 20 day VWAP exceeding
$0.10.
Issued to S Hardcastle and S Patrizi (Non-Executive Directors) in December 2019; vesting on 20 day VWAP exceeding
$0.15.
Issued to S Hardcastle and S Patrizi (Non-Executive Directors) in December 2019; vesting on 20 day VWAP exceeding
$0.20.
Issued to an employee in December 2019; vesting on 20 day VWAP exceeding $0.10.
Issued to an employee in December 2019; vesting on 20 day VWAP exceeding $0.15.
Issued to an employee in December 2019; vesting on 20 day VWAP exceeding $0.20.
Issued to a consultant in December 2019.
Issued to J Young (Non-Executive Chairman) in February 2020; vesting on 20 day VWAP exceeding $0.10.
Issued to J Young (Non-Executive Chairman) in February 2020; vesting on 20 day VWAP exceeding $0.15.
Issued to J Young (Non-Executive Chairman) in February 2020; vesting on 20 day VWAP exceeding $0.20.
Issued to a consultant in March 2020.
Issued to a consultant in June 2020.
Issued to C Henry (Non-Executive Director) in June 2020; vesting on 20 day VWAP exceeding $0.10.
Issued to C Henry (Non-Executive Director) in June 2020; vesting on 20 day VWAP exceeding $0.15.
Issued to C Henry (Non-Executive Director) in June 2020; vesting on 20 day VWAP exceeding $0.20.
Issued to a consultant in June 2020.
Issued to a broker in November 2020.
Issued to a corporate advisor in February 2021.
Issued to a consultant in February 2021.
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)
(xvii)
(xviii)
(xix)
(xx)
(xxi)
(xxii)
(xxiii)
(xxiv)
39
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
21.
RESERVES (CONTINUED)
(d) Movement in performance rights
Note
Exercise
price
On issue at
1 July 2021
Granted
during the
year
Vested
during the
year
Class B
Class C
Class D
Class A
Class B
Class C
(i)
(i)
(i)
(ii)
(ii)
(ii)
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
250,000
250,000
250,000
12,000,000
12,000,000
12,000,000
36,750,000
-
-
-
1,500,000
1,500,000
1,500,000
4,500,000
-
-
-
-
-
-
-
Cancelled/
expired/
forfeited
(250,000)
(250,000)
(250,000)
-
-
-
(750,000)
On issue at
30 June
2022
-
-
-
13,500,000
13,500,000
13,500,000
40,500,000
(i)
(ii)
Performance rights issued to Directors.
Performance rights issued to Directors, key management personnel and other employees.
Class
Vesting Condition of Current Performance Rights- vesting will occur:
A
B
C
20 Day VWAP of $0.20 and 12 months continuous service within 3 years
from the date of issue
20 Day VWAP of $0.25 and 18 months continuous service within 3 years
from the date of issue
20 Day VWAP of $0.30 and 24 months continuous service within 3 years
from the date of issue
Number on issue
at 30 June 2022
13,500,000
13,500,000
13,500,000
22.
STATEMENT OF CASH FLOWS RECONCILIATION
Reconciliation of the net loss after tax to net cash flows from operations
Loss from ordinary activities after income tax
(11,225,184)
(5,387,175)
Consolidated
2022
$
2021
$
Adjustments for:
Depreciation
Impairment
Gain on disposal of investments
Gain on sale of tenements
Equity settled share-based payments
Equity settled payments
Unrealised gain on investments
Acquisition of tenements expense
Foreign exchange loss/(gain)
Share of loss from equity accounted interest
Gain on sale of subsidiary
Other
Changes in assets and liabilities
Movement in trade and other receivables
Movement in other assets
Movement in trade and other payables
Movement in provisions
Net cash flow used in operating activities
120,860
334,355
-
-
2,157,619
-
2,542,787
-
(2,832)
468,605
(2,334,389)
18,488
48,863
11
(382,976)
-
797,448
6,949
(219,500)
1,335,613
1,022
-
-
-
(212,875)
(67,311)
1,637,694
83,200
(6,478,983)
(25,458)
(22,799)
373,660
52,677
(3,421,665)
40
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
23.
INTEREST IN JOINTLY CONTROLLED OPERATIONS
20.
As at 30 June 2022, the Group had the following significant interests in joint ventures:
(i)
(ii)
New South Wales tenements (excluding EL8442): On 12 March 2020, RareX announced Kincora
Copper Limited (Kincora) had exercised its option to acquire a 65% interest in its NSW tenements
(excluding EL8442) with RareX retaining a 35% free carried interest until such time as a positive
scoping study or preliminary economic assessment is delivered, following which industry standard
joint venture dilution mechanisms will apply.
As part of the divestment of Cosmos Exploration Ltd, it was agreed that RareX would retain a 25%
interest in the Orange East Project (EL 8442) which is free carried until completion of a bankable
feasibility study, following which a formal joint venture agreement will be negotiated.
24.
SEGMENT INFORMATION
Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating
decision maker (CODM), which has been identified by the Group as the Board of Directors.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components.
At 30 June 2022, the Group had the following segments:
Rare Earths
(Western Australia)
Gold/Nickel/Copper
(Western Australia)
Cobalt/Nickel
(Austria)
Cobalt
(Morocco)
Copper/Gold
(New South Wales)
Copper/Gold
(Kenya)
Corporate
Operating Profit/(Loss)
Total Assets
Total Liabilities
30/6/2022
$
30/6/2021
$
30/6/2022
$
30/6/2021
$
30/6/2022
$
30/6/2021
$
(5,746,412)
(3,479,869)
252,986
28,652
(1,388,935)
(308,004)
(217,483)
(70,938)
-
(2,707)
-
-
(21,968)
(28,881)
377
16,018
(107,615)
(59,457)
-
-
-
505,032
-
890
-
-
-
-
-
-
-
-
-
-
-
-
(5,195,882)
(1,697,165)
11,572,978
8,828,426
(872,412)
(819,450)
(11,225,184)
(5,387,175)
11,826,341
9,363,000
(2,261,347)
(1,127,454)
41
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
25.
COMMITMENTS
Estimated commitments for which no provisions were included in the financial
statements are as follows:
(a) Exploration Expenditure Commitments:
Payable
- not later than one year
- later than one year and not later than five years
Consolidated
2022
$
2021
$
199,000
572,000
771,000
565,760
2,263,040
2,828,800
Included in overall commitments calculations are estimates of the Company’s expected commitments in respect
of its sole funded exploration licenses.
All the exploration expenditure commitments are non-binding,
in respect of outstanding expenditure
commitments, in that the Company or its joint venture partners have the option to relinquish and lose these
licenses or their contractual commitments at any stage, at the cost of its cumulative expenditures up to the point
of relinquishment.
Refer to Note 23 for details of Jointly Controlled Operations.
(b) Lease Commitments
In the previous year, the Company entered into lease commitments which resulted in recognition of any right-of-
use asset, or associated lease liability. Please refer Note 17 and 19.
(c)
Contractual Commitments
The Company entered an agreement to acquire up to 100% of three cobalt licences in Morocco.
As at the balance date, the Company had acquired a 20% interest in these cobalt licences via the completion of the
first stage of the acquisition by acquiring an initial 20% interest in Atlas Management S.A.R.L, which holds three
Moroccan licences. The Board is currently reviewing its strategy and options for the Morocco Cobalt Project and at
this point, has elected not to progress with Stage 2 of the acquisition of Atlas Management.
The remaining stages of the acquisition, which at this time the Directors have elected not to proceed with, are as
follows:
-
-
-
-
("Stage 2"): payment of US$200,000 and issue of 120 million fully paid ordinary shares in RareX within 6 months
and 5 days from the completion of Stage 1, in consideration for a further 20% interest;
("Stage 3"): payment of US$200,000 and issue of 120 million fully paid ordinary shares in RareX within 6 months
and 5 days from the completion of Stage 2, in consideration for a further 20% interest;
("Stage 4"): payment of US$200,000 and issue of 120 million fully paid ordinary shares in RareX within 6 months
and 5 days from the completion of Stage 3, in consideration for a further 20% interest; and
("Stage 5"): payment of US$200,000 and issue of 120 million fully paid ordinary shares in RareX within 6 months
and 5 days from the completion of Stage 4, in consideration for a further 20% interest, such that RareX (or a
subsidiary of RareX) will have acquired or been issued a 100% interest at the completion of Stage 5.
42
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
26.
CONTINGENT LIABILITIES
Subject to a positive bankable feasibility study (BFS) being achieved within 36 months from settlement of the
acquisition of the Cummins Range Rare Earths Project by the Company, further deferred consideration of
$1,000,000 is payable to Element 25 Ltd which is to be settled in cash or shares in RareX Ltd at the election of
RareX Ltd. As this further deferred consideration is subject to a positive BFS, it is disclosed as a contingent liability
and has not been brought to account as a liability in the financial statements as at 30 June 2022.
27.
RELATED PARTY DISCLOSURES
Ultimate parent
(a)
The ultimate Australian parent entity and the ultimate parent of the consolidated entity is RareX Limited.
Subsidiaries and associate
(b)
The subsidiaries of RareX Limited are listed in the following table:
Name
Cosmos Exploration Ltd1
Cummins Range Pty Ltd
Geoinformatics
Exploration Tasmania Pty
Ltd
Great Northern Hydrogen
Pty Ltd1
Leogang Austria Pty Ltd
Nature of
investment
Country of
incorporation
% Equity interest
2021
2022
Investment $
2022
2021
Ordinary shares
Ordinary shares
Australia
Australia
28
100
100
100
1
4,782,250
1
4,782,250
Ordinary shares
Australia
100
100
Ordinary shares
Australia
Ordinary shares
Australia
100
100
100
100
1
1
10
1
1
10
-
RareX Kenya Ltd2
15
Ste Clancy Morocco Sarl
1 Incorporated as a 100% owned subsidiary of RareX on 22 March 2021 and became an associate on 30 November 2021
2 Incorporated as a 100% owned subsidiary of RareX on 13 October 2021
Ordinary shares
Ordinary shares
Kenya
Morocco
100
100
-
100
1
15
Transactions with related parties
(c)
The following table provides the total amount of transactions (GST exclusive where GST applies) entered into with
related parties for the relevant financial year. The transactions have all been undertaken on an arms’ length basis.
Sales of goods and services
Rent, rates and office charges to Cosmos Exploration Ltd, a related
party of Jeremy Robinson.
Repayment of expenses to Cosmos Exploration Ltd, a related party of
Jeremy Robinson. (Refer Note 5 for further details of divestment)
Consolidated
2022
$
2021
$
46,892
315,534
-
-
Consolidated
2022
$
2021
$
Amounts owed by respect of related party transactions included in the trade creditors and accruals balance at
30 June 2022 and 30 June 2021 are as follows:
Cosmos Exploration Ltd
7,362
-
Purchase of goods and services
Legal fees billed by Hamilton Locke, a company controlled by Shaun
Hardcastle
Consulting fees billed by Primero Group Ltd, a company associated
with Cameron Henry
Consolidated
2022
$
2021
$
8,627
178,593
-
-
43
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
27.
RELATED PARTY DISCLOSURES (continued)
Consolidated
2022
$
2021
$
Amounts owed in respect of related party transactions included in the trade creditors and accruals balance at
30 June 2022 and 30 June 2021 are as follows:
Director fees billed by John Young
Director fees billed by the Rod Dog Pty Ltd, a company controlled by
a director, Shaun Hardcastle
-
-
5,417
4,583
28.
SUBSEQUENT EVENTS
Subsequent to 30 June 2022, there have been no significant events with the exception of the below:
• Following the exercise of 15,000,000 unquoted options (exercisable at $0.025 each and expiring 27
September 2022) utilising the cashless exercise facility, the Company issued 9,460,038 shares to
Managing Director, Jeremy Robinson.
29.
DIRECTORS AND KEY MANAGEMENT PERSONNEL
Details of Key Management Personnel
(a)
The names of the Company’s officeholders in office at any time during the financial year are as follows.
Officeholders were in office for the entire period unless otherwise stated.
J Young
J Robinson
S Hardcastle
C Henry
O Malone
Chairman (Non-Executive)
Director (Executive)
Director (Non-Executive)
Director (Non-Executive)
Company Secretary
(b)
Compensation for Key Management Personnel
Short-term employee benefits
Non-monetary benefits
Post-employment benefits
Share-based payments
Total Compensation
30.
SHARE-BASED PAYMENT EXPENSE
Consolidated
2022
$
497,996
1,446
28,568
1,676,716
2,204,726
2021
$
402,902
580
24,043
88,601
516,126
(a) Recognised share-based payments expenses
The expense recognised for the expensing of employee and consultant services received is shown below:
Recognised in the Statement of Profit or Loss and Other Comprehensive Income
Expense recognised for directors’ services received
Expense arising from equity-settled share-based payment transactions –
directors and key management personnel
Expense arising from equity-settled share-based payment transactions – other
employees
Equity payment recognised for consulting fees
Equity-settled share-based payment transactions – options
issued
consideration for facilitation of acquisition and ongoing consultancy services
for
Consolidated
2022
$
2021
$
1,676,716
88,601
480,903
-
2,157,619
88,601
-
-
708,847
708,847
Total recognised in the Statement of Profit or Loss and Other Comprehensive
Income
2,157,619
797,448
44
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
30.
SHARE-BASED PAYMENT EXPENSE (continued)
(b)
Weighted average remaining contractual life
The weighted average remaining contractual life of the options on issue is 0.49 years (2021: 1.34 years).
(c)
Range of exercise price
The range of the exercise prices of the options on issue is $0.025 - $0.150 (2021: $$0.025 - $0.175).
(d) Weighted average fair value
The fair value of the options issued as share-based payments during the year was $0 per option (2021: $0.0816 per
option). No options were issue in the year.
(e) Weighted average share price
The weighted average price per share in relation to shares issued during the year was $0.0822 (2021 $0.0883).
(f)
Option valuation
During the year ended 30 June 2022, no options the following share based payments were made
During the year ended 30 June 2021, the following share based payments were made. The options have been
valued by the Directors using the Black-Scholes option pricing model based on the following:
Underlying value of the security
Exercise price
Valuation date
Expiry date
Life of Options in years
Volatility
Risk free rate
Number of Options
Valuation per Option
Valuation
Total consideration paid by option holders
Valuation less consideration paid
Broker Options
Corporate
Advisor Options
Consultant
Options
$0.12
$0.15
23/11/2020
30/11/2023
3
134.13%
0.11%
10,000,000
0.0874
874,000
-
874,000
$0.125
$0.15
5/02/2021
21/12/2023
2.87
103.88%
0.11%
5,000,000
0.0734
367,000
-
367,000
$0.125
$0.15
5/02/2021
21/12/2023
2.87
103.88%
0.11%
2,000,000
0.0734
146,800
-
146,800
Share based payments expense in the Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2022 is as follows:
Performance Rights (pro rata expense over vesting period)
Directors
Key Management Personnel
Employees
Sub-Total Performance Rights
Total Share Based Payments Expense
$
1,556,485
120,231
480,903
2,157,619
2,157,619
45
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
30.
SHARE BASED PAYMENTS (continued)
Share based payments expense in the Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2021 was as follows:
Shares
Fair value adjustment for shares issued to supplier
Fair value of shares issued to supplier
Sub-Total Shares
Options
Corporate Advisor Options
Consultant Options
Sub-Total Options
Performance Rights (pro rata expense over vesting period)
Directors
Key Management Personnel
Employees
Sub-Total Performance Rights
Total Share Based Payments Expense
(g)
Performance rights valuation
$
26,405
84,000
110,405
367,000
146,800
513,800
67,441
21,160
84,642
173,243
797,448
During the year ended 30 June 2022, the following share-based payments were made which have been accounted
for in the share-based payments reserve. The following performance rights, which were issued to Directors, key
management personnel and employees, were recorded at their fair value in the share-based payment reserve. The
performance rights have been valued by the Directors at the closing share price on the grant date, less discounts
to reflect the effects of any market based vesting conditions as detailed in the below table. The expected vesting
period for each performance right for performance based vesting conditions is the period until expiry of the
performance right.
Director
Class
Grant date
A
B
C
A
B
C
A
B
C
A
B
C
A
B
C
A
B
C
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
26/5/2021
5/2/2021
5/2/2021
5/2/2021
5/2/2021
5/2/2021
5/2/2021
J Young
J Robinson
S
Hardcastle
C Henry
O Malone
Other
Employees
Total
Fair value per
performance
right
($)
0.078200
0.073800
0.070300
0.078200
0.073800
0.070300
0.078200
0.073800
0.070300
0.078200
0.073800
0.070300
0.112400
0.106100
0.101100
0.112400
0.106100
0.101100
No. of
performance
rights
1,500,000
1,500,000
1,500,000
4,500,000
5,000,000
5,000,000
5,000,000
15,000,000
1,500,000
1,500,000
1,500,000
4,500,000
1,500,000
1,500,000
1,500,000
4,500,000
500,000
500,000
500,000
1,500,000
2,000,000
2,000,000
2,000,000
6,000,000
36,000,000
1 Performance rights are expensed on a straight-line basis over the vesting period.
Total fair value
of performance
rights issued
($)
Expense to
Statement of Profit
or Loss for the year1
($)
117,300
110,700
105,450
333,450
391,000
369,000
351,500
1,111,500
117,300
110,700
105,450
333,450
117,300
110,700
105,450
333,450
56,200
53,050
50,550
159,800
224,800
212,200
202,200
639,200
2,910,850
113,558
77,608
54,603
245,769
378,502
258,676
182,000
819,178
113,558
77,608
54,603
245,769
113,558
77,608
54,603
245,769
48,760
42,658
28,813
120,231
195,036
170,626
115,241
480,903
2,157,619
46
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
30.
SHARE BASED PAYMENTS (continued)
No performance rights were issued during the year ended 30 June 2022 (2021: Nil).
The performance rights have been valued by the Directors using the Black-Scholes option pricing model based on the
following. The fair value for each class of performance right and the discount applied to share price at grant date to reflect
market based vesting condition is shown in the table below:
Expiry
date
Life of
Options in
Years
Number of
Rights
Valuation
per Right
Total Fair
Value
Discount
applied to
share price at
grant date to
reflect
market based
vesting
condition
Directors
Underlying value
of the security
Exercise price
Grant date
Volatility
Risk free rate
Performance Right:
Class A
$0.087
Nil
26/5/21
104%
0.08%
Class B
Class C
26/5/24
26/5/24
26/5/24
Key management personnel and other employees
$0.125
Underlying value
of the security
Exercise price
Grant date
Volatility
Risk free rate
Performance Right:
Class A
Nil
5/2/21
104%
0.08%
5/2/24
Class B
Class C
Total
5/2/24
5/2/24
3
3
3
3
3
3
9,500,000
$0.0088
$0.0782
9,500,000
9,500,000
28,500,000
$0.0132
$0.0167
$0.0738
$0.0703
$742,900
$701,100
$667,850
$2,111,850
2,500,000
$0.0126
$0.1124
2,500,000
2,500,000
7,500,000
36,000,000
$0.0189
$0.0239
$0.1061
$0.1011
$281,000
$265,250
$252,750
$799,000
$2,910,850
The performance rights will vest on meeting the following performance conditions before the expiry date:
Class Vesting Condition - vesting will occur:
A
B
C
20 Day VWAP of $0.20 and 12 months continuous service within 3 years from the date of issue
20 Day VWAP of $0.25 and 18 months continuous service within 3 years from the date of issue
20 Day VWAP of $0.30 and 24 months continuous service within 3 years from the date of issue
Number
12,000,000
12,000,000
12,000,000
On meeting vesting conditions, performance rights will each convert into one ordinary share with no further consideration.
Performance rights were valued at the closing share price on the grant date, less discounts to reflect the effects of any market
based vesting conditions as detailed the table above. The expected vesting period for each performance right for
performance-based vesting conditions is the period until expiry of the performance right.
47
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
31.
AUDITOR’S REMUNERATION
The auditor of RareX Limited was SW Audit (previously known as Walker Wayland WA Audit Pty Ltd).
Amounts received or due and receivable by SW Audit (previously
known as Walker Wayland WA Audit Pty Ltd) for:
- an audit or review of the financial statements of the entity and its
controlled entity
- other services in relation to the entity and its controlled entity
Consolidated
2022
$
2021
$
23,500
-
23,500
22,000
-
22,000
32.
INFORMATION RELATING TO RAREX LIMITED (‘the Parent Entity’)
ASSETS
Current Assets
Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
2022
$
2021 (Restated)
$
8,531,893
1,900,336
10,432,229
627,114
240,121
867,235
9,564,994
4,672,845
4,361,677
9,034,522
484,916
314,060
798,976
8,235,546
46,175,177
8,578,414
(45,188,597)
9,564,994
35,775,631
6,420,795
(33,960,880)
8,235,546
Loss of the parent entity
(11,523,755)
(5,393,777)
Total comprehensive loss of the parent entity
(11,523,755)
(5,393,777)
Contingent liabilities of the parent entity: Nil.
Reserves included in the parent entity:
Options reserve
Share-based payment reserve
2022
$
2021
$
6,163,712
2,414,702
8,578,414
6,163,712
257,083
6,420,795
Commitments for the acquisition of property, plant and equipment by the parent entity: Nil.
48
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
33.
FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES
The consolidated entity’s principal financial instruments comprise cash and short-term deposits.
The main purpose of these financial instruments is to finance the consolidated entity’s operations. The
consolidated entity has various other financial assets and liabilities such as trade receivables and trade payables,
which arise directly from its operations. It is, and has been throughout the entire period under review, the
consolidated entity’s policy that no trading in financial instruments shall be undertaken.
For all financial instruments of the Company, the carrying value approximates the fair value.
The main risk arising from the consolidated entity’s financial instruments is cash flow interest rate risk. Other minor
risks are summarised below or disclosed at Note 20 in the case of capital risk management. The Board reviews and
agrees policies for managing each of these risks.
(a) Cash Flow Interest Rate Risk
The consolidated entity’s exposure to the risks of changes in market interest rates relates primarily to the
consolidated entity’s short-term deposits with a floating interest rate. These financial assets with variable rates
expose the consolidated entity to cash flow interest rate risk. All other financial assets and liabilities in the form of
receivables and payables are non-interest bearing. The consolidated entity does not engage in any hedging or
derivative transactions to manage interest rate risk. In regard to its interest rate risk, the consolidated entity
continuously analyses its exposure. Within this analysis consideration is given to potential renewals of existing
positions, alternative investments and the mix of fixed and variable interest rates. The sensitivity to the movement
in interest rates for the likely range of outcomes is immaterial.
Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances is impacted,
resulting in a decrease or increase in overall income.
(b)
Liquidity risk
The consolidated entity manages liquidity risk by maintaining sufficient cash reserves and through the continuous
monitoring of budgeted and actual cash flows. Further, the consolidated entity only invests surplus cash with major
financial institutions.
Contracted maturities of payables:
Payable
- less than 6 months
- 6 to 12 months
- 1 to 5 years
- later than 5 years
Total
(c) Commodity price risk
Consolidated
2022
$
2021
$
1,790,180
-
-
-
1,790,180
668,948
-
-
-
668,948
The consolidated entity has no direct commodity exposures.
(d)
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using
sensitivity analysis and cash flow forecasting. Given the current level of transactions denominated in foreign
currency, the Directors consider foreign current risk not material.
49
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
33.
FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(e) Price risk
The Group is exposed to price risk on the value of its financial assets being listed investments.
If there was a 10% increase or decrease in market price of these listed investments, the net realisable value of
these listed investments would increase/(decrease) by $115,483 (2021: $365,762). Accordingly, an increase of 10%
in the value of the listed investments would decrease the net loss by $115,483 (2021: $365,762) and a decrease of
10% in the value of the listed investments would increase the net loss by $115,483 (2021: $365,762).
(f)
Carrying values of financial instruments not recognised at fair value
Due to their short term nature, the carrying value of financial assets and financial liabilities, not recognised at fair
value, recorded in the financial statements approximates their respective fair values, determined in accordance
with accounting policies disclosed in Note 2 of the financial statements.
(g)
Fair value hierarchy
The following table details the Groups assets and liabilities, measured or disclosed at fair value using a three level
hierarchy reflecting the significance of the inputs used in making the measurements. The fair value hierarchy
consists of the following levels:
-
-
quoted prices in active markets for identical assets or liabilities (Level 1);
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (Level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
-
2022
Level 1
$
Level 2
$
Level 3
$
Total
$
Financial assets:
Fair value through profit or loss:
Listed investments
1,154,832
2021
Financial assets:
Fair value through profit or loss
Listed investments
3,657,619
(h)
Fair Value Estimation
-
-
-
-
1,154,832
3,657,619
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes. All financial assets and financial liabilities of the Group at the balance date are recorded at
amounts approximating their carrying amount. The fair value of financial instruments traded in active markets is
based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the
Group is the last trade price. The carrying value less impairment provision of trade receivables and payables are
assumed to approximate their fair values due to their short-term nature.
50
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
34.
RESTATEMENT OF PRIOR PERIOD BALANCES
In completing the financial statements for 30 June 2022, it was noted that the Company was not complying with
the conditions of AASB 132 Financial Instruments: Presentation. Options with a fair value of $874,000 issued to a
stockbroker during the year ended 30 June 2021 as part of their compensation in relation to a capital raising
undertaken by the Company were expensed to the Statement of Profit or Loss and Other Comprehensive Income
as a share-based payment rather than treated as a cost of raising capital and accounted for against equity in the
Statement of Financial Position. The Company has restated its opening retained earnings as disclosed in the
Statement of Changes in Equity and the Statement of Financial Position and Statement of Profit or Loss and Other
Comprehensive Income have been restated as below.
Adjustments made to the Statement of Financial Position as at 30 June 2021
Previous amount
$
30 June 2021
Effect of the
restatement
$
Restated amount
$
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-current Assets
Exploration and evaluation costs
Financial assets at fair value
Plant and equipment
Right of use asset
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Lease liability
Total Current Liabilities
Non-current Liabilities
Lease liability
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
4,477,985
227,303
4,705,288
505,032
3,657,619
114,431
380,630
4,657,712
9,363,000
668,948
73,226
71,220
813,394
314,060
314,060
1,127,454
8,235,546
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,477,985
227,303
4,705,288
505,032
3,657,619
114,431
380,630
4,657,712
9,363,000
668,948
73,226
71,220
813,394
314,060
314,060
1,127,454
8,235,546
36,189,630
6,419,832
(34,373,916)
8,235,546
(874,000)
-
874,000
-
35,315,630
6,419,832
(33,499,916)
8,235,546
51
RareX Limited ABN: 65 105 578 756 and controlled entity
2022
NOTES TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
34.
RESTATEMENT OF PRIOR PERIOD BALANCES (continued)
Adjustment made to the Statement of Profit or Loss and Other Comprehensive Income for the year ended 30
June 2021
Previous amount
$
30 June 2021
Effect of the
restatement
$
Restated amount
$
56,726
382,976
219,500
659,202
(797,441)
(728,715)
(48,863)
(7,664)
(38,010)
(1,671,448)
(2,291,409)
(1,335,613)
(1,203)
(11)
-
-
-
-
-
-
-
-
-
874,000
-
-
-
-
56,726
382,976
219,500
659,202
(797,441)
(728,715)
(48,863)
(7,664)
(38,010)
(797,448)
(2,291,409)
(1,335,613)
(1,203)
(11)
Income
Other income
Gain on sale of investments
Fair value increase in financial assets
Total income
Expenses
Administration expenses
Consultants and management expenses
Depreciation and amortisation
Financial costs
Legal expenses
Share-based payment expense
Exploration expenses
Acquisition of tenements
Foreign exchange (loss)/ gain
Impairment
Total expenses
(6,920,377)
874,000
(6,046,377)
Loss before income tax
(6,261,175)
874,000
(5,387,175)
Income tax expense
-
-
-
Loss attributable to the owners of RareX
Limited
Other comprehensive loss
Foreign currency translation reserve
Total comprehensive loss attributable to
owners of the parent
(6,261,175)
874,000
(5,387,175)
-
1,059
-
-
-
1,059
(6,260,116)
874,000
(5,386,116)
52
RareX Limited ABN: 65 105 578 756 and controlled entities
2022
DIRECTORS’ DECLARATION
The Directors of RareX Limited declare that:
1.
In the opinion of the Directors:
(a)
the attached financial statements and the notes thereto of the Company and of the consolidated entity are
in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30
June 2022 and of their performance for the year ended on that date; and
(ii)
complying with Accounting Standards;
(b)
(c)
the attached financial statements and the notes thereto of the Company and of the consolidated entity are
in accordance with International Financial Reporting Standards issued by the International Accounting
Standards Board; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
2.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2022.
Signed in accordance with a resolution of the Directors made pursuant to Section 295(5) of the Corporations Act 2001.
On behalf of the Board
Jeremy Robinson
Managing Director
Dated 30 September 2022
53
Take the lead
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF RAREX LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of RareX Limited (the Company) and its subsidiaries (the Group) which
comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit
or loss and comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to and forming part of the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the Corporations Act 2001,
including:
a. giving a true and fair view of the Group’s financial position as at 30 June 2022, and of its financial performance
for the year then ended, and
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional 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.
Brisbane
Level 15
240 Queen Street
Brisbane QLD 4000
T + 61 7 3085 0888
Melbourne
Level 10
530 Collins Street
Melbourne VIC 3000
T + 61 3 8635 1800
Perth
Level 25
108 St Georges Terrace
Perth WA 6000
T + 61 8 6184 5980
Sydney
Level 7, Aurora Place
88 Phillip Street
Sydney NSW 2000
T + 61 2 8059 6800
SW Audit ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards
Legislation. SW Audit is an independent member of ShineWing International Limited.
sw-au.com
54
Take the lead
1. Disposal of subsidiary Cosmos Exploration Ltd and profit from sale of tenements
Key audit matter
How our audit addressed the key audit matter
Refer to Note 5 Gain/(loss) on disposal of
subsidiary
• Obtaining and reviewing legal documentation in the
disposal of Cosmos
During the year, the Group disposed of Cosmos
Exploration Ltd (Cosmos) through an Initial Public
Offering (IPO) of Cosmos’ share and sold its
tenements to Cosmos. After the IPO of Cosmos,
the Group holds a 28.57% equity interest in
Cosmos and no longer controls it. As a result, the
Group recognised a net gain on disposal of
$334,389 and a profit from the sale of tenements of
$2,000,000 which was settled in Cosmos shares.
The disposal of Cosmos is a key audit matter due
to the gain on disposal and profit from sale of
tenements being material to the overall result of the
Group.
2.
Investment in associate - Cosmos
• Comparing the inferred valuation of Cosmos upon
the IPO to the value of Cosmos’ shares received in
exchange of the tenements
• Assessing management’s control assessment of
Cosmos
• Assessing the calculation of the gain on disposal
and the profit on sale of the tenements, and
• Assessing the adequacy and appropriateness of the
disclosures in the financial statements.
Key audit matter
How our audit addressed the key audit matter
Refer to Note 15 Investment in associate
• Obtaining the audited financial statement of Cosmos
The Group no longer controls Cosmos and
commenced accounting for the investment as an
associate using the equity method. The share of
Cosmos’ loss to the Group is $468,605.
The carrying value of the associate also is subject
to an impairment test if any impairment indicator is
noted.
The investment in the associate is a key audit
matter due to the carrying value of the investment
and share of associate profit being material to the
overall result of the Group and the impairment
indicator review requires judgement.
for the year ended 30 June 2022
•
Testing the equity accounting journals
• Considering the impairment indicators of the
associate at the reporting date, and
• Assessing the adequacy and appropriateness of the
disclosures in the financial statements.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in
the Group’s directors’ 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.
55
Take the lead
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or 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 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
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
56
Take the lead
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them, all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 4 to 10 of the directors’ report for the year ended 30
June 2022.
In our opinion, the Remuneration Report of RareX Limited for the year ended 30 June 2022 complies with section
300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
SW Audit (formerly ShineWing Australia)
Chartered Accountants
Richard Gregson
Partner
Perth, 30 September 2022
57
ASX Additional Information
Shareholder Information
The following information is based on share registry information processed up to 28 October 2022.
Distribution of Fully Paid Ordinary Shares
The number of holders, by size of holding, for fully paid ordinary shares in the Company is:
Spread of Holders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Holders
Number of Shares
278
593
1,019
2,706
799
5,395
82,954
2,286,633
8,342,295
108,032,403
460,642,291
579,386,576
There are 1,525 holders of unmarketable parcels comprising a total of 7,090,052 ordinary shares
amounting to 1.22% of issued capital.
Twenty Largest Holders of Shares
Shareholder
Mr Simon (Sui Hee) Lee
Mr Jeremy Kim Robinson
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
BNP Paribas Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited – A/C 2
Chetcuti Holdings Pty Ltd
West Trade Enterprises Pty Ltd
BNP Paribas Nominees Pty Ltd
Mr Maxwell Alfred Kippe
Mr Brett John Holdsworth
Mr Kim Robinson
Cranport Pty Ltd
Cale Consulting Pty Ltd
Swancave Pty Ltd
J P Morgan Nominees Australia Pty Limited
Andium Pty Limited
Mr John Alexander Young & Mrs Cheryl Kaye Young
BNP Paribas Nominees Pty Ltd ACF Clearstream
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
Number Held
35,746,210
21,571,149
14,748,657
11,144,096
9,906,857
9,369,373
9,091,780
8,055,789
8,000,000
6,040,344
5,200,000
5,072,892
4,614,706
4,500,000
3,982,900
3,611,112
3,444,997
3,388,889
3,333,333
% of Issued
Shares
6.17
3.72
2.55
1.92
1.71
1.62
1.57
1.39
1.38
1.04
0.90
0.88
0.80
0.78
0.69
0.62
0.59
0.58
0.58
3,250,667
174,073,751
0.56
30.04
There are 579,386,576 ordinary fully paid shares currently listed and trading on the Australian
Securities Exchange. There is no current on-market buy back taking place.
Substantial Holders
The Company notes the following substantial shareholder notices have been given to the Company
under the Corporations Act:
Substantial Shareholder
Mr Simon (Sui Hee) Lee
Number Held
35,746,210
58
Voting Rights - Fully Paid Ordinary Shares
Every shareholder present in person or by proxy, attorney or representative has one vote on a show
of hands, and on a poll, one vote for each fully paid share.
Unquoted Equity Securities
Quantity
2,500,000
2,500,000
3,500,000
4,000,000
4,000,000
4,000,000
Class
Options exercisable at $0.0607 each on or before 12 December 2022 and vesting on 20 day VWAP
exceeding $0.10
Options exercisable at $0.0607 each on or before 12 December 2022 and vesting on 20 day VWAP
exceeding $0.15
Options exercisable at $0.0607 each on or before 12 December 2022 and vesting on 20 day VWAP
exceeding $0.20
Options exercisable at $0.0607 each on or before 22 December 2022 and vesting on 20 day VWAP
exceeding $0.10
Options exercisable at $0.0607 each on or before 22 December 2022 and vesting on 20 day VWAP
exceeding $0.15
Options exercisable at $0.0607 each on or before 22 December 2022 and vesting on 20 day VWAP
exceeding $0.20
10,000,000 Options exercisable at $0.15 each on or before 30 November 2023
Options exercisable at $0.15 each on or before 31 December 2023
2,000,000
5,000,000
Options exercisable at $0.15 each on or before 31 December 2023 vesting 5 February 2022
13,500,000 Performance rights vesting on 20 day VWAP of $0.20 and 12 months service expiring 5 February
2024
13,500,000 Performance rights vesting on 20 day VWAP of $0.25 and 18 months service expiring 5 February
2024
13,500,000 Performance rights vesting on 20 day VWAP of $0.30 and 24 months service expiring 5 February
2024
Holders of Unquoted Securities Holding More than 20% of Each Class
Class
Options exercisable at $0.0607 each on or before 12
December 2022 and vesting on 20 day VWAP exceeding $0.10
Options exercisable at $0.0607 each on or before 12
December 2022 and vesting on 20 day VWAP exceeding $0.15
Holder
Guy William Moulang
Rod Dog Pty Ltd
Guy William Moulang
Rod Dog Pty Ltd
Number
1,500,000
1,000,000
1,500,000
1,000,000
1,500,000
1,000,000
1,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
10,000,000
1,000,000
1,000,000
1,250,000
5,000,000
Guy William Moulang
Rod Dog Pty Ltd
Valtellin Pty Ltd
Meesha Investments
Mr John A Young & Mrs Cheryl K
Young
Meesha Investments
Mr John A Young & Mrs Cheryl K
Young
Meesha Investments
Mr John A Young & Mrs Cheryl K
Young
CG Nominees (Australia) Pty Ltd
A and R Assets Pty Ltd
Mr Leo Samson Horn
Dr Christopher Baker & Mrs
Judith Homewood
Mr Jeremy Kim Robinson
Mr Jeremy Kim Robinson
5,000,000
Mr Jeremy Kim Robinson
5,000,000
Options exercisable at $0.0607 each on or before 12
December 2022 and vesting on 20 day VWAP exceeding $0.20
Options exercisable at $0.0607 each on or before 22
December 2022 and vesting on 20 day VWAP exceeding $0.10
Options exercisable at $0.0607 each on or before 22
December 2022 and vesting on 20 day VWAP exceeding $0.15
Options exercisable at $0.0607 each on or before 22
December 2022 and vesting on 20 day VWAP exceeding $0.20
Options exercisable at $0.15 each on or before 30 November
2023
Options exercisable at $0.15 each on or before 31 December
2023
Options exercisable at $0.15 each on or before 31 December
2023 vesting 5 February 2022
Performance rights vesting on 20 day VWAP of $0.20 and 12
months service expiring 5 February 2024
Performance rights vesting on 20 day VWAP of $0.25 and 18
months service expiring 5 February 2024
Performance rights vesting on 20 day VWAP of $0.30 and 24
months service expiring 5 February 2024
59
Schedule of Mining Tenements
Australian Tenement Schedule
State
WA
WA
WA
WA
WA
WA
WA
NSW
NSW
NSW
NSW
NSW
NSW
Project
Cummins Range
Cummins Range Extension
Weld North
Weld North
Weld North
Mt Mansbridge
Hong Kong
Condobolin
Cundumbul
Fairholme
Fairholme
Trundle
Jemalong
Lease No
E80/5092
E80/5372
E38/3455
E38/3530
E38/3531
E80/5430
EL 47/3566
EL 7748
EL 6661
EL 6552
EL 6915
EL 8222
EL 8502
RareX Interest
100%
100%
100%
100%
100%
100%
100%
35%
35%
35%
35%
35%
35%
Note
Kincora JV
Kincora JV
Kincora JV
Kincora JV
Kincora JV
Kincora JV
Moroccan Tenement Schedule
Licence Name
Tizi Belhaj
Bou Amzil
Imdere
Bou Amzil Extension
Licence No
234 08 79
233 88 04
233 94 05
PR 384 22 26
RareX interest
20%
20%
20%
-
Note
Earning up to 100%
Earning up to 100%
Earning up to 100%
100% on completion
Company Secretary
Ms Oonagh Malone
Registered Office
Unit 6, 94 Rokeby Road, Subiaco WA 6008
Telephone: +61 8 6383 6593
Share Registry
Automic Registry Services
126 Phillip Street, Sydney NSW 2000
Telephone: 1300 992 916
60