ANNUAL REPORT 2019
RESOURCE MINING
CORPORATION LIMITED
ABN 97 008 045 083
TABLE OF CONTENTS
Company Information ................................................................................................................................... 1
Chairman’s Letter ......................................................................................................................................... 2
Review of Strategic Intent............................................................................................................................. 3
Directors’ Report ........................................................................................................................................... 9
Financial Statements .................................................................................................................................. 17
Notes to the Consolidated Financial Statements ....................................................................................... 21
Directors’ Declaration ................................................................................................................................. 36
Independent Auditor’s Report to the Members........................................................................................... 37
Independent Auditor’s Independence Declaration ..................................................................................... 40
Additional Information ................................................................................................................................. 41
RMC ANNUAL REPORT 2019
COMPANY INFORMATION
ABN
Directors
97 008 045 083
William (Bill) Mackenzie (Non-Executive Chairman)
Warwick Davies (Managing Director)
Zhang Chi (Andy) (Non-Executive Director)
Company Secretaries
Amanda Sparks
Registered Office
Principal Place of Business
Share Registry
Auditor
Bankers
Securities Exchange Listing
Suite 14, Level 2
210 Bagot Road
SUBIACO, WESTERN AUSTRALIA 6008
Suite 14, Level 2
210 Bagot Road
SUBIACO, WESTERN AUSTRALIA 6008
Telephone:
Website:
+61 8 6494 0025
www.resmin.com.au
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
PERTH, WESTERN AUSTRALIA 6000
Telephone
Within Australia:
Outside Australia:
www.investorcentre.com/contact
1300 850 505
+61 3 9415 4000
BDO Audit (WA) Pty Ltd
38 Station Street
SUBIACO, WESTERN AUSTRALIA 6008
Telephone:
Facsimile:
+61 8 6382 4600
+61 8 6382 6401
Westpac Bank
116 James Street
NORTHBRIDGE, WESTERN AUSTRALIA 6000
Resource Mining Corporation Limited shares
are listed on the Australian Securities Exchange
(Home Exchange – Perth)
ASX Code: Shares RMI
RMC ANNUAL REPORT 2019
1
CHAIRMAN’S LETTER
Dear Shareholder
On behalf of the Board of Directors, it is with pleasure that I present Resource Mining Corporation Limited’s (RMC’s)
Annual Report for the year ended 30 June 2019.
The past financial year continued to be challenging for the Company. Over the past year, the Nickel market has
experienced some turbulence with prices beginning the year at US$15,000/ton in July ’18, falling to around
US$9,000/ton in Jan ’19 and ending the year at a very healthy level of US$18,000/ton at the end of June ’19. Price
levels reflect a continued decline in the LME nickel metal stock levels where demand for nickel has exceeded supply
for the past 4 years. Sustained demand from stainless steel producers combined with the emerging Electric Vehicle
(EV) battery market demand has contributed to the metal production shortfall.
The cobalt price reversed the dramatic price increases from the previous 2 years and retreated from a closing price in
July ’18 of US$75,000/ton to a very modest US$25,000 at the end of June 2019. The price decrease beginning
influenced by ready availability of the metal together with a downward revision of the medium to long term outlook of a
previously estimated worldwide shortfall.
Despite the turbulent year, your company continues to maintain its 100% interest in the Wowo Gap project pending a
sustained improvement in market conditions. The current approved license period for EL 1165 expired on 28 February
2018. The Company successfully applied for the renewal of the exploration license with advice being received from the
Mines Minister on 17th December 2018 that the tenement had been renewed for a further two years until 28 February
2020.
Project activity on EL 1165 was in keeping with the commitments for the EL 1165 license, site-based activities including
maintaining the project area and exploration equipment in a ‘ready state’ for future exploration and potential
development. Upskilling of casual labourers with regular training programs was undertaken with benefits of improved
performance providing flexibility for key tasks on site being experienced.
Off-site activity was spent understanding the battery minerals business and the roles nickel and cobalt play in the
various lithium ion battery types. An understanding of end-user’s product requirements continues as a management
focus.
The Company’s social engagement policy was enhanced during the year with positive outcomes resulting from the
regular and routine involvement with local landowner groups. The Company continued to provide support for local
schools, community groups as well as clan groups on a cooperative basis. The past policy of maximizing local purchase
of labour and food continued throughout the year to the satisfaction and mutual benefit of the company and
communities.
This support was evident when the major communities of Embessa and Obea provided overwhelming support at the
Warden’s court Hearing for the renewal of the exploration license for EL 1165. This support is welcomed and
appreciated by the Company.
On behalf of the Board, I thank the RMC team for their commitment during the year and my fellow directors for their
support. Most importantly, I thank you, the Shareholders, for your continued support.
Yours sincerely
William Mackenzie
Chairman
RMC ANNUAL REPORT 2019
2
REVIEW OF STRATEGIC INTENT
Resource Mining Corporation Limited (ASX: RMI) (Resource Mining, RMC or the Company) is an innovative, Perth-
based, mineral exploration company with a significant mineral deposit in Papua New Guinea (PNG).
The development of the Wowo Gap Nickel/Cobalt Project in south east PNG remains the key strategic goal of the
Resource Mining Group. Recent developments in the world’s nickel industry have focussed attention on the nickel
laterite projects in the South Pacific.
PAPUA NEW GUINEA - WOWO GAP NICKEL/COBALT/ LATERITE PROJECT (the Project): EL 1165 (RMC
100% interest)
PROJECT OVERVIEW
The Project is located 200 kilometres east of the PNG capital Port Moresby and approximately 35 kilometres from the
town of Wanigela situated on Collingwood Bay. The Project hosts significant nickel-cobalt mineralisation within the
laterite profile overlying an ultramafic plateau.
Completed exploration has outlined mineralisation along the 12-kilometre strike length with a total Indicated and
Inferred Mineral Resource Estimate of 125 million tonnes at 1.06 per cent Nickel (Ni), 0.07 per cent Cobalt (Co)*. See
Table 1 below for further details.
The full regolith profile of the Wowo Gap deposit with typical average thicknesses from top to bottom is described in
Table 1 below.
Lithology
Typical Geochemistry
Volcanic Ash
<0.3%Ni
Typical
thickness
1 metre
Description
Volcanic ash – barren overburden
Limonite
Saprolite
1.2%Ni, 50% Fe2O3, 5%MgO, 20% Si02
5 metres
Limonitic clay; Ni, Co, Fe, Mn enriched
1.5%Ni, 30% Fe2O3, 20%MgO, 35% Si02
5 metres
Rocky Saprolite
1.9%Ni, 20% Fe2O3, 30%MgO, 40% Si02
5 metres
Bedrock
<0.3%Ni
NA
Saprolite clay; Ni, Mg enriched
Saprolite clay within partly weathered UM
rocks;
Ultramafic rocks, peridotite and dunite
Table 1: Primary Lithology Units
*Refer to ASX announcement 14 December 2011, RMC confirms that it is not aware of any new information or data
that affects the information included in that market announcement and that all the material assumptions and technical
parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially
changed. RMC’s policy for Mineral Resources estimates is to have the estimates prepared by a suitably qualified and
experienced external consultant and have these estimates reviewed internally by the Board periodically.
Tenement Status EL 1165
Niugini Nickel Pty Ltd (Niugini Nickel), a 100% owned subsidiary of Resource Mining, is the sole owner of Exploration
Licence 1165. The Exploration Licence consists of 28 sub-blocks with an area of 94.40 square kilometres.
The Exploration Licence for EL1165 was renewed for a 2-year period to 28 February 2020 with no special conditions
with the renewal advice received from the Mines Minister on 17th December 2018.
Geology
Wowo Gap is located at the south-eastern end of the Papuan Ultramafic Belt, a complex of peridotite, pyroxenite and
gabbro which form the prominent east-west trending Didana Range.
The most prominent rock types are of the Papuan Ultramafic Belt, which occur as an east trending block through the
Didana Range and are bounded to the east and southeast by the Bereruma Fault. The Bereruma Creek is controlled
by this fault and is positioned in Wowo Gap between the Didana Range to the west and the Goropu Mountains to the
east. In the Didana Range the ultramafic rocks consist of tectonite ultramafics, cumulate ultramafics and gabbro and
granular gabbro.
The tectonite ultramafics crop out at the eastern end of the Didana Range adjacent to and within the western section
of the Wowo Gap Nickel Laterite Project. The Sivai Breccia, co-host of the Wowo Gap mineralisation, flanks the
tectonite ultramafic at the eastern end of the Didana Range adjacent to the Bereruma Fault.
The ultramafic rocks are flanked by younger clastic sediments and basaltic volcanics of the Pliocene Domara River
Conglomerate, the Musa Volcanics and the Silimidi Conglomerate. In the northern foothills of the Didana Range the
Bonua Porphyry is associated with the Musa Volcanics.
The Project area lies within an erosional regime of an east dipping lateritic profile developed over the underlying
ultramafics. The Project area is the physiographic expression of the northeast trending Bereruma Fault.
RMC ANNUAL REPORT 2019
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REVIEW OF STRATEGIC INTENT
A complete lateritic profile is preserved, with partial truncation associated with recent drainage systems. The depth of
weathering varies according to rock type and the degree of brecciation. The lateritic profile is typically 10 to 15 metres
thick, occasionally more than 20 metres proximal to the Sivai Breccia.
Nickel Market
The Nickel market continued to improve during the year driven by a combination of reasonable strong demand from
the stainless-steel industry as well as continued growth from the battery industry. Development of lithium ion batteries
rich in nickel as an alternative to cobalt, has seen the forecast demand reflected in the nickel current price. Table 2
illustrates the movement in spot Nickel Prices over the past 5 years. This improvement reflects the combination of
increased demand and continued reduced metal output.
Figure 1: 5 Year Nickel Spot Price
Electric Vehicles (EV)
In every electric vehicle (EV) battery, there is a range of metals including cobalt, lithium, nickel, manganese and
graphite. The electrification of transport is transforming the demand and supply of these battery raw materials which
commentators are predicting double-digit growth for battery raw materials over the next decade.
According to commentators, demand is being driven
• Total passenger electric vehicle (EV) car sales, including hybrid electric vehicles (HEV), were up by over
24% last year
• Global electric car sales (with a plug) will account for 7% of all passenger car sales by 2025, 14% by 2030
and 38% by 2040
• Battery pack sizes continue to trend larger through the medium term
• NMC 811 cells (80% nickel, 10% manganese and 10% cobalt) are being produced on a greater scale
resulting in increased nickel demand at the expense of cobalt and lithium
• Most automotive manufacturers plan to go completely electric by 2050
Wood Mackenzie, in a report on Battery Minerals 25 July 2019, outlined their view of the future demand for battery
minerals including nickel, in the Table 3 “Global battery sector demand by metal (kt)’ below. Demand for Nickel is
forecast to grow by 15% during the period 2018 to 2040.
RMC ANNUAL REPORT 2019
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REVIEW OF STRATEGIC INTENT
Figure 2: Global Battery Sector Demand by Metal (kt)
As further support for the growth in EV battery sector, India is reported to be contemplating the construction of at least
four Tesla-style giga factories to manufacture batteries with an investment of around $4 billion, as the country prepares
to switch to vehicles electric to curb pollution and cut its dependence on imported petroleum. oil. The national
government hopes that battery storage manufacturing will enable India to develop an electric vehicle ecosystem
including manufacturing and R&D. To facilitate the battery factory development, the government may offer a raft of
incentives to manufacturers such as concessional financing options and other incentives. This support for an
indigenous battery industry in India is further evidence of the potential growth in the market for Nickel in coming years.
Although the battery sector share of nickel demand is much smaller than other metals, commentators suggest that
getting the quantity of nickel that EVs will need by the mid-2020s will be a challenge. The hitherto low nickel price has
hindered nickel chemical project development and with lead times often up to 10 years, investment in new production
facilities will need to take place soon to ensure the anticipated demand for nickel in EV batteries is met.
Direct Shipped Nickel Laterite
Background
Previous exploration has been focussed on the determination of a suitable source of direct shipped nickel laterite to
satisfy the Chinese Nickel Pig Iron industries demand for product. China imports approximately 60Mtpa of a variety of
grades of laterite ore. Sources of nickel laterite for this purpose include Indonesia, Philippines, New Caledonia and
more recently, Guatemala. (Indonesia and Philippines supply 90% of China’s demand). China’s demand for nickel
laterite ore remained relatively stable during 2014,2015 and 2016 whilst Indonesia’s minerals export ban was in place.
With the easing of export restrictions, China’s laterite demand has increased for 45Mtpa to 60Mtp today despite the
growth of an indigenous nickel production industry in Indonesia.
RMC completed a Feasibility Study into a DSO operation for the Wowo Gap Project in 2016 which confirmed the
potential for this type of development subject to a satisfactory nickel ore price.
Some commentators see growth in the nickel industry in Indonesia as the key to the future for nickel. Since the
Indonesian Government banned the export of nickel ores in 2014, in order to facilitate a local nickel processing industry,
the strategy has achieved mixed success. The principal adopted was to allow the continued export of nickel ores on
the condition that exporters undertook to construct nickel smelters or similar processing facilities in Indonesia. The net
result has been that Indonesia is now a producer of nickel pig iron and stainless-steel. There are increasing rumours
RMC ANNUAL REPORT 2019
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REVIEW OF STRATEGIC INTENT
that the Indonesian Government may reimpose export restrictions on nickel ores in order to preserve all grades of ore
for ‘in-country’ processing rather than continue to permit laterite ore exports.
Figure 3 below shows the continued decline in LME Nickel Warehouse stock levels over the past 5 years. The dramatic
decline since December 2017 is evidence of the excess of demand over nickel supply.
Figure 3. 5 Year LME Warehouse Stock Level
Cobalt
Like lithium, cobalt prices have softened since the middle of 2018 when cobalt prices peaked on future supply fears in
April 2018. These fears have proven unfounded with cobalt prices declining rapidly since the April 2018 peak to levels
of
BRISPOT NOMINEES PTY LTD
MOUNT GIBSON IRON LIMITED
INTUICION INC
CENTURY THREE X SEVEN RESOURCE FUND INC
MR DIMITRIOS GRAIKOS
NICAMA INVESTMENTS PTY LTD
MR WILLIAM ROSS MACKENZIE
FAIRSTONE HOLDINGS PTY LIMITED
CORPORATE FINANCE (HEIDELBERG) PTY LTD
MR WARWICK JEFFREY DAVIES
SWISS TRADING OVERSEAS CORP
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Number of Shares % of Shares
46.17
3.60
3.44
2.87
2.86
2.86
2.70
1.98
136,793,768
10,656,250
10,192,024
8,503,171
8,483,924
8,469,895
8,000,000
5,866,819
5,510,000
4,100,000
3,478,025
3,360,271
3,170,000
3,100,000
3,000,000
2,092,847
1,910,633
1,780,000
1,679,437
1,677,259
1.86
1.38
1.17
1.13
1.07
1.05
1.01
0.71
0.64
0.60
0.57
0.57
TOTAL TOP 20 HOLDERS
TOTAL REMAINING HOLDERS BALANCE
TOTAL
231,824,323
64,443,024
78.25%
21.75%
296,267,347
100.00%
RMC ANNUAL REPORT 2019
41
ADDITIONAL SHAREHOLDER INFORMATION
VOTING RIGHTS
Article 15 of the Constitution specifies that on a show of hands every member present in person, by
attorney or by proxy shall have:
a)
b)
for every fully paid share held by him one vote
for every share which is not fully paid a fraction of the vote equal to the amount paid on the share
over the nominal value of the shares.
INTEREST IN MINING TENEMENTS
Tenement
Tenement No.
RMC Interest
Country in which
Licence is held
Wowo Gap
EL1165
100%
Papua New Guinea
RMC ANNUAL REPORT 2019
42