Rex Minerals Limited Annual Report 2019

Plain-text annual report

ANNUAL REPORT 20 19 A B N 1 2 1 2 4 9 6 0 5 2 3 ANNUAL REPORT 20 19 CORPORATE DIRECTORY A B N 1 2 1 2 4 9 6 0 5 2 3 DIRECTORS Dr David Carland (Non-Executive Chairman) Mr Richard Laufmann (CEO and Managing Director) Mr Alister Maitland (Non-Executive Director) Mr Mitchell H Hooke AM (Non-Executive Director) Mr Ian Smith (Non-Executive Director) Mr Ronald Douglas (Non-Executive Director) SHARE REGISTRARS Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford, Victoria 3067 Telephone: +61 (0) 3 9415 4000 (investors) 1300 850 505 (investors within Australia) COMPANY SECRETARY Ms Kay Donehue PRINCIPAL and REGISTERED OFFICE Level 6, 1 Collins Street Melbourne, Victoria 3000 CONTACT DETAILS Rex Minerals Ltd PO Box 3435 Rundle Mall, South Australia 5000 Telephone: +61 (0) 8 8299 7100 Email: rex@rexminerals.com.au Website: www.rexminerals.com.au OPERATION LOCATIONS HOG RANCH NEVADA USA AUDITORS KPMG Australia 151 Pirie Street Adelaide, South Australia 5000 BANKERS ANZ Banking Group Limited Level 21, 11 Waymouth Street Adelaide, South Australia 5000 Ord Minnett Limited Level 7, 161 Collins Street Melbourne, Victoria 3000 LEGAL ADVISORS Baker McKenzie Level 19, 181 William Street Melbourne, Victoria 3000 HILLSIDE SOUTH AUSTRALIA ANNUAL REPORT 30 JUNE 20 19 TABLE OF CONTENTS LETTER FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER REVIEW OF OPERATIONS TENEMENT SCHEDULE DIRECTORS’ REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION LEAD AUDITOR’S INDEPENDENCE DECLARATION INDEPENDENT AUDITOR’S REPORT ADDITIONAL SHAREHOLDER INFORMATION 2-3 4-10 5 11-22 23 24 25 26 27-43 44 45 46-49 50 1 REX MINERALS LTD LETTER FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER A B N 12 124 960 523 A Level 6 1 Collins Street Melbourne Victoria 3000 Australia T (08) 8299 7100 P PO Box 3435 Rundle Mall South Australia 5000 Australia E rex@rexminerals.com.au W www.rexminerals.com.au Dear Fellow Shareholder, This year has seen many fundamental developments that affect our Company. Unquestionably, those external forces, reﬂected in the macro-global economic and political framework, deeply affect the business environment in which we operate and inﬂuence our actions. Internally, we have been deliberate and have adjusted our Company’s underlying structure to broaden our opportunities. Importantly, we began the year by rebalancing and adding signiﬁcant operational and development expertise to the Board, with the appointment of Ian Smith and Ron Douglas. As a smaller company, swift and informed decisions are crucial to navigating the path forward. Our ability to enter into and transact on the recent Hog Ranch acquisition is evidence of their already signiﬁcant contribution. To explain further our acquisition of Hog Ranch, let me reﬂect on the DNA of Rex Minerals as an explorer with development aspirations. There can be no doubt that our portfolio, built on copper in South Australia, gives us signiﬁcant “pounds in the ground” leverage within one of the commodities crucial to the electriﬁcation revolution which underpins efforts in some parts of the world to reduce carbon emissions. It is evident that the pace of this revolution and the obvious emerging supply deﬁcit has yet to materialise. Viewed simplistically, the next few years could see a future where either: (cid:129) the world generally moves forward with conﬁdence into this electriﬁcation revolution and the inherent supply constraints in the copper market see Rex shareholders rewarded; or (cid:129) the electriﬁcation revolution and/or global economic growth stalls and the copper supply squeeze continues to be delayed. Currently, the latter scenario prevails, and in this reality, gold offers a unique hedge and industry investment opportunity. Seizing on this thematic brings us to Hog Ranch. Given our exposure to Australia, scanning the world, no jurisdiction beckons more favourably for geological, geographical and sovereign opportunity than Nevada. In one transaction, we have signiﬁcantly reduced sovereign risk, and diversiﬁed commodity risk to add the perfect hedge investment. In this regard, I would like to reﬂect on some hard numbers which speak to the shareholder beneﬁts we see from this opportunity: (cid:129) (cid:129) In one year, the gold price has moved from an already-strong incentive price of US$1,200 to US$1,500/oz, an increase of 25%. In the same timeframe, the copper price has declined by approximately 16% and sits at two-year lows, well below the consensus incentive price to replace production. (cid:129) Nevada is recognised by the Fraser Institute (Investment Attractiveness Index) as the Number One destination globally – up from second spot last year. In the same period, and while still attractive, South Australia has slipped from Number 14 to Number 24. (cid:129) The gold district in Nevada ranks arguably as one of the most proliﬁc and prospective geological opportunities globally. (cid:129) Whilst completing due diligence on what is an exploration investment, we have already completed and issued a maiden resource statement for the prospect. (cid:129) We negotiated the transaction, on a no cash basis at a share price circa A$0.06 (roughly A$600K for the ﬁrst tranche) which equates to an entry price based on the maiden resource of A$0.72/oz or US$0.49/oz. REX MINERALS LTD LETTER FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER A B N 12 124 960 523 A Level 6 1 Collins Street Melbourne Victoria 3000 Australia T (08) 8299 7100 P PO Box 3435 Rundle Mall South Australia 5000 Australia E rex@rexminerals.com.au W www.rexminerals.com.au So Rex shareholders now have access to an asset acquired for notionally less than US$0.50/oz on day one. I might draw your attention to just a fraction of the credentials of the small team that we have at Rex. Ian Smith ran Newcrest, Australia’s largest gold miner, taking it from near obscurity to a behemoth, and acquiring its prize asset, Lihir along the way. Richard Laufmann, having operated the WMC Gold Operations, as a by-line constructed one of the most successful Heap Leach projects in the country during his tenure and has a long history with gold. To summarise, this investment offers Rex shareholders immediate exposure to gold and provides camp-scale opportunities for small and large low-grade surface projects in addition to exciting high-grade underground epithermal targets. This in no way changes the fact that Hillside is our ﬂagship asset. The past year and immediate period ahead see us continue to ready the project for development. We have committed over $15 million of our precious funds and ﬁve years to the Program for Environment Protection and Rehabilitation (PEPR) licensing process alone, including many hundreds of consultations with community and other stakeholders. We are very close to the ‘next steps’ here and we hope to report on this in the very near future. In continuing this theme, with the PEPR resolution a key component in driving ﬁnalisation of the updated feasibility study, as well as next steps in our ﬁnancing discussions, we will update the market as we make material progress on this front. I look forward to an exciting road ahead, in which we can now leverage both opportunities to our best commercial beneﬁt. Yours sincerely, Dr David Carland Chairman Mr Richard Laufmann Chief Executive Ofﬁcer REX MINERALS LTD REVIEW OF OPERATIONS for the year ended 30 June 2019 1 9 CORPORATE The year commenced with the completion of Rex Minerals Ltd’s (Rex or the Company) successful capital raising which was announced on 12 June 2018. Following shareholder approval on 25 July 2018, the Company issued 21.4 million ordinary shares and received $2.4 million before costs for Tranche 2 and issued a further 9.3 million ordinary shares for an additional $1.0 million for the Share Purchase Plan, before costs. The Company completed the full assignment of the Adelaide ofﬁce lease to a new tenant and relocated its registered ofﬁce and principal place of business to Level 6, 1 Collins Street, Melbourne during the ﬁnancial year. The lease assignment represents a saving on the Company’s remaining ﬁve-year lease commitment totalling approximately $2.5 million. Rex was pleased to appoint two Non-Executive Directors to its Board, Ian Smith and Ron Douglas, on 18 February 2019. The appointment of two such highly experienced mining operators signiﬁcantly enhances the strategic, technical and operational talent within the Company. HILLSIDE PROJECT – SOUTH AUSTRALIA Rex submitted the full Program for Environment Protection and Rehabilitation (PEPR) document in February 2018 and obtained the ﬁrst full formal feedback from the Department of Energy and Mining (DEM) and other regulatory departments in September 2018. Rex proceeded to work through the feedback with the regulators, resulting in the next full version of the PEPR being submitted in June 2019. An independent peer review of the Hillside PEPR was commissioned in May 2019 by Rex conﬁrming committed design/engineering and management controls, if implemented as described, are appropriate in the context of the agreed Environmental Outcomes for the Hillside Project; and the nominated monitoring program as described in the PEPR will be sufﬁcient to demonstrate the performance of the Hillside Project in achieving the Environmental Outcomes. All reviewing agencies have been through their respective sections of the PEPR with our team, noting that the PEPR had not technically changed since the February 2018 submission. It is anticipated any further comments will be minor and will provide for completion of the PEPR after which the remaining land access agreements can be ﬁnalised. Throughout the year Rex continued to meet with a variety of community members, businesses and other stakeholders around the Hillside Project and more broadly the Yorke Peninsula. The technical team at Rex has been focused on the Extended Feasibility Study (2015 EFS) cost update into 2019 dollars, including a detailed review and reﬁnement of certain decisions and assumptions contained in the original. While some cost inputs have escalated over the past four years (eg: power and exchange rate assumptions), the possibilities of signiﬁcant operating cost savings have emerged in the areas of mining ﬂeet operations and maintenance. The quantiﬁcation of these savings has warranted the engagement of external parties, thus contributing to delaying our process. One key objective in beginning this EFS update was always to improve the economics of the Hillside Project, and this is fundamentally still important. Completion of the Chinese Feasibility Study (CFS) has been delayed by Rex due to costing updates of the mining sections, however ﬁnalisation of the CFS report is progressing. The purpose of commissioning the CFS was to convert our EFS to Chinese feasibility standards, which are understood by Chinese banks. This should provide Rex with a clear opportunity to engage Chinese parties interested in ﬁnancing the project. In addition, it allowed us to assess the issues should we choose to pursue Chinese Engineering, Procurement, Construction Management (EPCM) development in the future. Rex completed its lease-wide strategic review of its exploration licenses to evolve further the exploration target portfolio, this has generated new regional Iron Oxide Copper Gold (IOCG) targets under minimal cover. The Company is now considering the timing and ﬁnancing required to progress these, in what we consider a highly prospective IOCG land package. The Hillside Project is situated 12 kilometres south of the township of Ardrossan on the Yorke Peninsula, South Australia (Figure 1). The Hillside Project is planned around an open pit mine, initially with a 13-year mine life, producing approximately 35,000 tonnes (t) of copper contained in concentrate and 24,000 ounces (oz) of gold per annum. ANNUAL REPORT 2 0 1 9 4 REX MINERALS LTD REVIEW OF OPERATIONS (Continued) for the year ended 30 June 2019 HILLSIDE PROJECT – SOUTH AUSTRALIA (CONTINUED) Figure 1: Location of the Hillside Project and Rex’s exploration licences on the Yorke Peninsula. SOUTH AUSTRALIAN TENEMENT SCHEDULE at 30 June 2019 Tenement Location Lease Status Area Type Current Area Expiry Date EL5508 EL5683 Moonta South Granted Moonta South Granted EL5981 1 Moonta South Granted EL6100 EL6136 EL6143 Moonta South Granted Moonta South Granted Moonta South Granted EL6189 2 Moonta South Granted EL6245 3 Moonta South Granted ML6438 Hillside Granted EML6439 Hillside Granted MPL146 Hillside Granted km2 km2 km2 km2 km2 km2 km2 km2 Ha Ha Ha 74 21 122 94 185 104 354 1,168 2,998 225 94 04/11/2019 09/06/2020 22/06/2019 16/01/2020 19/03/2020 15/04/2020 01/08/2019 01/08/2019 15/09/2035 15/09/2022 15/09/2035 1 Licence renewal submitted 21/05/2019 to the DEM with a reduction to 108km2. The renewal is currently being processed. 2 Licence renewal submitted 11/06/2019 to the DEM. Renewal of licence term to 01/08/2022 granted to Rex on 15 July 2019. 3 Licence renewal submitted 11/06/2019 to the DEM and currently being processed. 5 1 9 REX MINERALS LTD HOG RANCH – NEVADA, USA REVIEW OF OPERATIONS (Continued) for the year ended 30 June 2019 Acquisition Rex entered into a non-binding Heads of Agreement (HOA) with Hog Ranch Group Pty Ltd (HRG) on 17 July 2019. The non-binding HOA allowed Rex exclusivity to complete due diligence and ﬁnalise commercial terms required to prepare formal documentation. Rex completed six months due diligence (both before and after the signing of the HOA) and all decisions regarding this acquisition were made by the Board, subject to review by an independent subcommittee established for this purpose. Rex announced on 20 August 2019 that it had completed the acquisition of HRG including the Hog Ranch Gold Property (Hog Ranch) in Nevada, USA. This investment offers Rex shareholders immediate exposure to the gold sector in one of the world’s most well-endowed gold regions and immediately diversiﬁes our commodity spread and geographical risk. Hog Ranch provides camp-scale opportunities for small and large low-grade surface projects, in addition to exciting high-grade underground epithermal deposits. The consideration for the acquisition is based on the Rex share price at completion date (9 cents per share) and is deemed to be $900,000 plus an additional 20 million shares (at an imputed value at this share price of $1.8 million) if the milestone outcomes are achieved. The consideration is payable in the following form: 1. 10 million fully paid ordinary Rex shares; 2. 20 million Hog Ranch Consideration Rights which convert to Rex shares on the outcome of the following Milestones: a. 5 million Hog Ranch Consideration Rights on announcement by Rex to ASX by no later than 31 October 2024 on completion of an Inferred Mineral Resource in addition to any Indicated and Measured Mineral Resource in total of 2 million ounces (Moz) or higher of contained gold as deﬁned by the 2012 JORC Code with respect to the Hog Ranch Project and has a minimum grade of 0.4 grams per tonne (g/t) of gold in addition to a minimum tonnage of 100 million tonnes (Mt); and b. 15 million Hog Ranch Consideration Rights on announcement by Rex to ASX by no later than 31 October 2024 of the Board approving a decision to mine the Hog Ranch Project. Consistent with ASX requirements, the terms of the Hog Ranch Consideration Rights are subject to shareholder approval at the upcoming Annual General Meeting (AGM) to be held in November 2019. The AGM will also seek the approval of the shares to be issued to Rex’s CEO as part of the HRG acquisition. The notice of meeting will outline further information and details of the terms subject to shareholder approval. Figure 2: Location of the Hog Ranch Property situated in Nevada, USA. Below: Hog Ranch during WMC operations. ANNUAL REPORT 2 0 1 9 6 REX MINERALS LTD REVIEW OF OPERATIONS (Continued) for the year ended 30 June 2019 HOG RANCH – NEVADA, USA (CONTINUED) Mineral Resource Summary On 2 September 2019, Rex announced a maiden Inferred Mineral Resource estimate for Hog Ranch (the documentation and reporting of which has been independently peer reviewed by Peter Stoker of AMC Consultants Pty Ltd). The Inferred Mineral Resource consists of 44Mt @ 0.6g/t equating to 0.83Moz of gold. Classiﬁcation Inferred Tonnes 44Mt Gold Grade 0.6g/t Gold Ounces 0.83Moz The maiden Mineral Resource is based on a large historical drilling database containing a total of 2,678 drill holes. A large percentage of this historical drilling was completed by Western Mining Corporation Ltd (WMC) which operated an open pit and heap leach operation there from 1988 through to 1991. The Mineral Resource is based on the large shallow disseminated gold mineralisation that exists from surface at Hog Ranch and extends to 175m below surface. Table 1: Summary results from the Hog Ranch block model at various cut-off grades within a US$1,300/oz pit shell. Cut-off Grade Tonnes Gold Grade Gold Ounces 0.2g/t 0.3g/t 0.4g/t 0.5g/t 64Mt 44Mt 30Mt 20Mt Exploration Target 0.5g/t 0.6g/t 0.7g/t 0.8g/t 0.99Moz 0.83Moz 0.67Moz 0.53Moz There is considerable evidence for further extensive shallow gold mineralisation at Hog Ranch outside the Inferred Mineral Resource. Rex has deﬁned an Exploration Target of approximately 0.6Moz to 1.6Moz based on drill hole data that lies outside of the Inferred Mineral Resource which includes a distance up to 100m from the drill data (lower range estimate), and a distance up to 400m from the drill data (upper range estimate). This Exploration Target takes into consideration the natural variation of the gold grade. Table 2 below is a summary of the Exploration Target ranges using a cut-off grade of 0.3g/t gold. Similar additional parameters as deﬁned for the Hog Ranch Inferred Mineral Resource, as announced by Rex on 2 September 2019, were also applied to the extrapolated block model which is the basis for the Exploration Target. The potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufﬁcient exploration to estimate a Mineral Resource in this area and it is uncertain if further exploration will result in the estimation of a Mineral Resource. Table 2: Exploration Target expressed as a range of possible outcomes from further exploration activities. Category Cut-off Grade Tonnes Gold Grade Gold Ounces Exploration Target – Lower Exploration Target – Upper 0.3g/t 0.3g/t 46Mt 85Mt 0.4g/t 0.6g/t ~0.6Moz ~1.6Moz 7 REX MINERALS LTD 1 9 HOG RANCH – NEVADA, USA (CONTINUED) REVIEW OF OPERATIONS (Continued) for the year ended 30 June 2019 Deeper High-Grade Vein Hosted Targets There is an extensive body of research which has shown that underneath shallow gold deposits, similar to the dispersed gold mineralisation identiﬁed at Hog Ranch, there often exists vein hosted gold deposits which can contain very high-grade gold mineralisation. This mineralised zone is often at a speciﬁc depth range known as the “boiling zone”. This boiling zone typically exists a few hundred metres beneath the ancient surface from when the gold mineralisation was deposited, and at Hog Ranch, is interpreted to exist at least at 150m or further beneath almost all the historical drilling information (Figure 3). Figure 3: Schematic diagram representing the current day setting of the gold target types at Hog Ranch. Hog Ranch during WMC operations. ANNUAL REPORT 2 0 1 9 8 REX MINERALS LTD REVIEW OF OPERATIONS (Continued) for the year ended 30 June 2019 HOG RANCH – NEVADA, USA (CONTINUED) Deeper High-Grade Vein Hosted Targets (Continued) The high-grade vein hosted gold mineralisation at the Sleeper and Midas deposits are examples of this style of target, which are interpreted to have formed as part of the same geological event as Hog Ranch. Evidence at Hog Ranch of this style of deposit includes: (cid:129) Numerous small but very high-grade quartz-adularia veins (Figure 4), particularly in the mined 139 and Geib open pits; and (cid:129) Multiple very high-grade assay results within the Hog Ranch drill hole database (Table 3). Figure 4: Laminated quartz-adularia vein from the 139 pit at Hog Ranch. Signiﬁcant amounts of ﬁne visible gold can be identiﬁed along some speciﬁc laminations within this rock sample. Table 3: Signiﬁcant drilling results (over 20g/t gold) from the Hog Ranch drill hole database outside of the mined historical open pits. All reported intersections are down hole lengths only and not true widths. The drill intersections are largely interpreted to be from near vertical quartz veins which implies that the true width may be much less than the reported down hole lengths. Hole Number Pit/Area From (feet) To (feet) Interval (feet) Interval (m) Gold Grade(g/t) 6-069 6-146 6-155 7-019 7-120 7-126 7-215 7-238 8-018 8-018 8-025 8-199 8-255 9-042 9-044 91-375 9-240 95-31 Geib Krista Geib Geib Geib Geib Geib Geib Krista Krista Geib 139 139 Geib Geib 139 139 Cameco 275 250 260 210 205 250 145 200 395 415 270 300 345 165 240 240 105 165 280 255 265 215 215 255 150 205 400 420 275 305 350 195 245 245 110 185 5 5 5 5 10 5 5 5 5 5 5 5 5 30 5 5 5 20 1.5 1.5 1.5 1.5 3.0 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 9.1 1.5 1.5 1.5 6.1 31.7 20.5 35.2 26.5 59.5 50.0 38.7 92.9 28.3 32.7 64.9 194.1 23.7 19.7 72.8 44.4 26.3 61.8 9 REX MINERALS LTD 1 9 COMPETENT PERSONS STATEMENT REVIEW OF OPERATIONS (Continued) for the year ended 30 June 2019 Mineral Resources, Exploration Target and Exploration Results The information in this Annual Report for the Hog Ranch Property that relates to Exploration Results, Exploration Target or Mineral Resources is based on, and fairly reﬂects, information compiled by Mr Steven Olsen who is a Member of the Australasian Institute of Mining and Metallurgy and an employee of Rex Minerals Ltd. Mr Olsen is also a shareholder of Rex Minerals Ltd. Mr Olsen has sufﬁcient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as deﬁned in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Olsen consents to the inclusion in the Annual Report of the matters based on his information in the form and context in which it appears. All information compiled in this Annual Report has been previously announced and this statement fairly represents a summary of the supporting information and documentation. Rex Minerals Ltd conﬁrms that it is not aware of any new information or data that materially affects the information included in the market announcement and that all material assumptions and technical parameters underpinning the estimates included in referenced previous market announcements continue to apply and have not materially changed. Forward-Looking Statements This Annual Report contains “forward-looking statements”. All statements other than those of historical facts included in this Annual Report are forward-looking statements. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, copper, gold and other metals price volatility, currency ﬂuctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as political and operational risks and governmental regulation and judicial outcomes. The Company does not undertake any obligation to release publicly any revisions to any “forward-looking statement”. Above and Left: Hog Ranch Project, Nevada. ANNUAL REPORT 2 0 1 9 10 DIRECTORS’ REPORT For the year ended 30 June 2019 11 REX MINERALS LTD DIRECTORS’ REPORT For the year ended 30 June 2019 1 9 The Directors present their report together with the consolidated ﬁnancial statements of the Group comprising of Rex Minerals Ltd (the Company) and its subsidiaries (the Group or Rex), for the ﬁnancial year ended 30 June 2019 and the auditors’ report thereon. DIRECTORS The Directors of the Company at any time during or since the end of the ﬁnancial year are: Name, qualiﬁcations and independence status Dr David Carland Chairman Independent Non- Executive Director (PhD (Econometrics), MEc, BEc (Hons), MAICD) Mr Richard Laufmann Chief Executive Ofﬁcer and Managing Director (B.Eng (Mining), MAusIMM, MAICD) Mr Alister Maitland Independent Non- Executive Director (B.Com, FAICD, FAIM, SF Fin) Experience, special responsibilities and other directorships Dr David Carland has been a Director since 12 December 2013 and was appointed Chairman of Rex Minerals on 1 January 2014. Dr Carland also serves as a member of the Company’s Audit Committee and its Remuneration Committee. Dr Carland has over 35 years of investment banking and commercial experience in both the private sector and government. He is the Executive Director of Australian Resources Development Limited, a company focused on the provision of specialised advice and assistance on the structuring, ﬁnancing and developing of energy and resource projects. Dr Carland was the co-founder and part-owner of BurnVoir Corporate Finance Limited (BurnVoir), an independent specialist investment banking ﬁrm focusing on the energy, resource and infrastructure sectors. Prior to establishing BurnVoir, Dr Carland was executive vice president and head of energy and power at Bankers Trust, and before that, he was deputy managing director and head of corporate ﬁnance at UBS Australia. He was previously a non-executive director of Indophil Resources NL. Dr Carland has held senior executive roles with the CRA Group (now Rio Tinto), including management of the commercial arrangements for the purchase of the Gladstone Power Station. His roles have seen him based in the US and London. Mr Richard Laufmann is a founding Director of Rex Minerals and was formerly a non-executive director (since 2007). He was appointed Chief Executive Ofﬁcer and Managing Director (CEO) of the Company on 23 April 2015. Mr Laufmann is a mining engineer with broad experience in the resources sector, both corporate and operational. Mr Laufmann’s previous roles include chief executive ofﬁcer of Indophil Resources NL (until January 2015, an ASX listed company with a large copper-gold Joint Venture in the Philippines) and prior to that, ﬁve years as chief executive ofﬁcer of Ballarat Goldﬁelds NL. Mr Laufmann also previously led WMC Resources Limited’s gold business as general manager-operations. Mr Alister Maitland was appointed a Director of Rex Minerals on 16 September 2011. He is Chairman of the Audit Committee and a member of the Remuneration Committee. Mr Maitland is a former executive director of ANZ Banking Group with a background in international ﬁnance whose banking experience extended beyond Australasia to cover Asia, the Sub Continent, the Middle East, Europe and America. His professional experience has included global business expansion, internal and external consulting, treasury projects and international political agendas. As chief executive of ANZ Bank for New Zealand, he was responsible to the local board for that country’s operations. He has been a non-executive director of a number of publicly-listed ASX companies and Government bodies covering a wide range of activities including property services, mining, banking, asset management and health. He is a former chairman of Ballarat Goldﬁelds NL, director of Lihir Gold Ltd and Malayan Banking Berhad (Maybank). ANNUAL REPORT 2 0 1 9 12 REX MINERALS LTD DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 DIRECTORS (CONTINUED) Name, qualiﬁcations and independence status Mr Mitchell H Hooke AM Independent Non- Executive Director (B.Rur.Sc. (UNE), MAIA, MAICD) Mr Ian Smith Independent Non- Executive Director (B.E (Hons, Mining), BF in Admin, FIEAust, FAusIMM, MAICD) Experience, special responsibilities and other directorships Mr Mitchell H Hooke AM was appointed a Director of Rex Minerals on 4 August 2015. He is Chairman of the Remuneration Committee and a member of the Audit Committee. Mr Hooke is globally-recognised for his in-depth knowledge and strategic leadership in Australian and global public policy advocacy, as well as delivering on practical operational issues in the development of economic, social and environmental policy and practice across the minerals, agriculture, and food and grocery industries in Australia and internationally. Mr Hooke was the chief executive ofﬁcer of Grains, Food and Grocery, and the Minerals Councils of Australia spanning over 25 years until his retirement from the MCA at the end of 2013. He is the Chairman of Partners in Performance International, a Director of The Menzies Research Centre Ltd and with a long and strong rural background, he is an Independent Director of Grain Producers Australia Limited. He is a Non-Executive Director of coal-based technology company GTL Energy Ltd, and was formerly a non- executive director of USA private equity Elgin National Industries. Mr Hooke is also a member of the Advisory Boards of Micromine Ltd and The University of New England (UNE) Advisory Group. Mr Ian Smith was appointed a Director of Rex Minerals on 18 February 2019. Mr Smith is a mining engineer with more than 40 years’ experience in the mining and services sector. He has held some of the most senior positions in the Australian resources industry, most recently managing director and chief executive ofﬁcer of Orica. Prior to that, he was managing director and chief executive ofﬁcer of Newcrest, growing the business to what has become Australia’s biggest, and globally one of the largest, gold mining companies. Mr Smith is a Fellow of both the Australasian Institute of Mining and Metallurgy and the Institute of Engineers. In prior roles Mr Smith was global head of operational and technical excellence with Rio Tinto, London and managing director – Comalco Aluminium Smelting with Rio Tinto in Brisbane. He has technical, operational, ﬁnancial and strategic expertise, having also held senior and executive positions with WMC Resources, Pasminco and CRA. Mr Smith is a past president of the Australian Mines & Metals Association and is a past chairman of the Minerals Council of Australia. Mr Smith was formerly a non-executive director of White Rock Minerals Ltd. Mr Ronald Douglas Mr Ronald Douglas was appointed a Director of Rex Minerals on 18 February 2019. Independent Non- Executive Director (B.Eng, FAIM, MAustIMM, MAICD) Mr Douglas is an engineer by qualiﬁcation and has extensive experience leading owners’ teams for major projects located around the world. Mr Douglas is the Executive Vice President, Project Delivery for Ausenco and he has over 35 years’ global experience in project delivery and resources sector management. His previous roles have included global head of projects and technology for Orica; executive general manager projects and studies for Newcrest; chief executive ofﬁcer of Australian Solomons Gold; managing director for Anglesey Aluminium Metal (part of Rio Tinto); and general manager for Rio Tinto’s aluminium and coal projects. Mr Douglas is a Fellow of the Australian Institute of Management, a Member of the Australasian Institute of Mining and Metallurgy and a Member of Australian Institute of Company Directors. He has extensive and well-recognised expertise in industrials, minerals and metals, as well as oil and gas. Mr Douglas was formerly a non-executive chairman of Highlands Paciﬁc Limited. 13 REX MINERALS LTD 1 9 COMPANY SECRETARY DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 Ms Kay Donehue (GradDipACG, GIA(Cert), AGIA, ICSA, AAICD, Chartered Secretary) Ms Donehue has over 25 years’ experience in the mining and banking industries, and most recently has focused extensively on company secretarial and governance roles in the mining sector. Ms Donehue was previously Company Secretary of Indophil Resources NL which was delisted from the ASX in 2015 following completion of a Scheme of Arrangement with its major shareholder. Ms Donehue is an Associate of the Governance Institute of Australia and holds a Graduate Diploma in Applied Corporate Governance. DIRECTORS’ MEETINGS The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the ﬁnancial year and the numbers of meetings attended by each Director were: Director Board Meetings Audit Committee Meetings Remuneration Committee Meetings 4 Dr David Carland Mr Richard Laufmann1 Mr Alister Maitland Mr Mitchell Hooke Mr Ian Smith2 Mr Ronald Douglas3 A 6 6 6 5 3 2 B 6 6 6 6 3 3 A 2 2 2 2 1 1 B 2 2 2 2 1 1 A – – – – – – B – – – – – – A – Number of meetings attended. B – Number of meetings held during the year whilst the Director held ofﬁce. 1 Mr Laufmann is not a member of the Committees but attends meetings as appropriate by invitation. 2 Mr Smith is not a member of the Committees but attends meetings as appropriate by invitation. 3 Mr Douglas is not a member of the Committees but attends meetings as appropriate by invitation. 4 Any matters for consideration by the Remuneration Committee were managed directly by the Board and accordingly, no separate meetings were held by the Remuneration Committee during the year. CORPORATE GOVERNANCE STATEMENT Rex has adopted comprehensive systems of control and accountability as the basis for the administration and compliance of effective and practical corporate governance. These systems are reviewed regularly and revised if appropriate. The Board is committed to administering the Company’s policies and procedures with transparency and integrity, pursuing the genuine spirit of good corporate governance practice. To the extent they are applicable, Rex has adopted the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, 3rd Edition. As the Company’s activities transform in size, nature and scope, additional corporate governance structures will be considered by the Board and assessed as to their relevance. In accordance with the ASX Principles and Recommendations and the ASX Listing Rules, the Corporate Governance Statement and a more detailed discussion of the Company’s approach can be found on its website: www.rexminerals.com.au/company-proﬁle. This Corporate Governance Statement is dated 30 June 2019 and was approved by the Board on 12 September 2019. ANNUAL REPORT 2 0 1 9 14 REX MINERALS LTD DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 PRINCIPAL ACTIVITIES The principal activity of the Group during the year was minerals exploration, evaluation and development. Rex intends to make the best use of, and fully exploit, the Hillside Mineral Resource, and remains committed to the development of the Hillside Project. There were no signiﬁcant changes in the nature of the Group’s principal activities during the year. The Group’s principal objective is to create value through the discovery and development of mineral resources. Our strategy to deliver on this objective is to: (cid:129) ﬁnalise our PEPR to ensure all approvals are in place so that the Hillside Project is positioned to start up coincident with the copper supply deﬁcit currently emerging; optimise the Hillside Project through: > capital cost reductions by competitive re-tender of plant and equipment; > an operating effectiveness review; complete the acquisition of Hog Ranch Group Pty Ltd including the Hog Ranch Gold property (Hog Ranch) located in Nevada, USA; announce a maiden Inferred Mineral Resource for Hog Ranch; further the Hog Ranch Resource validation and commence broader economic studies; further develop the exploration target portfolio, for our highly prospective gold mining claims in Nevada and our Iron Oxide Copper Gold (IOCG) tenements in South Australia; and evolve the pool of corporate and ﬁnancing options available. (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) (cid:129) OPERATING AND FINANCIAL REVIEW The income statement shows a loss after tax of $5.1 million (2018: $5.2 million) for the year. The Group has no bank debt. As at 30 June 2019, the Group had a cash position of $2.7 million (2018: $4.0 million). Operating activities resulted in a net cash outﬂow for the year of $4.6 million (2018: $4.8 million). SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no signiﬁcant changes in the state of affairs of the Group during the ﬁnancial year. DIVIDENDS PAID OR RECOMMENDED The Directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report. EVENTS SINCE THE END OF THE FINANCIAL YEAR Rex announced on 20 August 2019 completion of the acquisition of Hog Ranch Group Pty Ltd and has issued 9,353,849 fully paid ordinary shares as consideration to the vendors other than the CEO. The consideration to be issued to the CEO, together with the Hog Ranch Consideration Rights, are subject to shareholder approval at the upcoming AGM to be held in November 2019. Other than mentioned above, no matters or circumstances have arisen since 30 June 2019 that have signiﬁcantly affected the Group’s operations, results or state of affairs. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS The Group is working towards the development of the Hillside Project and continued minerals exploration on the tenements and mineral claims owned or controlled by the Group. Other than that which is disclosed throughout the Annual Report, further information about likely developments in the operations of the Group and the expected results of those operations in future ﬁnancial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Group. 15 REX MINERALS LTD DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 1 9 ENVIRONMENTAL REGULATION The Group’s operations are subject to environmental regulation in respect of mineral tenements relating to exploration activities on those tenements. No breaches of any environmental requirements were recorded during the ﬁnancial year. INDEMNIFICATION AND INSURANCE OF OFFICERS The Company provides insurance to cover legal liability and expenses for the Directors and Executive Ofﬁcers of the Company. The Directors and Ofﬁcers Liability Insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the Ofﬁcers in their capacity as Ofﬁcers. Disclosure of the nature of the liability cover and the amount of the premium is subject to a conﬁdentiality clause under the insurance policy. The Company has entered into an agreement with Directors and Executive Ofﬁcers to indemnify these individuals against any claims and related expenses, which arise as a result of their work in their respective capacities. The Company has not provided any insurance or indemnity for the auditor of the Company. NON-AUDIT SERVICES During the year, KPMG Australia (KPMG), the Group’s auditor, did not perform any services other than the audit and review of the ﬁnancial statements. Details of amounts paid to the auditor of the Group, KPMG and its related practices for audit services during the year, are set out below. 2019 2018 $ $ Audit and review of ﬁnancial statements 48,128 48,175 REMUNERATION REPORT – AUDITED The Directors present the Remuneration Report for the year ended 30 June 2019, outlining key aspects of the remuneration policy and framework and the remuneration awarded during the year. Principles of compensation Remuneration is referred to as compensation throughout this report. Key Management Personnel (KMP) comprise the Directors of the Company and Senior Executives for the Group. KMP have authority and responsibility for planning, directing and controlling the activities of the Company and the Group. Compensation packages may include a mix of ﬁxed and variable compensation, and short-term and long-term performance-based incentives. Fixed compensation Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any fringe beneﬁts tax charges related to employee beneﬁts including motor vehicles), as well as leave entitlements and employer contributions to superannuation funds. Compensation levels are reviewed annually through a process that considers individual, segment and overall performance of the Group. Market research provides analysis and guidance for compensation. Performance linked compensation Performance linked compensation may include both short-term and long-term incentives, and is designed to reward senior executives for meeting or exceeding their ﬁnancial and personal objectives. The short-term incentive is an ‘at risk’ bonus provided in the form of cash, while the long-term incentive is provided as options over ordinary shares of the Company pursuant to the terms and conditions of the options. ANNUAL REPORT 2 0 1 9 16 REX MINERALS LTD DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 REMUNERATION REPORT – AUDITED (CONTINUED) Short-term incentive The short-term incentive (STI) is a discretionary bonus provided in the form of cash. At the end of the ﬁnancial year, the Board assesses the performance of the Group and individuals. The Board determines and approves the cash incentive to be paid to individuals. During the year, no STI cash bonuses were paid or payable. Long-term incentive The long-term incentive (LTI) is provided as options over ordinary shares of the Group. The Board believes the LTI is an important component of a comprehensive remuneration strategy. It aligns participants’ interests with those of shareholders by linking their overall total rewards to the long-term success of the Company and helps retain cash funds within the Company. The Board received shareholder approval for an Option Incentive Plan at the Annual General Meeting on 22 November 2018. The plan is administered by the Board which has the discretion to determine eligibility to participate in the plan. Consequences of performance on shareholder wealth The variable components of the Group’s Executives’ remuneration (the STI and LTI) seek to encourage alignment of management performance and shareholders’ interests by linking remuneration to the performance of the Group. Whilst the Remuneration Committee takes into consideration the indices detailed below, the Board acknowledges that as an exploration and development company, the use of such indices does not fully reﬂect the Group’s performance. Net loss attributable to equity holders of the parent (million) 2019 $ 5.1 2018 $ 5.2 2017 $ 0.8 2016 $ 5.1 2015 $ 8.7 Closing share price at ﬁnancial year’s end ($) 0.053 0.105 0.056 0.051 0.105 Service agreements In line with Group policy, the Group has entered into contracts with each of its Executive Ofﬁcers, and they are capable of termination on up to two months’ notice. The Group retains the right to terminate a contract immediately by making payment in lieu of notice. Executive Ofﬁcers are also entitled to receive (on termination of employment) their statutory entitlements of accrued annual and long service leave, together with any superannuation beneﬁts. The employment contract provides for no additional entitlement on termination in the event of removal for misconduct or gross negligence. The employment contract outlines the components of compensation paid to the Executive Ofﬁcers, but does not prescribe how compensation levels are modiﬁed year to year. Compensation levels are reviewed each year to meet the principles of the compensation policy. There is currently no STI plan offered to Executive Ofﬁcers. The Company has established an Option Incentive Plan, and the Board may invite Executive Ofﬁcers to participate under the terms and conditions of the plan as an LTI. Non-Executive Directors Total compensation for all Non-Executive Directors, last voted upon by shareholders at the 2011 AGM, is not to exceed $500,000 per annum and is set based on advice from external advisors with reference to fees paid to other Non-Executive Directors of comparable companies. The Chairman and Non-Executive Directors do not receive performance related remuneration. Directors’ fees cover all main Board activities and membership of Board committees. 17 1 9 REX MINERALS LTD DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 REMUNERATION REPORT – AUDITED (CONTINUED) Directors’ and Executive Ofﬁcers’ remuneration Details of the nature and amount of each major element of remuneration of Directors and Executive Ofﬁcers for 2019 are as follows: s u n o B f o n o i t r o p o r p n o i t a r e n u m e r e c n a m r o f r e p x i m n o i t a r e n u m e R d e t a l e r % e l b a i r a V I T L k s i r t a d e x i F l a t o T $ e l b a i r a V n o i t a r e n u m e r n o i t a r e n u m e r d e x i F d e s a b e r a h S s t n e m y a p m r e t - g n o L t s o P t n e m y o l p m e m r e t - t r o h S e u l a v r i a F ) d ( s n o i t p o $ e c i v r e s g n o L ) c ( e v a e l $ - r e p u S n o i t a u n n a $ h s a c I T S ) b ( s u n o b $ & y r a l a S ) a ( s e e f $ – – – – – – – – % 1 % 2 % 2 % 3 1 % 3 1 % 9 9 % 8 9 % 8 9 % 7 8 % 7 8 6 3 8 , 0 1 1 6 3 3 , 1 6 3 0 , 7 6 6 3 0 , 7 6 8 8 2 , 7 2 8 8 2 , 7 2 6 3 3 , 1 6 3 3 , 1 0 2 6 , 3 0 2 6 , 3 – – – – – 0 0 5 , 9 0 0 7 , 5 0 0 7 , 5 3 5 0 , 2 3 5 0 , 2 % 1 % 9 9 9 8 8 , 6 0 3 8 0 0 , 4 1 0 9 , 9 0 5 7 , 3 2 % 1 % 1 % 9 9 % 9 9 9 0 9 , 9 4 1 4 0 0 , 2 4 0 0 , 5 7 2 4 0 0 , 2 – – – – 6 8 2 , 1 3 0 , 1 4 6 2 , 9 1 1 0 9 , 9 6 5 7 , 8 4 – – – – – – – – – 0 0 0 , 0 0 1 n a m r i a h C , d n a l r a C d i v a D r D s r o t c e r i D e v i t u c e x E - n o N 0 0 0 , 0 6 0 0 0 , 0 6 5 1 6 , 1 2 5 1 6 , 1 2 d n a l t i a M r e t s i l A r M e k o o H l l e h c t i M r M 1 h t i m S n a I r M 2 s a l g u o D d l a n o R r M r o t c e r i D g n i g a n a M 0 3 2 , 9 6 2 O E C , n n a m f u a L d r a h c i R r M 5 0 9 , 7 4 1 3 r o t c e r i D t c e j o r P , l l a H g e r G r M 0 0 0 , 3 7 2 5 6 3 , 3 5 9 4 O F C , e t n o m a v i R r e b m A s M : P M K n o i t a s n e p m o c l a t o T s e v i t u c e x E n o i t a r e n u m e r ’ s r e c ﬁ f O e v i t u c e x E d n a ’ s r o t c e r i D f o e l b a t e h t o t n o i t a l e r n i s e t o N ANNUAL REPORT 2 0 1 9 18 t n u o m a e h t s t n e s e r p e r e v o b a e h t d n a t n e m e e r g a y c n a t l u s n o c a h g u o r h t d e g a g n e s i l l a H . 9 1 0 2 y r a u r b e F 8 1 n o d e c n e m m o c l s a g u o D r M r M . 9 1 0 2 y r a u r b e F 8 1 n o d e c n e m m o c h t i m S r M . y n a p m o c d e t a e r l P M K e h t o t i d a p e h t s t n e s e r p e r e v o b a e h t d n a t n e m e e r g a y c n a t l u s n o c a h g u o r h t d e g a g n e s i e t n o m a v R s M i . y n a p m o c d e t a e r l P M K e h t o t i d a p t n u o m a . 1 . 2 . 3 . 4 . n o l i t a s g e i l d e s a b - e t a t s h t i w e c n a d r o c c a n i s n o i t i d n o c i e c v r e s d e r i u q e r e h t s t e e m e e y o p m e l l a u n n a d e u r c c a d n a y r a a s l h s a c s e d u c n l i t i , s r e c ﬁ f O e v i t u c e x E r o F . s d r a d n a t S g n i t n u o c c A n a i l a r t s u A h t i w e c n a d r o c c a n i d e r u s a e m P M K y b i d e v e c e r s t n u o m a e d u c n l i s e e f d n a y r a a S l ) a ( . r a e y l i a c n a n ﬁ 9 1 0 2 e h t o t n o i t a e r l n i l e b a y a p r o d e u r c c a e r e w s e s u n o b h s a c I T S o N . s t n e m e l t i t n e e v a e l e h t f i h s a c n i i d a p e b l y n o l l i i w h c h w e v a e l i e c v r e s g n o l r o f l a u r c c a t e n e h t s t n e s e r p e R ) b ( ) c ( m o r f d o i r e p e h t r e v o l y n e v e d o i r e p g n i t r o p e r h c a e o t d e t a c o l l a d n a l e d o m g n c i r p i n o i t p o s n o i t p o e h t f o e u a v l r i a f f o n o i t r o p e h t s i d e s o c s d i l e u a v l e h T . e t a d g n i t s e v o t t n a r g . d o i r e p g n i t r o p e r h c a e n i e s n e p x e n a s a i d e s n g o c e r l s e o h c S - k c a B e h t l g n s u i t n a r g f o e t a d e h t t a l d e t a u c a c l s i s n o i t p o e h t f o e u a v l r i a f e h T ) d ( REX MINERALS LTD DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 REMUNERATION REPORT – AUDITED (CONTINUED) Directors’ and Executive Ofﬁcers’ remuneration Details of the nature and amount of each major element of remuneration of Directors and Executive Ofﬁcers for 2018 are as follows: s u n o B f o n o i t r o p o r p n o i t a r e n u m e r e c n a m r o f r e p d e t a l e r % e l b a i r a V I T L k s i r t a d e x i F x i m n o i t a r e n u m e R l a t o T $ e u l a v r i a F ) d ( s n o i t p o $ e c i v r e s g n o L ) c ( $ e v a e l - r e p u S n o i t a u n n a $ h s a c I T S ) b ( s u n o b $ & y r a l a S ) a ( $ s e e f e l b a i r a V n o i t a r e n u m e r n o i t a r e n u m e r d e x i F d e s a b e r a h S s t n e m y a p m r e t - g n o L t s o P t n e m y o l p m e m r e t - t r o h S – – – – – – % 4 % 7 % 7 % 6 9 % 3 9 % 3 9 9 8 2 , 4 1 1 9 8 7 , 4 9 8 4 , 0 7 9 8 4 , 0 7 9 8 7 , 4 9 8 7 , 4 – – – 0 0 5 , 9 0 0 7 , 5 0 0 7 , 5 % 5 % 5 9 6 5 0 , 9 0 3 8 6 3 , 4 1 8 0 7 , 1 0 5 7 , 3 2 % 3 % 2 % 7 9 % 8 9 4 8 1 , 0 0 3 4 8 1 , 7 – – 7 8 8 , 8 6 2 4 8 1 , 7 ) 8 3 8 , 1 ( 2 1 8 , 7 1 4 9 3 , 3 3 1 , 1 3 0 1 , 3 4 ) 0 3 1 ( 2 6 4 , 2 6 – – – – – – – 0 0 0 , 0 0 1 n a m r i a h C , d n a l r a C d i v a D r D s r o t c e r i D e v i t u c e x E - n o N 0 0 0 , 0 6 0 0 0 , 0 6 d n a l t i a M r e t s i l A r M e k o o H l l e h c t i M r M r o t c e r i D g n i g a n a M 0 3 2 , 9 6 2 O E C , n n a m f u a L d r a h c i R r M 9 2 7 , 5 4 2 1 r o t c e r i D t c e j o r P , l l a H g e r G r M 0 0 0 , 3 9 2 2 O F C , e t n o m a v i R r e b m A s M 9 5 9 , 7 2 0 , 1 : P M K n o i t a s n e p m o c l a t o T s e v i t u c e x E r e d n u i d a p s t n u o m a e h T . t n e m e e r g a y c n a t l u s n o c a h g u o r h t d e g a g n e w o n s i l a u n n a d e u r c c a d n a y r a a s l h s a c s e d u c n l i t i s r e c ﬁ f O e v i t u c e x E r o F . s d r a d n a t S g n i t n u o c c A d n a 8 1 0 2 h c r a M 1 3 n o y n a p m o C e h t h t i w t n e m y o p m e l d e s a e c l l a H r M . 1 n a i l a r t s u A h t i w e c n a d r o c c a n i d e r u s a e m P M K y b i d e v e c e r s t n u o m a e d u c n l i s e e f d n a y r a a S l ) a ( n o i t a r e n u m e r ’ s r e c ﬁ f O e v i t u c e x E d n a ’ s r o t c e r i D f o e l b a t e h t o t n o i t a l e r n i s e t o N e v o b a e h t d n a t n e m e e r g a y c n a t l u s n o c a h g u o r h t d e g a g n e s i e t n o m a v R s M i . 2 . r a e y . e v o b a d e d u c n l i e r a t n e m e e r g a i s h t l i a c n a n ﬁ 8 1 0 2 e h t o t n o i t a e r l n i l e b a y a p r o d e u r c c a e r e w s e s u n o b h s a c I T S o N . s t n e m e l t i t n e e v a e l . y n a p m o c d e t a e r l P M K e h t o t i d a p t n u o m a e h t s t n e s e r p e r e h t f i h s a c n i i d a p e b l y n o l l i i w h c h w e v a e l i e c v r e s g n o l r o f l a u r c c a t e n e h t s t n e s e r p e R ) b ( ) c ( . n o l i t a s g e i l d e s a b - e t a t s h t i w e c n a d r o c c a n i s n o i t i d n o c i e c v r e s d e r i u q e r e h t s t e e m e e y o p m e l m o r f d o i r e p e h t r e v o l y n e v e d o i r e p g n i t r o p e r h c a e o t d e t a c o l l a d n a l e d o m g n c i r p i n o i t p o s n o i t p o e h t f o e u a v l r i a f f o n o i t r o p e h t s i d e s o c s d i l e u a v l e h T . e t a d g n i t s e v o t t n a r g . d o i r e p g n i t r o p e r h c a e n i e s n e p x e n a s a i d e s n g o c e r l s e o h c S - k c a B e h t l g n s u i t n a r g f o e t a d e h t t a l d e t a u c a c l s i s n o i t p o e h t f o e u a v l r i a f e h T ) d ( 19 1 9 REX MINERALS LTD DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 REMUNERATION REPORT – AUDITED (CONTINUED) Shares under option All options refer to unquoted options over ordinary shares of Rex Minerals Ltd, which are exercisable on a one-for-one basis under the terms and conditions of the Option Incentive Plan. The options do not entitle the holder to participate in any share issue of the Company. All options expire on the earlier of their expiry date or in the case of termination, as deﬁned in the terms and conditions of the plan. During the year, the Company issued 2.0 million options and issued 3.0 million ordinary shares as a result of the exercise of options. At 30 June 2019, there were 15.8 million unquoted options over ordinary shares of the Company, 13.8 million at an exercise price of 6.3 cents expiring 30 November 2019 and 2.0 million at an exercise price of 8.4 cents, expiring 31 January 2023. Since the end of the ﬁnancial year, the Company has not issued any ordinary shares as a result of the exercise of options. Reconciliation of options and ordinary shares held by Key Management Personnel (KMP) Options The table below shows a reconciliation of unquoted options over ordinary shares in the Company held directly, indirectly or beneﬁcially by each KMP including their related parties, during the ﬁnancial year. The fair value of the options is calculated at the date of grant, using the Black-Scholes option pricing model and allocated to each reporting period evenly over the period from grant to vesting date. Name Held at 1 July 2018 Number of options granted Number of options exercised Number of options vested % of options vested Held at 30 June 2019 Fair value of options granted in 2019 Fair value of options expensed in 2019 Maximum fair value of options yet to vest or be expensed Dr David Carland 1,000,000 Mr Alister Maitland 1,000,000 Mr Mitchell Hooke 1,000,000 – – – 1,000,000 1,000,000 – 1,000,000 666,000 1,000,000 Mr Ian Smith Mr Ronald Douglas – – 1,000,000 1,000,000 Mr Richard Laufmann 3,000,000 Mr Greg Hall 1,500,000 Ms Amber Rivamonte 1,500,000 – – – – – – – – 3,000,000 100,000 1,500,000 – 1,500,000 100 100 100 – – 100 100 100 – 1,000,000 334,000 – – – $1,336 $1,336 $1,336 – – – 1,000,000 $28,800 $3,620 1,000,000 $28,800 $3,620 $25,180 $25,180 3,000,000 1,400,000 1,500,000 – – – $4,008 $2,004 $2,004 – – – The table below shows a reconciliation of unquoted options over ordinary shares in the Company held directly, indirectly or beneﬁcially by each KMP including their related parties, during the 2018 ﬁnancial year. No options lapsed or were forfeited during the 2018 ﬁnancial year. Name Held at 1 July 2017 Number of options granted Number of options vested % of options vested Held at 30 June 2018 Fair value of options granted Fair value of options expensed in 2018 Maximum fair value of options yet to vest or be expensed Dr David Carland 1,000,000 Mr Alister Maitland 1,000,000 Mr Mitchell Hooke 1,000,000 Mr Richard Laufmann 3,000,000 Mr Greg Hall 1,500,000 Ms Amber Rivamonte 1,500,000 – – – – – – 666,666 666,666 666,666 2,000,000 1,000,000 1,000,000 66 66 66 66 66 66 1,000,000 1,000,000 1,000,000 3,000,000 1,500,000 1,500,000 – – – – – – $4,789 $1,336 $4,789 $1,336 $4,789 $1,336 $14,368 $4,008 $7,184 $2,004 $7,184 $2,004 ANNUAL REPORT 2 0 1 9 20 REX MINERALS LTD DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 REMUNERATION REPORT – AUDITED (CONTINUED) Reconciliation of options and ordinary shares held by Key Management Personnel (KMP) (Continued) The fair value of the unlisted options granted during 2019 has been measured independently at the date of the grant based upon the Black-Scholes option pricing model. The inputs used in the measurement of the fair value at grant date are as follows. Grant date 14 February 2019 Fair value per option at grant date 2.88 cents Exercise price per option 8.4 cents Premium to closing share price prior to grant date 10.5% Expiry date 31 January 2023 Options vest in three equal tranches as follows: (cid:129) Tranche 1 – one third vest on 31 January 2020; (cid:129) Tranche 2 – one third vest on 31 January 2021; (cid:129) Tranche 3 – one third vest on 31 January 2022. All options expire on the earlier of their expiry date or in the case of termination, as deﬁned in the Option Incentive Plan. On termination, in the event that a KMP is deemed to be a good leaver, then all unvested options will immediately vest. In the event that a KMP is deemed to be a bad leaver, the options (whether vested or unvested) expire shortly thereafter. The terms and conditions of each grant of options affecting remuneration in the current and future reporting periods are set out below. Grant date Vesting dates Expiry date Exercise price (cents) Value per option at grant date (cents) % vested 22 December 2015 One third 30 November 2016 One third 30 November 2017 One third 30 November 2018 14 February 2019 One third 31 January 2020 One third 31 January 2021 One third 31 January 2022 Shareholdings 30 November 2019 6.3 2.51 100 31 January 2023 8.4 2.88 – The table below shows a reconciliation of ordinary shares in the Company held, directly, indirectly or beneﬁcially by each KMP including their related parties, during the ﬁnancial year. The table below also includes any movement in ordinary shares since the end the ﬁnancial year and the totals held at the date of this report by each KMP including their related parties. Name Held at 30 June 2018 or start date Received on exercise of option Purchased or sold during the year Held at 30 June 2019 Received on exercise of option Purchased or sold since the end of year Held at date of this report Dr David Carland 886,524 1,000,000 136,364 2,022,888 Mr Alister Maitland 202,000 – 136,364 338,364 Mr Mitchell Hooke 305,143 666,000 136,364 1,107,507 Mr Ian Smith Mr Ronald Douglas – – Mr Richard Laufmann 3,541,666 – – – – – – – 909,000 4,450,666 Mr Greg Hall – 100,000 – 100,000 Ms Amber Rivamonte 850,000 – 100,000 950,000 – – – – – – – – – – – – – – – 2,022,888 338,364 1,107,507 – – 4,450,666 100,000 2,584,606 3,534,606 21 1 9 REX MINERALS LTD DIRECTORS’ REPORT (Continued) for the year ended 30 June 2019 REMUNERATION REPORT – AUDITED (CONTINUED) Reconciliation of options and ordinary shares held by Key Management Personnel (KMP) (Continued) Other transactions with Key Management Personnel (KMP) KMP hold positions in other companies that result in them having control or signiﬁcant inﬂuence over those companies. During the year, KMP related companies transacted with the Group. The terms and conditions of these transactions were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-KMP related companies on an arm’s length basis. Rounding The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated 24 March 2016 and in accordance with that Financial Instrument, amounts in the consolidated ﬁnancial statements and Directors’ Report have been rounded off to the nearest thousand dollars, unless otherwise stated. All currencies are in Australian dollars unless stated otherwise. Lead Auditor’s Independence Declaration The lead auditor’s independence declaration is set out on page 45 and forms part of the Directors’ Report for the year ended 30 June 2019. Dated at Melbourne this 12th day of September 2019. Signed in accordance with a resolution of the Directors: Mr Richard Laufmann Chief Executive Ofﬁcer ANNUAL REPORT 2 0 1 9 22 REX MINERALS LTD CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2019 2018 Note $000 $000 Current assets Cash and cash equivalents 7 2,723 3,984 Trade and other receivables 38 247 Prepayments 35 35 Total current assets 2,796 4,266 Non-current assets Exploration and evaluation expenditure 1,645 1,645 Property, plant and equipment 9 14,401 14,930 Water infrastructure 4,076 4,076 Total non-current assets 20,122 20,651 Total assets 22,918 24,917 Current liabilities Trade and other payables 10 257 314 Employee beneﬁts 11 633 512 Provisions 36 36 Total current liabilities 926 862 Non-current liabilities Trade and other payables 10 – 348 Employee beneﬁts 11 30 29 Total non-current liabilities 30 377 Total liabilities 956 1,239 Net assets 21,962 23,678 Equity Issued capital 12(a) 196,269 192,910 Reserves 12(c) 360 399 Accumulated losses (174,667) (169,631) Total equity 21,962 23,678 The notes on pages 27 to 43 are an integral part of these ﬁnancial statements. 23 1 9 REX MINERALS LTD CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 June 2019 2018 Note $000 $000 Finance income 98 60 Administrative expenses (1,247) (1,248) Depreciation expense 9 (101) (163) Employee beneﬁts expense 13 (1,921) (2,178) Marketing expenses (86) (76) Exploration and evaluation (1,414) (1,551) Loss on disposal of ﬁxed assets (440) (1) Loss before tax (5,111) (5,157) Income tax beneﬁt 14 – – Total loss for the period after tax (5,111) (5,157) Other comprehensive income – – Total comprehensive loss attributable to members of Rex Minerals Ltd (5,111) (5,157) Loss per share attributable to members of Rex Minerals Ltd Basic loss per share (cents) 15 (1.80) (2.33) Diluted loss per share (cents) 15 (1.80) (2.33) The notes on pages 27 to 43 are an integral part of these ﬁnancial statements. ANNUAL REPORT 2 0 1 9 24 REX MINERALS LTD CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June Attributable to equity holders of the Group Share Share based Accumulated Total capital payments losses equity reserve Note $000 $000 $000 $000 Balance at 1 July 2018 192,910 399 (169,631) 23,678 Issue of ordinary shares 12(a) 3,560 – – 3,560 Transaction costs of share issue (201) – – (201) Share based payments 12(c) – 36 – 36 Transfer from share based payments reserve – (75) 75 – Total comprehensive loss for the period – – (5,111) (5,111) Balance at 30 June 2019 196,269 360 (174,667) 21,962 Balance at 1 July 2017 189,566 319 (164,474) 25,411 Issue of ordinary shares 12(a) 3,639 – – 3,639 Transaction costs of share issue (295) – – (295) Share based payments 12(c) – 80 – 80 Total comprehensive loss for the period – – (5,157) (5,157) Balance at 30 June 2018 192,910 399 (169,631) 23,678 The notes on pages 27 to 43 are an integral part of these ﬁnancial statements. 25 1 9 REX MINERALS LTD CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2019 2018 Note $000 $000 Cash ﬂows from operating activities Cash paid to suppliers and employees (3,302) (3,313) Exploration and evaluation payments (1,386) (1,562) Interest received 94 68 Net cash used in operating activities 16 (4,594) (4,807) Cash ﬂows from investing activities Acquisition of property, plant and equipment 9 (12) (9) Net cash used in investing activities (12) (9) Cash ﬂows from ﬁnancing activities Proceeds from issue of share capital 12 3,560 3,639 Payment of transaction costs (215) (279) Net cash from ﬁnancing activities 16 3,345 3,360 Net decrease in cash and cash equivalents (1,261) (1,456) Cash and cash equivalents at beginning of the period 3,984 5,440 Cash and cash equivalents at period end 7 2,723 3,984 The notes on pages 27 to 43 are an integral part of these ﬁnancial statements. ANNUAL REPORT 2 0 1 9 26 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS 1. REPORTING ENTITY Rex Minerals Ltd (the ‘Company’) is a company domiciled in Australia. The address of the Company’s registered ofﬁce is Level 6, 1 Collins Street, Melbourne, Victoria 3000. These consolidated ﬁnancial statements comprise the Company and its subsidiaries (together referred to as the ‘Group’). The Group is a for proﬁt entity primarily involved in minerals exploration and evaluation in Australia. 2. BASIS OF PREPARATION (a) Statement of compliance The consolidated ﬁnancial statements are general purpose ﬁnancial statements which have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated ﬁnancial statements comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB). These consolidated ﬁnancial statements were approved by the Board of Directors on 12 September 2019. (b) Basis of measurement The Group ﬁnancial statements have been prepared on the historical cost basis. The Group ﬁnancial statements have been prepared on a going concern basis which contemplates the continuity of normal business activity and realisation of assets and the settlement of liabilities in the normal course of business. The Group has no debt obligations. The Group recorded a loss of $5.111 million, and net cash outﬂows from operating and investing activities of $4.594 million for the year ended 30 June 2019. The Group’s position as at 30 June 2019 included available cash reserves of $2.723 million; and current assets of $2.796 million which exceed current liabilities of $0.926 million by $1.870 million. The Group’s principal objective is to create value through the discovery and development of mineral resources and as such, it does not presently have a source of operating income, rather it is reliant on equity raisings or funds from other external sources to fund its activities. To support its planned activities, the Group will be required to raise additional funds over the next 12 months and in the future. The Group has a history of successfully raising cash through equity raisings, including $7.012 million in June/July 2018. The Directors reasonably expect that the Group will be able to raise funds as required, the Group also has unencumbered land with a book value $14.110 million which could be made available for sale or used as security for additional funds, if necessary. The Directors are therefore of the opinion that the going concern basis is appropriate in the circumstances. (c) Functional and presentation currency These Group ﬁnancial statements are presented in Australian dollars, which is the functional currency of all entities in the Group. The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191and in accordance with that Rounding Instrument, all ﬁnancial information is presented in Australian dollars and has been rounded to the nearest thousand, unless otherwise stated. (d) Use of estimates and judgements The preparation of ﬁnancial statements requires Management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, information about signiﬁcant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most signiﬁcant effect on the amount recognised in the ﬁnancial statements are described in the following notes and their related accounting policies: (cid:129) Note 9 (cid:129) Note 17 (cid:129) Note 21 Recoverable value of non-current assets Share based payments Contingencies 27 1 9 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 2. BASIS OF PREPARATION (CONTINUED) (e) Changes in signiﬁcant accounting policies The Group adopted AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments on 1 July 2018. Application of AASB 15 did not have a signiﬁcant impact on the ﬁnancial statements. AASB 9 Financial Instruments As at 1 July 2018, the Group reassessed the classiﬁcation and measurement of ﬁnancial assets and liabilities based on the business model by which they are managed and their cash ﬂow characteristics. The following table explains the original categories under AASB 139 and the new categories under AASB 9 for each class of the Group’s ﬁnancial assets and liabilities as at 1 July 2018. There was no impact on the measurement of the Group’s ﬁnancial assets and liabilities on transition to AASB 9. Financial assets and liabilities Classiﬁcation under AASB 9 Original classiﬁcation under AASB 139 Cash and cash equivalents Amortised cost loans and receivables Loans and receivables Trade and other receivables Amortised cost loans and receivables Loans and receivables Trade and other payables Amortised cost loans and receivables Loans and receivables AASB 9 replaces the ‘incurred loss’ model in AASB 139 with an ‘expected credit loss’ (ECL) model. The new impairment model applies to ﬁnancial assets measured at amortised cost and in the Group’s case this includes other receivables and cash and cash equivalents. Application of the ECL model did not have a signiﬁcant impact on the ﬁnancial statements 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently to all periods presented in these Group ﬁnancial statements, except if mentioned otherwise (see Note 2(e)) and have been applied consistently by Group entities. The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board that are relevant to the Group and effective for the current annual reporting period. (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, potential voting rights that currently are exercisable are taken into account. The ﬁnancial statements of subsidiaries are included in the Group ﬁnancial statements from the date that control commences until the date that control ceases. (ii) Transactions eliminated on consolidation Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the Group ﬁnancial statements. ANNUAL REPORT 2 0 1 9 28 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial instruments Policy applicable from 1 July 2018 All ﬁnancial assets and liabilities are initially recognised at the fair value of consideration paid or received, net of transaction costs as appropriate, and subsequently carried at fair value or amortised cost. Financial assets are not reclassiﬁed subsequent to their initial recognition unless the Group changes its business model for managing ﬁnancial assets, in which case all affected ﬁnancial assets are reclassiﬁed on the ﬁrst day of the ﬁrst reporting period following the change in the business model. A ﬁnancial asset is measured at amortised cost if it meets both of the following conditions: (cid:129) it is held within a business model whose objective is to hold assets to collect contractual cash ﬂows; and (cid:129) its contractual terms give rise on speciﬁed dates to cash ﬂows that are solely payments of principal and interest on the principal amount outstanding. (i) Receivables – other debtors Other debtors are measured at amortised cost less impairment losses. Other debtors are reviewed on an ongoing basis for any indicators of impairment. An impairment loss is recognised for debts which are known to be uncollectible. An impairment allowance is raised for any doubtful accounts. (ii) Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. (iii) Trade and other payables Liabilities are recognised for amounts to be paid in the future for goods and services provided to the Group prior to the end of the reporting period and are stated at amortised cost. The amounts are unsecured and are usually paid within 30 days of recognition. Policy applicable before 1 July 2018 (iv) Non-derivative ﬁnancial instruments Non-derivative ﬁnancial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents and trade and other payables. Non-derivative ﬁnancial instruments are recognised initially at fair value plus, for instruments not at fair value through proﬁt or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative ﬁnancial instruments are measured as described below. A ﬁnancial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash ﬂows from the ﬁnancial assets expire or if the Group transfers the ﬁnancial asset to another party without retaining control or substantially all risks and rewards of the asset. Sales of ﬁnancial assets are accounted for at trade date, ie. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations speciﬁed in the contract expire or are discharged or cancelled. (v) Share capital Ordinary shares Ordinary shares are classiﬁed as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. (c) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment (PP&E) are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. (ii) Subsequent costs The cost of replacing part of an item of PP&E is recognised in the carrying amount of the item if it is probable that the future economic beneﬁts embodied within the part will ﬂow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of PP&E are recognised in proﬁt or loss as incurred. 29 1 9 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Property, plant and equipment (Continued) (iii) Depreciation Depreciation is recognised in the proﬁt or loss for items of PP&E on a straight-line basis over the estimated useful lives of each part of an item of PP&E. The estimated useful lives for the current and comparative periods are as follows: (cid:129) (cid:129) Plant and equipment Buildings 3 – 10 years 10 – 20 years Land is not depreciated. Water infrastructure will be depreciated over the life of the Hillside Project, upon commencement of production. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. (d) Exploration and evaluation expenditure Exploration and evaluation expenditure, excluding the costs of acquisition, is expensed within the proﬁt and loss as incurred. Costs incurred in acquiring rights, the entry premiums paid to gain access to areas of interest and amounts payable to third parties to acquire interests in existing projects are capitalised as incurred and assessed for impairment triggers annually. (e) Impairment (i) Financial assets Policy applicable from 1 July 2018 The Group recognises loss allowances for ECLs on ﬁnancial assets measured at amortised cost. Loss allowances for other receivables are always measured at an amount equal to lifetime ECLs. Policy applicable before 1 July 2018 A ﬁnancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A ﬁnancial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash ﬂows of that asset. An impairment loss in respect of a ﬁnancial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash ﬂows discounted at the original effective interest rate. Individually signiﬁcant ﬁnancial assets are tested for impairment on an individual basis. The remaining ﬁnancial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in proﬁt or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For ﬁnancial assets measured at amortised cost, the reversal is recognised in proﬁt or loss. (ii) Non-ﬁnancial assets The carrying amounts of the Group’s non-ﬁnancial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash ﬂows are discounted to their present value using a pre-tax discount rate that reﬂects current market assessments of the time value of money and the risks speciﬁc to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generate cash inﬂows from continuing use that are largely independent of the cash inﬂows of other assets or groups of assets (the ‘cash-generating unit’). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to beneﬁt from the synergies of the combination. ANNUAL REPORT 2 0 1 9 30 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (ii) Non-ﬁnancial assets (Continued) An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in proﬁt or loss. Impairment losses recognised in respect of cash-generating units are allocated ﬁrst to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (f) Employee beneﬁts (i) Wages, salaries and annual leave Liabilities for employee beneﬁts for wages, salaries and annual leave that are expected to be settled within 12 months of the reporting date represent obligations resulting from employee services provided to the reporting date, and are calculated at undiscounted amounts based on remuneration, wage and salary rates that the Company expects to pay as at reporting date including related on-costs such as workers compensation insurance and payroll tax. (ii) Long-term beneﬁts The Group’s obligation in respect of long service leave is measured as the present value of the future beneﬁt expected to be paid to employees that has been earned in return for their service in the current and prior periods. Consideration is given to the expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using Australian corporate bond rates. (iii) Share based payments Equity-based compensation is recognised as an expense in respect of the services received. The fair value of options granted is recognised as an expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the participants become unconditionally entitled to the options. The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the options, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. (h) Tax (i) Income taxes Income tax expense comprises current and deferred tax. Income tax expense is recognised in proﬁt or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for ﬁnancial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable proﬁt, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities, will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable proﬁts will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax beneﬁt will be realised. Research and development beneﬁts are recognised in the year the beneﬁt is received. 31 1 9 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h) Tax (Continued) (ii) Tax consolidation The Company and its wholly-owned Australian resident entities are part of a tax consolidated group. As a consequence, all members of the tax consolidated group are taxed as a single entity. The head entity within the tax consolidated group is Rex Minerals Ltd. The tax consolidated group has entered into tax funding and tax sharing agreements. (iii) Goods and services tax Revenue, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the Australian Taxation Ofﬁce (ATO) is included as a current asset or liability in the balance sheet. Cash ﬂows are included in the statement of cash ﬂows on a gross basis. The GST components of cash ﬂows arising from investing and ﬁnancing activities which are recoverable from, or payable to, the ATO are classiﬁed as operating cash ﬂows. (i) Finance income Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in proﬁt or loss, using the effective interest method. (j) Earnings/loss per share The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the proﬁt or loss attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is determined by adjusting the proﬁt or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. (k) Segment reporting The Group determines and presents operating segments based on the information that internally is provided to the CEO, who is the consolidated entity’s chief operating decision-maker. An operating segment is a component of the Group that engages in exploration activities which incurs expenses. An operating segment’s expenditures are reviewed regularly by the CEO to make decisions about resources to be allocated to the segment and to assess its performance. Segment expenditure that is reported to the CEO includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to acquire PP&E. (l) Restoration and rehabilitation provision Obligations to restore and rehabilitate certain areas of property may arise from time to time as a result of the Group’s activities. A provision for rehabilitation and restoration is recognised in respect of the estimated cost of rehabilitation, decommissioning and restoration of areas of disturbance existing at reporting date, but not yet rehabilitated. Rehabilitation activities include dismantling infrastructure, removal and treatment of waste material, and land rehabilitation, including recontouring, top-soiling and revegetation of the disturbed area. Provisions for the cost of the rehabilitation program are recognised at the time that environmental disturbance occurs (or is acquired). A corresponding asset is recognised in PP&E or exploration and evaluation assets only to the extent that it is probable that future economic beneﬁts associated with the rehabilitation, will ﬂow to the entity. Determining the cost of rehabilitation and restoration of the area of disturbance requires the use of signiﬁcant estimates and assumptions, including: the timing of the cash ﬂows and expected life of the relevant area of interest, the application of relevant environmental legislation, and the future expected costs of rehabilitation, decommissioning and restoration. Changes in the estimates and assumptions used to determine the cost of rehabilitation, decommissioning and restoration could have a material impact on the carrying value of the site restoration provision and related asset. The provision is updated based on the facts and circumstances at the reporting date. ANNUAL REPORT 2 0 1 9 32 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2019, and have not been applied in preparing these consolidated ﬁnancial statements: (cid:129) AASB 16 Leases removes the classiﬁcation of leases as either operating or ﬁnance leases for the lessee, effectively treating all leases on balance sheet. Short-term leases and leases of low value assets are exempt from the lease accounting requirements. These amendments will be effective for the Group’s 2020 ﬁnancial statements with early adoption permitted. The new standard is not expected to have signiﬁcant impact on the ﬁnancial statements. 4. DETERMINATION OF FAIR VALUES A number of the Group’s accounting policies and disclosures require the determination of fair values for ﬁnancial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes speciﬁc to that asset or liability. (a) Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash ﬂows, discounted at the market rate of interest at the reporting date. (b) Non-derivative ﬁnancial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash ﬂows, discounted at the market rate of interest at the reporting date. (c) Share based payments The fair value of options granted to participants as compensation is independently measured using a Black- Scholes option pricing model. Measurement inputs include the exercise price of the options, the term of the options, the vesting and performance criteria, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share (based on an evaluation of the Company’s historical volatility), expected term of the instruments (based on historical experience and general option holder behaviour), the expected dividend yield and the risk-free interest rate (based on government bonds) for the term of the option. 5. FINANCIAL RISK MANAGEMENT (a) Capital Management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so as to maintain an adequate capital base sufﬁcient to maintain future exploration and progress of its projects. In order to maintain or adjust the capital structure, the Group may return capital to shareholders or issue new shares. The Group’s focus has been to raise sufﬁcient funds through equity to fund exploration and evaluation activities, and currently has no external borrowings. The Group encourages employees and contractors to be shareholders through the Option Incentive Plan. There were no changes in the Group’s approach to capital management during the year. Risk management policies and procedures are established with regular monitoring and reporting. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. (b) Credit risk Credit risk is the risk of ﬁnancial loss to the Group if a customer or counter-party to a ﬁnancial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables and cash balances. (c) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its ﬁnancial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufﬁcient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. To this end, actual cash ﬂows and forecast future cash ﬂows are reported to and monitored by the Board on a periodic basis. 33 1 9 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 5. FINANCIAL RISK MANAGEMENT (CONTINUED) (d) Market risk Market risk is the risk that changes in market prices (such as foreign exchange rates), interest rates and equity prices that will affect the Group’s income or the value of its holdings of ﬁnancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. 6. SEGMENT REPORTING The consolidated entity operated in one geographical segment at 30 June 2019, being South Australia and one industry, minerals mining and exploration. 7. CASH AND CASH EQUIVALENTS 2019 2018 $000 $000 Bank balances and short-term deposits 2,723 3,984 Cash and cash equivalents 2,723 3,984 The Group’s total cash and funds on deposit of $2.723 million (2018: $3.984 million) is exposed to interest rate risk and a sensitivity analysis for ﬁnancial assets and liabilities is disclosed in note 18. 8. DEFERRED TAX ASSETS (DTA) AND DEFERRED TAX LIABILITIES (DTL) 2019 2018 $000 $000 Exploration and evaluation assets (494) (494) Property, plant and equipment (83) (101) Provisions 208 161 Equity costs 101 71 Net DTA/(DTL) (268) (363) Tax losses recognised to the extent of the DTL 268 363 – – Tax losses do not expire under current tax legislation. A DTA has not been recognised in respect of these items because it is not probable within the immediate future, that taxable proﬁts will be available, against which the Company can utilise the beneﬁts. The DTA not recognised is $54.715 million (2018: $53.144 million). ANNUAL REPORT 2 0 1 9 34 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 9. PROPERTY, PLANT AND EQUIPMENT Land and Plant and buildings equipment Total 2019 $000 $000 $000 Cost Balance at 1 July 2018 15,074 2,127 17,201 Additions – 12 12 Disposals (765) (181) (946) Balance at 30 June 2019 14,309 1,958 16,267 Depreciation and impairment losses Balance at 1 July 2018 404 1,867 2,271 Depreciation 36 65 101 Disposals (368) (138) (506) Balance at 30 June 2019 72 1,794 1,866 Carrying amounts At 1 July 2018 14,670 260 14,930 At 30 June 2019 14,237 164 14,401 Land and Plant and buildings equipment Total 2018 $000 $000 $000 Cost Balance at 1 July 2017 15,074 2,121 17,195 Additions – 9 9 Disposals – (3) (3) Balance at 30 June 2018 15,074 2,127 17,201 Depreciation and impairment losses Balance at 1 July 2017 317 1,793 2,110 Depreciation 87 76 163 Disposals – (2) (2) Balance at 30 June 2018 404 1,867 2,271 Carrying amounts At 1 July 2017 14,757 328 15,085 At 30 June 2018 14,670 260 14,930 10. TRADE AND OTHER PAYABLES 2019 2018 $000 $000 Current Trade payables 9 15 Accrued expenses 248 299 Total current trade and other payables 257 314 Non-current Accrued expenses – lease incentive – 348 Total non-current trade and other payables – 348 Total trade and other payables 257 662 35 1 9 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 11. EMPLOYEE BENEFITS PROVISIONS 2019 2018 $000 $000 Current Annual leave 462 369 Long service leave 171 143 Total current employee beneﬁts provisions 633 512 Non-current Long service leave 30 29 Total non-current employee beneﬁts provisions 30 29 Total employee beneﬁts provisions 663 541 12. EQUITY (a) Movements in shares on issue: Date of Number of Issue issue shares price $ $000 Opening balance at 1 July 2018 253,597,684 192,910 Capital raising – Placement 25/07/2018 30,660,548 0.110 3,373 Less costs of placement (201) Exercise of options 22/08/2018 1,975,983 0.063 124 Exercise of options 07/12/2018 1,000,000 0.063 63 Closing balance at 30 June 2019 287,234,215 196,269 Opening balance at 1 July 2017 220,519,784 189,566 Capital raising – Placement 18/06/2018 33,077,900 0.110 3,639 Less costs of placement (295) Closing balance at 30 June 2018 253,597,684 192,910 (b) Movements in options on issue: Date of Number of Exercise Expiry issue options price $ date Opening balance as at 1 July 2018 16,800,000 Exercise of options 22/12/2015 (1,975,983) 0.063 30/11/2019 Exercise of options 22/12/2015 (1,000,000) 0.063 30/11/2019 Issue of options 14/02/2019 2,000,000 0.084 31/01/2023 Closing balance as at 30 June 2019 15,824,017 Opening balance as at 1 July 2017 16,800,000 Closing balance as at 30 June 2018 16,800,000 ANNUAL REPORT 2 0 1 9 36 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 12. EQUITY (c) Movements in share based payment reserve: $000 Opening balance at 1 July 2018 399 Share based payments 36 Transfer from share based payments (75) Closing balance at 30 June 2019 360 Opening balance at 1 July 2017 319 Share based payments 80 Closing balance at 30 June 2018 399 This share based payment reserve is used to recognise the fair value of options issued to participants for options granted which have not been exercised. 13. EMPLOYEE BENEFITS EXPENSE 2019 2018 $000 $000 Wages and salaries 1,770 2,027 Share based payments 29 56 Increase/(decrease) in liability for annual leave 93 71 Increase/(decrease) in liability for long service leave 29 24 Total employee beneﬁts expense 1,921 2,178 14. INCOME TAX BENEFIT NUMERICAL RECONCILIATION BETWEEN TAX BENEFIT AND PRE-TAX ACCOUNTING LOSS 2019 2018 $000 $000 Loss before tax for the period (5,111) (5,157) Income tax beneﬁt using the corporation tax rate of 30% (2018: 30%) (1,533) (1,547) Non-deductible expenses (6) 26 Other non-temporary differences 44 (89) Net effect of tax losses not recognised 1,495 1,610 Total income tax expense/(beneﬁt) on pre-tax net loss – – 37 REX MINERALS LTD 1 9 15. LOSS PER SHARE NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 2019 2018 cents cents Loss per share Basic loss per share (1.80) (2.33) Diluted loss per share (1.80) (2.33) (a) Basic loss per share The calculation of basic loss per share at 30 June 2019 was based on the loss attributable to ordinary equity holders of $5.111 million (2018: $5.157 million) and a weighted average number of ordinary shares outstanding during the ﬁnancial year ended 30 June 2019 of 284,493,544 (2018: 221,610,264). (b) Diluted loss per share The calculation of diluted loss per share at 30 June 2019 is the same as basic loss per share. In accordance with AASB 133 Earnings per share, as potential ordinary shares may result in a situation where their conversion results in a decrease in the loss per share, no dilutive effect has been taken into account. Potential ordinary shares relating to the Option Incentive Plan totalled 15,824,017 at 30 June 2019. 16. RECONCILIATION OF CASH FLOWS FROM OPERATING AND FINANCING ACTIVITIES 2019 2018 Note $000 $000 Cash ﬂows from operating activities Loss before tax for the period (5,111) (5,157) Adjustments for non-cash items: Depreciation 9 101 163 Share based payments 12(c) 36 80 Adjustments for other items: Loss on disposal of property plant and equipment 440 1 Operating loss before changes in working capital and provisions (4,534) (4,913) (Increase)/decrease in trade and other receivables 208 49 (Decrease)/increase in trade and other payables (390) (37) (Decrease)/increase in employee beneﬁts 122 94 Net cash used in operating activities (4,594) (4,807) Cash ﬂows from ﬁnancing activities Issue of share capital Proceeds from share issue 12(a) 3,560 3,639 Transactions costs of share issue (201) (295) Share capital before changes in working capital 3,359 3,344 (Decrease)/increase in trade and other payables (14) 16 Net cash used in ﬁnancing activities 3,345 3,360 ANNUAL REPORT 2 0 1 9 38 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 17. SHARE BASED PAYMENTS (a) Description of share based payment arrangements During the ﬁnancial year ending 30 June 2019, two million options were granted to Directors on 14 February 2019, expiring 31 January 2023. Options are exercisable at a price of 8.4 cents each and options will vest in three equal tranches as follows: (cid:129) Tranche 1 – one third vest on 31 January 2020 (cid:129) Tranche 2 – one third vest on 31 January 2021 (cid:129) Tranche 3 – one third vest on 31 January 2022 All options refer to unquoted options over ordinary shares of Rex Minerals Ltd, which are exercisable on a one-for-one basis under the terms and conditions of the Option Incentive Plan. The options do not entitle the holder to participate in any share issue of the Company. All options expire on the earlier of their expiry date or in the case of termination, as deﬁned in the Option Incentive Plan. (b) Option expense 2019 2018 $000 $000 Option expense 36 80 Total recognised as share based payments 36 80 (c) Outstanding options At 30 June 2019, there were 15,824,017 unlisted options outstanding, 13,824,017 at an exercise price of 6.3 cents expiring 30 November 2019 and 2,000,000 at an exercise price of 8.4 cents, expiring 31 January 2023. 18. FINANCIAL INSTRUMENTS Exposure to credit risk and interest rate risks arise in the normal course of the Group’s business. (a) Credit risk Management monitors the exposure to credit risk on an ongoing basis through monitoring the Group’s counterparties. The Group does not require collateral in respect of ﬁnancial assets. At reporting date, cash is held with a number of reputable ﬁnancial institutions. The maximum exposure to credit risk is represented by the carrying amount of each ﬁnancial asset in the balance sheet. (b) Fair value The ﬁnancial assets and ﬁnancial liabilities included in assets and liabilities approximate their net fair values. (c) Liquidity risk The following are the contractual maturities of ﬁnancial liabilities. Carrying Contractual 1 year 1-2 Financial liabilities amount cash ﬂows or less years Group $000 $000 $000 $000 2019 Trade and other payables 257 (257) (257) – 257 (257) (257) – 2018 Trade and other payables 662 (314) (314) (348) 662 (314) (314) (348) 39 1 9 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 18. FINANCIAL INSTRUMENTS (CONTINUED) (d) Interest rate risk The Group’s exposure to market interest rates relates primarily to the Group’s short-term deposits. At balance date, the Group had the following ﬁnancial assets exposed to interest rate risk: 2019 2018 $000 $000 Cash and cash equivalents 2,723 3,984 Total cash and cash equivalents 2,723 3,984 At balance date, the Group has no ﬁnancial liabilities exposed to variable interest rate risks. The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance sheet date. At 30 June 2019, if interest rates had moved, as illustrated in the table below, with all other variables constant, proﬁt or loss and equity would have been affected as follows: Proﬁt or loss Equity higher/(lower) higher/(lower) 2019 2018 2019 2018 $000 $000 $000 $000 Group +1% (100 basis points) 27 40 – – – 1% (100 basis points) (27) (40) – – The movements in proﬁt or loss are due to higher/lower interest earnings on cash balances. The movements in equity are directly linked to movements in the Consolidated statement of proﬁt or loss and other comprehensive income. (e) Impairment losses None of the Group’s receivables are past due (2018: nil). 19. OPERATING LEASES At the end of the reporting period, the future minimum lease payments under non-cancellable operating leases are payable as follows: 2019 2018 $000 $000 Not later than one year – 415 Later than one year but not later than ﬁve years – 1,749 Greater than ﬁve years – 268 In 2019, the Group fully assigned its Adelaide leased ofﬁce space and as a result no longer has any operating lease commitments. During the year, an amount of $0.096 million was recognised as an expense in proﬁt and loss in respect of the ofﬁce lease (2018: $0.432 million). ANNUAL REPORT 2 0 1 9 40 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 20. EXPLORATION EXPENDITURE COMMITMENTS In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum exploration work to meet the minimum expenditure requirements under the various exploration licences which are held. These obligations are expected to be fulﬁlled in the normal course of operations. Mining interests may be relinquished or joint ventured to reduce this amount. The State Government has the authority to defer, waive or amend the minimum expenditure requirements. 2019 2018 $000 $000 Not later than one year 3,066 1,956 Later than one year but not later than ﬁve years 130 1,681 21. CONTINGENCIES The Directors are of the opinion that there are no matters for which provision is required in relation to any contingencies, as it is not probable that a future sacriﬁce of economic beneﬁt will be required or the amount is not capable of reliable measurement. The Group’s bankers have provided guarantees amounting to $0.020 million to certain government bodies as security over the Group’s performance of rehabilitation obligations on certain tenements. Under the agreement, the Group has indemniﬁed the bank in relation to these guarantees. The guarantees are backed by deposits amounting to $0.020 million as at 30 June 2019 (2018: $0.020 million). The Group’s bankers are no longer required to provide a guarantee regarding ofﬁce operating leases as security over the Group’s obligations regarding the leases held. The Group has been fully released from its obligations and as such the guarantee has been cancelled and is no longer supported by a cash deposit (2018: $0.199 million). 22. RELATED PARTIES (a) Parent and ultimate controlling party Country of Ownership Interest Incorporation 2019 2018 Parent entity Rex Minerals Ltd Australia Subsidiaries Rex Minerals (SA) Pty Ltd Australia 100% 100% Rex Minerals (Iron Ore) Pty Ltd Australia 100% 100% Rex Hillside (Property) Pty Ltd Australia 100% 100% 41 1 9 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 22. RELATED PARTIES (CONTINUED) (b) Transactions with Key Management Personnel (KMP) (i) Loans to Directors There were no loans advanced to Directors for the year ending 30 June 2019. (ii) KMP compensation KMP compensation comprised the following: 2019 2018 $ $ Short-term beneﬁts 953,365 1,027,959 Post-employment beneﬁts 48,756 62,462 Share based payments 19,264 43,103 Other long-term beneﬁts 9,901 (130) 1,031,286 1,133,394 Information regarding individual Directors’ and Executive Ofﬁcers’ compensation and some equity instrument disclosures as permitted by Corporations Regulations 2M.3.03 are provided in the Remuneration Report section of the Directors’ Report on pages 16 to 22. There have been no changes to KMP between 1 July 2019 and the date of this report. (iii) Other KMP transactions A number of KMP hold positions in other companies that result in them having control or signiﬁcant inﬂuence over those companies. During the year, KMP related companies transacted with the Group. The terms and conditions of these transactions were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-KMP related companies on an arm’s length basis. Information regarding individual Directors’ and Executive Ofﬁcers’ compensation are provided in the Remuneration Report section of the Directors’ Report on pages 16 to 22. The aggregate value of transactions and outstanding balances related to KMP companies were as follows: Transaction values Balance payable year ended 30 June as at 30 June 2019 2018 2019 2018 Transaction $ $ $ $ Geological and IT Services 1 134,283 140,000 5,550 10,000 1 During the year, geological and IT consulting services were independently provided by a company jointly controlled by the Chief Financial Ofﬁcer. The contract terms are based on normal market rates for this type of service and amounts are payable under normal market terms. ANNUAL REPORT 2 0 1 9 42 REX MINERALS LTD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) 23. PARENT ENTITY DISCLOSURES As at, and throughout, the period ending 30 June 2019, the parent company of the Group was Rex Minerals Ltd. 2019 2018 $000 $000 Result of the parent entity Loss for the period (4,968) (5,082) Other comprehensive income – – Total comprehensive loss for the period (4,968) (5,082) Financial position of the parent entity at year end Current assets 2,796 4,266 Total assets 16,922 18,854 Current liabilities 782 651 Total liabilities 812 1,171 Total equity of the parent entity comprising of Share capital 196,269 192,910 Share based payments reserve 360 399 Accumulated losses (180,519) (175,626) Total equity 16,110 17,683 Parent entity contingencies The Parent entity’s contingencies are the same as the Group’s contingencies as detailed in Note 21. 24. SUBSEQUENT EVENTS Rex announced on 20 August 2019 completion of the acquisition of Hog Ranch Group Pty Ltd and has issued 9,353,849 fully paid ordinary shares as consideration to the vendors other than the CEO. The consideration to be issued to the CEO, together with the Hog Ranch Consideration Rights, are subject to shareholder approval at the upcoming AGM to be held in November 2019. Other than mentioned above, there has not arisen in the interval between the end of the ﬁnancial year and the date of this report any item, transaction or event of a material nature likely, in the opinion of the Directors of the Company, to affect signiﬁcantly the operations of the Group, the results of those operations, or the state of affairs of the Group in future ﬁnancial years. 25. AUDITORS’ REMUNERATION 2019 2018 KPMG Australia $ $ Audit services 48,128 48,175 Other services – – No non-audit services were provided in the current year. 43 REX MINERALS LTD DIRECTORS’ DECLARATION 1 9 (a) 1. 2. 3. In the opinion of the Directors of Rex Minerals Ltd (the Company): the consolidated ﬁnancial statements and notes and the Remuneration Report in the Directors’ Report, set out on pages 16 to 22, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s ﬁnancial position as at 30 June 2019 and of its performance for the ﬁnancial year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001. (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations required by section 295A of the Corporations Act 2001from the Chief Executive Ofﬁcer and Chief Financial Ofﬁcer for the ﬁnancial year ended 30 June 2019. The Directors draw attention to Note 2 to the consolidated ﬁnancial statements, which includes a statement of compliance with International Financial Reporting Standards. Signed in accordance with a resolution of the Directors: Mr Richard Laufmann Chief Executive Ofﬁcer Dated this 12th day of September 2019. ANNUAL REPORT 2 0 1 9 44 Lead Auditor’s Independence Dec Section 307C of the Corporations laration under Act 2001 To the Directors of Rex Minerals Limited I declare that, to the best of my knowledge and belief, in relation to the the financial year ended 30 June 2019 there have been: e audit of Rex Minerals Limited for i. ii. KPMG no contraventions of the auditor independence require C rp raations Act 2001 in relation to the audit; and por or ements as set out in the no contraventions of any applicable code of professio nal conduct in relation to the audit. Paul Cenko Partner Adelaide 12 September 2019 partnership and a member firm of the KPMG KPMG, an Australian network of independe International Coopera ent member firms affiliated with KPMG ative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the shareholders of Rex Minerals Limited R otidu aeh tn otrope RlaicannFiehf t troep O oninpi We have audited the innancial Report of Rex Minerals Limited (the Company). i al Fi In our opinion, the accompanying Financial Report of the Company is in accordance with the C rp raations Act 2001, including: por or t (cid:1) giving a true and fair view of the Group's financial position as at 30 June 2019 and of its financial performance for the year ended on that date; and (cid:1) complying with Austraaliaan Accounting Staand rdds t the Corp raations r por R egul ar and laations 2001. r i B orfsisa opi onni The Financial Report comprises: (cid:1) Consolidated staatem t of fiinanciaal position as a ent t f l i t 30 June 2019; (cid:1) Consolidated ent loss a statem t of pr fiit tof comprehensive income, Consolidated staatem t o ent in equity,, and Consolidated staatement of caash fllow f y year then ended; or r t c t f and other fof changes ws for the (cid:1) Notes including a summary of significant accountin g policies; and (cid:1) Directorss' De laraation. arcl r The Group consists of the Rex Minerals Limited (the C and the entities it controlled at the year-end or from tim during the financial year. Company) me to time We conducted our audit in accordance with Austraaliaan Auditing Staanda we have obtained is sufficient and appropriate to provide a basis for ou rardds. We believe that the aud ur opinion. t r i dit evidence Our responsibilities under those standards are further described in the the Financiaal Report section of our report. i Auditor’s responsibilities foor f the audit of We are independent of the Group in accordance with the C rp raations s Act 2001 and the ethical req of the Accounting Profeessional and Ethicaal Staandardds Boardd’s APE f Ethics for P S 110 C S Accountants (the Code) that are relevant to our audit of the Financial R Report in Australia. We have f other ethical responsibilities in accordance with the Code. ode of or r por lc or f r t f l quirements Pr feessional fulfilled our of K sertatMtiduAey The Keey Audiitt M ttt rss we identified are: er at id K (cid:1) (cid:1) Going concern basis of accounting; and Recoverable value of non-current assets. KKeey Aud professio significan the curre judgement, were ertMtiddiitt Maatterss are those matters onal nce in our audit of the Financia nt period. that, in our of most al Report of These m our audit in formin provide a atters were addressed in the of the Financial Report as a ng our opinion thereon, and separate opinion on these m e context of whole, and we do not atters. KPMG, an Australian partnership and a member firm of the KPMG wnet oork of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved Professional Standards Legislation. d under ccaofsisban reconcg noiG ount gni Refer to Note 2(b) to the Financial Repor ort The key audit matter the going conc The Group’s use of oncern basis of accounting and the associated extent o of uncertainty is a key audit matter due to the high lev vel of judgement required by us in evaluating the Group’ p’s assessment of going concern and the events or conditi ons that may cast significant doubt on their ability to cont ntinue as a going concern. These are outlined in Note 2(b) b). The Directors have determined that the e use of the going concern basis of accounting is approp priate in preparing the financial report. Their assessment of going concern was based on cash flow projections. The pr The preparation of these projections incorporated a numbe er of assumptions e Directors have judgements, and the and significant ssible outcomes range of pos the concluded ent does not give considered in arriving at this judgement gnificant doubt on rise to a material uncertainty casting signi ng concern. the Group’s ability to continue as a going We critically assessed the levels of uncertainty, as it related to the Group’s ability to continue as a going concern, within these assumptions and judgements, focusing on the following: that (cid:1) (cid:1) (cid:1) the Group’s planned levels of operational and capital expenditure, and the ability of the Group to manage cash outflows. the Group’s ability to raise additional funds from shareholders or other parties and the projected timing thereof This included source of funds and timing thereof. This included source of funds and feasibility of securing those funds; and the Group’s ability to divest land or utilise the land as security to raise additional funds if necessary. This included timing and quantum of potential proceeds. feasibility, projected the In assessing this key audit matter, we involved senior audit team members who understand the Group’s business, industry and the economic environment it operates in. How the matter was addressed in our audit Our procedures included: (cid:1) We analysed the cash flow projections by: - Evaluating the underlying data used to generate the projections. We specifically looked for their consistency with the Group’s intentions, as outlined in Directors minutes and their comparability to past practices; - Assessing the planned levels of operating and capital expenditures for consistency of relationships and trends to the Group’s historical results and our understanding of the business, industry and economic conditions of the Group; i t f f ti to d ti ibilit ability the Group’s - We assessed the Group’s ability to raise additional funds from shareholders or other pa arties for feasibility, quantum and timing, an nd their impact to going concern. We re ead Directors minutes to understand and as raise ssess ad dditional shareholder funds. We used our kn nowledge of the client, its historical ability to o raise funds, its industry and status to as ssess the level of associated uncertainty. - W We assessed the Group’s ability to divest lan nd or utilise the land as security to raise d dditional funds, if necessary. ad - W We evaluated the Group’s going concern sclosures in the financial report by di omparing them to our understanding of co e matter, the events or conditions th corporated into the cash flow projection in ssessment, the Group’s plans to address as ose events or conditions, and accounting th andard requirements. st veroecR lab e astenrruc-nonfoeuval sets Property, plant and equipment $14.401 Water infrastructure $4.076m Exploration and evaluation expenditure Collectively referred to as ‘non-current $1.645m assets’. m – Note 9 The key audit matter How the matter was addressed in our audit The Group's recoverable value of non- based on either the successful deve Hillside project or sale of the non-cur recoverable value of non-current asse matter due to: (cid:1) Significance of the balances to statements, being 88% of total ass The need for management to appropriate basis of assessing re which can be either: - A 'value in use' assessment (cid:1) judgement significant in de recoverable value of the Hillside the use of a feasibility model sensitive to changes in assump - A 'fair value' assessment whic data sourced from third partie comparable transactions which number and frequency. For the year ended 30 June 2019, a fa been adopted to determine the recove non-current assets. current assets is elopment of the rent assets. The ets is a key audit the financial sets; and determine the ecoverable value which requires etermining the e project due to which is highly ptions; or ch is based on s in relation to h are limited in air value basis has erable value of the Our procedures included: (cid:1) Assessing the the appropriateness methodology used to determine the value of assets with to Australian reference Accounting standards. of (cid:1) Checking the Group's assessment of the fair value of property, plant and equipment to data sourced by the Group from an external valuer. competence and objectivity of the Group's external valuers by gaining an understanding of their experience and qualifications. (cid:1) Assessing the scope, (cid:1) Checking the Group's assessment of fair value as the undeveloped ore resources of performed by the Directors. (cid:1) Evaluating the scope, competence and objectivity of the Group's internal experts who produced the Resource Statement utilised undeveloped within resources. valuation the of (cid:1) Obtaining details of comparable transactions the sale of undeveloped ore involving resources from our valuation specialists to h i f G f he Group's th inform our assessment of urces. valuation of undeveloped ore resou (cid:1) Assessing the Group's disclosure against the requirements of Australian Accounting Standards. ' O onitamornfIr eth Other Information is financial and non-financial information in Rex Minerals Limited’s annual reportin provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible fo Information. ng which is or the Other Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do n an audit opinion or any form of assurance conclusion thereon, with the exception of the Remunera and our related assurance opinion. not express tion Report In connection with our audit of the Financial Report, our responsibility is to read the Other Informatio so, we consider whether the Other Information is materially inconsistent with the Financial Re knowledge obtained in the audit, or otherwise appears to be materially misstated. on. In doing port or our We are required to report if we conclude that there is a material misstatement of this Other Inform based on the work we have performed on the Other Information that we obtained prior to the d Auditor’s Report we have nothing to report. mation, and date of this tocreiDethfoesitilibisnopesR rs htorf he icnanFi tropeRal The Directors are responsible for: (cid:1) (cid:1) (cid:1) preparing the Financial Report that gi gives a true and fair view in accordance with Austraaliaan Accounting Staandardds and the Corporaations Act 2001 2001; ardt r r i implementing necessary internal cont fair view and is free from material mis trol to enable the preparation of a Financial Report that gives a true and sstatement, whether due to fraud or error; and assessing the Group and Company's a concern basis of accounting is approp concern and using the going concern ba and Company or to cease operations, ability to continue as a going concern and whether the use of the going priate. This includes disclosing, as applicable, matters related to going n basis of accounting unless they either intend to liquidate the Group , or have no realistic alternative but to do so. A tidaue htrofesitilibisnopsers’rotidu t troepRlaicnanFie htfo Our objective is: (cid:1) (cid:1) to obtain reasonable assurance abou misstatement, whether due to fraud out whether the Financial Report as a whole is free from material or error; and to issue an Auditor’s Report that includes udes our opinion. Reasonable assurance is a high level of as with Austraaliaan Auditing Staandardds will alw ssurance, but is not a guarantee that an audit conducted in accordance ways detect a material misstatement when it exists. r r t i Misstatements can arise from fraud or er they could reasonably be expected to inf Financial Report. rror. They are considered material if, individually or in the aggregate, nfluence the economic decisions of users taken on the basis of the A further description of our responsibilities Assuraan e Standaardds Boardd website a description forms part of our Auditor’s Repor es for the audit of the Financial Report is located at the Auditing and at: http:///wwww.auasb.gov.au/auditors_responsibilities/ar1.pdf. This eport. rd ce // r r R e tpor itarunemeRheton eRon tpor Opinion Directors’ responsibilities In our opinion, the Remuneration Report of Rex Minerals Limited for the year ended 30 June 2019, complies with Section 300A of the C rp raations Act 2001. por or The Directors of the Company are responsible preparation and presentation of the Remuneration accordance with Section 300A of the C rp raations A e for the Report in Act 2001. por or Our responsibilities We have audited the Remuneration Report included ors report for the year ended 16 to 22 of the Directo 16 to 22 of the Directors’ report for the year ended 2019. d in pages d 30 June responsibility Our is Remuneration Report, accordance with Austraa r to express an opinion based on our audit cond ialiaan Auditing Staa daardds. rndt on the ducted in KPMG kClP Paul Cenko Partner Adelaide 12 September 2019 REX MINERALS LTD ADDITIONAL SHAREHOLDER INFORMATION 1 9 Additional information required by the Australian Stock Exchange (ASX) Listing Rules and not shown elsewhere in this report is set out below and the information was applicable as at 31 July 2019. Distribution of ordinary shares The number of shareholders, by size of holding: Total % of Range Holders Units Issued Capital 1 – 1,000 634 274,591 0.10 1,001 – 5,000 1,125 3,193,320 1.11 5,001 – 10,000 649 5,167,901 1.80 10,001 – 100,000 1,334 50,098,853 17.44 100,001 – 999,999,999 423 228,499,550 79.55 Total 4,165 287,234,215 100.00 The number of shareholders holding less than a marketable parcel: 2,060 Twenty largest shareholders The names of the twenty largest shareholdings of quoted ordinary shares are: Number of % of Name Shares Held Issued Capital 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Grand South Development Limited 14,653,777 5.10 BNP Paribas Noms Pty Ltd (DRP) 8,628,815 3.00 United Overseas Service Management Ltd 8,606,571 3.00 S & S Olsen Pty Ltd 5,752,000 2.00 Greenstone Property Pty Ltd (Titeline Property A/C) 5,345,531 1.86 Stone Poneys Nominees Pty Ltd (Chapman Super Fund A/C) 4,007,833 1.40 Panjeta Investment Group Pty Ltd 4,000,000 1.39 Mrs Vickie Jane Jones 3,750,157 1.31 Mrs Natalie Laufmann 3,500,000 1.22 Dr Susan Jane Winspear & Mr Timothy Charles Winspear (James S/F A/C) 3,500,000 1.22 HSBC Custody Nominees (Australia) 2,904,532 1.01 11. 12. Dr Steven G Rodwell 2,664,240 0.93 13. Mr Elliott Grant Wylie 2,600,000 0.91 Mr Paul Christopher Walker 2,188,976 0.76 14 ZW 2 Pty Ltd 2,150,000 0.75 15. 16. Ms Fei Chen 2,106,200 0.73 Program Images Pty Ltd (The Carland Super fund A/C) 2,022,888 0.70 17. BNP Paribas Noms Pty Ltd (UOB KH P/L AC UOB KH DRP) 1,916,979 0.67 18. HSBC Custody Nominees (Australia) 1,906,071 0.66 19. BNP Paribas Nominees Pty Ltd (IB AU Noms Retailclient DRP) 1,863,785 0.65 20. Total 84,068,355 29.27 Substantial shareholders There is one substantial shareholder lodged with the Company: Name Number of % of Shares Held Issued Capital Grand South Development Limited 14,653,777 5.10 Voting rights On a show of hands, every shareholder of fully-paid ordinary shares present in person or by proxy shall have one vote and upon a poll, each share shall have one vote. Stock exchange listing Rex Minerals Ltd is listed on the ASX. The Company’s ASX code is RXM. ANNUAL REPORT 2 0 1 9 50 REX MINERALS LTD NOTES for the year ended 30 June 2019 51 REX MINERALS LTD NOTES for the year ended 30 June 2019 1 9 ANNUAL REPORT 2 0 1 9 52 A B N 1 2 1 2 4 9 6 0 5 2 3 Designed and Produced by Celtink Creative info@celtink.com ANNUAL REPORT 20 19 STAY IN TOUCH A Level 6, 1 Collins Street Melbourne, Victoria 3000 T +61 (0) 8 8299 7100 P PO Box 3435 Rundle Mall, South Australia 5000 E rex@rexminerals.com.au W www.rexminerals.com.au ABN 12 124 960 523

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