A.B.N. 94 088 488 724
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
CONTENTS
CORPORATE DIRECTORY
ASX Announcement dated 30 October 2020:
2
Paulsens East Feasibility Study
Demonstrates Significant Cashflow
Generation and Financial Returns
Company Projects:
1. Paulsens East Iron Ore Project (WA)
1. Apurimac Iron Ore Project (Peru)
2. Solaroz Lithium Project (Argentina)
3. Burke Graphite Project (Queensland)
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss
and Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report
List of Mineral Concessions
Annual Mineral Resources Statement
JORC Code Competent Persons’
Compliance Statements
Additional ASX Information
51
55
61
65
70
81
88
89
90
91
92
93
113
114
118
119
121
124
The 2020 Corporate Governance Statement
can be found at the following URL
on the Company’s website:
http://strikeresources.com.au/corporate/corporate-governance/
Visit www.strikeresources.com.au for
• Market Announcements
• Financial Reports
• Corporate Governance
• Forms
• Email Subscription
BOARD
Farooq Khan
William Johnson
Victor Ho
Malcolm Richmond
Matthew Hammond
COMPANY SECRETARY
Victor Ho
Chairman
Managing Director
Director
Non-Executive Director
Non-Executive Director
PRINCIPAL AND REGISTERED OFFICE
Level 2
31 Ventnor Avenue
West Perth, Western Australia 6005
Telephone:
Facsimile:
Email:
Website:
(08) 9214 9700
(08) 9214 9701
info@strikeresources.com.au
www.strikeresources.com.au
AUDITORS
Rothsay Auditing
Chartered Accountants
Level 1, Lincoln House
4 Ventnor Avenue
West Perth, Western Australia 6005
Telephone:
Website:
(08) 9486 7094
www.rothsayresources.com.au
STOCK EXCHANGE
Australian Securities Exchange
Perth, Western Australia
ASX CODE
SRK
SHARE REGISTRY
Advanced Share Registry Limited (ASX:ASW)
Main Office:
110 Stirling Highway
Nedlands, Western Australia 6009
Local Telephone:
Telephone:
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Email:
Web:
1300 113 258
(08) 9389 8033
(08) 6370 4203
admin@advancedshare.com.au
www.advancedshare.com.au
Sydney Office:
Suite 8H, 325 Pitt Street
Sydney, New South Wales 2000
Telephone:
(02) 8096 3502
Investor Portal
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ANNUAL REPORT | 1
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
Friday, 30 October 2020
ASX Code: SRK
ASX MARKET ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates Significant
Cashflow Generation and Financial Returns
HIGHLIGHTS
•
•
•
•
•
•
•
•
•
Feasibility Study for Paulsens East Iron Ore Project confirms strong Project economics with net
cashflow of $167 Million and NPV of $140 Million over initial four-year mine life.
1.5 Mtpa production schedule for 4 years (6.0 Mt total), with an estimated 75% of production as DSO
Lump at 62% Fe which attracts premium pricing.
Low technical risk – conventional mining, crushing and screening and direct transport to bulk loading
facility at Port Hedland.
Low capital cost of $15.7 Million (including contingency).
LOM production underpinned by JORC Ore Reserve of 6.2 Million tonnes at 59.9% Fe, 7.43% SiO2,
3.77% Al2O3 and 0.086% P.
Targeting first ore production during the first half of 2021 with the mining approvals process well
underway.
Offtake and funding discussions well advanced.
Mining Proposal, Works Approvals and Project Management Plan advancing to fast-track approvals
for site-works commencement.
Investigations ongoing for further upside from potential for production of higher grade (63% - 64%)
products, extension of mine life and exploitation of surface detrital material.
Strike Resources Limited (ASX:SRK) (Strike) is pleased to report on the results from the Feasibility Study
(Study) undertaken for its Paulsens East Iron Ore Project (the Project) located in the Pilbara, Western
Australia.
The Study has confirmed the potential for the Project to generate $167 Million in net cashflows (pre-tax)
over a four-year life of mine (LOM) at an average Benchmark1 iron ore price of US$100/t (US$115/t declining
to US$85/t) for a pre-production capital cost of $15.7 Million.
If a Benchmark iron ore price of US$115/t (approximate to current levels) is sustained over LOM, the Project
has the potential to generate $279 Million in net cashflows.
Notes:
•
The Probable Ore Reserve that underpins the Study has been prepared by a Competent Person, with
a Competent Person’s Statement included in this announcement.
•
looking
The Company has concluded that it has a reasonable basis for providing the forward
statements included in this announcement. The detailed reasons for this conclusion are outlined
throughout this announcement.
‐
1 Benchmark price for 62% iron ore Fines CFR China
www.strikeresources.com.au
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
Level 2, 31 Ventnor Avenue, West Perth, Western Australia 6005
ASX : SRK
T | (08) 9214 9700
F | (08) 9214 9701
E | info@strikeresources.com.au
ANNUAL REPORT | 2
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Project Economics and Assumptions
The results from the Study together with key assumptions are summarised in the following tables, with further
details contained within the Feasibility Study - Summary section and the Appendices to this announcement.
Financial Metrics
Life of Mine Revenue
Operating Net Cashflow
NPV
IRR
Unit
A$M
A$M
A$M
%
Study Outcome
Benchmark
Iron Ore Price
US$115/t2
1,032
279
227
223
Operating Metrics
Production Rate
Average Strip Ratio
Initial LOM
Total Tonnes Processed
Average C14 Costs
Table 1: Study Financial Metrics (pre-tax)
Unit
Mtpa
Waste:Ore
Years
Mt
US$/t
Table 2: Study Operating Metrics
Study Outcome
Benchmark
Iron Ore Price
US$100/t3
906
167
140
213
Study Outcomes
1.5
3:1
4
6.2
64.8
Key Assumptions
Benchmark Price
Lump to Fines Ratio
Price received – Lump (62% Fe)
Price received – Fines (59% Fe)
US$/A$ Exchange Rate
Study Input
Benchmark
Iron Ore Price
US$115/t LOM
Unit
115
US$/t
75:25
Lump:Fines
127
US$/t
103
US$/t
0.70
US$/A$
Table 3: Study Key Assumptions (average over LOM)
Study Input
Benchmark
Iron Ore Price
US$100/t LOM
100
75:25
112
89
0.70
An economic model prepared by Strike forecasts an operating net cashflow of $167 Million (pre-tax) and a
net present value (NPV) of $140 Million (pre-tax) over an initial four-year mine life, at an average Benchmark
Price of US$100/t over LOM (US$115/t in the first year of production declining to US$85/t in the fourth year).
Estimated pre-production capital costs are approximately $15.7 Million (including contingencies), with an
internal rate of return (IRR) of 213%.
An average iron ore price of US$100 per tonne5 (62% Fe Fines, delivered CFR China) (Benchmark Price)
has been assumed over the LOM.
If the Benchmark Price is assumed to be at recent levels (US$115/t6) for the LOM, the forecast operating net
cashflow is $279 Million and pre-tax NPV is $227 Million over the four year LOM.
Average C1 cash costs free onboard (FOB) across the LOM are expected to be approximately US$64.8 per
tonne.
2 Constant over LOM
3 Average over LOM
4 C1 Costs include mining, processing, haulage, port handling, administration and marketing, but excludes royalties, shipping,
depreciation and capital charges.
5 The Benchmark Price is assumed to decline from US$115 per tonne in the first full year of production to US$85 per tonne in
the fourth year, equating to an average of US$100 per tonne over LOM
6 As at 28 October 2020
ANNUAL REPORT | 3
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
The forecast Project financial metrics (NPV, IRR and Operating Net Cashflows) are calculated and shown net
of applicable royalties but before deductions for tax. Strike will be subject to Australian corporate tax at an
assumed rate of 30% on its taxable income. Any tax payable may potentially be reduced by utilising Strike’s
carried forward tax losses, which currently totals ~$25 Million7.
Project Location
The Project is located ~10 kilometres from Northern Star Resources Limited’s (ASX:NST) Paulsens Gold
Mine, ~200 kilometres west of Paraburdoo (where a key ‘FIFO’ airport is located), and ~600 kilometres by
road from Port Hedland (refer Figure 1).
Figure 1: Paulsens East Project Location, West Pilbara
7 Subject to compliance with Australian tax laws
ANNUAL REPORT | 4
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Project JORC Mineral Resource and Ore Reserve
The Project consists of a three-kilometre-long outcropping high-grade hematite ridge, containing a JORC
Indicated Mineral Resource of 9.6 Million tonnes at 61.1% Fe, 6.0% SiO2, 3.6% Al2O3, 0.08% P (at a cut-
off grade of 58% Fe).8
As part of the completion of the Study, part of the JORC Indicated Mineral Resource has been converted to
a maiden JORC Probable Ore Reserve of 6.2 million tonnes at 59.9% Fe, 7.43% SiO2, 3.77% Al2O3 and
0.086% P (at a cut-off grade of 55% Fe).
Figure 2: Paulsens East Hematite Ridge
Project Production Details
Strike plans a 1.5 Million tonnes per annum (Mtpa) production schedule of direct shipping ore (DSO) over a
minimum four-year LOM (totalling approximately 6.0 Million tonnes). This initial production target has been
determined to facilitate fast track production of lower strip-ratio material at first instance, with the opportunity
to expand production once the initial production target is met and is underpinned by the Probable Ore Reserve
of 6.2 Million tonnes (within the Indicated Mineral Resource of 9.6 Million tonnes).
An open cut mine is proposed, with an average forecast waste to ore ratio of 3.0 over the first four years of
mining. Ore will be crushed and screened to produce DSO Lump and Fines products, with estimated average
product Lump grade of 62% Fe and Fines grade of 59% Fe over the LOM. Metallurgical testwork indicates
that a 75/25 (or higher) Lump/Fines split can be expected where Lump ore typically attracts a significant price
premium compared to Fines. An on-site laboratory will be established for ongoing analysis of ore samples to
manage grade control and ensure consistency of product grades.
Processed Lump and Fines products will be trucked from the mine to the Utah Point Multi-User Bulk Handling
facility at Port Hedland (Utah Point), predominantly by sealed road, where it will be stockpiled prior to being
loaded directly into ocean going vessels (OGV’s) for export to customers.
Mining, crushing and screening and haulage operations will be undertaken by specialist contractors with
overall supervision and management provided by Strike employed personnel.
Strike is targeting a Project development and execution timetable for first ore production to commence in the
first half of calendar 2021.
8 Refer Strike’s ASX Announcement dated 4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated
Category at Paulsens East Iron Ore Project
ANNUAL REPORT | 5
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Feasibility Study Development
Strike has a number of highly experienced Iron Ore Executives on its Board and Management Team. The
Study has been undertaken internally with assistance and oversight from project delivery and engineering
consultancy Engenium, together with contributions from external consultants. Capital and Operating Costs
have been predominantly obtained from proposals and quotations from selected experienced industry service
providers and contractors, supported by detailed estimates from external consultants.
Strike has a confidence level of +/- 15% in the Project’s forecast Capital and Operating Costs.
Project Opportunities
Opportunities identified with the potential to have a materially positive impact on the value of the Project
include:
•
•
•
•
•
Increasing the production rate materially above 1.5 Mtpa, given that Utah Point does not currently have
export capacity restraints.
Extending the LOM, underpinned by the balance of the existing JORC Indicated Mineral Resource
inventory.
Producing a higher grade (63 - 64%) product with Metallurgical testwork currently underway to confirm
this potential.
Exploration potential based on small hematite conglomerate outcrops along the surface and a drill
intersection located 1.6 kilometres along the hematite ridge at the south-eastern corner of the tenement
previously identified by Strike9 and more recently taken surface rock-chip samples grading 64.4% -
66.2% Fe identified at multiple locations in the same area.10
Exploration potential based on areas of surface detrital material identified north of the hematite ridge,
where screening and assay results from a sample showed a highly encouraging product grade of 60%
Fe, 6.4% SiO2 and 3.4% Al2O3 with a mass recovery of 83% on crushing to -32mm and simple wet
screening at +1mm size (refer Figure 3). 11
The exploration targets (referred to above) are conceptual in nature, there has been insufficient exploration
to estimate a JORC Mineral Resource in respect of the same and it is uncertain if further exploration will result
in the estimation of a JORC Mineral Resource in this regard.
9 Refer Strike’s ASX Announcements dated 4 December 2019: High Grade Results Located 1.6km from 9.6Mt Resource and 5
December 2019: Drilling and Surface Sampling Results at Paulsens East Iron Ore Project
10 Refer Strike’s ASX Announcements dated 15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential
at Paulsens East Iron Ore Project
11 Refer Strike’s ASX Announcement dated 14 October 2020: Discovery of High Grade Iron Rich Detritals at Surface at Paulsens
East
ANNUAL REPORT | 6
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Figure 3 - Paulsens East test pit at eastern end of outcropping hematite ridge with detritals in foreground
Key Project Risks
The key risks identified for the Project include:
•
•
•
•
•
•
•
A significant decline in the iron ore price from current and recent levels (currently the Benchmark iron
ore price is approximately US$115/t).
A significant strengthening of the Australian currency against the US currency.
Delays in obtaining necessary approvals/permits.
Maintaining steady state operations at the proposed annualised production rate whilst achieving
sustainable high grade products.
Realising the forecast level of premium pricing for the Lump product over LOM.
Cost escalations for key Project inputs such as fuel, staffing and shipping costs.
Shortages in suitable staffing/contractors due to COVID-19 travel restrictions.
Strike Managing Director, William Johnson:
“The completion of the Feasibility Study is another key milestone achieved in moving Paulsens
East towards production.
The continued strength to the iron ore price contributes to the robust economics of the Project,
which are driven principally by the high-quality nature of the iron ore contained within the deposit
and the low life of mine strip ratio.
The Project has the potential to generate very significant cashflows for Strike over an initial four-
year mine life with a relatively low capital cost requirement.
Furthermore, the Project has additional upside potential with opportunities identified to potentially
improve Fe grades, increase the production rate and extend the mine life”.
ANNUAL REPORT | 7
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
FEASIBILITY STUDY - SUMMARY
1.
Introduction
The Study has been overseen by project delivery and engineering consultancy Engenium, with inputs from
Strike internal staff together with external consultants and with proposals and/or quotations provided by
experienced industry participants as follows:
Feasibility Study Component
Study Management
Mining Schedule and
JORC Probable Ore Reserve
JORC Mineral Resource
Metallurgical Test work
Capital and Operating Costs
Civil and Earthworks
Mining, crushing and transport
costs
Logistics
Environmental
Marketing
Economic Modelling
Principal Input
Engenium
Harry Warries (MSc – Mine Engineering, FAusIMM), Principal,
Mining Focus Consultants Pty Ltd
Philip Jones (BAppSc (Geol), MAIG, MAusIMM) (Consultant)
ALS Metallurgy Iron Ore Technical Centre
Engenium and Strike
Engenium and contractors
Estimates/Quotations received from industry service providers
and facility operators
Strike
Ecologia Environmental Consultants
Mark Hancock, Principal, Haven Resources Pty Ltd
Strike
Table 4: Study Management and Contributors
2.
Tenement Status and Location
The Project is beneficially owned by Paulsens East Iron Ore Pty Ltd (ABN 96 643 291 230) (PEIOPL), being
a wholly-owned subsidiary of Strike.
The Project’s tenements comprise a Mining Lease M 47/1583 and various Miscellaneous Licences
(applications pending grant) to allow for the construction of a main access corridor to connect the mine to the
Nanutarra Munjina Road and an access corridor and site for a potential mining camp.
Tenement
Mining Lease
M 47/1583
Registered Holder
Orion Equities
Limited
Date Granted
4 September
2020
Date Expiry
3 September 2041
(initial term of 21 years)
Area
381.87 Ha
(~3.82km2)
Table 5: Paulsens East Tenement Details
The registered holder of M 47/1583 and applicant for the Miscellaneous Licences is Orion Equities Limited
(ABN 77 000 742 843) (ASX:OEQ) (Orion). The Project’s original tenements were acquired by the Strike
Group from the Orion Group in 2005 and 2008.12
M 47/1583 (centroid 22° 34' 8" S, 116° 20' 35" E) is located in the Pilbara region of Western Australia,
approximately 10 kilometres from the Paulsens Gold Mine (owned by Northern Star Resources Limited
(ASX:NST)), approximately 200 kilometres west of Paraburdoo, approximately 233 kilometres by road from
the Port of Onslow and approximately 600 kilometres by road from Port Hedland (refer Figure 1).
12 For further background details, refer to Strike’s ASX Announcements dated 20 September 2005: Acquisition of Uranium
Tenements and 11 August 2008: Acquisition of Outstanding Interests in Berau Coal and Paulsens East Iron Ore Projects.
ANNUAL REPORT | 8
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
3.
Iron Ore Mineralisation
Paulsens East consists of hematite iron ore mineralisation occurring as a ridge rising to approximately 60
metres above the valley floor and extending for approximately three kilometres West to East (refer Figures 4
and 5).
Figure 4: Satellite image of Paulsens East Ridge
Figure 5: Paulsens East Ridge, facing East
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
4.
JORC Ore Reserve and Mineral Resource Estimates
Table 6 summarises the Paulsens East JORC Indicated Mineral Resource within a 58% Fe lower grade cut-
off wireframe. The Indicated Mineral Resource extends from the surface to 75 metres below the deepest drill
intersection or the 150 metre RL (reduced level), whichever occurs first.
Mineral
Resources
Category
Indicated
Fe%
Range
Million
Tonnes
Fe%
SiO2%
Al2O3%
P%
S%
LOI%
>58
0.01
Table 6: Paulsens East Mineral Resource estimate using a 58% Fe lower cut-off wireframe.
0.08
61.1
3.6
6.0
9.6
2.1
Of the Indicated Mineral Resource referred to above, approximately 3 Million tonnes of 61% Fe (with 5.9%
SiO2 and 3.6% Al2O3) hematite material is estimated to occur above the base of the ridge (as defined by drill
hole collars) with minimal overburden.
Table 7 shows the Paulsens East JORC Indicated Mineral Resource for a range of cut-off grades.
Mineral
Resources
Category
Indicated
Indicated
Indicated
Indicated
Indicated
Indicated
Fe%
Range
Million
Tonnes
>60
>59
>58
>57
>56
>55
6.75
8.15
9.62
10.54
11.73
12.50
Fe%
62.05
61.61
61.13
60.82
60.38
60.08
SIO2%
AL2O3%
5.21
5.56
5.97
6.27
6.86
7.22
3.37
3.53
3.64
3.7
3.69
3.67
P%
0.08
0.08
0.08
0.09
0.09
0.09
S%
0.01
0.01
0.01
0.01
0.01
0.01
LOI%
1.92
1.99
2.13
2.20
2.27
2.35
Table 7: Paulsens East Mineral Resource estimate using a range of lower cut-off wireframes.
Table 8 summarises the JORC Probable Ore Reserve that has been converted from (and within) the JORC
Indicated Mineral Resource based on the outcomes of the Study (adopting a cut-off grade of 55% Fe to
produce a marketable product):
Ore Reserves
Category
Fe% Range
Million Tonnes
Fe%
SiO2%
Al2O3%
P%
Probable
6.2
Table 8: Paulsens East Mineral Resource estimate using a 58% Fe lower cut-off wireframe.
7.43
59.9
>55
3.77
0.086
The Ore Reserve is derived from the Indicated Resource and the Mineral Resources outlined above in Tables
6 and 7 are inclusive of the Ore Reserve.
Further technical details in relation to the above JORC Ore Reserve and Mineral Resource estimates are set
out in Appendices A, B and C.
5. Physical Characteristics of the Iron Ore Deposit at Paulsens East
The Paulsens East iron ore deposit comprises three main bands of iron rich hematite conglomerate mappable
as continuous bands along its three kilometre strike length. These bands were originally deposited in the
Proterozoic and formed by erosion of mineralised bedrock and its subsequent reconstitution. During
reconstitution, hematite pebbles were deposited and held together in hematite matrix along land and marine
interface such that the high purity heavy hematite conglomerate bands occur interbedded with ferruginous
quartzites and subordinate ferruginous clay.
There is a sharp boundary at 58% Fe in the drill holes at 1.0 metre (2006 drilling) and at 0.5 metre sample
widths (all subsequent drilling) and as such block modelling and resource estimation are based on a cut-off
grade of 58% Fe.
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
In outcrop, however, the high-grade material (+64% Fe) stands in sharp contrast with low grade intervening
siliceous material. The core of the deposit is generally very high grade and it is expected that sampling of
blast holes and sharp colour contrast will assist greatly in grade control.
6. Metallurgical Testwork
Figure 6: Paulsens East Rock Chip Sample
ALS Metallurgy Iron Ore Technical Centre (ALS IOTC) in Perth, Western Australia has conducted a series of
metallurgical tests for physical properties on bulk composite samples collected from various surface locations
across the entire length and width of the Paulsens East deposit in 2019.13
The composite sample had a head grade of 65.6% Fe, 3.41% SiO2 and 1.44% Al2O3. The composite head
grade of the testwork samples was obtained from material sourced from surface mineralisation across the
entire strike length of the deposit. The nature of the deposit, being a sharp ridge defined by an outcropping
steeply dipping slope face of 30 to 40 metres in height, means that the test samples are likely to be reasonably
typical of the physical properties of the initial mined material.
Figure 7 below shows the sharp ridge-like character of the deposit.
Figure 7: The Ridge-form hanging Wall of the Paulsens East Iron Ore Deposit
13 Refer Strike’s ASX Announcement dated 10 October 2019: Outstanding Metallurgical Testwork Results at Paulsens East
Iron Ore Deposit Indicate 79% Lump Yield with Low Impurities
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STRIKE RESOURCES LIMITED
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ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Specific gravity tests were also completed on twenty separate samples.
Subsequent to the completion of this testwork (the results of which are summarised below in Section 6.1) a
Bulk Sample programme was completed from an excavated test-pit on-site during August 2020, from which
approximately 3,000 kilogrammes of representative Ore/Waste and transition material was collected and sent
to ALS IOTC laboratories for further testwork (refer Figure 8).14
Figure 8: Paulsens East test pit at eastern end of outcropping hematite ridge
The test pit excavated for the Bulk Sample clearly exposed the multiple bands of high-grade hematite iron
ore, which extend to depth and three kilometers east to west along strike (refer Figure 9).
14 Refer Strike’s ASX Announcement dated 2 September 2020: Test Pit and Bulk Samples to Advance Offtake Agreements
Completed at Paulsens East
ANNUAL REPORT | 12
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Figure 9: High grade hematite iron ore bands extending from top of ridge to depth
6.1. 2019 Test Work Overview
The following results are from 2019 testwork undertaken by ALS IOTC.
Lump and Fines (Stage Crush and Drop Tower)
The stage crush and drop tower test results indicate that 79% of crushed material is likely to be
classified as ‘Lump’ material (> 6.3 mm < 32.5mm in size), which typically attracts a price premium
(depending upon market factors at the time of sale) over ‘Fines’ material (< 6.3 mm) of the same grade.
The testwork also indicates that the Lump material is likely to be approximately 2% Fe higher in grade
than that of the Fines material, which will also potentially attract a further price premium for the Lump
material.
Assays of the material taken after the drop tower test confirmed that both the Lump and Fines materials
are likely to be exceptionally low in deleterious elements such as phosphorous (~0.05%) and sulphur
(~0.008%), which can otherwise result in price penalties.
Crush Work Index
The crush work Indices for the samples varied from 27.4 to 6.5, averaging 15.3 kwh/tonne.
Tumble Index
Tumble Index of Lump material varied from 95.6% to 95.9%, averaging 95.8%, an excellent result
indicating that there is likely to be minimal degradation of the Lump material during handling and
transportation.
Specific Gravity
Specific Gravity (SG) measurements on twenty samples (averaging 65% Fe) returned a consistent
result of 4.80. It should be noted that JORC Indicated Mineral Resource estimate is based on an
assumed SG of 4.2, taking into account dilution and a low-grade envelope.
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Further SG measurements are planned on lower grade material and waste in outcropping areas and
at depth in drill holes, for mine planning purposes and to determine the potential for an increase in
resource size and a decrease in mining strip ratios.
A summary table of metallurgical testwork results is in Table 19 in Appendix D.
6.2. 2020 Test Work Overview
The current series of testwork programmes being undertaken by ALS IOTC on the material recovered from
the Bulk Sample (collected in August 2020) are designed to prepare and analyse indicative ROM primary
crusher ore feed samples for ongoing metallurgical testing and beneficiation testwork.
The samples (High Grade Hematite and Waste Ores) have been crushed into Lump and Fines products for
ore characterisation and grades/impurity level analyses.
Blended Lump and Fines products constituting a 90:10 blend of High Grade Hematite : Waste ore have been
prepared for representation as potential product samples for marketing. The head-grade analyses of these
samples are presented Table 18 in Appendix D.
The beneficiation testwork programme will review the physical and metallurgical characterisation of the Lump
and Fines products at varying Hematite: Waste ore ratios to determine the optimal final product (Fe) grade
versus plant recovery percentages – via varying ore beneficiation methodologies. This testwork will assist
with optimising the design of the crushing and screening plant.
The completion of the testwork on the Bulk Sample is still pending as at the date of release of the Study.
7. Mining
Iron mineralisation in the tenement (M 47/1583) crops out as a ridge up to ~60 metres above the valleys on
either side. It occurs as continuous bands of iron rich conglomerate with a cumulative width averaging 6.3
metres extending over a strike distance of approximately three kilometres.
It is proposed to mine the deposit using experienced contract mining and drill and blast operators, using
conventional diesel-powered tracked excavators and off-road haul trucks. Mining will be open cut and is
expected to occur above the water table, so no dewatering will be required.
The proposed Mine Schedule is based on JORC Ore Reserve Model using a Fe cut-off grade of 55% and
assuming a 10% ore loss, delivering 6.2 million tonnes of ore to the run of mine (ROM) at an average grade
of ~60% Fe over the LOM of 4 years.
Pre-production works are estimated to take approximately four months, which will include:
•
•
•
•
Establishing sufficient operating ramps and initial mining benches that will ensure the required mill feed
will be achieved on a sustainable basis;
Establishing the mine haul roads from the ridge and pit to the ROM pad and waste dumping areas;
Managing the generation of mine waste to build up the Mining Operations Centre (MOC) infrastructure
pads, including the associated ROM pad, waste and topsoil stockpiles and South East Waste Dump
access road; and
Building strategic ROM inventories equivalent to a minimum of four weeks of primary crusher feed,
ready for commissioning of the process plant and for long-term operational risk management and
supply contingency.
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Iron ore mineralisation outcrops on top of the ridge, which protrudes between approximately 40 to 60 metres
above its base. It is envisaged that a ‘pioneering mining fleet’, comprising a small 50 tonne excavator and
associated articulated dump trucks (ATD’s), together with two drill and blast drill rigs, will be required in the
first instance to access the top of the ridge, as well as establishing and mining the first few benches.
Once the pioneering fleet has established three to four mining benches across the upper portion of the ridge
surface, the production mining fleet will commence mining. The production fleet will utilise a 105 tonne
excavator, with waste and ore transported to waste dumps and the ROM pad respectively using 100 tonne
payload dump trucks.
Production is forecast to progressively ramp up to an annualised production rate of 1.5 Mtpa of ore within
eight months of the pioneering Mining Fleet commencing work. Mining is expected to transition from day shift
only to day and night shifts once pre-production and pioneering are complete. Suitable lighting will be
provided in the working areas (including at dump locations) to allow safe operations at night.
Ore will be mined on 5 metre bench heights and 2.5 metre flitches to facilitate accurate grade control.
For the purposes of the Mining Schedule in the Study, the mine has been divided into the ‘Main Pit’ (including
Starter Pit and Final Cutback) and the ‘West Pit’. The Main Pit is further divided into five ‘Slices’. The Mine
Schedule envisages mining commencing at the Main Pit Starter Pit, comprising Slices 1, 2 and 3 as well as
the West Pit (refer Figures 10, 11 and 12).
Slice 1, Slice 2 and Slice 3 of the Main Pit Starter Pit are completed in the second half of Year 2. During the
same year, the Main Pit transitions into the final cutback of the pit, which effectively mines the pit to its final
depth.
Slice 4 of the Main Pit would be commenced in the first quarter of Year 1, when its upper benches are
established by the pioneering fleet. At this point in time, Slice 4 would be mined independently from Slice 1,
Slice 2 and Slice 3. However, in the second half of Year 2, Slice 4 catches up with the remainder of the Main
Pit and is mined together with the rest of the Main Pit Final Cutback.
Figure 10: Mining Schedule Pit Design
In the first year of mining, the waste to ore ratio will average 2.7:1. As mining becomes progressively deeper,
the waste to ore ratio will increase but the overall waste to ore ratio over the four-year life of mine is still
expected to be relatively low at 3.0:1
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The pit slope is estimated vary between 26 degrees to 44.5 degrees along the footwall and 44.5 degrees
along the hanging wall (north wall). The average slope along the north wall will reduce to 40 degrees, taking
into account a haul road along the north wall (refer Figure 11).
Figure 11: Pit cross section designs
Total waste movement is expected to be approximately 19 Million tonnes over LOM. Waste will be dumped
in two dump locations with the main waste dump to be located south east of the pit on the southern side of
the ridge (Waste Dump 1) with a second waste dump located north east of the pit (Waste Dump 2) (refer
Figure 12). Waste material is predominantly indurated ferruginous siliceous sandstones, quartzite and
massive basalt. No sulphide materials have been encountered in exploration drilling and there is very low
potential for any acid forming materials to be present in the dumped waste material.
A diversion channel will be constructed to divert an existing creek system around Waste Dump 1 (see Figure
12).
ROM pad, crushing and screening infrastructure as well as truck loading, workshops and fuel depot are
proposed to be located on a low-lying dolomite ridge to the east of the pit, outside a 500m blasting exclusion
zone and located as close as practicable to the ore body (refer Figure 12).
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8. Processing
Figure 12: Study Mine Layout
The Ore Processing Facility involves the primary and secondary crushing of ROM ore and screening over a
tri-deck screen to produce separated Lump and Fines stockpiles.
The Primary (jaw) Crusher will be fed by a front-end loader from the ROM pad and will reduce (crush) the ore
from -750mm to a P90 of -150mm at a rate of 500 tph (dry) of ROM ore. The Secondary (cone) Crusher will
receive 500 tph (dry) of primary crushed ore (at -150mm). The cone crusher settings will be designed to
maximise Lump production, in preference to Fines. The ore discharged from the Secondary Crusher will be
conveyed to a triple-deck screen, to segregate the Lump from the Fines ore (by size fractioning) and return
any/all +32mm material back to the Secondary Crusher for re-processing.
The ore that passes through the top two decks but does not pass through the bottom deck (being -
32mm/+6.3mm ore) will be considered a Lump product. The ore would be transported by a purpose-sized
conveyor (rated for 500tph (dry) with a nominal operating rate of approximately 375-400 tph (dry)) and
telescopic stacker, to the Lump stockpile.
Metallurgical testwork indicates that the Lump to Fines production ratio is likely to be better than 75% Lump
to 25% Fines and that the Lump product is likely to be on average 2% higher grade than the Fines product
(refer Table 8).
Product
Lump
Fines
Size
> 6.3mm < 32mm
< 6.3mm
Proportion
> 75%
< 25%
LOM Average Grade
62% Fe
59% Fe
Table 8: Lump and Fines Specifications.
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Head Grade analyses of a 90:10 blend of high-grade hematite:waste from the August 2020 Bulk Sample
confirmed that a 62% Lump product low in alumina and a 59% Fines product with a moderate level of alumina
can be achieved from the Ore Reserve.15
An ore loss of 4% has been assumed through the processing circuit.
An on-site laboratory will be established for ongoing analysis of ore samples to manage grade control and
ensure consistency of product grades.
Prior to haulage, crushed ore will be conditioned with water to ensure that the moisture content of the ore is
suitable for transport, stockpiling at the port and shipping (approximately 4%-5% by weight).
9. Operations Camp
Local accommodation and services will be required to cater for up to 80 persons operating on-site, including
Strike personnel and contractors.
Strike is currently negotiating to utilise an existing mining camp at a neighbouring project which is currently
on care and maintenance and which has sufficient capacity to accommodate the Project’s requirements
during construction and on-going operations.
As an alternative (should agreement not be reached on the use of the neighbouring camp facilities), Strike is
planning for the construction of a dedicated 80 person mining camp at its own site approximately 3 kilometres
south of the mine operations area.
Communications to the mining operations area will be provided by a dedicated high bandwidth microwave
service or via satellite. A dedicated radio network will operate at the mine site to enable efficient site
communications between operations staff.
The mine site will operate on day and night shifts. Site personnel will be working mostly on a two week on,
one week off roster. Staff will travel to and from site via Paraburdoo or Onslow Airports, from where they will
be transported by bus to/from site.
The re-commissioning of a local (Wyloo) airstrip (previously used for charter flights to service the Paulsens
Gold Mine) is also being considered as an alternative.
An approximately 18 kilometre long all-weather haulage road will be constructed to connect the mine site to
the bitumen Nanutarra Road, with a junction to the Nanutarra Munjina Road designed to accommodate the
trucking fleet proposed to transport iron ore to Utah Point in Port Hedland.
10. Water
Water for mining operations, ore conditioning, dust suppression will be sourced from local bores to be located
within the Mining Lease.
Three water bores have been drilled on the Mining Lease with pump testing demonstrating the potential to
provide sufficient water for construction and mining operations. Strike will be applying for a water licence to
take water from these bores for mining operations.
15 Refer also Section 6 (Metallurgical Testwork) and Appendix D
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11. Civil Works
Early civil and earth works (prior to mining operations) will be required for:
•
•
•
•
•
•
•
Construction of the haulage road from the mine site to Nanutarra Road.
Construction of the access road for the proposed mining camp.
Levelling and site preparations for mining camp construction.
Levelling and site preparations for the Mining Operations Centre (MOC), ROM pad and other mine site
facilities/infrastructure.
Establishment of water bores (on sites already drilled and pump tested) and water storage facility and
fuel farm.
Excavation of a creek diversion for Waste Dump 1.
Construction of access ramps and haul roads for mine operations.
12. Haulage
Crushed ore will be loaded onto four trailer (‘quad’) road trains, which will transport crushed Lump and Fines
ore from the mine to a receiving stockpile bunker area at the Utah Point Multi-User Bulk Handling facility
(Utah Point) at Port Hedland.
Strike has entered into a Memorandum of Understanding (MOU) with Campbell Transport Pty Ltd, as Strike’s
preferred haulage contractor.16
Contract negotiations are currently ongoing regarding the final commercial terms of the haulage
arrangements.
13. Port Facility
Utah Point was opened in 2010 and is operated by the Pilbara Ports Authority (PPA). It was established to
provide multi-user access to port facilities and export markets, with an environmental licence to load
approximately 24 Million tonnes of bulk material per year.
Utah Point will require no direct capital investment by Strike at the port, as there is already a well-established
and operational facility present specifically designed for iron ore.
The PPA currently has stockpile and throughput capacity for the proposed production rate of 1.5 Mtpa for the
Project.
The facilities at Utah Point allow for direct access and dumping of ore from Quad road trains into the ore
hoppers (or bunkers) at the stockpile area, with no requirement for any intermediary stockpiles or double
handling of ore. Ore can be loaded rapidly at a rate in excess of 4,000 wet tonnes per hour directly into the
hold of Panamax or Mini-cape vessels, with cargo capacities up to 110,000 tonnes.
Strike is currently in discussions with the PPA regarding the final commercial terms for the use of Utah Point.
14. Shipping
It is envisaged that an average of 12 - 15 shipments of ore per year will be undertaken, each with a cargo of
approximately 110,000 tonnes. The shipments will be scheduled to enable the export of the targeted 1.5 Mtpa
of production.
16 Refer Strike’s ASX Announcement dated: 29 April 2020: MOU Executed for Iron Ore Haulage Services with Campbell Transport for
Paulsens East Iron Ore Project
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15. Product Marketing and Sales
The current strong iron ore price is being driven primarily by economic stimulus in China and sustained supply
constraints out of Brazil, where ongoing tailings dam management issues and the impact of the COVID-19
pandemic on various of Vale’s operations have resulted in them continue to deliver at the low end of guidance
and well below nameplate capacity.
Strike is of the view that these factors will continue to support high iron ore prices in the near to medium term.
The Lump and Fines products to be produced are expected to be high grade (approximately 62% Fe and
59% Fe respectively over LOM), with some moderate levels of impurities alumina and silica reporting mainly
to the Fines.
Lump iron ore typically attracts a significant price premium compared to Fines material of similar grade, which
has been reflected in the economic model.
An allowance for potential discounts to benchmark prices due to grade and impurities has also been made,
as well as an allowance for marketing and shipping costs.
Discussions are ongoing with multiple potential offtake parties and customers. Whilst Strike has not yet made
any firm binding commitments, discussions with several parties are well advanced.
16. Environmental
The initial field work for a reconnaissance flora and vegetation survey and Level 1 fauna and fauna habitat
assessment has been completed over the Project area and will be incorporated into the preparation of a
Mining Proposal for submission to the Western Australian Department of Mines, Industry Regulation and
Safety (DMIRS).
During the field work, evidence of Northern Quoll (Endangered EPBC Act and BC Act) was recorded on
motion sensors and cameras. Strike will develop a strategy to minimise and impact the Project may have on
the Quoll habitat.
No other significant environmental issues have been identified at this stage.
17. Heritage Survey and Native Title
A Heritage Survey over the main Project area was undertaken with representatives of the Puutu Kunti
Kurrama & Pinikuras (PKKP) traditional owners in March 2020, with the main hematite ridge being cleared
(approved) by the PKKP for mining. A further Heritage Survey is planned for November 2020 to clear several
remaining areas associated with infrastructure (haul road, waste dumps, camp etc.).
On 14 August 2020, Strike entered into a Native Title Mining Agreement (Native Title Agreement) and State
Deed (for the grant of a mining lease) with the PKKP Aboriginal Corporation RNTBC (PKKPAC). The
PKKPAC holds native title on trust for the benefit of the Puutu Kunti Kurrama and Pinikura People (PKKP)
Traditional Owners. 17
The Native Title Agreement provides an agreed framework for Strike to undertake its mining activities at the
Project in a way that minimises any impacts on Aboriginal Cultural Heritage. The agreement has a strong
focus on protection of Aboriginal heritage and includes effective safeguards for the care and protection of the
lands and rights of the PKKP peoples.
Strike has also agreed to provide a package of financial and business development related benefits for the
PKKP, including an annual payment based on the value of iron ore sales, an annual training and development
allowance for PKKP members together with opportunities for PKKP members to contract for the provision of
certain support operations related to the Project.
17 Refer Strike’s ASX Announcement dated 17 August 2020: Native Title Agreement Paves Way for Iron Ore Development
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18. Royalties
A 7.5% Royalty on gross iron ore revenues (excluding shipping costs) to the Western Australian State
Government has been factored into the economic model.
Strike also has a liability to pay Orion Equities Limited (ASX:OEQ) a royalty of 2% of gross revenues
(exclusive of GST) from any commercial exploitation of any minerals from the Project - this royalty entitlement
stems from Strike’s acquisition of a portfolio of tenements (including the Paulsens East tenement) from Orion
in September 2005.12
19. Capital and Operating Costs
Strike envisages using contract mining, crushing, haulage and transport operators where possible to minimise
upfront capital costs.
A breakdown of expected capital and pre-start costs is included in Table 9 below:
Capital/Pre-Start Costs
Mining Administration Centre Setup
Water Bores, Fuel storage etc.
Civil Works – MOC
Haul Road Construction
Earthworks and Civils
Mobilisation and Setup
Mining Pre-Production
Contingency
Total
A$M
1.1
1.0
1.4
5.3
1.9
2.4
1.9
0.7
15.7
Table 9: Expected Capital and Pre-Start Costs
The Study envisages that local accommodation and camp services will be available for up to 80 Strike
personnel and contractors at a neighbouring mine camp facility, which is currently on care and maintenance.
As an alternative (should agreement with not be reached with the owners of the neighbouring mine camp
facilities), Strike is planning for the construction of a dedicated 80 persons mining camp at a site approximately
3 kilometres south of the mine operations area, which would add approximately $2.6 Million in capital cost to
the Project.
Operating costs have been estimated based mainly upon proposals and/or quotations received from
experienced industry participants, potential contractors and service providers with input from external
consultants, with annual and average costs over LOM in Table 10 below:
Financial Metrics
C1 Cost Year 1
C1 Cost Year 2
C1 Cost Year 3
C1 Cost Year 4
Average C1 Costs4
Unit
US$/t
US$/t
US$/t
US$/t
US$/t
Study Outcome
62.1
66.4
61.3
68.6
64.8
Table10: Expected C1 Costs
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20. Economic Modelling
An economic model has been prepared by Strike, using inputs from various sources as summarised in Table
11 below:
Model Input
– Capital and Pre- Start Costs
Mine Operations Establishment
Haul Road Construction
Civil and Earth Works
Model Input – Operating Costs
Management and Mine Camp Operations
Mining and Crushing Costings
Haulage Costs
Port Operations
Shipping Costs
Iron Ore Pricing
Royalties
Contingency
Principal Source
Engenium / Contractors
Engenium / Contractors
Engenium / Contractors
Principal Source
Strike / Contractors
Strategic Mines (Consultant) / Contractors
Contractors
Port Operator
Shipping Agent
Published Benchmark pricing / Strike
/ Haven Resources Pty Ltd (Consultant)
State Government of Western Australia
Strike
Model Input – Mining Schedule
Mining Schedule
Principal Source
Mining Focus Consultants Pty Ltd
Table 11: Sources of Economic Model Inputs
The majority of the cost estimates used in the Study are based upon proposals and/or quotations from suitably
experienced industry participants with input from external consultants. Strike believes that it is reasonable to
attribute a +/- 15% level of confidence to the estimated capital costs and an overall +/- 15% to the operating
costs.
A production rate of approximately 1.5 Mtpa has been selected for the first 4 years, with total production over
the LOM of 6.0 Million tonnes. This schedule has been selected taking account of the physical characteristics
of the deposit, the capacity and constraints of potential mining and processing contractors.
An average Benchmark Price of US$100 per tonne5 (62% Fe Fines, delivered CFR China) has been assumed
over the LOM, an approximately 13% discount to the prevailing iron ore at the time of this Study
(approximately US$115/t)7.
It is assumed that during the LOM and using the Benchmark Price as a base, the average Lump price received
will be at a premium price to the 62% Benchmark Price taking account of the premium expected for the Lump
ore. The average price received for the Fines ore is assumed to be at a discount to the 62% Benchmark
Price, taking account of assumed discounts/penalties associated with impurities and grade relative to the 62%
Benchmark Price index.
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Key inputs used for the economic model are highlighted in Table 12 below:
Key Inputs
US$/A$ Exchange Rate
Total Ore Production
Mine Life
Annual Ore Production
Lump: Fines Ratio
Processing Losses
Mining and Processing Costs
Haulage and Port Costs
Shipping Costs
Benchmark Iron Ore Price 62% Fines CFR China
Lump Premium (per dry metric tonne unit)
Price Received – Lump
Price Received – Fines
Discount Rate
Units
US$/A$
Mt
Years
Mtpa
Lump:Fines
%
A$/t
A$/t
A$/t
US$/t
US$/dmtu
US$/t
US$/t
%
Value
0.70
6.0
4
1.5
75:25
4
29
56
13
100
0.20
112
89
8
20.1. Economic Model Results
Table 12: Economic Model Inputs
The results of the economic modelling based upon the assumptions above are summarised in Table 13 below:
Economic Model - Financial Metrics
Life of Mine Revenue
Operating Net Cash Flow
NPV
IRR
Capex Payback Period
Study Outcomes
906
167
140
213
9
Table 13: Economic Model Operating and Financial Metrics (pre-tax)
Unit
A$M
A$M
A$M
%
Months
The forecast Project financial metrics (NPV, IRR and Operating Net Cashflows) are calculated and shown net
of applicable royalties but before deductions for tax. Strike will be subject to Australian corporate tax at the
assumed rate of 30% on its taxable income. Any tax payable may potentially be reduced by utilising Strike’s
carried forward tax losses, which currently total ~$25 Million.7
The economic model confirms the Project has the potential to generate an attractive economic return with an
operating net cashflow of $167 Million (pre-tax) and NPV of $140 Million (pre-tax) over a four-year mine
life, assuming an average Benchmark Price of US$100 per tonne5 (currently approximately US$115/t6).
If the Benchmark Price is assumed to be at recent levels (US$115/t) for the LOM, with other assumptions
unchanged, the forecast pre-tax operating net cashflow increases to $279 Million and NPV increases to
$227 Million.
The average C1 Cost (over LOM) is forecast to be US$64.8 per tonne. The Project is expected to be able to
continue to generate positive cashflow throughout the four-year mine life if the Benchmark iron ore price
remains above approximately US$80/t (currently ~ US$115/t), the assumed premiums and discounts to the
Benchmark Price index for product delivered remain and at an assumed constant US$/A$ exchange rate of
0.70.
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20.2. Sensitivity
A sensitivity analysis on the financial model highlights that the Project value is most sensitive to the
following variables:
•
•
•
•
Iron ore price;
US$/A$ exchange rate;
Lump Premium price; and
Haulage Costs.
For example, a 10% increase in the average Benchmark iron ore price to US$110/t over the LOM would result
in a 42% increase in forecast NPV to approximately $199 Million (pre-tax). Conversely, a 10% decline in the
average Benchmark iron ore price to US$90/t over LOM would result in the expected NPV for the Project
reducing to approximately $81 Million (pre-tax).
Figure 13 below highlights the sensitivities of the Project NPV to changes in various inputs:
Paulsens East Sensitivity Anaysis
NPV
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
-
-10% -8% -7% -6% -5% -4% -2% -1% 0%
1%
2%
4%
5%
6%
7%
8% 10%
62% Fines Benchmark Price
Exchange Rate
Haulage Costs
Mining and Processing Costs
Lump Premium
Figure 13: Sensitivity Analysis - Benchmark Iron Ore price, exchange rate and operating costs
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21. Opportunities
There are clearly defined opportunities that may significantly improve the economic and operational
performance of the Project as described in this Study. Such improvements, which will be the focus of ongoing
analysis and testing, include the potential for:
•
•
•
•
•
•
Increasing the production rate materially above 1.5 Mtpa, given that Utah Point does not currently have
export capacity restraints.
Extending the LOM, underpinned by the balance of the existing JORC Indicated Mineral Resource
inventory.
Improvements in operational efficiencies relating to the transport logistics (mine to port to ship).
Producing a higher grade (63 - 64%) product with Metallurgical testwork currently underway to confirm
this potential where surface sampling has indicated the extensive occurrences of higher grades of iron
(64% – 66% Fe) than those currently assumed as average product grades (59% - 62%) in Strike’s
economic model.
Exploration upside based on small hematite conglomerate outcrops along the surface and a drill
intersection located 1.6 kilometres along the hematite ridge at the south-eastern corner of the tenement
previously identified by Strike9 and more recently taken surface rock-chip samples grading 64.4% -
66.2% Fe identified at multiple locations in the same area.10
Exploration upside based on areas of surface detrital material identified approximately 100 metres
north of the hematite ridge, where screening and assay results from a sample showed a highly
encouraging product grade of 60% Fe, 6.4% SiO2 and 3.4% Al2O3 with a mass recovery of 83% on
crushing to -32mm and simple wet screening at +1mm size (refer Figure 3).11
The exploration targets (referred to above) are conceptual in nature, there has been insufficient exploration
to estimate a JORC Mineral Resource in respect of the same and it is uncertain if further exploration will result
in the estimation of a JORC Mineral Resource in this regard.
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22. Risks
The key risks identified for the Project include:
•
•
•
•
•
•
•
A significant decline in the iron ore price from current and recent levels (currently the Benchmark iron
ore price is approximately US$115/t).
A significant strengthening of the Australian currency against the US currency.
Delays in obtaining necessary approvals/permits.
Maintaining steady state operations at the proposed annualised production rate whilst achieving
sustainable high-grade product quality.
Realising the forecast level of premium pricing for the Lump product over LOM.
Cost escalations for key Project inputs such as fuel, staffing and shipping costs.
Shortages in suitable staffing/contractors due to COVID-19 travel restrictions.
23. Approvals
The following key approvals/agreements/permits are still required from the relevant parties/authorities:
•
•
•
•
•
•
•
•
•
DMIRS approval of a Mining Proposal (and ancillary matters) to conduct mining operations on Mining
Lease M 47/1583.
Grant of Miscellaneous Licences, including for construction of the haul road (from Nanutarra Road to
mine site).
Dangerous Goods Transport and Storage licence(s) – for drill and blast activities and fuel storage.
DMIRS and Local Shire Works Approvals for mine site construction.
DMIRS Native Vegetation Clearing Permits, including for drilling and ROM pad/processing plant
footprints.
Department of Water and Environmental Regulation (DWER) approvals, including a water and
borefield extraction licence/permit and Beds and Banks approval for creek diversion.
Main Roads WA approvals, including for the construction of the haul road that intersects with Nanutarra
Road and road haulage (including truck configuration and axle loading).
Access Agreement with the Pilbara Ports Authority (PPA) for stockpile and loading at Utah Point.
Agreement for use of nearby mining camp for worker accommodation.
24. Timing
Strike envisages that with reasonable assumptions concerning the receipt of necessary approvals and funding
(in particular the receipt of DMIRS approval of the Mining Proposal during December 2020) first production
from the Project could commence in the first half of calendar 2021.
To achieve this goal, Strike is targeting the following key milestones:
Key Activity
DMIRS approval of Mining Proposal
Commercial Contracts/Agreements
Final Investment Decision
Financing
Mobilisation/Construction
Mine Commissioning
Target Date for Completion (2020/2021)
December 2020
December 2020/January 2021
December 2020
December 2020
January 2021
May 2021
Table 14: Project Milestones
ANNUAL REPORT | 26
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
25. Funding
Strike believes there is a reasonable basis to assume the necessary funding for the Project will be obtained,
for the following reasons:
(a)
(b)
Strike has been able to raise funding for its exploration and development over the past 15 years in
order to progress its projects. During this time, Strike has successfully raised over $100 Million in
equity to fund its various projects. During 2019/2020, Strike raised approximately $2.8 Million equity
capital from professional and sophisticated investors, principally to advance the development of the
Paulsens East Project.
The positive outcomes delivered by the Study provide confidence to the Board in the ability of Strike
to fund the development capital through conventional debt and/or equity financing. A mix of debt and
equity is the most likely funding model so 100% of the capital expenditure will not need to be borrowed.
There will also be a requirement for working capital to fund the mining of the first shipments prior to
receipt of payment.
In this regard:
(i)
(ii)
Strike is exploring a range of options to fund this working capital requirement including pre-sales
of iron ore or vendor finance for the first shipment.
Strike has held discussions with its corporate advisors regarding the ability to secure funding
for the Project, as well as with iron ore traders and agents who have indicated that project
funding may be available from customers in China as pre-payment for supply or as a loan
against a guaranteed offtake for the whole or part of the proposed production of iron ore from
the Project.
Strike has a strong financing track record and it is the view of the Board that when the project
parameters in this Study are met, that funding will be able to be arranged. Notwithstanding this, the
normal risks for the raising of capital will apply to Strike, such as the state of equity capital and debt
markets, the status of approvals required to advance the Project and the price of iron ore.
(c)
Strike believes that its funding opportunities will be improved at the completion of:
(i)
(ii)
receipt of all necessary permits and approvals; and
commercial contracts secured with equipment providers, service providers and offtake partners.
(d)
(e)
The funding models being considered will depend will likely be conventional debt and equity financing,
but may include convertible notes, prepayment for offtake and/or other options for projects of a similar
nature.
The raising of equity by Strike may be dilutive to existing shareholders, depending on the price at which
the then funding is completed.
ANNUAL REPORT | 27
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
26. Next Steps
The Study has successfully outlined Strike’s preferred mining and processing plans, production rate, capital
costs, operating costs and infrastructure requirements to support the Project production plan. It has
determined that the Project has strong financial and economic merit, whilst being deemed technically low risk.
In order to advance the Project towards development, the following additional work programmes are required:
•
•
•
•
•
•
•
•
•
•
Final Mine development sequencing and ramp/road prioritisation and development during Pre-
Production period.
Further metallurgical test work, including confirmation of Lump/Fines ratio following crushing and
screening, Lump and Fines
range distribution
and mineralogy/morphology verification for marketing purposes.
final grades and SG, product size
Detailed design works for haulage road and other infrastructure and sourcing of suitable sheeting
materials.
Submission of a Mining Proposal.
Development of operational Project Management Plan (PMP).
Submissions for various outstanding permits/approval (see Section 23 above).
Accelerated engagement and contract negotiations with key contractors (mining, crushing and
screening, haulage, stevedoring and civil) and infrastructure providers/stakeholders (Main Roads WA;
Pilbara Ports Authority).
Negotiations towards securing one or more offtake/sales agreements with potential customers.
Identification and recruitment of key operational staff.
Development of appropriate systems and processes for Health and Safety, Environmental
Management, Heritage Management, Risk Management, Contractor Management and Compliance.
ANNUAL REPORT | 28
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
For further background information about Paulsens East, please refer to Strike’s previous ASX market
announcements as follows:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
26 October 2020: Iron Detrital Sampling Programme Completed at Paulsens East
14 October 2020: Discovery of High Grade Iron Rich Detritals at Surface at Paulsens East
7 September 2020: Grant of Mining Lease for Paulsens East Iron Ore Project
2 September 2020: Test Pit and Bulk Samples to Advance Offtake Agreements Completed at Paulsens
East
17 August 2020: Native Title Agreement Paves Way for Iron Ore Development
22 July 2020: Native Title Agreement Progress to Final Stage
15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential at Paulsens East
Iron Ore Project
22 June 2020: Engenium to Complete Paulsens East Feasibility Study
29 April 2020: MOU Executed for Iron Ore Haulage Services with Campbell Transport for Paulsens
East Iron Ore Project
9 April 2020: Revised Scoping Study for Utah Point, Port Hedland Supports Excellent Project
Economics for Paulsens East Iron Ore Project
3 April 2020: Final Heritage Surveys Now Completed for Paulsens East Iron Ore Project
25 March 2020: Utah Point, Port Hedland Considered as Preferred Port Option for Paulsens East Iron
Ore Project
12 February 2020: Substantial Progress Towards Development of Paulsens East Iron Ore Project
5 December 2019: Drilling and Surface Sampling Results at Paulsens East Iron Ore Project
4 December 2019: High Grade Results Located 1.6km from 9.6Mt Resource
28 November 2019: Excellent Scoping Study Results for Paulsens East Iron Ore Project
19 November 2019: Beadon Creek Onslow Selected as Preferred Port for Paulsens East
24 October 2019: Strike Strengthens Management Team for Paulsens East Iron Ore Project with Key
Appointments
10 October 2019: Outstanding Metallurgical Testwork Results at Paulsens East Iron Ore Deposit
Indicate 79% Lump Yield with Low Impurities
4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated Category at
Paulsens East Iron Ore Project
15 July 2019: Maiden JORC Resource of 9.1 Million Tonnes at 63.4% Fe – Paulsens East Iron Ore
Project in the Pilbara
1 August 2019: Strong Progress at the Paulsens East Iron Ore Project
19 June 2019: Strike’s Iron Ore Assets
The Strike ASX market announcements referred to above may be viewed and downloaded from Strike’s
website: www.strikeresources.com.au or the ASX website: www.asx.com.au under ASX code “SRK”.
AUTHORISED FOR RELEASE - FOR FURTHER INFORMATION:
William Johnson
Managing Director
T | 0419 047 460
E | wjohnson@strikeresources.com.au
ANNUAL REPORT | 29
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
ABOUT STRIKE RESOURCES LIMITED (ASX:SRK)
Strike Resources is an ASX listed resource company which is developing the Paulsens East Iron Ore Project
in Western Australia and owns the high grade Apurimac Magnetite Iron Ore Project in Peru. Strike is also
developing a number of battery minerals related projects around the world, including the highly prospective
Solaroz Lithium Brine Project in Argentina and the Burke Graphite Project in Queensland.
JORC CODE COMPETENT PERSON’S STATEMENT
(a)
(b)
(c)
The information in this announcement that relates to Mineral Resources is based on information compiled
by Mr Philip Jones (BAppSc (Geol), MAIG, MAusIMM), who is a Member of the Australian Institute of Mining
and Metallurgy (AusIMM) and the Australian Institute of Geoscientists (AIG). Mr Jones is an independent
contractor to Strike Resources Limited. Mr Jones has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’ (the JORC Code). Mr Jones consents to the inclusion in
this document of the matters based on this information in the form and context in which it appears.
The information in this document that relates to Ore Reserves is based on information compiled by Mr Harry
Warries (MSc – Mine Engineering, FAusIMM), who is a Fellow of AusIMM. Mr Warries is the Principal of
Mining Focus Consultants Pty Ltd, a Consultant to Strike Resources Limited. Mr Warries has sufficient
experience that is relevant to the style of mineralisation and type of deposit under consideration and to the
activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the JORC
Code. Mr Warries consents to the inclusion in this document of the matters based on this information in the
form and context in which it appears.
The information in this document that relates to metallurgical sampling, metallurgical testing and
metallurgical results undertaken during 2020 is based on information compiled by Dr Michael J Wort
(FAusIMM CP(Met)), who is a Fellow of AusIMM and a Chartered Professional Engineer. Dr Wort is an
independent contractor to Strike Resources Limited. The information that relates to Processing and
Metallurgy is based on the work done by ALS Metallurgy Iron Ore Technical Centre (ALS IOTC) on a bulk
sample collected under the direction of Dr Wort and fairly represents the information compiled by him from
the ALS IOTC testwork reports. Dr Wort has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the JORC Code. Dr Wort consents to the inclusion in
this document of the matters based on this information in the form and context in which it appears.
(d)
The information in this document that relates to Mineral Resources and related Exploration
Results/Exploration Targets (as the case may be, as applicable) is also extracted from the following ASX
market announcements made by the Strike Resources Limited on:
•
4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated Category at
Paulsens East Iron Ore Project.
•
•
15 July 2019: Maiden JORC Resource of 9.1 Million Tonnes at 63.4% Fe – Paulsens East Iron Ore
Project in the Pilbara.
1 August 2019: Strong Progress at the Paulsens East Iron Ore Project.
The information in the original announcements that relates to these Mineral Resources and related
Exploration Results/Exploration Targets (as applicable) is based on, and fairly represents, information and
supporting documentation prepared by Mr Philip Jones (BAppSc (Geol), MAIG, MAusIMM), who is a Member
of AusIMM and a Member of the Australian Institute of Geoscientists (AIG). Mr Jones is an independent
contractor to Strike Resources Limited. Mr Jones has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the JORC Code. The Company confirms that it is not
aware of any new information or data that materially affects the information included in the original market
announcements. The Company confirms that the form and context in which the Competent Person’s findings
are presented have not been materially modified from the original market announcements.
ANNUAL REPORT | 30
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
(e)
The information in this document that relates to metallurgical sampling, metallurgical testing and
metallurgical results undertaken during 2019 is extracted from the following ASX market announcement
made by the Strike Resources Limited on:
•
10 October 2019: Outstanding Metallurgical Testwork Results at Paulsens East Iron Ore Deposit
Indicate 79% Lump Yield with Low Impurities.
The information in the original announcement that relates to these metallurgical testwork matters is based
on, and fairly represents information and supporting documentation compiled by Mr Philip Jones (BAppSc
(Geol), MAIG, MAusIMM), who is a Member of the AusIMM and AIG. Mr Jones is an independent contractor
to Strike Resources Limited. The information that relates to Processing and Metallurgy is based on the work
done by ALS IOTC on a bulk sample collected under the direction of Mr Jones and fairly represents the
information compiled by him from the ALS IOTC testwork reports. Mr Jones has sufficient experience that
is relevant to the style of mineralisation and type of deposit under consideration and to the activity being
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the JORC Code. The
Company confirms that it is not aware of any new information or data that materially affects the information
included in the original market announcements. The Company confirms that the form and context in which
the Competent Person’s findings are presented have not been materially modified from the original market
announcement.
(f)
The information in this document that relates to Other Exploration Results and related Exploration
Targets (as applicable) is extracted from the following ASX market announcements made by the Strike
Resources Limited on:
•
•
15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential at Paulsens East
Iron Ore Project
14 October 2020: Discovery of High Grade Iron Rich Detritals at Surface at Paulsens East
•
4 December 2019: High Grade Results Located 1.6km from 9.6Mt Resource at Paulsens East
The information in the original announcements that relate to these Other Exploration Results and related
Exploration Targets (as applicable) is based on, and fairly represents, information and supporting
documentation prepared by Mr Hem Shanker Madan (Honours and Masters Science degrees in Applied
Science), who is a Member of AusIMM. Mr Madan is an independent contractor to Strike Resources Limited
and was formerly the Managing Director (September 2005 to March 2010) and Chairman (March 2010 to
February 2011) of Strike Resources Limited. Mr Madan has sufficient experience that is relevant to the style
of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as
a Competent Person as defined in the 2012 Edition of the JORC Code. The Company confirms that it is not
aware of any new information or data that materially affects the information included in the original market
announcements. The Company confirms that the form and context in which the Competent Person’s findings
are presented have not been materially modified from the original market announcements.
The Strike ASX market announcements referred to above may be viewed and downloaded from the Company’s
website: www.strikeresources.com.au or the ASX website: www.asx.com.au under ASX code “SRK”.
FORWARD LOOKING STATEMENTS
This document contains “forward-looking statements” and “forward-looking information”, including statements and forecasts which
include without limitation, expectations regarding future performance, costs, production levels or rates, mineral reserves and
resources, the financial position of Strike, industry growth and other trend projections. Often, but not always, forward-looking
information can be identified by the use of words such as “plans”, “expects”, “is expected”, “is expecting”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates”, or “believes”, or variations (including negative variations) of such words and
phrases, or state that certain actions, events or results “may”, “could”, “would”, “might”, or “will” be taken, occur or be achieved.
Such information is based on assumptions and judgements of management regarding future events and results. The purpose of
forward-looking information is to provide the audience with information about management’s expectations and plans. Readers
are cautioned that forward-looking information involves known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of Strike and/or its subsidiaries to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among
others, changes in market conditions, future prices of minerals/commodities, the actual results of current production, development
and/or exploration activities, changes in project parameters as plans continue to be refined, variations in grade or recovery rates,
plant and/or equipment failure and the possibility of cost overruns.
Forward-looking information and statements are based on the reasonable assumptions, estimates, analysis and opinions of
management made in light of its experience and its perception of trends, current conditions and expected developments, as well
as other factors that management believes to be relevant and reasonable in the circumstances at the date such statements are
made, but which may prove to be incorrect. Strike believes that the assumptions and expectations reflected in such forward-
looking statements and information are reasonable. Readers are cautioned that the foregoing list is not exhaustive of all factors
and assumptions which may have been used. Strike does not undertake to update any forward-looking information or statements,
except in accordance with applicable securities laws.
ANNUAL REPORT | 31
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
APPENDIX A
PAULSENS EAST IRON ORE PROJECT – TECHNICAL INFORMATION
Geology
Regional Geology
Paulsens East is located near the centre of the Wyloo Dome on the Wyloo 1:250,000 scale geology sheet
within the crystalline basement (refer Figure 14).
Figure 14: Regional geology (Wyloo geology sheet 1:250,000 SH5010)
Pilbara Supergroup
The oldest rocks on the Wyloo 1:250,000 scale geological sheet SH50-10 are exposed in the core of the
Wyloo Dome. They are a metamorphosed sequence of mafic volcanics, dolerite, gabbro, and minor chert,
and are intruded by the Metawandy Granite. They are generally schistose and are unconformably overlain
by rocks of the Fortescue Group.
The dolerite and gabbro occur either as individual sills and dykes or as sheeted-dyke complexes. Large
enclaves of mafic schist occur in the Metawandy Granite. The mafic rocks are broadly correlated with the
Pilbara Supergroup (Ap) of the northern Pilbara Block.
Within the Pilbara Supergroup is the Mount McGrath Formation, a sequence of conglomerate, arenite, wacke,
mudstone, dolomitic mudstone and dolomite. This formation hosts the hematite mineralisation at Paulsens
East.
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Paulsens East Feasibility Study Demonstrates
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Local Geology and Mineralisation
Figure 15: Paulsens East Geology Map
The Paulsens East tenement includes sediments of the Middle Proterozoic Wyloo Group which contain
hematite mineralisation. The Wyloo Group rocks range from the continental Beasley River Quartzite to red
beds of the Mt McGrath Formation that have been overlain by the shallow marine Duck Creek Dolomite.
The iron mineralisation found within the tenement occurs as a hematite conglomerate in the Mt McGrath
Formation forming a prominent arcuate ridge up to 60 metres high, with cumulative average widths of ~6
metres and approximately 3,000 metres long. The conglomerate consists of hematite pebbles in a hematite
rich matrix and cement.
The conglomerate, when it is fully mineralised, is composed of hematite clasts in a hematite matrix. When
the conglomerate is “unmineralised” (i.e. below economic cut-off grade) the clasts are composed chert and
often Weeli Wolli BIF (a distinctive banded red chert alternating with a siliceous hematite BIF – see clast just
by point of pick in (Figure 16).
At least one of the conglomerate
beds appears
fairly
abruptly into a cherty siliceous
bed along strike to the west.
to grade
“halfway”
A
mineralised
conglomerate was also found at a
few locations where the silica in
the clasts has been leached out
leaving vughs (refer Figure 16).
Figure 16: Close up view of “unmineralised” conglomerate with chert and BIF clasts in
hematite matrix as found at Paulsens East
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Earlier exploration has been conducted in the nearby areas to look for the source of hematite pebbles without
success.
Figure 17: Close up view of hematite conglomerate with hematite matrix as found at Paulsens East
Figure 18: Close up view of “halfway” hematite conglomerate with vughs after chert as found at Paulsens East
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Surface mapping and drilling has shown that the hematite conglomerate is usually found in three main beds of
variable thickness up to approximately 10 metres, although up to five hematite beds of limited strike length have
been identified along the mineralised ridge (refer Figure 19).
Figure 19: Looking east along Paulsens East ridge showing bedding
Mapping along the ridge indicates that to the west of the resource, the conglomerate clasts tend to become cherty
and the matrix siliceous, with a consequent drop in Fe grade. The lower conglomerate bed also in part becomes
more like a massive chert in sections to the west of the resource along the ridge.
Figure 20: Looking west along Paulsens East ridge showing bedding and massive blocky hematite conglomerate beds
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ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
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Figure 21: Looking west along Paulsens East ridge showing dip slopes of hematite conglomerate beds
Drilling and Rock Sampling Programmes
Between 2006 and 2008, Strike conducted an extensive rock chip sampling programme across the ridge and
two drilling campaigns comprising 66 holes for 3,537 metres of reverse circulation (RC) drilling, to determine
the extent and quality of the Paulsens East mineralisation.
Figure 22: Drilling at Paulsens East (North side), 2008
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A summary of the drill holes comprising the database used in the Mineral Resource estimate is included in
Table 15.
Type
RC (2006)
RC (2008)
TOTAL
IDs
PERC001 to PERC008
PERC009 to PERC064
Includes PERC029A & PERC063A
Number
8
Total Drilled (m)
813
58
66
2,724
3,537
Table 15: Summary of holes used in resource estimation
The drill hole spacing is semi-regular along the north side of the target ridge as shown in Figure 23. The drill
hole spacing was controlled by drill access along the ridge. Most holes were drilled between 30 and 60
degrees from horizontal with an approximate south azimuth from sites near the base of the ridge. On most
cross sections there is only one drill hole.
Figure 23: Drill hole location plan showing semi-regular spacing of holes
Sample recovery using a face sampling hammer for all the samples collected is reported to be excellent. All
samples were split, mostly at 0.5m intervals with some at 1m, using a drill rig mounted rotary cone splitter
with the laboratory split bagged in a pre-labelled calico bag. Proper procedures were followed when splitting
and bagging the drilling samples prior to being dispatched to Ultra Trace Laboratories for chemical analysis.
All drilling and field sampling were continually monitored by a site geologist who also logged the chips for
each sample interval to produce geological lithology logs.
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Paulsens East Feasibility Study Demonstrates
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Topography
The topography was surveyed using drone photogrammetry between 29th July – 2nd August 2019.
Parameters for the survey are as follows:
Collection Drone:
Nominal Ground Clearance:
Drone Flight Speed:
Photo interval:
Total Flight Distance:
Area Surveyed:
DJI Mavic 2 Pro
60-70m
8m/s
18m
approximately 125-line kilometres
454 Hectares
The Mavic 2 Pro utilises GNSS GPS/Glonass satellite control and for the duration of the survey, 12-18
satellites were visible to the drones. Accuracy in this configuration of +/- 2-4m E-W can be expected, with
elevation control not as reliable. Further accuracy can be gained by using Ground Control Points, although
none were available for this survey.
Normally, the final DC Levelled Digital Elevation Model (DEM) Grid would be DC levelled against a ground
control elevation, to link it into either WGS84 MASL elevation or an Australian Height Datum (AHD). This
was not available for the Paulsens East area at the time of processing although may be considered at a later
date. An alternative, the DC Levelled DEM Grid was referenced against the Space Shuttle Radar data
(SRTM), which has a nominal ground pixel size of 30m and is the default DEM for the Google Earth
Application.
All the drill collars were projected to the photogrammetry surface to generate standardised elevations.
Sampling Method and Approach
In the 2006 drilling programme, all the drill samples were dispatched for chemical analysis. In 2008, only
samples logged with a high iron content were analysed.
Regular laboratory repeats and approximately 10% field sample duplicates were processed and showed very
good correlation (refer Figure 24 and Figure 25).
70
60
50
%
e
F
e
t
a
c
i
l
p
u
D
40
30
20
10
0
0
Strike Field Duplicates (20 samples)
y = 1.0023x
Fe
Linear (Fe)
10
20
30
40
50
60
70
Original Fe%
Figure 24: Field duplicate correlations
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70
60
50
40
30
20
10
%
e
F
t
a
e
p
e
R
0
0
Laboratory Repeats (25 samples)
y = 1.001x
Fe
Linear (Fe)
10
20
30
40
50
60
70
Original Fe%
Figure 25: Laboratory repeat
The hole collars were surveyed using a hand-held GPS. The accuracy of drill hole collar surveys cannot be
fully verified but were found to lie where expected on drill pads shown on the georeferenced images.
Considering the large dimensions of the mineralisation, the accuracy of the collar data is sufficiently accurate
for an Indicated Mineral Resource estimate.
Bulk Density
A standard bulk density of 4.2 t/m3 was used for this estimate. This bulk density is typical for hematite ore
(hematite mineral = 5.26 in Australian Field Geologists’ Manual – Monograph 9, AusIMM). The hematite
conglomerate beds are low in goethite/ limonite and shale and as such this is reflected in low loss on ignition
(LOI). The standard bulk density assumed for the estimation reflects absence of goethite, limonite and shale
material commonly found in Hamersley iron ores.
Resource Modelling Methodology
The Paulsens East Mineral Resources were modelled using MineMap IMS® software. A polygon was created
on each variably spaced drilling section, approximately perpendicular to the strike of the ridge, using a 58%
Fe lower cut off with a minimum drill intersection width of 1.0 m, however a few intersections less than 1.0 m
were included to maintain continuity between cross sections. Some intersections of lower than cut-off material
was included in the polygons as “included waste” to maintain continuity between higher-grade intersections.
The 58% Fe lower cut-off grade was chosen to reflect the iron mineralisation as it produced coherent
intersections on the drill holes.
The average drill intersection width is 6.26 metres. Note that since most of the drill holes were designed to
intersect the mineralisation approximately orthogonally, the drill intersection width in most drill holes would be
only slightly longer than the true width of the mineralisation. Where the azimuth of a hole or the dip of a hole
is not orthogonal to the mineralisation the drill intersection width will be longer than the true width of the
mineralisation.
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Unit 1
Unit 2
Unit 3
Unit 4
Unit 5
Total
Drill
Interval
51
1.00
6.00
2.08
Fe%
61.26
61.77
Drill
Interval
52
0.50
8.50
2.40
Fe%
62.03
62.16
Drill
Interval
41
0.50
10.00
2.05
Fe%
59.71
61.29
Drill
Interval
11
0.50
2.50
1.45
Fe%
60.90
61.61
Drill
Interval
4
0.50
4.00
1.75
Drill
Interval
54
1.00
16.00
6.26
Fe%
62.33
63.13
Fe%
61.53
61.82
Count
Minimum
Maximum
Average
Width average
Table 16: Mineralisation width statistics
Since there was usually only one drill hole per cross section, the few sections with multiple holes were
interpreted first to get a sense of the dip. Then the rest of the sections were interpreted by linking the main
mineralised drill intersection with the crest of the ridge, corresponding with the geological mapping of the
mineralisation (refer 26). On most sections there are three iron units separated by shales and quartzites.
Figure 26: Typical cross section (432285E) showing three main mineralised units
The sections were then linked by wireframes to produce a 3D model. The interpreted mineralised zones on
each section generally showed good continuity between sections.
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Paulsens East Feasibility Study Demonstrates
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The grades were interpolated using Inverse Distance Cubed (ID3) into the model blocks using a 100 m along-
strike search ellipse. The parameters used in the modelling are outlined in Table 17.
Parameters
East/West limits
North/South limits
Block dimensions (metres) X (strike), Y (across strike), Z (depth)
Algorithm
Inverse Distance Weighting Power
Upper RL
Base RL
Search Ellipse Along strike
Search Ellipse Across strike (to fill model, mineralised bodies only
several metres thick)
Search Ellipse Depth
Rotation Z (dip off vertical)
Rotation Y (strike)
Rotation X (plunge)
430,350E – 433,350E
7,503,850N - 7,505,150N
5.0m x 5.0m x 2.0m
3D Ellipsoidal
2
340.0m RL
150.0m RL
100m
100m
100m
0o
0o
0o
Table 17: Modelling parameters used to model the Paulsens East Mineral Resource
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JORC CODE (2012 EDITION)
TABLE 1 – CHECKLIST OF ASSESSMENT AND REPORTING CRITERIA
APPENDIX B
Section 1 Sampling Techniques and Data
(Criteria in this section apply to all succeeding sections)
Criteria
Sampling
techniques
Commentary
• The only samples used in the resource estimate are splits of chips collected during
Reverse Circulation (RC) drilling.
Drilling
techniques
Drill sample
recovery
• Most of the drilling was designed to penetrate the whole width of the mineralised zone
approximately orthogonally. All the drilling samples were split with a cyclonic splitter.
• All drilling met industry standards and used to obtain usually 0.5 m samples from which
3 kg was pulverised for XRF analysis.
• All the drilling used in the resource modelling was RC drilling.
• All the samples were logged by a qualified geologist and visually assessed for sample
recovery. The logging indicates that the sample recoveries were excellent.
• The RC drilling was monitored by the site geologist and when sample recoveries were
becoming a problem, drilling was stopped.
• There are no known relationships between grades and sample recovery.
Logging
• All the drill samples were logged by a qualified geologist at a sufficient level to support
resource modelling.
• The logging was both qualitative and quantitative.
• Each hole was logged entirely.
Sub-sampling
techniques and
sample
preparation
Quality of assay
data and
laboratory tests
Verification of
sampling and
assaying
• The RC sample chips were split using a rig mounted cyclonic splitter.
• The sample collection and sub-sampling was appropriate for the mineralisation being
sampled.
• Field duplicates and laboratory standards were used for Quality Assurance and Quality
Control (QAQC).
• To ensure the sampling is unbiased, the whole of the mineralised zone was drilled and
drill holes spaced on a regular grid. The RC chips were collected and sub-sampled in a
cyclonic splitter.
• The samples collected and submitted for assay are of an appropriate size for the grain
size of the material being sampled.
• The samples were analysed using XRF by an independent ISO accredited laboratory
following international standard procedures to produce total assays.
• No geophysical results are reported.
• Field duplicates and laboratory standards were used for QAQC.
• No independent verification of the data was made by the Competent Person (for the
Mineral Resource).
• No twinned holes have been drilled to check quality of original drilling.
• All data collection, data entry, data verification procedures and data storage protocols
are properly documented.
• No adjustments were made to the assay data.
Location of data
points
•
The drill hole collars were surveyed using a hand-held GPS. The accuracy of drill hole
collar surveys cannot be fully verified but were found to lie where expected on drill pads
shown on the georeferenced images.
• The topography was surveyed using drone photogrammetry by Yoda Consulting
Australia Pty Ltd between 29 July – 2 August 2019. An accuracy of +/- 2-4 m E-W/N-S
can be expected, with elevation control not as reliable. The DC Levelled DEM Grid was
referenced against the Space Shuttle Radar data (SRTM), which has a nominal ground
pixel size of 30m.
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Paulsens East Feasibility Study Demonstrates
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Criteria
Data spacing and
distribution
Commentary
• The Competent Person (for the Mineral Resource) believes that the spacing of the
drilling on sections at approximately 50 - 150m spacing along with an accurate
topographic photogrammetry survey with high resolution photos and surface GPS
mapping, is sufficient for a low order Indicated resource estimate.
• Since the bulk of the sampling used in the resource estimates, the RC drilling, is sampled
at fixed 0.5 m intervals, there was no sample compositing.
Orientation of
data in relation to
geological
structure
• The intersection angle of the drilling with respect to the mineralisation was variable, but
generally at approximately 60-80 degrees, making most drill intersections longer than
the true width of the mineralisation. The resource modelling software uses the data in
3D and so compensates for the wider apparent thicknesses.
Sample security
• All the samples submitted for chemical analysis were securely transported from the field
to the laboratory.
Audits or reviews
• There have been no audits or reviews of the sampling techniques or data.
Section 2 Reporting of Exploration Results
(Criteria listed in the preceding section also apply to this section)
Criteria
Mineral tenement
and land tenure
status
Exploration done
by other parties
Commentary
• The resource lies entirely within Mining Lease M47/1583 (previously, Retention Licence
R47/07) which is registered with Orion Equities Limited (but 100% beneficially owned by
the Company), which is due to expire in 2041.
• No other parties have carried out significant iron ore exploration at Paulsens East.
Geology
• The iron mineralisation is a conglomerate within the Mount McGrath Formation
composed of hematite clasts within a hematite matrix.
Drill hole
Information
Type
IDs
Number Total Drilled (m)
RC (2006) PERC001 to PERC008
RC (2008) PERC009 to PERC064
Includes PERC029A & PERC063A
TOTAL
8
58
66
813
2,724
3,537
Data aggregation
methods
Relationship
between
mineralisation
widths and
intercept lengths
•
Information on the 2006 and 2008 drilling programmes, including the drill-hole locations
and collar details, are included in Appendix A and C.
• All intersections quoted in text are length weighted averages and all resource estimates
are tonnage weighted averages
• No metal equivalents have been reported.
• The resource modelling was carried out in 3D and all apparent widths accounted for in
the estimation method.
• Most of the drill holes were designed to intersect the mineralisation approximately
orthogonally. The drill intersection width in most drill holes would be only slightly longer
than the true width of the mineralisation. Where the azimuth of a hole or the dip of a
hole is not orthogonal to the mineralisation the drill intersection width will be longer than
the true width of the mineralisation.
Diagrams
• All the diagrams necessary to describe the project are included in the body of this
announcement.
Balanced
reporting
Other substantive
exploration data
• The Competent Person (for the Mineral Resource) believes that the reporting of the
Exploration Results in this document is balanced.
• No other exploration data other than local geology maps were considered in the
resource estimate.
Further work
• Further
in-fill drilling, metallurgical
testwork and mining studies have been
recommended.
ANNUAL REPORT | 43
30 JUNE 2020
STRIKE RESOURCES LIMITED
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ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Section 3 Estimation and Reporting of Mineral Resources
(Criteria listed in Section 1, and where relevant in Section 2, also apply to this section)
Criteria
Database integrity
Site visits
Geological
interpretation
Commentary
• Data used as received but checked for Hole ID and sample interval errors by MineMap ©
software. Some RC sample assays in database were checked against laboratory spread
sheets and no errors were found.
• The Competent Person (for the Mineral Resource) visited the site on 17 August 2019 and
inspected the mineralised outcrop at various points over the whole strike length of the deposit
and instructed the field technician on where to take the GPS readings of the hematite outcrop.
• The mineralisation is a series of conglomerate beds with hematite clasts and matrix separated
by thin shale and quartzite beds.
• The interpretation of the mineralisation and modelling wireframes is based on surface
mapping and drilling.
• The hematite conglomerates are sedimentary.
Dimensions
• The outcropping mineralised conglomerate has a strike length of approximately 3 km and is
open at depth.
Estimation and
modelling
techniques
• The resource modelling was done with MineMap © software by interpolating grades into a
digital block model using an Inverse Distance Cubed (ID3) algorithm confined by wire framing
of the >58% Fe mineralised zones with 100m search radii along and across strike and 100m
up and down dip.
• The Competent Person (for the Mineral Resource) considers that these modelling parameters
are appropriate for an Indicated resource of the type and style of mineralisation being
modelled.
•
It is assumed that the mineralised conglomerate beds can be satisfactorily mined in an open
cut to a minimum of 1 m width and beneficiation, if required, will produce a profitable and
marketable product.
• The model cells of 5 m X 5 m 2 m are suitable for representing the style of mineralisation
being modelled.
• No variable correlations were considered.
• The wireframes confining the resource model are based on drill intercept grades >58% and
correlated with the outcropping ridge.
• No grades were cut because the Fe grades had no high-grade outliers.
• The resource model was checked and validated visually against the drilling using colour
Moisture
• All tonnes and grades are on a dry basis.
coded grades.
Cut-off parameters
• The resource modelling was confined by wire framing of the >58% Fe mineralised zones.
This grade represents an approximate economic cut-off and allows correlations of the
mineralisation between cross sections.
Mining factors or
assumptions
Metallurgical
factors or
assumptions
• No mining factors were considered for the mineral resource estimate although it was assumed
that if the deposit is mined, it will be mined using the open pit mining methodology.
• Metallurgical tests were performed on representative samples of the mineralisation collected
in 2019.
• Metallurgical tests are on-going on a bulk sample collected in August 2020.
• Further metallurgical testwork has been scheduled to determine if beneficiation by screening
and/or gravity separation and/or optical recognition can economically produce a higher
grade/value marketable product.
Environmental
factors or
assumptions
• No environmental factors were considered however the tenement has sufficient suitable area
to accommodate a small mining and processing operation including provision for waste
disposal.
• There are no obvious especially environmentally sensitive areas in the vicinity of the deposit
although the usual impact studies and government environmental laws and regulations will
need to be complied with.
Bulk density
• There were no specific gravity measurements taken of the mineralisation for the mineral
resource model.
• A bulk density of 4.2 (based on the density of hematite mineral = 5.26 in Australian Field
Geologists’ Manual – Monograph 9 AusIMM) was used. This value is typical of high-grade
hematite mineralisation.
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STRIKE RESOURCES LIMITED
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ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
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Criteria
Commentary
• Subsequent bulk density testing has confirmed a bulk density of 5.59 for the high-grade
hematite (in situ), supporting the estimation for bulk density of 4.2 used in the Mineral
Resource modelling.
Classification
• The resource was classified by the Competent Person (for the Mineral Resource) as Indicated
based on the spacing of the drilling and quality of the data used in the estimation.
• The Competent Person (for the Mineral Resource) believes this classification to be
appropriate.
Audits or reviews
• No audits or reviews of the Mineral Resource Estimates have been made.
Discussion of
relative accuracy/
confidence
• The drill hole spacing is too wide to provide sufficient confidence in the resource estimate for
a higher-level resource category. The quality of the data is considered to be reasonable for
a low order Indicated resource estimate.
• All quoted estimates are global for the deposit.
• No mine production has been recorded at the deposit.
Section 4 Estimation and Reporting of Ore Reserves
(Criteria listed in Section 1, and where relevant in Sections 2 and 3, also apply to this section)
Criteria
Mineral Resource
estimate for
conversion to Ore
Reserves
Site visits
Commentary
• The Paulsens East Mineral Resource as described in Section 3 formed the basis for the
conversion to Ore Reserves.
• The Mineral Resources are inclusive of the Ore Reserves.
• The Competent Person for the Ore Reserves, Mr Harry Warries, has not visited the site.
• Harry Warries is very familiar with the Pilbara region in general, having worked in the area
and visited many iron ore projects in the same region and with Paulsens East being a
greenfield project no site visit was deemed to be necessary.
Study status
• A Feasibility Study was completed by Strike Resources Limited in October 2020.
Cut-off parameters
• A cut-off grade of 55% Fe was applied, which will result in the production of a marketable
product.
Mining factors or
assumptions
• The basis of design for the Project is predicated on crushing and screening 1.5Mtpa of
crusher feed. The average waste to ore strip ratio is approximately 3.0 : 1 and a maximum
total material movement of up to 8Mtpa will be required.
• Mining is undertaken by conventional open pit methods of drill and blast, followed by load and
haul, utilising mining equipment comprising 110t diesel hydraulic excavators and 90t off-
highway dump trucks as the main production fleet. However, initial mining will be completed
by a “pioneering fleet” which will progress across the ridge to ‘open’ the mine faces/benches.
This pioneering fleet consists of a 50t excavator and 50t articulated dump trucks.
• Detailed pit design work was completed based on pit optimisations using Whittle Four-X
optimisation software. Only Indicated Mineral Resources were used in the pit optimisation.
• Pit slope parameters were based on a geotechnical assessment that was based on
information contained within the resource drilling database, supplemented by additional data
sourced from the GeoVIEW.WA portal, including historical exploration reports and geological
mapping. Essentially, five separate domains were identified along the 3 km strike length of
the deposit. Overall pit wall slope angles ranging from 26º to 45º were modelled.
• Strict grade control procedures will be implemented based on blast hole sampling and mining
will be selective, mining ore on 5m benches and 2.5m flitches.
• Some mining dilution has been incorporated as part of the resource estimation process and
a mining ore loss of 10% was assumed.
• A minimum cutback mining width of 30m is adopted.
• The mine plan includes no Inferred Resources.
• The primary infrastructure required for the project is a variety of infrastructure installed to
provide basic supplies of water, power, fuel, communications, buildings and access roads,
including a crushing plant, offices and workshops and other mine site related infrastructure.
• The Project would road haul the product from the mine site stockpiles to the Port Hedland
Multiuser Utah Point port where it would be stockpiled before being transferred onto ships for
export.
ANNUAL REPORT | 45
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Criteria
Metallurgical
factors or
assumptions
Environmental
Infrastructure
Commentary
• The Competent Person considers the proposed mining method to be appropriate, given the
nature of the deposit’s mineralisation and the scale of the proposed operations.
• Processing is by conventional primary jaw crusher followed by a secondary cone crusher and
screening, producing a Lump and Fines product.
• ALS Metallurgy Iron Ore Technical Centre (ALS IOTC) in Perth, Western Australia undertook
metallurgical test work for the Project based on bulk composite samples collected from
various surface locations across the entire length and width of the Paulsens East Iron Ore
deposit.
• The stage crush and drop tower test results indicate that 79% of crushed material is likely to
be classified as ‘Lump’ material (> 6.3 mm < 32.5mm in size), and 21% as ‘Fines’ material (<
6.3 mm).
• The testwork indicated that the Lump material is likely to be approximately 2% Fe higher in
grade than that of the Fines material.
• Assays of the material taken after the Drop Tower test confirmed that both the Lump and
Fines materials were likely to be exceptionally low in deleterious elements such as
phosphorous (~0.05%) and sulphur (~0.008%).
• Subsequent analysis of samples taken as part of a Bulk Sample programme in August 2020
served to confirm the high-grade nature of the ore as being representative of the orebody as
a whole.
• Head Grade analyses of a 90:10 blend of high-grade hematite:waste from the August 2020
Bulk Sample confirmed that a 62% Lump product low in alumina and a 59% Fines product
with a moderate level of alumina can be achieved from the Ore Reserve consistent with the
assumptions used in the Feasibility Study.
• A reconnaissance flora and vegetation survey and Level 1 fauna and fauna habitat
assessment has been completed over the Project area and will be incorporated into the
preparation of a Mining Proposal for submission to the DMIRS.
• During the field work, evidence of Northern Quoll (Endangered EPBC Act and BC Act) was
recorded on motion sensors and cameras. The Company will develop a strategy to minimise
and impact the Project may have on the Quoll habitat.
• No other significant environmental issues have been identified.
• Total waste movement is expected to be approximately 19 Million tonnes over LOM. Waste
will be dumped in two dump locations with the main waste dump to be located south east of
the pit on the southern side of the ridge (Waste Dump 1) with a second waste dump located
north east of the pit (Waste Dump 2). Waste material is predominantly indurated ferruginous
siliceous sandstones, quartzite and massive basalt. No sulphide materials have been
encountered in exploration drilling and there is very low potential for any acid forming
materials to be present in the dumped waste material.
• A diversion channel will be constructed to divert an existing creek system around Waste
Dump 1.
• The proposed infrastructure to be built includes low
grade and waste rock dumps, ROM pads,
surface haul roads to processing plant, pumping infrastructure, workshops and fuel
storage/supply facilities, technical and administration facilities, power station, mine
accommodation camp
facilities and associated mine
infrastructure.
facility, explosives storage
‐
• The ore haulage route to Port Hedland, approximately 600 km from the minesite, is mostly
along an existing sealed highway. An approximately 18 km haulage road will be constructed
from the mine site to the paved road.
• The ore haulage fleet will consist of high
capacity road trains. The preferred haulage
contractor has an existing maintenance facility for trucks in Port Hedland.
‐
• Utah Point is operated by the Pilbara Ports Authority (PPA). The PPA has confirmed stockpile
and throughput capacity is currently available for the proposed production rate of 1.5Mtpa for
the Project.
• The facilities at Utah Point allow for direct access and dumping of ore from road trains into
the ore hoppers (or bunkers) at the stockpile area, with no requirement for any intermediary
stockpiles or double handling of ore.
• The Company is currently in discussions with the PPA regarding the final commercial terms
for the use of Utah Point.
ANNUAL REPORT | 46
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Criteria
Costs
Commentary
• All facility and port charges have been appropriately allowed for in the project financial model.
• The workforce will be made up of a combination of mostly fly
out (FIFO) employees,
contractors and management staff. The Company is currently negotiating to use a
neighbouring mining camp (currently on care and maintenance) but as an alternative is
planning a dedicated camp facility on site to provide accommodation, meals and recreation
facilities for FIFO workers.
in fly
‐
‐
• Workers will travel to site mostly via flights to Paraburdoo on commercial carriers, from where
they will be transported by bus to site
• The majority of the capital cost estimates used in the Feasibility Study are based upon
proposals and/or budget estimates from suitably experienced industry participants or
estimates received from external consultants.
• Mining operating costs (drilling, blasting, loading, hauling and ore processing to mine product
stockpile) were prepared based on pricing estimates received from suitably qualified and
experienced mining contractors. Mining operating costs were also reviewed by an
independent consultant.
• The main deleterious element to be considered for the Project is Alumina (Al2O3). A product
price penalty of 7% of the base product price for the Fines product was applied in the financial
modelling to account for levels of Alumina expected to occur in the Fines.
•
Iron Ore pricing was based on the Platts 62% Fe index (Benchmark Price) and an average
Benchmark Price of US$100/dmt over the life of mine CFR China was adopted in the
Feasibility Study.
• A foreign exchange rate of US$ / A$ of 0.70 was adopted for the Feasibility Study.
• A Western Australia government royalty of 7.5% is applicable, as well as third party royalties
of between 2.5% and 3.0%, dependent on the iron ore price.
• Transport costs were derived from proposals from contractors (haulage) and estimates
received from shipping brokers (shipping).
Revenue factors
•
Iron Ore pricing was based on the Platts 62% Fe index and an iron ore price of US$100/dmt,
over the life of mine CFR China was adopted as the base case.
• Based on metallurgical test work, a premium was applied to the Lump product, whilst a
penalty was applied to the Fines product due mainly to relatively high levels of Alumina
present in the ore which are expected to report mostly to the Fines product.
Market
assessment
• There is a transparent quoted and strongly traded market for the sale of iron ore. The market
for Western Australian iron ore is well established and liquid.
• The iron ore price has performed strongly during 2020 due to strong economic stimulus in
China and supply disruption from Brazil.
• High grade iron ore is becoming a scarcer product as global ore reserves are depleted and
more 58% Fe deposits are exploited. There is a reasonable expectation that the Paulsens
East Lump and Fines products will be well sought after as high
grade iron product with
relatively low to levels of impurities.
• For the Feasibility Study, Strike has forecast the Benchmark Price to remain at its current
level of approximately $115 per tonne during 2021, declining progressively to US$85 per
tonne in 2024, equating to an average Benchmark iron ore price over the 4 year mine life of
US$100 per tonne.
‐
Economic
• The financial evaluation undertaken as part of the Study indicated a positive net present
value (NPV) at an 8% discount rate.
• A sensitivity analysis on the financial model highlights that the Project value is most
sensitive to the following factors:-
–
Iron ore price
– US$ / A$ exchange rate
– Road haulage cost
• A positive 10% change in the iron ore price results in an approximate 40% increase in NPV.
Conversely, a 10% negative change in the iron ore price results in an approximate 40%
decrease in NPV
Social
• A Native Title Agreement has been executed with the Traditional Owners of the land
(PKKP).
• Access Agreements have been negotiated and executed (or expect to be executed) with a
pastoral leaseholder and other tenement holders who are otherwise impacted by the
Company’s proposed operations.
ANNUAL REPORT | 47
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
Criteria
Other
Commentary
• No material naturally occurring risks have been identified, other than those which are typically
encountered in mining operations in this region of Western Australia. The area is subject to
occasional significant rainfall events, particularly in summer months when the remains of
cyclones can cross the area. Appropriate measures to manage stormwater during and
immediately after these events are planned to be in place prior to commencement of mining
operations.
• No material contracts for sale of product are in place at this point in time.
• Draft agreements are being reviewed/negotiated with Pilbara Ports Authority and other
various potential contractors and suppliers.
• A Memorandum of Understanding with Campbell Transport is in place for haulage services.
• The Paulsens East Iron Ore Project is located entirely within a granted and current Western
Australian mining lease (M47/1583) over which Strike has secure 100% beneficial interest.
• A number of Miscellaneous Licences have been applied for to permit the development of an
access road to the mine site from the paved Nanutarra Road, as well as for the development
of a mining village. These Miscellaneous Licences are expected to be granted prior to
commencement of mining operations.
• A Mining Proposal for the Project is expected to be submitted to the DMIRS once relevant
Miscellaneous Licences have been granted.
• Other Government permits/approvals which will be sought include:
- Native Vegetation Clearing Permit
- Dangerous Goods Transport and Storage license(s) – for drill and blast activities and fuel
storage.
- Works Approvals for Mine site construction.
- Beds and Banks approval for creek diversion.
- Department of Water and Environmental Regulation (DWER) approvals, including a water
and borefield extraction licence/permit.
- Main Roads WA approvals, including for the construction of the haulage road that
intersects with Nanutarra Road and road haulage (including truck configuration and axle
loading).
• There are reasonable grounds to expect that these and any future Government
permits/approvals will be granted and maintained within the necessary time frames for
successful implementation of the Project.
Classification
• Probable Ore Reserves were declared based on the Indicated Mineral Resources.
• The Mineral Reserve estimate appropriately reflects the Competent Person’s view of the
deposit.
Audits or reviews
No audits or reviews of Ore Reserve estimates have been undertaken.
Discussion of
relative accuracy/
confidence
• The relative accuracy and confidence of the Ore Reserve estimate is inherent in the Ore
Reserve Classification.
Mining dilution and ore loss should be re-evaluated once production data becomes
available.
ANNUAL REPORT | 48
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
DRILL COLLAR DETAILS
APPENDIX C
HOLE ID
PERC001
PERC002
PERC003
PERC004
PERC005
PERC006
PERC007
PERC008
PERC009
PERC010
PERC011
PERC012
PERC013
PERC014
PERC015
PERC016
PERC017
PERC018
PERC019
PERC020
PERC021
PERC022
PERC023
PERC024
PERC025
PERC026
PERC027
PERC028
PERC029
PERC029A
PERC030
PERC031
PERC032
PERC033
PERC034
PERC035
PERC036
PERC037
PERC038
PERC039
PERC040
PERC041
PERC042
PERC043
PERC044
PERC045
PERC046
PERC047
PERC048
PERC049
PERC050
PERC051
PERC052
PERC053
PERC054
PERC055
PERC056
PERC057
PERC058
PERC059
PERC060
PERC061
PERC062
PERC063
PERC063A
PERC064
East
MGA94_Z50
430,952
431,382
432,043
432,322
432,771
432,901
433,143
434,149
433,193
433,105
433,019
432,925
432,885
432,885
432,818
432,743
432,691
432,499
432,488
432,349
431,931
431,931
431,728
431,725
431,457
431,295
431,791
431,368
431,374
431,374
431,846
430,955
430,861
430,781
430,707
430,630
431,228
431,654
431,585
431,523
431,075
431,131
432,036
432,122
432,124
432,186
432,284
432,380
432,535
433,197
433,190
433,130
433,018
432,900
432,803
432,687
432,614
432,438
432,279
432,102
431,360
433,312
433,297
433,245
433,267
433,262
North
MGA94_Z50
7,504,968
7,504,939
7,504,777
7,504,674
7,504,357
7,504,228
7,504,045
7,502,753
7,503,982
7,504,038
7,504,081
7,504,167
7,504,213
7,504,213
7,504,263
7,504,313
7,504,343
7,504,514
7,504,513
7,504,576
7,504,794
7,504,797
7,504,878
7,504,880
7,504,956
7,504,948
7,504,835
7,504,917
7,504,915
7,504,915
7,504,816
7,504,964
7,504,942
7,504,939
7,504,942
7,504,931
7,504,936
7,504,883
7,504,902
7,504,918
7,504,945
7,504,940
7,504,739
7,504,649
7,504,650
7,504,620
7,504,580
7,504,524
7,504,457
7,503,941
7,503,848
7,503,952
7,504,029
7,504,126
7,504,206
7,504,296
7,504,327
7,504,428
7,504,474
7,504,576
7,504,806
7,503,931
7,503,881
7,503,964
7,503,779
7,503,918
RL
254
241
242
238
233
250
246
229
249
256
250
250
240
240
244
255
247
258
256
263
257
256
254
252
255
255
265
263
263
263
272
240
249
263
260
258
257
265
258
258
257
256
255
255
254
257
261
269
262
233
249
230
244
256
265
271
276
282
285
262
287
235
235
244
237
240
DEPTH Azimuth
82
64
120
148
147
100
94
58
36
54
54
34.5
42.5
30.5
45.5
48.5
48.5
48.5
54.5
54.5
54.5
46.5
54.5
54.5
54.5
54.5
54.5
54.5
24.5
54.5
54.5
54.5
42.5
48.5
54.5
54.5
54.5
45
54.5
47.5
54.5
48.5
54.5
46
35.5
42.5
51
54.5
54.5
24.5
34
48.5
38.5
38.5
39.5
27
54.5
54.5
54.5
54.5
54.5
54
54
38
6
39
174
167
204
202
212
221
236
160
239
227
210
248
215
275
238
218
218
222
228
210
202
202
191
191
165
169
194
160
160
160
219
142
166
174
170
168
178
187
176
191
181
183
190
198
198
201
190
209
213
350
190
24
40
40
25
18
27
15
18
35
350
196
194
195
245
205
Dip
-60
-60
-63
-60
-60
-55
-55
-60
-45
-29
-25
-23
-17
-40
-19.5
-15.5
-23
-20
-40
-24
-20
-40
-25
-40
-25
-25
-25
-25
-40
-40
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-40
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-25
-60
-60
-45
-60
-45
Start Date
6/12/2006
7/12/2006
7/12/2006
8/12/2006
9/12/2006
9/12/2006
10/12/2006
11/12/2006
31/05/2008
1/06/2008
2/06/2008
3/06/2008
4/06/2008
5/06/2008
6/06/2008
6/06/2008
11/06/2008
11/06/2008
12/06/2008
13/06/2008
14/06/2008
14/06/2008
16/06/2008
17/06/2008
19/06/2008
19/06/2008
23/06/2008
24/06/2008
24/06/2008
25/06/2008
25/06/2008
26/06/2008
26/06/2008
26/06/2008
27/06/2008
27/06/2008
27/06/2008
28/06/2008
28/06/2008
28/06/2008
29/06/2008
29/06/2008
29/06/2008
30/06/2008
30/06/2008
30/06/2008
30/06/2008
7/01/2008
7/01/2008
7/02/2008
7/02/2008
7/04/2008
7/05/2008
7/05/2008
7/05/2008
7/06/2008
7/06/2008
7/07/2008
7/07/2008
7/08/2008
7/08/2008
9/07/2008
9/07/2008
10/07/2008
10/07/2008
10/07/2008
End Date
6/12/2006
7/12/2006
8/12/2006
8/12/2006
9/12/2006
9/12/2006
11/12/2006
11/12/2006
1/06/2008
1/06/2008
3/06/2008
3/06/2008
5/06/2008
5/06/2008
6/06/2008
6/06/2008
11/06/2008
11/06/2008
12/06/2008
13/06/2008
14/06/2008
15/06/2008
17/06/2008
17/06/2008
19/06/2008
19/06/2008
23/06/2008
24/06/2008
24/06/2008
25/06/2008
25/06/2008
26/06/2008
26/06/2008
26/06/2008
27/06/2008
27/06/2008
27/06/2008
28/06/2008
28/06/2008
28/06/2008
29/06/2008
29/06/2008
29/06/2008
30/06/2008
30/06/2008
30/06/2008
30/06/2008
7/01/2008
7/01/2008
7/02/2008
7/02/2008
7/05/2008
7/05/2008
7/05/2008
7/06/2008
7/06/2008
7/07/2008
7/07/2008
7/07/2008
7/08/2008
7/08/2008
9/07/2008
9/07/2008
10/07/2008
10/07/2008
10/07/2008
Drill
Company
Wallis
Wallis
Wallis
Wallis
Wallis
Wallis
Wallis
Wallis
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
Rock
ANNUAL REPORT | 49
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX ANNOUNCEMENT
Paulsens East Feasibility Study Demonstrates
Significant Cashflow Generation and Financial Returns
METALLURGICAL TESTWORK RESULTS
Table 18 below shows a Summary of the Head Grade Analyses (October 2020) on Lump and Fines products
constituting a 90:10 blend of High Grade Hematite : Waste ore, from a 3,000 kilogramme Bulk Sample
collected from a Test Pit on the Paulsens East deposit at the eastern edge of the outcropping hematite ridge.
APPENDIX D
90:10 DILUTION - LUMP SAMPLES (AS BLENDED) - HEAD ASSAYS
LUMP SAMPLE
ID
HIGH GRADE COMPOSITE
FERRUGINOUS SCHIST
CHERTY HEMATITE
HEAD ASSAY
Wt.
Distn.
(%)
90.0
7.0
3.0
Fe
Grade
(%)
65.3
22.7
38.0
62.4
SiO2
Grade
(%)
2.85
45.20
43.99
6.04
Al2O3
Grade
(%)
1.54
11.30
1.50
1.73
90:10 DILUTION - FINES SAMPLES (AS BLENDED) - HEAD ASSAYS
LUMP SAMPLE
ID
HIGH GRADE COMPOSITE
FERRUGINOUS SCHIST
CHERTY HEMATITE
HEAD ASSAY
Wt.
Distn.
(%)
90.0
7.0
3.0
Fe
Grade
(%)
63.3
22.2
27.4
59.2
SiO2
Grade
(%)
4.26
43.20
57.19
8.49
Al2O3
Grade
(%)
2.36
13.75
2.36
3.21
P
Grade
(%)
0.094
0.063
0.048
0.088
P
Grade
(%)
0.132
0.078
0.062
0.123
S
Grade
(%)
0.007
0.016
0.005
0.006
S
Grade
(%)
0.011
0.018
0.006
0.010
Table 18: ALS IOTC Head Grade Analyses – Lump:Fines based on
90:10 blend of High Grade Hematite : Waste ore (October 2020)
Table 19 below shows a Summary of the Metallurgical Testwork results (September 2019) on a bulk
composite sample of approximately 250 kilogrammes recently collected from various surface locations across
the entire length and width of the Paulsens East deposit on the hematite ridge.
Table 19: ALS IOTC Metallurgical Testwork - Summary Results (September 2019)
ANNUAL REPORT | 50
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
COMPANY PROJECTS
Strike Resources Limited (ASX:SRK) (Strike) is an ASX listed resource company which is developing the
Paulsens East Iron Ore Project in Western Australia. Strike also owns the high grade Apurimac Magnetite
Iron Ore Project in Peru and is also developing a number of battery minerals related projects around the
world, including the highly prospective Solaroz Lithium Brine Project in Argentina and the Burke Graphite
Project in Queensland.
Paulsens East Iron Ore Project (Pilbara, Western Australia)
(Strike – 100%)
The Paulsens East Iron Ore Project (Paulsens East) is located in the Pilbara region of Western Australia,
~10 kilometres from the Paulsens Gold Mine (owned by Northern Star Resources Limited (ASX:NST)), ~200
kilometres west of Paraburdoo, ~233 kilometres by road from the Port of Onslow and ~600 kilometres by road
from Port Hedland.
With an increase in iron ore prices, in June 2019, Strike recommenced previous work (conducted between
2006 – 2008) to examine the potential for undertaking a Direct Shipping Ore (DSO) mining operation using
contract mining, crushing and transportation by truck to port then ship to China.1
Project Development Achievements
On 18 July 2019, Strike reported a significant Maiden JORC Inferred Mineral Resource for Paulsens East
of 9.1 Million tonnes at 63.4 % Fe, 5.6% SiO2, 3.2% Al2O3 and 0.08% P. 2 The Inferred Mineral Resource
estimate was based upon data derived from two drilling campaigns undertaken by Strike (comprising a total
of 66 reverse circulation (RC) holes for 3,537 metres drilled) together with an extensive rock chip sampling
programme.
On 4 September 2019, Strike reported a significant upgrade from Inferred to JORC Indicated Mineral
Resource of 9.6 million tonnes at 61.1 % Fe, 6.0% SiO2, 3.6% Al2O3 and 0.08% P (at a cut-off grade of 58%
Fe).3 This upgrade was as a result of a programme of surveying and sampling, which was undertaken to
increase the confidence in the iron ore mineralisation and to enable a detailed mine plan and economic model
to be developed.
A key feature of the Paulsens East Mineral Resource is an approximately 3 kilometre-long ridge of high-grade
outcropping hematite conglomerate which extends up to 60 metres above the surrounding terrain. Of the
JORC Indicated Mineral Resource referred to above, approximately 3 million tonnes of 61% Fe hematite
material (with 5.9% SiO2 and 3.6% Al2O3) is estimated to occur above the base of the ridge (as defined by drill
hole collars) with minimal overburden.
There is potential to extend the high grade iron ore mineralisation based on small hematite conglomerate
outcrops along the surface and a drill intersection located 1.6 kilometres away at the south-eastern corner of
the tenement previously identified by Strike4 and more recently taken surface rock-chip samples grading
64.4% - 66.2% Fe identified at multiple locations in the area.5 This exploration target is conceptual in nature,
there has been insufficient exploration to estimate a JORC Mineral Resource in respect of the same and it
is uncertain if further exploration will result in the estimation of a JORC Mineral Resource.
1 Refer Strike’s ASX Announcement dated 19 June 2019: Strike’s Iron Ore Assets
2 Refer Strike’s ASX Announcement dated 15 July 2019: Maiden JORC Resource of 9.1 Million Tonnes at 63.4% Fe - Paulsens East
Iron Ore Project in the Pilbara
3 Refer Strike’s ASX Announcement dated 4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated Category
at Paulsens East Iron Ore Project
4 Refer Strike’s ASX Announcements dated 4 December 2019: High Grade Results Located 1.6km from 9.6Mt Resource and 5
December 2019: Drilling and Surface Sampling Results at Paulsens East Iron Ore Project
5 Refer Strike’s ASX Announcements dated 15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential at
Paulsens East Iron Ore Project
ANNUAL REPORT | 51
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
COMPANY PROJECTS
On 10 October 2019, Strike reported the results of metallurgical test work undertaken on a bulk composite
sample of approximately 250 kilogrammes collected from various surface locations across the entire length
and width of the Paulsens East deposit.6 The results were highly encouraging, indicating the potential for a
very high lump:fines ratio of 79:21, where the ‘lump’ material (> 6mm < 30mm in size) has low deleterious
elements, low degradation during transport and other positive metallurgical properties. The indicated very
high lump:fines ratio is regarded as highly positive for the project as lump material typically attracts a price
premium over equivalent ‘fines’ material of the same grade. The test work also indicates that the lump material
is likely to be approximately 2% Fe higher in grade than that of the fines material, which will also potentially
attract a further price premium for the lump material.
On 28 November 2019, Strike released the results of a Scoping Study7 for a 1.5Mtpa production schedule of
direct shipping ore (DSO) over a minimum four-year life of mine (LOM). The Scoping Study was based on
an open-cut mine, with ore crushed and screened to produce DSO Lump and Fines products to be trucked
to Onslow predominantly by sealed road, where it will be stockpiled prior to being loaded directly from the
wharf at the Onslow Marine Supply Base at Beadon Creek for transhipment into ocean going vessels (OGV’s)
for export to customers.
On 9 April 2020, Strike released the results of a Revised Scoping Study based upon the Utah Point Multi-
User Bulk Handling facility (Utah Point) in Port Hedland as the alternative export port, to simplify transport
logistics by removing the need for transhipment barges and the ‘double handling’ of ore and with the higher
trucking costs largely offset by the removal of transhipment and handling costs together with lower shipment
costs to China from larger tonnage ships that can berth at Utah Point.8
On 14 August 2020, Strike entered into a Native Title Mining Agreement (Native Title Agreement) and State
Deed (for the grant of a mining lease) (State Deed) with the PKKP Aboriginal Corporation RNTBC (PKKPAC).
The PKKPAC holds native title on trust for the benefit of the Puutu Kunti Kurrama and Pinikura People (PKKP)
Traditional Owners.9 The Native Title Agreement provides an agreed framework for Strike to undertake its
mining activities at Paulsens East in a way that minimises any impacts on Aboriginal Cultural Heritage. The
agreement has a strong focus on protection of Aboriginal heritage and includes effective safeguards for the
care and protection of the lands and rights of the PKKP peoples. Strike has also agreed to provide a package
of financial and business development related benefits for the PKKP, including an annual payment based on
the value of iron ore sales, an annual training and development allowance for PKKP members together with
opportunities for PKKP members to contract for the provision of certain support operations related to the
Project.
On 4 September 2020, Strike received the grant of a Mining Lease (M47/1583) for an initial term of 21 years.10
In August 2020, Strike successfully completed a test pit and collected ~3 tonnes of bulk samples to provide
material (reflective of the final iron ore product) for offtake discussions and marketing and for further
metallurgical testing and beneficiation testwork to optimise the plant design for mine crushing and the screening
circuit.11 The test pit was excavated close to the eastern edge of the three kilometre long outcropping hematite
ridge and clearly exposed the multiple bands of high-grade hematite iron ore, which extend to depth and ~three
kilometres east to west along strike. Head Grade analyses of a 90:10 blend of high-grade hematite:waste ore by
ALS Metallurgy Iron Ore Technical Centre (ALS IOTC) confirmed that a 62% Lump product low in alumina and a
59% Fines product with a moderate level of alumina can be achieved.
In addition, sampling from surface to a depth of 1.5 metres approximately 100 metres north of the hematite
ridge indicated the presence of loose scree dominated by high-grade hematite. Screening and assay results
from this detrital material showed a highly encouraging product grade of 60% Fe, 6.4% SiO2 and 3.4% Al2O3
with a mass recovery of 83% on crushing to -32mm and simple wet screening at +1mm size.
6 Refer Strike’s ASX Announcement dated 10 October 2019: Outstanding Metallurgical Testwork Results at Paulsens East Iron Ore
Deposit Indicate 79% Lump Yield with Low Impurities
7 Refer Strike’s ASX Announcement dated 28 November 2019: Excellent Scoping Study Results for Paulsens East Iron Ore Project
8 Refer Strike’s ASX Announcements dated 9 April 2020: Revised Scoping Study for Utah Point, Port Hedland Supports Excellent Project
Economics for Paulsens East Iron Ore Project and 25 March 2020: Utah Point, Port Hedland Considered as Preferred Port Option for
Paulsens East Iron Ore Project
9 Refer Strike’s ASX Announcement dated 17 August 2020: Native Title Agreement Paves Way for Iron Ore Development
10 Refer Strike’s ASX Announcement dated 7 September 2020: Grant of Mining Lease for Paulsens East Iron Ore Project
11 Refer Strike’s ASX Announcement dated 14 October 2020: Discovery of High Grade Iron Rich Detritals at Surface at Paulsens East
ANNUAL REPORT | 52
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
COMPANY PROJECTS
Detrital iron ore deposits are formed by weathering and erosion of outcropping iron mineralisation, with such
eroded material often being found at the base of outcropping ridges of mineralised rock (as at Paulsens East)
presenting itself as pebbles and fine gravel mixed up with soil and alluvium. The technique for mining and
upgrading detrital iron ore typically includes simple excavation (e.g. using a bulldozer and front end loader)
and minor crushing to the required top size together with relatively inexpensive dry or wet screening. Because
the detrital material is already broken and reduced in size, strip ratios are exceptionally low and no drilling or
blasting would typically be required. Thus, potential exists for significant savings in the cost of mining surface
detrital materials, compared to mining normal bedrock deposits.
In October 2020, Strike completed a sampling programme to test the potential extent and quality of the detrital
material at Paulsens East. 50 pits were excavated (varying in depth from 0.25 metre and up to 3 metres deep
in places, with the depth typically increasing further away from the base of the hematite ridge) over an area
totalling 8.1 hectares where surface detrital material was visible.12 Samples have been sent for metallurgical
test work and analysis to determine the Fe grade, impurities and the best manner for the detrital material to
be upgraded to a DSO product.
On 30 October 2020, Strike announced the completion of the Feasibility Study on Paulsens East, which
confirmed strong project economics for a 1.5Mtpa production rate over an initial 4 year LOM with DSO (lump
and fines) product trucked to Port Hedland for export.13
As part of the completion of the Feasibility Study, part of the JORC Indicated Mineral Resource has been
converted to a maiden JORC Probable Ore Reserve of 6.2 million tonnes at 59.9% Fe, 7.43% SiO2, 3.77%
Al2O3 and 0.086% P (at a cut-off grade of 55% Fe).
A full copy of Strike’s ASX announcement on the Feasibility Study and maiden JORC Probable Ore Reserve
is included on pages 2 – 50 of this Annual Report.
Activities Proposed for Paulsens East
The following Paulsens East related activities and work programmes are planned/underway:
•
•
•
•
•
•
•
Completion of metallurgical testing and beneficiation testwork on three-tonne test pit bulk sample
collected in August 2020.
Completion of analysis and testwork on hematite rich detrital samples collected from 50 shallow (0.25
– 3 metre) pits excavated along a 1.5km strike length on the northern side of the hematite ridge in
October 2020.
The conclusion of all remaining access agreements to pave the way for the grant of Miscellaneous
Licences required for mining operations.
The finalisation and submission of the Mining Proposal (for approval to undertake mining operations
on the Mining Lease) to the Western Australian Department of Mines, Industry Regulation and Safety
(DMIRS).
Undertake residual Heritage Surveys required and secure all required clearances from the PKKP, for
proposed mining operations.
Advancing contract negotiations with potential/preferred providers in respect of mine site construction,
haulage and access roads construction, drill and blast, mining and crushing services, fuel supply and
on-site fuel facility installation, telecommunications installation, camp facilities and other related
infrastructure and services in support thereof.
Continued engagement with the preferred haulage contractor.
12 Refer Strike’s ASX Announcement dated 26 October 2020: Iron Detrital Sampling Programme Completed at Paulsens East
13 Refer Strike’s ASX Announcement dated 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow
Generation and Financial Returns - the Company confirms that all material assumptions underpinning the production targets and
forecast financial information derived from the production targets in this announcement continue to apply and have not materially
change
ANNUAL REPORT | 53
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
COMPANY PROJECTS
•
•
•
•
Continued engagement with the Pilbara Ports Authority (PPA) to utilise the Utah Point Multi-User Bulk
Handling facility at Port Hedland.
Advancing offtake agreements.
Advancing all applications for permits, licences and other regulatory approvals required for proposed
mining operations (ie. DMIRS, Department of Water and Environmental Regulation (DWER), Main
Roads WA).
Development of appropriate systems and processes for Health and Safety, Environmental
Management, Heritage Management, Risk Management, Contractor Management and Compliance.
Recent ASX Announcements
For further reference, refer to Strike’s recent ASX Announcements on Paulsens East:
•
•
•
•
•
•
•
•
30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow Generation and
Financial Returns
26 October 2020: Iron Detrital Sampling Programme Completed at Paulsens East
14 October 2020: Discovery of High Grade Iron Rich Detritals at Surface at Paulsens East
7 September 2020: Grant of Mining Lease for Paulsens East Iron Ore Project
2 September 2020: Test Pit and Bulk Samples to Advance Offtake Agreements Completed at Paulsens
East
17 August 2020: Native Title Agreement Paves Way for Iron Ore Development
22 July 2020: Native Title Agreement Progress to Final Stage
15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential at Paulsens East
Iron Ore Project
ANNUAL REPORT | 54
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
COMPANY PROJECTS
Apurimac Iron Ore Project (Peru)
(Strike – 100%)
Strike’s Apurimac Iron Ore Project in Peru is recognised as one of the highest grade, large scale magnetite
projects in the world with the potential to support the establishment of a significant iron ore operation. Over
A$50 Million has been expended by Strike since 2005 on acquisition, exploration, studies and administration
costs relating to its Peru assets.
Figure 1: Strike Apurimac Iron Ore Project, showing route of proposed Andahuaylas Railway
Prior Pre-Feasibility Studies
A Pre-Feasibility Study completed in 200814 and updated in 2010 15 on the Apurimac Project indicated clear
potential for development of a world class iron ore project, with competitive capital costs and very low
operating costs:
•
•
The 2008 Pre-Feasibility Study undertaken by Snowden Mining Industry Consultants and SKM utilised
a proposed slurry pipeline configuration but considered a range of infrastructure options including a
railway. The concentrate pipeline was the preferred transport solution (under the study) as the
additional capital cost of building a railway compared to a slurry pipeline outweighed the operational
and other benefits of a railway. For further details, refer to Strike’s ASX Announcement dated 23 July
2008: Prefeasibility Results Confirm World Class Prospects in Peru.
Further infrastructure studies were undertaken by Ausenco Sandwell and SRK Consulting in 2010,
including a more detailed technical and costing study on building and operating a dedicated railway.
The purpose of these studies was to further compare the economics of the slurry pipeline versus
railway infrastructure solutions at various production levels. For further details, refer to Strike’s ASX
Announcement dated 23 November 2010: Apurimac Project Update and Strike’s December 2010
Quarterly Report.
14 Refer Strike’s ASX Announcement dated 23 July 2008: Prefeasibility Results Confirm World Class Prospects in Peru
15 Refer Strike’s ASX Announcement dated 23 November 2010: Apurimac Project Update and Strike’s December 2010 Quarterly Report
ANNUAL REPORT | 55
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
COMPANY PROJECTS
Andahuaylas Railway Study
In early 2018, the Peru Government signalled its intention to undertake a formal study to build a multi-user
railway from the inland city of Andahuaylas in southern Peru, to the mineral export Port of San Juan de
Marcona on the west coast of Peru (the Andahuaylas Railway). 16
In October 2018, the Ministry of Transport and Communications in Peru (MOTC) awarded a tender to an
international consortium of engineering companies (Consorcio Ferrocarril Del Sur, the Southern Railway
Consortium) to complete a study on the construction of the Andahuaylas Railway.17
Strike understands that the primary motivation behind the MOTC Andahuaylas Railway initiative is to provide
economic stimulation to the relatively poorer regions of Ica, Arequipa, Ayacucho and Apurimac. The Apurimac
Region in particular is positioned well inland and has historically suffered from lack of good transport
infrastructure connecting it to the coastal areas and the Peru capital, Lima.
Strike’s Apurimac Project is located only 20km from the city of Andahuaylas. The proposed Andahuaylas
Railway (approximately 570km in length) would provide a direct link from the Apurimac Project to an
established mineral export port, significantly improving development options for Apurimac, which would be
one of the biggest users of the railway.
Included in Strike’s Pre-Feasibility Studies on Apurimac (referred to above) was a comprehensive study
undertaken by international engineering companies into the technical and commercial aspects of building a
railway from Andahuaylas to San Juan de Marcona. A detailed route alignment was mapped by Strike,
together with capital and operating cost estimates (in the order of +- 20%) relating to:
•
•
•
•
track infrastructure;
equipment, including locomotives, ore wagons, maintenance of way machines, vehicles etc;
maintenance and operating facilities, including repair shops, tools and equipment, railway offices,
communications and train control equipment, bunkhouses and online buildings; and
railway system manpower.
The Andahuaylas Railway
route
proposed by the MOTC (refer Figure
1) almost exactly mirrors the railway
route considered by Strike in its own
Pre-Feasibility Studies on Apurimac
(referred to above).
The scale of Strike’s Apurimac
Project, if it proceeds through the
Andahuaylas Railway, is likely to
provide for very significant economic
benefits to the Apurimac Province in
terms of both direct investment and
job creation. Other mineral projects
in the Apurimac Region are also
likely to directly benefit from the
Andahuaylas Railway (refer Figure
2).
Figure 2: Mineral Projects in the Apurimac Regions
16 Refer Strike’s ASX Announcement dated 8 February 2018: Peru Government Plans Railway Linking Strike’s Apurimac Iron Ore Project
to Port
17 Refer Strike’s ASX Announcement dated 24 October 2018: Peru Government Awards $13 Million Tender for Andahuaylas Railway
Study Linking Strike’s Apurimac Iron Ore Project to Port
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A railway would also allow for capital and processing costs at the mine to be substantially reduced, given the
considerably simplified process to produce lump and fines products from Strike’s high-grade ore compared
to producing a slurry concentrate.
In April 2019, Strike executed a Cooperation and Confidentiality Agreement with the Southern Railway
Consortium 18. Given the scale of economic and social benefits which the Andahuaylas Railway will bring to
the Apurimac Region (and Peru as a country), Strike has agreed to share its own railway study with the
Southern Railway Consortium, provide input and advice and otherwise cooperate with the consortium in
whatever way it can to expedite the completion of its feasibility study.
In August 2019, the Managing Director attended a review meeting in Peru with representatives from the
Southern Railway Consortium and other major mining companies operating in or close to the Apurimac region.
At this meeting it was confirmed that the consortium had selected the preferred route for the Andahuaylas
Railway, which aligns with the route previously identified by Strike in its own studies. This route leads directly
to the existing Airport at Andahuaylas, which is located only several hundred metres from Strike’s main
Opaban I deposit at Apurimac (refer Figure 3).
Figure 3: Outcropping Iron ore at the Opaban 1 ore body (with Andahuaylas Airport in the background)
The selection of the preferred Andahuaylas Railway route is significant for Strike, since if the railway goes
ahead as planned using this route it will deliver the ideal transport infrastructure solution to advance the
Apurimac Project, with the railway line envisaged to start directly at Strike’s Apurimac Project and terminating
at a multi-user export port on the coast of Peru.
Due to the impact of the COVID-19 pandemic, Strike understands that the Southern Railway Consortium’s
Andahuaylas Railway Study has been delayed beyond its original published timetable (of mid-2020).
18 Refer Strike’s ASX Announcement dated 18 April 2019: Strike Enters into Cooperation Agreement with Peru Railway Consortium
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JORC Mineral Resources
A JORC (2012) Indicated and Inferred Mineral Resource has been defined at the main Opaban 1 and
Opaban 3 concessions of 269Mt of iron ore at 57.3% Fe (142 Mt Indicated Resource at 57.84% Fe and 127
Mt Inferred Resource at 56.7% Fe). 19
The exceptionally high-grade +57% Fe magnetite iron at Apurimac is almost twice as high as the grades of
magnetite deposits developed in Australia. The Apurimac ore bodies present as continuous broad zones of
mineralisation with predominantly high grade, coarse grained magnetite providing comparatively high mass
recoveries (>60%) at coarse grind size (>500 microns).
Favourable topography (refer Figure 4) indicates the potential for a low mining strip ratio (between 1.2 – 1.8)
and the coarse-grained nature of the ore provides significant processing energy savings as only coarse
grinding is necessary to liberate the magnetite.
Metallurgical testwork on reverse circulation chip samples from the Opaban 1 ore body has returned excellent
product grades with low impurities, at coarse crushing with particle sizes of 80% passing 125 and 250 microns:
Table 1: Testwork results showing potential for high grade, low impurity product from Opaban 1 ore
%
68.02 to 68.28
Fe
0.01 to 0.02
P
1.51 to 1.77
SiO2
Al2O3 0.30 to 0.35
Within the Apurimac JORC Mineral Resource, there has also been identified the potential for low impurity
Direct Shipping Ore (DSO) material of approximately 67.9 Mt at 61.5% Fe with low impurities (refer Table 2),
which could be mined from surface and shallow near surface mineralisation.
Table 2: Opaban 1 DSO characteristics
%
61.5
Fe
0.03
P
0.1
S
Al2O3 1.7
1.0
LOI
In addition to the current JORC Mineral Resource, there is significant exploration potential given the deposits
are open at depth and along strike with very promising drill results including 154m @ 62% Fe and extensive,
undrilled gravity and magnetic anomalies.
19 Refer Strike’s ASX Announcement dated 19 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard
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Figure 4: Opaban I deposit has favourable topography for low strip-ratio, open cut mining
Small-Scale Production Potential
Strike has examined ways in which it can potentially bring a small scale mining and trucking operation into
production utilising very high grade surface and near surface mineralisation that is present across the Opaban
1 and Opaban 3 deposits.
As referred to above, within the current JORC Mineral Resource of 269 Mt at 57.3% Fe there has been
identified the potential for DSO material of approximately 67.9 Mt at 61.5% Fe (with low impurities) to be
mined from surface and shallow near surface mineralisation.
In December 2013, Strike commenced a pilot operation, where approximately 8,000 tonnes of ore was mined
from surface outcrops from its concessions by local artisanal miners, using an excavator.
Figure 5: Excavation of high-grade iron ore from Opaban 3, 2013
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Figure 6: Stockpile created from artisanal mining at Opaban 3 deposit, 2013
Once mined, the ore was transported to a third-party crushing plant near the coastal town of Pisco in Southern
Peru. After crushing, the ore was sold to a local steel plant for use in their blast furnace to produce steel for
the domestic market.
The quality of iron ore product delivered to the plant was consistently superior than the minimum
characteristics specified by the plant (refer Table 3).
Table 3: Peru steel plant minimum specifications for delivered iron ore
Fe
P
S
SiO2
%
> 64
< 0.08
< 0.08
< 4.0
Strike gained valuable experience in the mining and transport of iron ore from its concessions during this pilot
programme and believes that, given the current and expected iron ore price in the medium term, the pilot
programme can potentially be expanded to produce a small scale but high grade iron ore mining operation in
a relatively short period, for export of iron ore to China.
Such an operation would need to be undertaken in compliance with Peruvian legislation permitting small
groups of local ‘artisanal miners’ (that are in the process of being formalised under applicable regulations) to
mine up to 350 tonnes per day (or ~125,000 tonnes per annum) from specific portions of a mining concession.
This legislation allows for significantly reduced timetables and simplified processes for obtaining
environmental and other permitting.
Based upon the pilot production previously undertaken and a review of the DSO material, Strike would target
initial production of high-grade DSO with low impurities:
Table 4: Target characteristics of DSO material from Opaban 3
Fe
P
S
SiO2
LOI
Al2O3
%
64.35
0.07
0.07
2.85
0.56
0.91
Given Strike’s concessions contain multiple locations of outcropping ore, it is possible that multiple areas
could be mined simultaneously by different groups of local artisanal miners under Strike’s direction, thus
giving Strike the potential to sell several hundred thousand tonnes of DSO per year to Chinese (and potentially
other) buyers.
Strike has had discussions with the local community and artisanal miners, together with potential equipment
suppliers and transport operators and continues to examine the practicalities and commercial viability of
commencing such an operation in the near term.
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Strike notes that the Peruvian Government has restricted the ability of mining companies to undertake
exploration and other activities due to the COVID-19 pandemic and Strike believes this will have an impact
on any advancement of the Apurimac Project in the short-term.
Solaroz Lithium Project (Argentina)
(Strike – 90%)
The Solaroz Lithium Brine Project (Solaroz) comprises 8 (eight) exploitation concessions totalling 12,000
hectares (Solaroz Concessions) located mostly adjacent to and principally surrounded by concessions held
by ASX-listed Orocobre Limited (ASX:ORE ) and TSX-listed Lithium Americas Corporation (TSX:LAC), within
South America’s ‘Lithium Triangle’ in North-West Argentina.
Solaroz is located in the same Salar de Olaroz Basin as and directly adjacent to the producing Salar de Olaroz
Lithium Brine Project operated by Orocobre and its JV partner, Tokyo Stock Exchange listed Toyota Tsusho
Corporation (TYO:8015) (refer Figure 7).
The location of Solaroz is considered by Strike to be highly strategic and prospective for containing
commercial quantities and concentrations of lithium-rich brine, since Strike believes that the aquifer which
supplies the lithium-rich brine being extracted by Orocobre is likely to extend under Strike’s Solaroz
Concessions. This will be tested by geophysical work and drilling in due course with a view to fast tracking
production of lithium carbonate dependent upon these works being successfully concluded.
The Solaroz Concessions are located in the Jujuy Province in northern Argentina, approximately 230
kilometres north-west of the capital city of Jujuy and lie at an altitude of approximately 3,900 metres and are
accessed by good quality road infrastructure. The location is supported by favourable conditions in terms of
both the operating environment and local infrastructure. Very limited rainfall combined with dry, windy
conditions create the ideal environment for the brine-evaporation process. The area is also serviced by a gas
pipeline which intersects the Solaroz Concessions, high voltage electricity, and paved highways. Three major
seaports, Buenos Aires in Argentina, Antofagasta and Iquique in Chile, are serviced by international carriers
and are easily accessible by road and/or rail.
The Salar de Olaroz is one of a number of land locked salt lakes located high up in the Argentinian Puna
Region. The Salar de Olaroz Basin is bounded by a pair of north-south reverse faults that thrust Andes
Paleozoic sediment west to east as a result of the Pacific Plate colliding with the South American Plate. This
results in the west side of the basin being continually pushed higher which replenishes the sediment fill within
the basin.
Argentina holds the world’s biggest lithium resources (as brine deposits) and is currently the world’s third
largest producer of lithium, after Australia and Chile. One of the key attractions of lithium brine projects in
Argentina is their low cost of production compared to hard rock lithium projects – Argentinian (and Chilean)
lithium brine projects are well recognised as being the lowest on the lithium carbonate production cost curve.
The principle reason for the low operating cost is that lithium rich brine, once pumped to the surface (typically
from aquifers at up to several hundred metres depth) is then transferred to large evaporation ponds, which
rely on free energy from the sun and local atmospheric conditions to concentrate the brine. There are
generally no environmentally damaging tailings or toxic by-products.
Strike proposes to follow the well-established and proven production methodology for converting lithium-rich
brines into lithium carbonate in a similar manner to existing Argentinian based lithium brine producers.
In July 2019, Strike completed the preparation of an Environmental Impact Assessment (EIA) Report for
exploration work at Solaroz.20 The EIA Report includes results from collecting and monitoring baseline
environmental data and a detailed proposed fieldwork programme covering 2 years of proposed exploration
activity. Following a period of consultation with local community groups, the EIA Report was submitted to the
Jujuy Mining Authority (the provincial authority responsible for approving exploration and mining activities at
Solaroz) for review.
20 Refer Strike’s ASX Announcement dated 19 July 2019: Completion of Environmental Impact Assessment Report for Solaroz Lithium
Project, Argentina
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COMPANY PROJECTS
Strike understands that review and approval of the EIA Report has been delayed as a consequence of COVID-
19 issues in Argentina. The Argentine authorities have also restricted the ability of mining companies to
undertake exploration activities due to COVID-19. Strike continues to monitor the situation in Argentina and
will advise shareholders of developments as they occur.
Figure 7: Solaroz Project – Location of Concessions
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Figure 8: Photographs of Solaroz concession area taken from ‘Site A’ (top) facing North and ‘Site B’ (bottom) facing South
(Sites as identified in Figure 7: Solaroz Project – Location of Concessions)
The Solaroz Concessions lie over the same Salar de Olaroz Basin from which Orocobre is extracting and
processing lithium rich brine for sale as lithium carbonate since 2015. The Solaroz Concessions follow and
overlap into the visible white halite salt layer of the ‘Salar’ (salt lake) and extend as substantial flat areas with
1 - 2 metres of elevation to the visible halite area, providing the ideal location and topography for the
construction of evaporation ponds (refer Figure 8).
Strike’s interpretation of the basin architecture is that the aquifer which supplies the lithium-rich brine being
extracted by Orocobre (and targeted by other exploration and development companies in the area) extends
under the Solaroz Concessions (refer Figure 9).
Strike’s exploration target is based on the interpretation that the alluvial deposits upon which the Solaroz
Concessions are located (at the North-West corner of the Salar) have been deposited relatively recently and
lie directly above the productive deep sand unit of the lithium rich aquifer from which Orocobre is extracting
its brine (refer “Deep Sand Unit”, shown in yellow in Figure 9). This exploration target is conceptual in nature,
there has been insufficient exploration to estimate a JORC Mineral Resource in respect of the same and it
is uncertain if further exploration will result in the estimation of a JORC Mineral Resource.
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Figure 9: Geological cross sections depicting evolution of Olaroz Salar Basin
and Strike’s primary target zone for lithium mineralisation
This exploration target is conceptual in nature, there has been insufficient exploration to estimate a JORC
Mineral Resource in respect of the same and it is uncertain if further exploration will result in the estimation
of a JORC Mineral Resource.
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Strike’s geological interpretation indicates that the majority of the Solaroz Concessions are likely to lie directly
over the productive lithium rich aquifer. Previously published geophysical studies undertaken by Orocobre 21
indicate that the sub-surface brine hosting aquifers appear to extend well outside the boundaries of the visible
salt area and to depth and adds evidence supporting the likelihood of lithium rich brine hosted beneath the
Solaroz Concessions.
Other exploration and development companies (for example, Advantage Lithium Corp. (TSXV:AAL);
Millennial Lithium Corp. (TSXV:ML); Lake Resources N.L. (ASX:LKE) and Galan Lithium Limited (ASX:GLN)
have also confirmed through geophysics and drilling that lithium-rich brine hosting aquifers in Argentina tend
to extend well outside boundaries of today’s visible salt pans.
Burke Graphite Project (Queensland, Australia)
(Strike – ~70%)
The Burke Graphite Project is located in the Cloncurry region in North Central Queensland, where there is
access to well-developed transport infrastructure to an airport at Mt Isa (~122km) and a port in Townsville
(~783km).
Figure 10: Burke Graphite Project Tenement Location in North Central Queensland
21 Reference: Olaroz Technical Report dated 13 May 2011: Salar De Olaroz Lithium-Potash Project, Jujuy Province, Argentina
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A Mineral Resource Estimate (MRE) for the Burke Project has defined a maiden Inferred Mineral Resource
of22:
•
6.3 million tonnes @ 16.0% Total Graphitic Carbon (TGC) for 1,000,000 tonnes of contained
graphite;
• Within the mineralisation envelope there is included higher grade material of 2.3 million tonnes @
20.6% TGC (with a TGC cut-off grade of 18%) for 464,000 tonnes of contained graphite which will be
investigated further.
In addition to the high-grade nature of the deposit, the Burke Graphite Project:
•
•
•
•
Comprises natural graphite that has been demonstrated to be able to be processed by standard
flotation technology to international benchmark product categories. The flotation tests conducted by
Independent Metallurgical Operations Pty Ltd (IMO) have confirmed that a concentrate of purity in
excess of 95% and up to 99% TGC can be produced using a standard flotation process;
Contains graphite from which Graphene Nano Platelets (GNP) have been successfully extracted direct
from the Burke Graphite deposit via Electrochemical Exfoliation (ECE). The ECE process is relatively
low cost and environmentally friendly compared to other processes, yet it can produce very high purity
Graphene products. The ECE process is however not applicable to the vast majority of worldwide
graphite deposits as it requires a TGC of over 20% and accordingly the Burke Deposit has potentially
significant processing advantages over other graphite deposits;
Is located in the relatively safe and mining friendly jurisdiction of Queensland, Australia with well-
developed transport infrastructure and logistics nearby; and
Is potentially amenable to low cost open-pit mining.
High Grade Intersections from Drilling
A maiden drilling campaign was undertaken by Strike between 24 April 2017 and 14 May 2017 to test the
graphite mineralisation in the key Burke tenement, EPM 2544323. Total metres drilled were 735.2m (618m in
9 RC holes and 117.2m in one diamond core hole) spread across four cross-sections over a strike length of
500m.
Drilling confirmed the continuity of high grade (>10%) graphite mineralisation over 500m along strike in the
NE-SW direction and confirmed the presence of extensive zones of very high-grade graphite mineralisation,
commencing at surface and extending to at least 100m in depth (refer Figure 11). Intersections encountered
include:
•
•
Diamond Core Hole BGDD001 : 99.8 Metres @ 21.1% TGC from 9 metres depth; and
RC Hole BGRC001 : 43 Metres @ 18.87% TGC from 21 metres depth.
22 Refer Grade Tonnage Data in Table 2 of CSA Global’s Burke Graphite Project MRE Technical Summary dated 9 November 2017
(attached as Annexure A of Strike’s ASX Announcement dated 13 November 2017: Maiden Mineral Resource Estimate Confirms Burke
Project as One of the World’s Highest Grade Natural Graphite Deposits)
23 Refer Strike’s ASX Announcements dated and 13 June 2017: Extended Intersections of High-Grade Graphite Encountered at Burke
Graphite Project and 21 June 2017: Further High-Grade Intersection Encountered at Burke Graphite Project
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Figure 11: Burke Tenement Drilling Cross Section 7830950mN
Ground EM Surveys
A ground Electro Magnetic (EM) survey was completed in June 2018, covering the south-eastern corner of
Burke tenement EPM 25443 (drilled by Strike in 2017) 24 and the Corella tenement EPM 25696 (South)
(located ~20 km south of EPM 25443) 25.
The EM survey identified the Corella Prospect as a significant target area for additional high-grade
mineralisation as well as identifying new zones of increased conductivity adjacent to previously drilled graphite
mineralisation at the Burke Prospect.
The Corella Prospect (north east corner of EPM 25696 (South)) EM survey was carried out over outcropping
and sub-cropping Geological Survey of Queensland mapped Graphitic Schists - the “Milo beds” - within the
Corella Formation. Graphite grading 5 -10% TGC is widespread throughout the outcropping Milo beds and
the EM survey was carried out to identify higher-grade areas of mineralisation and identify future drill targets.
The survey highlighted an area of approximately 1000m x 500m (refer Figure 12) within which conductive
features similar to those corresponding to high-grade graphite occurring at the Burke EPM 2543 tenement
were identified.
24 Refer Strike’s ASX Announcements dated 13 June 2017: Extended Intersections of High-Grade Graphite Encountered at Burke
Graphite Project and 21 June 2017: Further High-Grade Intersection Encountered at Burke Graphite Project
25 Refer Strike’s ASX Announcement dated 26 June 2018: Burke Graphite Project – New Target Area Identified From Ground Electro-
Magnetic Surveys
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Figure 12: EM Survey - Corella Prospect, Burke Graphite Project
The conductive features identified at the Corella Prospect appear to be shallow to flat-lying and occur in areas
of outcropping and sub-cropping graphite that have rock chips (from previous sampling by Strike) of up to
14.85% TGC26.
In addition to identifying the new potential at Corella, the EM survey identified minor structural offsets, together
with new zones of increased conductivity at the previously drilled Burke Prospect.
26 Refer Strike’s ASX announcement dated 21 April 2017: Jumbo Flake Graphite Confirmed at Burke Graphite Project, Queensland
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Figure 13: EM Survey - Burke Prospect, Burke Graphite Project
The EM survey over the south-eastern corner of Burke EPM 2543 was carried out over outcropping and sub-
cropping Geological Survey of Queensland mapped Graphitic Schists of the Corella Formation. The survey
highlighted the high-grade graphite identified in Strike’s maiden drilling programme and identified minor
structural offsets, together with new zones of increased conductivity (refer Figure 13). In addition, the survey
verified the width and dip of the drill intersected high-grade graphite.
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DIRECTORS’ REPORT
The Directors present their report on Strike Resources Limited ABN 94 088 488 724 (Company or SRK) and
its controlled entities (the Consolidated Entity or Strike) for the financial year ended 30 June 2020 (Balance
Date).
SRK is a company limited by shares that was incorporated in Western Australia and has been listed on the
Australian Securities Exchange (ASX) since 7 March 2000 (ASX Code: SRK).
The Company has prepared a consolidated financial report incorporating the entities that it controlled during
the financial year, being wholly owned subsidiaries.
PRINCIPAL ACTIVITIES
Strike Resources Limited is an ASX listed resource company which is developing the Paulsens East Iron Ore
Project in Western Australia. Strike also owns the high grade Apurimac Magnetite Iron Ore Project in Peru
and is also developing a number of battery minerals related projects around the world, including the highly
prospective Solaroz Lithium Brine Project in Argentina and the Burke Graphite Project in Queensland.
Strike’s principal activities during the financial year were:
•
•
the evaluation and development of its Paulsens East Iron Ore Project in Western Australia;
the advancement of environmental approvals for an exploration programme at its Solaroz Lithium-
Brine Project in Argentina;
•
•
the evaluation of its Apurimac Iron Ore Project in Peru; and
the evaluation of its Burke Graphite Project in Queensland.
OPERATING RESULTS
Consolidated
Total revenue
Total expenses
Loss before tax
Income tax expense
Loss after tax
CASH FLOWS
Consolidated
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Net change in cash held
Cash held at year end
June 2020
$
74,016
(1,475,729)
(1,401,713)
-
(1,401,713)
June 2020
$
(1,623,313)
1,063,496
2,609,968
2,050,151
3,241,161
June 2019
$
306,461
(2,181,554)
(1,875,093)
-
(1,875,093)
June 2019
$
(1,728,417)
568,164
-
(1,160,253)
1,289,411
In addition to its cash reserves, Strike held an investment portfolio of $0.164 million comprising securities in
ASX listed resource stocks (30 June 2019: $1.34 million).
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DIRECTORS’ REPORT
FINANCIAL POSITION
Consolidated
Cash
Financial assets at fair value through profit or loss
Exploration and evaluation expenditure
Receivables
Other assets
Liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total equity
June 2020
$
3,241,161
164,083
1,016,713
57,494
9,991
(254,373)
4,235,069
151,049,893
15,065,961
(161,880,785)
4,235,069
June 2019
$
1,289,411
1,340,686
348,956
166,391
7,502
(117,992)
3,034,954
148,439,925
15,074,101
(160,479,072)
3,034,954
REVIEW OF OPERATIONS
Paulsens-East Iron Ore Project (Western Australia)
The Paulsens East Iron Ore Project is located approximately 140 kilometres west of Tom Price, 8 kilometres
from the Paulsens Gold Mine, ~233 kilometres by road (of which ~210 kilometres is good quality paved road)
from the Port of Onslow and ~590 kilometres by road from Port Hedland. Paulsens East consists of hematite
iron ore mineralisation occurring as a ridge rising to approximately 60 metres above the valley floor and
extending for approximately 3,000 metres West to East.
With an increase in iron ore prices, in June 2019, Strike recommenced previous work (conducted between
2006 – 2008) to examine the potential for undertaking a Direct Shipping Ore (DSO) mining operation using
contract mining, crushing and transportation by truck to port then ship to China.1
On 18 July 2019, Strike reported a significant Maiden JORC Inferred Mineral Resource for Paulsens East.2
On 4 September 2019, Strike reported a significant upgrade of the Paulsens East resource from an Inferred
to an Indicated JORC Mineral Resource category.3
On 28 November 2019, Strike released the results of a Scoping Study based upon ore being trucked from
the mine to Onslow predominantly by sealed road, where it will be stockpiled prior to being loaded directly
from the wharf at Beadon Creek for transhipment into ocean going vessels for export to customers.4
On 9 April 2020, Strike released the results of a Revised Scoping Study based upon the Utah Point Multi-
User Bulk Handling facility (Utah Point) in Port Hedland as the export port.5
1 Refer Strike’s ASX Announcement dated 19 June 2019: Strike’s Iron Ore Assets
2 Refer Strike’s ASX Announcement dated 15 July 2019: Maiden JORC Resource of 9.1 Million Tonnes at 63.4% Fe - Paulsens East Iron Ore
Project in the Pilbara
3 Refer Strike’s ASX Announcement dated 4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated Category at
Paulsens East Iron Ore Project
4 Refer Strike’s ASX Announcement dated 28 November 2019: Excellent Scoping Study Results for Paulsens East Iron Ore Project
5 Refer Strike’s ASX Announcements dated 9 April 2020: Revised Scoping Study for Utah Point, Port Hedland Supports Excellent Project
Economics for Paulsens East Iron Ore Project and 25 March 2020: Utah Point, Port Hedland Considered as Preferred Port Option for Paulsens
East Iron Ore Project
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DIRECTORS’ REPORT
On 14 August 2020, Strike entered into a Native Title Mining Agreement (Native Title Agreement) and State
Deed (for the grant of a mining lease) (State Deed) with the PKKP Aboriginal Corporation RNTBC (PKKPAC).
The PKKPAC holds native title on trust for the benefit of the Puutu Kunti Kurrama and Pinikura People (PKKP)
Traditional Owners. 6
On 4 September 2020, Strike received the grant of a Mining Lease (M47/1583) for an initial term of 21 years.7
For further details, please refer to Strike’s announcements on the Paulsens East Iron Ore Project:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
7 September 2020: Grant of Mining Lease for Paulsens East Iron Ore Project
2 September 2020: Test Pit and Bulk Samples to Advance Offtake Agreements Completed at Paulsens
East
17 August 2020: Native Title Agreement Paves Way for Iron Ore Development
22 July 2020: Native Title Agreement Progress to Final Stage
15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential at Paulsens East
Iron Ore Project
22 June 2020: Engenium to Complete Paulsens East Feasibility Study
29 April 2020: MOU Executed for Iron Ore Haulage Services with Campbell Transport for Paulsens
East Iron Ore Project
9 April 2020: Revised Scoping Study for Utah Point, Port Hedland Supports Excellent Project
Economics for Paulsens East Iron Ore Project
3 April 2020: Final Heritage Surveys Now Completed for Paulsens East Iron Ore Project
25 March 2020: Utah Point, Port Hedland Considered as Preferred Port Option for Paulsens East Iron
Ore Project
12 February 2020: Substantial Progress Towards Development of Paulsens East Iron Ore Project
5 December 2019: Drilling and Surface Sampling Results at Paulsens East Iron Ore Project
4 December 2019: High Grade Results Located 1.6km from 9.6Mt Resource
28 November 2019: Excellent Scoping Study Results for Paulsens East Iron Ore Project
19 November 2019: Beadon Creek Onslow Selected as Preferred Port for Paulsens East
24 October 2019: Strike Strengthens Management Team for Paulsens East Iron Ore Project with Key
Appointments
10 October 2019: Outstanding Metallurgical Testwork Results at Paulsens East Iron Ore Deposit
Indicate 79% Lump Yield with Low Impurities
4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated Category at
Paulsens East Iron Ore Project
15 July 2019: Maiden JORC Resource of 9.1 Million Tonnes at 63.4% Fe – Paulsens East Iron Ore
Project in the Pilbara
1 August 2019: Strong Progress at the Paulsens East Iron Ore Project
19 June 2019: Strike’s Iron Ore Assets
6 Refer Strike’s ASX Announcement dated 17 August 2020: Native Title Agreement Paves Way for Iron Ore Development
7 Refer Strike’s ASX Announcement dated 7 September 2020: Grant of Mining Lease for Paulsens East Iron Ore Project
ANNUAL REPORT | 72
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A.B.N. 94 088 488 724
DIRECTORS’ REPORT
Solaroz Lithium Project (Argentina)
Strike holds a 90% interest in the highly prospective Solaroz Lithium Brine Project (Solaroz) within South
America’s ‘Lithium Triangle’ in North-West Argentina.8
Solaroz comprises 8 exploitation concessions totalling 12,000 hectares located in Jujuy Province in northern
Argentina and is located in the same Salar de Olaroz Basin as the producing Salar de Olaroz Lithium Brine
Project operated by Orocobre Limited (ASX:ORE) (and its JV partner, Tokyo Stock Exchange listed Toyota
Tsusho Corporation (TYO:8015)) and concessions held by Lithium Americas Corporation (TSX:LAC).
In July 2019, Strike completed the preparation of an Environmental Impact Assessment (EIA) Report for
exploration work at Solaroz.9 The EIA Report includes results from collecting and monitoring baseline
environmental data and a detailed proposed fieldwork programme covering 2 years of proposed exploration
activity. Following a period of consultation with local community groups, the EIA Report was submitted to the
Jujuy Mining Authority (the provincial authority responsible for approving exploration and mining activities at
Solaroz) for review.
Strike understands that the review and approval of its EIA Report by the Jujuy Mining Authority has been
delayed by COVID-19 pandemic related issues in Argentina. The Argentine authorities have also restricted
the ability of mining companies to undertake exploration activities due to the COVID-19 pandemic. Both of
these matters will impact upon Strike advancing this project in the short-term.
The terms of acquisition are also summarised in Note 22(g) (Contingencies - Deferred Payments Relating to
Acquisition of Solaroz Lithium Project (Argentina)) of the accompany financial statements.
For further details, please refer to Strike’s announcements on the Solaroz Lithium Brine Project:
•
•
•
19 July 2019: Completion of Environmental Impact Assessment Report for Solaroz Lithium Project,
Argentina
17 April 2019: Strike Commences Solaroz Lithium Brine Project Work Programme in Argentina
13 March 2019: Strike Secures Solaroz Lithium Brine Project in Argentina’s Lithium Triangle, a copy
of which is attached to this Half Year Report
Apurimac Iron Ore Project (Peru)
Strike’s Apurimac Iron Ore Project in Peru is recognised as one of the highest grade, large scale magnetite
projects in the world with the potential to support the establishment of a significant iron ore operation.10 Over
A$50 million has been invested by Strike since 2005 on acquisition, exploration, study and operational costs
relating to its Peru assets, including a Pre-Feasibility Study completed in 200811 and updated in 201012 on
the Apurimac Project.
The Ministry of Transport and Communications in Peru (MOTC) has awarded a tender to an international
the Southern Railway
consortium of engineering companies (Consorcio Ferrocarril Del Sur,
Consortium) 13 to complete a study on the construction of a multi-user railway from the inland city of
Andahuaylas in southern Peru, to the mineral export Port of San Juan de Marcona on the west coast of Peru
(the Andahuaylas Railway). 14
8 Refer Strike’s ASX Announcement dated 13 March 2019: Strike Secures Solaroz Lithium Brine Project in Argentina’s Lithium Triangle
9 Refer Strike’s ASX Announcement dated 19 July 2019: Completion of Environmental Impact Assessment Report for Solaroz Lithium Project,
Argentina
10 Refer Strike’s ASX Announcement 20 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard
11 Refer Strike’s ASX Announcement dated 23 July 2008: Prefeasibility Results Confirm World Class Prospects in Peru
12 Refer Strike’s ASX Announcement dated 23 November 2010: Apurimac Project Update and Strike’s December 2010 Quarterly Report
13 Refer Strike’s ASX Announcement dated 24 October 2018: Peru Government Awards $13 Million Tender for Andahuaylas Railway Study Linking
Strike’s Apurimac Iron Ore Project to Port
14 Refer Strike’s ASX Announcement dated 8 February 2018: Peru Government Plans Railway Linking Strike’s Apurimac Iron Ore Project to Port
ANNUAL REPORT | 73
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
DIRECTORS’ REPORT
Strike’s Apurimac Project is located only 20km from the city of Andahuaylas. The proposed Andahuaylas
Railway (approximately 570km in length) would provide a direct link from Strike’s Project to an established
mineral export port, significantly improving the Apurimac Project’s development prospects.
In April 2019, Strike executed a Cooperation and Confidentiality Agreement with the Southern Railway
Consortium to share its own railway study12, provide input and advice and otherwise cooperate with the
consortium in whatever way it can to expedite the completion of its feasibility study.15
In August 2019, Strike’s Managing Director attended a review meeting in Peru with representatives from the
Southern Railway Consortium and other major mining companies operating in or close to the Apurimac region.
At this meeting it was confirmed that the consortium had selected the preferred route for the Andahuaylas
Railway, which aligns with the route previously identified by Strike in its own studies.16
Due to the impact of the COVID-19 pandemic, Strike understands that the Southern Railway Consortium’s
Andahuaylas Railway Study will be delayed beyond its original published timetable (of mid-2020). In
addition, Strike notes that the Peruvian Government has also restricted the ability of mining companies to
undertake exploration activities due to the COVID-19 pandemic and Strike believes this will have an impact
on any advancement of this project in the short-term.
Burke Graphite Project (Queensland)
Strike’s Burke Graphite Project17 (in which Strike holds a ~70% interest 18) is located in the Cloncurry region
in North Central Queensland, where there is access to well-developed transport infrastructure to an airport at
Mt Isa (~122km) and a port in Townsville (~783km).
In November 2017, Strike defined a maiden Inferred Mineral Resource estimate for the Burke Project with the
grades placing the Burke deposit as one of the highest-grade deposits of graphite in the world held by an
Australian listed company.19
In June 2018, Strike announced the completion of a ground Electro Magnetic (EM) survey covering the south-
eastern corner of Burke tenement EPM 25443 (North) (drilled by Strike in 201720) and the Corella tenement
EPM 25696 (South) (located ~20 km south of EPM 25443), which identified the Corella Prospect as a
significant target area for additional high grade mineralisation as well as identifying new zones of increased
conductivity adjacent to previously drilled graphite mineralisation at the Burke Prospect.21
No material activity was undertaken on this project during the financial year - the COVID-19 pandemic will
have an impact on any advancement of this project in the short-term.
For further details, please refer to Strike’s announcements on the Burke Graphite Project:
•
•
•
26 June 2018: Burke Graphite Project – New Target Area Identified From Ground Electro-Magnetic
Surveys
13 November 2017: Maiden Mineral Resource Estimate Confirms Burke Project as One of the World’s
Highest Grade Natural Graphite Deposits
16 October 2017: Test-work confirms the potential suitability of Burke graphite for Lithium-ion battery
usage and Graphene production
15 Refer Strike’s ASX Announcement dated 18 April 2019: Strike Enters into Cooperation Agreement with Peru Railway Consortium
16 Refer also Strike’s ASX Announcement dated 5 December 2019: Railway Project Gathers Momentum in Peru – Positive Outlook for Strike’s
Apurimac Iron Ore Project
17 Refer Strike’s ASX Announcement dated 9 November 2016: Strike Secures Graphite Project in Queensland
18 In July 2017, Strike completed its earn-in obligations to acquire a 60% interest in the Burke Graphite Project tenements. All subsequent
expenditure on the project are shared in proportion to the owners’ interests (with an industry standard dilution to apply if a party elects not to
contribute their share).
19 Refer Strike’s ASX Announcement dated 13 November 2017: Maiden Mineral Resource Estimate Confirms Burke Project as One of the World’s
Highest Grade Natural Graphite Deposits).
20 Refer Strike’s ASX announcements dated 13 June 2017: Extended Intersections of High-Grade Graphite Encountered at Burke Graphite Project
and 21 June 2017: Further High-Grade Intersection Encountered at Burke Graphite Project
21 Refer Strike’s ASX Announcement dated 26 June 2018: Burke Graphite Project – New Target Area Identified From Ground Electro-Magnetic
Surveys
ANNUAL REPORT | 74
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
DIRECTORS’ REPORT
•
•
•
21 June 2017: Further High-Grade Intersection Encountered at Burke Graphite Project
13 June 2017: Extended Intersections of High-Grade Graphite Encountered at Burke Graphite Project
21 April 2017: Jumbo Flake Graphite Confirmed at Burke Graphite Project, Queensland
Quarterly Reports
Further information on the Consolidated Entity’s activities and operations during the financial year are also
contained in Strike’s Quarterly Activities and Cash Flow Reports lodged on ASX dated:
•
•
•
•
31 July 2020: Quarterly Activities and Cash Flow Reports for June 2020;
30 April 2020: Quarterly Activities and Cash Flow Reports for March 2020;
31 January 2020: Quarterly Activities and Cash Flow Reports for December 2019; and
31 October 2019: Quarterly Activities and Cash Flow Reports for September 2019.
DIVIDENDS
No dividends have been paid or declared during the financial year.
SECURITIES ON ISSUE
The Company has 207,134,268 fully paid ordinary shares on issue as at 30 June 2020 and currently (30 June
2019: 145,334,268). All such shares are listed on ASX. The Company has no other securities on issue.
CAPITAL RAISINGS
On 18 July 2019, the Company raised $0.981 million through a placement of 21,800,000 shares at 4.5 cents
per share to professional and sophisticated investors.22 This issue was ratified and approved by shareholders
at a general meeting23 held on 6 September 2019 24.
On 5 June 2020, the Company raised $1.8 million through a placement of 40,000,000 shares at 4.5 cents per
share to professional and sophisticated investors.25 This issue was ratified and approved by shareholders at
a general meeting 26 held on 2 September 202027, thus refreshing the Company’s 15% placement capacity
under the ASX Listing Rules.
The funds raised from these placements (net of expenses associated with their issue) are being applied
towards the costs of advancement of exploration, evaluation and development of the Company’s Paulsens
East Iron Ore Project and other resource projects and for general working capital purposes.
At the 2 September 2020 General Meeting, shareholders also approved a resolution giving the Directors the
flexibility and timeliness to issue up to 60 million new shares to wholesale (ie. sophisticated or professional)
investors (subject to a minimum price28) during a 3 month period after the date of the General Meeting, without
using up the Company’s 15% placement capacity and without the need to seek prior shareholder approval.
22 Refer Strike’s ASX Announcements dated 19 July 2019: Appendix 3B – New Issue and Application for Quotation – 21.8M and 15 July 2019:
Maiden JORC Resource of 9.1 Million Tonnes at 63.4% Fe - Paulsens East Iron Ore Project in the Pilbara
23 Refer Strike’s ASX Announcement dated 5 August 2019: Notice of General Meeting and Explanatory Statement
24 Refer Strike’s ASX Announcement dated 6 September 2019: Results of General Meeting
25 Refer Strike’s ASX Announcements dated 5 June 2020: Appendix 21 – Application for Quotation of 40M Shares, 1 June 2020: Proposed Issue
of Securities – SRK and 1 June 2020: Completion of $1.8 Million Capital Raising
26 Refer Strike’s ASX Announcement dated 30 July 2020: Notice of General Meeting, Explanatory Statement and Proxy Form
27 Refer Strike’s ASX Announcement dated 2 September 2020: Results of General Meeting
28 That is at least 80% of the volume weighted average market price (as defined in the ASX Listing Rules) of Strike shares over the 5 days on
which sales were recorded prior to the date of issue
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
DIRECTORS’ REPORT
Any share issue (and the issue price related thereto) will be determined by the Directors at their absolute
discretion at the relevant time.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
The Directors note that the COVID-19 pandemic has had an effect on the Consolidated Entity’s operations,
particularly in Argentina (impacting the Solaroz Lithium-Brine Project) and Peru (impacting the Apurimac
Magnetite Iron Ore Project and Cusco Magnetite Iron Ore Project) with a lesser effect in Queensland
(impacting the Burke Graphite Project), including but not limited to the consequences of Government imposed
(international and national/local) travel restrictions and lockdowns/shutdowns. There have been no other
significant changes in the state of affairs of the Consolidated Entity save as otherwise disclosed in this
Directors’ Report or the financial statements and notes thereto.
FUTURE DEVELOPMENTS
The Consolidated Entity will continue to:
•
•
•
•
advance the evaluation and development of its Paulsens East Iron Ore Project in Western Australia;
advance the exploration and evaluation of its Solaroz Lithium-Brine Project in Argentina;
advance its other resource projects through exploration, evaluation and development (as appropriate,
as the case may be); and
potentially investigate and pursue other prospective projects in the resources sector.
The likely outcomes of these activities depend on a range of technical and economic factors and also industry,
geographic and other strategy specific issues (including the impacts of the COVID-19 pandemic). In the
opinion of the Directors, it is not possible or appropriate to make a prediction on the results of these activities,
the future course of markets or the forecast of the likely results of the Consolidated Entity’s activities.
ENVIRONMENTAL REGULATION
The Consolidated Entity holds mineral tenements/concession licences issued by the relevant mining and
environmental protection authorities of the various countries in which it operates (from time to time). In the
course of its mineral exploration, evaluation and development activities, the Consolidated Entity adheres to
licence conditions and environmental regulations imposed upon it by various authorities (as applicable). The
Consolidated Entity has complied with all licence conditions and environmental requirements (as applicable)
during the financial year and up to the date of this report. There have been no known material breaches of
the Consolidated Entity’s licence conditions and environmental regulations during the financial year and up
to the date of this report.
ANNUAL REPORT | 76
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
DIRECTORS’ REPORT
BOARD OF DIRECTORS
Farooq Khan
Chairman
Appointed
18 December 2015; Director since 1 October 2015
Qualifications
BJuris, LLB (Western Australia)
Experience
Mr Khan is a qualified lawyer having previously practised principally in the field of corporate law.
Mr Khan has extensive experience in the securities industry, capital markets and the executive
management of ASX-listed companies. In particular, Mr Khan has guided the establishment and
growth of a number of public listed companies in the investment, mining and financial services
sector. He has considerable experience in the fields of capital raisings, mergers and acquisitions
and investments.
Special responsibilities
Member of the Audit Committee
Member of the Remuneration and Nomination Committee
Relevant Interests in
shares and options
Other current
directorships in listed
entities
1,813,231 shares (held jointly)29
(30 June 2020: 530,010 shares (held directly))
Executive Chairman of:
Orion Equities Limited (ASX:OEQ) (since 23 October 2006)
Bentley Capital Limited (ASX:BEL) (since 2 December 2003)
Executive Chairman and Managing Director of:
Queste Communications Ltd (ASX:QUE) (since 10 March 1998)
Former directorships
in other listed entities
in past 3 years
Alternate Director of Keybridge Capital Limited (ASX:KBC) (26 June to 18 July 2019)
William Johnson
Managing Director
Appointed
25 March 2013; Director since 14 July 2006
Qualifications
MA (Oxon), MBA
Experience
William Johnson holds a Masters Degree in Engineering Science from Oxford University, England
and an MBA from Victoria University, New Zealand. His 30-year business career spans multiple
industries and countries, with executive/CEO experience in mineral exploration and investment
(Australia, Peru, Chile, Saudi Arabia, Oman, North Africa and Indonesia), telecommunications
infrastructure investment (New Zealand, India, Thailand and Malaysia) and information technology
and Internet ventures (New Zealand, Philippines and Australia). Mr Johnson is a highly experienced
public company director and has considerable depth of experience in corporate governance,
business strategy and operations, investment analysis, finance and execution.
Special
responsibilities
None
Relevant Interests in
shares and options
Other current
directorships in listed
entities
Former directorships
in other listed entities
in past 3 years
349,273 shares (directly)30
Executive Director of
Bentley Capital Limited (ASX:BEL) (since 1 January 2016; Director since March 2009)
Non-Executive Director of Molopo Energy Limited (ASX:MPO) (since 31 May 2018)
Keybridge Capital Limited (ASX:KBC) (29 July 2016 to 17 April 2020)
Yowie Group Ltd (ASX:YOW) (10 April 2018 to 8 October 2018)
29 Refer Strike’s ASX Announcement dated 28 August 2020: Appendix 3Y – Change of Director’s Interest Notice – F Khan
30 Refer Strike’s ASX Announcement dated 20 May 2019: Change of Director’s Interest Notice - William Johnson
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
DIRECTORS’ REPORT
Malcolm Richmond
Non-Executive Director
Appointed
Director since 25 October 2006
Qualifications
BSc Hons (Metallurgy) and B. Comm. Merit (Econs) (New South Wales)
Experience
Mr Richmond has 30 years’ experience with the Rio Tinto and CRA Groups in a number of positions
including: Vice President, Strategy and Acquisitions; Managing Director, Research and Technology;
Managing Director, Development (Hamersley Iron Pty Limited) and Director of Hismelt Corporation
Pty Ltd. He was formerly Deputy Chairman of the Australian Mineral Industries Research
Association and Vice President of the WA Chamber of Minerals and Energy. Mr Richmond has
also served as a Member on the Boards of a number of public and governmental bodies and other
public listed companies.
He is a qualified metallurgist and economist with extensive senior executive and board experience
in the resource and technology industries both in Australia and internationally. His special interests
include corporate strategy and the development of markets for internationally traded minerals and
metals - particularly in Asia.
Mr Richmond served as Visiting Professor at the Graduate School of Management and School of
Engineering, University of Western Australia until January 2012 and is a Fellow of the Australian
Academy of Technological Sciences & Engineering, a Fellow of Australian Institute of Mining and
Metallurgy and a Member of Strategic Planning Institute (US).
Special
responsibilities
Chairman of the Audit Committee
Member of the Remuneration and Nomination Committee
Relevant Interests in
shares and options
Nil
Other current
directorships in listed
entities
Former directorships
in other listed entities
in past 3 years
Non-Executive Director of Argonaut Resources NL (ASX:ARE) (since 14 March 2012)
Nil
Matthew Hammond
Non-Executive Director
Appointed
25 September 2009
Qualifications
BA (Hons) (Bristol)
Experience
Mr Hammond is Group Managing Director and CFO of Mail.ru, a leading European Internet
communication and entertainment services group, which is listed on the London Stock Exchange.
Prior to that he was Group Strategist for Metalloinvest Holdings, where he had broad-ranging
responsibilities for part of the non-core asset portfolio and advised the Metalloinvest Board on
strategic acquisitions and investments. He began his career at Credit Suisse and was Sector Head
in Equity Research and in Private Bank Ultra High Net Worth Client Advisory advising on portfolio
allocation, strategic M&A and individual investments. As a Technology Analyst at Credit Suisse, he
was ranked #1 in the Extell and Institutional Investor surveys 8 times.
Special
responsibilities
Chairman of the Remuneration and Nomination Committees
Member of the Audit Committee
Relevant Interests in
shares and options
Nil
Other current
directorships in listed
entities
Former directorships
in other listed entities
in past 3 years
Managing Director and Chief Financial Officer of Mail.Ru Group Limited (LSE:MAIL)
(since April 2011; Director since May 2010; CFO since June 2013);
Non-Executive Director of
Realm Therapeutics plc (formerly PuriCore plc) (LSE:RLM) (May 2010 to 17 November 2017)
ANNUAL REPORT | 78
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
DIRECTORS’ REPORT
Victor Ho
Director and Company Secretary
Appointed
Director since 24 January 2014; Company Secretary since 30 September 2015
Qualifications
BCom, LLB (Western Australia), CTA
Experience
Victor Ho has been in Executive roles with a number of ASX-listed companies across the
investments, resources and technology sectors over the past 20 years. Mr Ho is a Chartered Tax
Adviser (CTA) and previously had 9 years’ experience in the taxation profession with the Australian
Tax Office (ATO) and in a specialist tax law firm. Mr Ho has been actively involved in the investment
management of listed investment companies (as an Executive Director and/or a member of the
Investment Committee), the structuring and execution of a number of corporate, M&A and
international joint venture (in South America, Indonesia and the Middle East) transactions, capital
raisings and capital management initiatives and has extensive experience in public company
administration, corporations’ law and ASX compliance and investor/shareholder relations.
Special
responsibilities
Secretary of Audit Committee and Remuneration and Nomination Committee
Relevant Interests in
shares and options
Nil
Other positions held
in listed entities
Former position in
other listed entities
in past 3 years
Executive Director (also Company Secretary) of:
Orion Equities Limited (ASX:OEQ) (Secretary since 2 August 2000 and Director since 4 July 2003)
Queste Communications Ltd (ASX:QUE) (Secretary since 30 August 2000 and Director since 3 April
2013)
Company Secretary of Bentley Capital Limited (ASX:BEL) (since 5 February 2004)
Company Secretary of Keybridge Capital Limited (ASX:KBC) (13 October 2016 to 13 October 2019)
DIRECTORS' MEETINGS
The following table sets out the numbers of meetings of the Company's Directors held during the financial
year (including Directors’ circulatory resolutions), and the numbers of meetings attended by each Director of
the Company:
Board Meetings
Audit Committee
Remuneration Committee
Name of Director
Attended
Farooq Khan
William Johnson
Malcolm Richmond
Matthew Hammond
Victor Ho(a)
Notes:
7
7
6
5
7
Max. Possible
Meetings
7
7
7
7
7
Attended
2
-
1
1
2
Max. Possible
Meetings
2
-
2
2
2
Attended
-
-
-
-
-
Max. Possible
Meetings
-
-
-
-
-
(a)
Mr Ho attended Audit Committee meetings as Secretary of the Audit Committee
Audit Committee
The Audit Committee was established in March 2010 and currently comprises Malcolm Richmond (as
Chairman), Farooq Khan and Matthew Hammond.
The Audit Committee has a formal charter to prescribe its objectives, duties and responsibilities,
access and authority, composition, membership requirements of the Committee and other
administrative matters. Its function includes reviewing and approving the audited annual and reviewed
half-yearly financial reports, ensuring a risk management framework is in place, reviewing and
monitoring compliance issues, reviewing reports from management and matters related to the external
auditor.
A copy of the Audit Committee Charter may be downloaded from the Company’s website:
http://strikeresources.com.au/corporate/corporate-governance/.
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A.B.N. 94 088 488 724
DIRECTORS’ REPORT
Remuneration and Nomination Committee
The Remuneration and Nomination Committee was established in August 2010 and currently
comprises Matthew Hammond (as Chairman), Farooq Khan and Malcolm Richmond.
The Remuneration and Nomination Committee has a formal charter to prescribe its purpose, key
responsibilities, composition, membership requirements, powers and other administrative matters. The
Committee has a:
•
•
Remuneration function - with key responsibilities to make recommendations to the Board on
policy governing the remuneration benefits of the Managing Director and Executive Directors,
including equity-based remuneration and assist the Managing Director to determine the
remuneration benefits of senior management and advise on those determinations; and a
Nomination function - with key responsibilities to make recommendations to the Board as to
various Board matters including the necessary and desirable qualifications, experience and
competencies of Directors and the extent to which these are reflected in the Board, the
appointment of the Chairman and Managing Director, the development and review of Board
succession plans and addressing Board diversity.
A copy of the Remuneration and Nomination Committee Charter may be downloaded from the
Company’s website: http://strikeresources.com.au/corporate/corporate-governance/.
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
REMUNERATION REPORT
This Remuneration Report details the nature and amount of remuneration for each Director and Company
Executive (being a company secretary or senior manager) (Key Management Personnel) of the Company.
The information provided under headings (1) to (8) below has been audited for compliance with section 300A
of the Corporations Act 2001 (Cth) as required under section 308(3C).
(1)
Key Management Personnel disclosed in this report
Name
Current Position
Tenure
Farooq Khan
Chairman
Chairman since 18 December 2015; Director since 1 October 2015
William Johnson
Managing Director
Managing Director since 25 March 2013; Director since July 2006
Victor Ho
Director and Company
Secretary
Director since 24 January 2014; Company Secretary since 30 September
2015
Malcolm Richmond Non-Executive
Director
Director since 25 October 2006; Previously, Chairman between 3
February 2011 and 18 December 2015
Matthew Hammond Non-Executive
Since 25 September 2009
Director
(2)
Remuneration Policy
The Board (with guidance from the Remuneration and Nomination Committee) determines the
remuneration structure of all Key Management Personnel having regard to the Consolidated Entity’s
strategic objectives, scale and scope of operations and other relevant factors, including experience
and qualifications, length of service, market practice (including available data concerning remuneration
paid by other listed companies in particular companies of comparable size and nature within the
resources sector in which the Consolidated Entity operates), the duties and accountability of Key
Management Personnel and the objective of maintaining a balanced Board which has appropriate
expertise and experience, at a reasonable cost to the Company.
The Remuneration and Nomination Committee: A purpose of the Committee is to assist the
Managing Director and the Board to adopt and implement a remuneration system that is required to
attract, retain and motivate the personnel who will enable the Company to achieve long-term success.
In carrying out this ‘remuneration function’, the Committee’s key responsibilities are to:
•
•
•
make recommendations to the Board on the specific benefits to be provided to the Managing
Director within the policy
conduct an annual review of Non-Executive Directors’ fees and determining whether the limit
on the Non-Executive Directors’ fee pool remains appropriate, and
assist the Managing Director to determine the remuneration (including equity-based
remuneration) of ‘Senior Management’ (being executive direct reports to the Managing Director
and other senior employees) and advise on those determinations.
A copy of the Remuneration and Nomination Committee Charter may be downloaded from the
Company’s website: http://strikeresources.com.au/corporate/corporate-governance/.
Corporate Governance Principles: The Company’s Corporate Governance Statement (CGS) also
addresses matters pertaining to the Board, Senior Management and Remuneration.
The latest version of the CGS may be downloaded from the Company’s website:
http://strikeresources.com.au/corporate/corporate-governance/.
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STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
REMUNERATION REPORT
Fixed Cash Short-term Employment Benefits: The Key Management Personnel of the Company
are paid a fixed amount per annum plus applicable employer superannuation contributions. The Non-
Executive Directors of the Company are paid a maximum aggregate base remuneration of $550,00031
per annum inclusive of employer superannuation contributions where applicable, to be divided as the
Board determines appropriate.
The Board has determined the following fixed cash remuneration for current Key Management
Personnel as follows (as at 30 June 2020):
(a) Mr Farooq Khan (Chairman) - a base fee of $80,000 per annum plus employer superannuation
contributions;
(b) Mr William Johnson (Managing Director) - a base fee of $208,000 per annum plus employer
superannuation contributions;
(c) Mr Victor Ho (Director and Company Secretary) - a base fee of $95,000 (comprising $45,000
fees) per annum plus employer
fees and $50,000 Company Secretarial
Director’s
superannuation contributions;
(d) Mr Malcolm Richmond (Non-Executive Director) - a base fee of $15,000 per annum plus
employer superannuation contributions; and
(e) Mr Matthew Hammond (Non-Executive Director) - a base fee of $15,000 per annum.
Special Exertions and Reimbursements: Pursuant to the Company’s Constitution, each Director is
also entitled to receive:
•
•
Payment for reimbursement of all travelling, hotel and other expenses reasonably incurred by a
Director for the purpose of attending meetings of the Board or otherwise in and about the
business of the Company; and
In respect of Non-Executive Directors, payment for the performance of extra services or the
making of special exertions for the benefit of the Company (at the request of and with the
concurrence of the Board).
Short-Term Benefits: The Managing Director has the opportunity to earn an annual short-term
incentive (STI) cash amount if predefined key performance indicators (KPI’s) are achieved. The
STI/KPI’s are reviewed annually (where applicable). There were no STI KPI’s set for the Managing
Director in respect of the past 2018/19 financial year or the 2019/20 financial year.
Long-Term Benefits: Other than early termination benefits disclosed in ‘Employment Agreements’
below, Key Management Personnel have no right to termination payments save for payment of accrued
unused annual and long service leave (where applicable) (other than Non-Executive Directors).
Equity-Based Benefits: The Company has not provided equity based benefits (e.g. grant of shares
or options) to Key Management Personnel during the financial year. The Company has previously
granted unlisted options to Key Management Personnel (refer ‘Options Held By Key Management
Personnel’ below). There were no shares issued as a result of the exercise of options previously
issued to Key Management Personnel during the financial year.
Employee Share Option Plan: The Company has an Employee Share Option Plan (the ESOP) which
was last approved by shareholders at the 2008 Annual General Meeting held on 6 November 200832.
The ESOP was developed to assist in the recruitment, reward, retention and motivation of employees
(and potentially Executive Directors). Under the ESOP, the Board will nominate personnel to
participate and will offer options to subscribe for shares in the Company to those personnel. A
summary of the terms of ESOP is set out in Annexure B to the Company’s Notice of Annual General
Meeting and Explanatory Statement dated 8 October 200833. The Company has not granted any
options to Key Management Personnel during the financial year.
31 As approved by shareholders at the Annual General Meeting held on 25 November 2009; refer Strike’s Notice of Annual General Meeting
released on ASX on 27 October 2009 and Strike’s ASX Announcement dated 25 November 2009: Results of Annual General Meeting
32 Refer Strike’s ASX Announcement dated 6 November 2008: Results of Annual General Meeting
33 Refer Strike’s ASX Announcement dated 8 October 2008: Notice of 2008 AGM and Explanatory Statement and Proxy Form
ANNUAL REPORT | 82
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
REMUNERATION REPORT
Post-Employment Benefits: The Company does not presently provide retirement benefits to Key
Management Personnel. The Company notes that shareholder approval is required where a Company
proposes to make a “termination payment” (for example, a payment in lieu of notice, a payment for a
post-employment restraint and payments made as a result of the automatic or accelerated vesting of
share based payments) in excess of one year’s “base salary” (defined as the average base salary over
the previous 3 years) to a director or any person who holds a managerial or executive office.
Performance-Related Benefits and Financial Performance of Company: Save for any applicable
STI(s) in place for the Managing Director or any applicable equity-benefits that may be provided to Key
Management Personnel, the current remuneration of Key Management Personnel is fixed, is not
dependent on the satisfaction of a performance condition and is unrelated to the Company’s
performance.
In considering the Company's performance and its effects on shareholder wealth, Directors have had
regard to the data set out below for the latest financial year and the previous four financial years.
Profit/(Loss) Before Income Tax
Basic Earnings/(Loss) per share (cents)
Dividends Paid (total)
Dividends Paid (per share)
Capital Returns Paid (total)
Capital Returns Paid (per share)
VWAP Share Price on ASX for financial year ($)
Closing Bid Share Price on ASX at 30 June ($)
2020
(1,401,713)
(0.83)
-
-
-
-
0.051
0.045
2019
(1,875,093)
(1.22)
-
-
-
-
0.074
0.045
2018
(681,614)
(0.47)
-
-
-
-
0.066
0.053
2017
(1,147,929)
(0.79)
-
-
-
-
0.053
0.042
2016
(628,670)
(0.43)
-
-
-
-
0.050
0.040
(3)
Details of Remuneration of Key Management Personnel
Details of the nature and amount of each element of remuneration of each Key Management Personnel
paid or payable by the Company during the financial year are as follows:
2020
Key
Management
Personnel
Short-term Benefits
Post-
Employment
Benefits
Other Long-
term
Benefits
Performance
- related
%
Cash
salary and
fees
$
Non-cash
benefit
$
Superannuation
$
Long
service
leave
$
Equity-
Based
Shares &
options
$
Directors:
William Johnson
Farooq Khan
Malcolm Richmond
Victor Ho
Matthew Hammond
Company Secretary:
Victor Ho
-
-
-
-
-
-
208,000
80,000
36,250
45,000
36,250
50,000
-
-
-
-
-
-
19,760
7,600
3,444
4,275
-
4,750
-
-
-
-
-
-
-
-
-
-
-
-
2019
Key
Management
Personnel
Short-term Benefits
Post-
Employment
Benefits
Other
Long-term
Benefits
Performance
- related
%
Cash
salary and
fees
$
Annual
Leave
$
Superannuation
$
Long
service
leave
$
Equity-
Based
Shares &
options
$
Directors:
William Johnson
Farooq Khan
Malcolm Richmond
Victor Ho
Matthew Hammond
Company Secretary:
Victor Ho
-
-
-
-
-
-
208,000
80,000
45,000
45,000
45,000
50,000
-
-
-
-
-
-
19,760
7,600
4,275
4,275
-
4,750
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
227,760
87,600
39,694
49,275
36,250
54,750
Total
$
227,760
87,600
49,275
49,275
45,000
54,750
ANNUAL REPORT | 83
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
REMUNERATION REPORT
(4)
Employment Agreements
Details of the material terms of employment agreements entered by the Company with Key
Management Personnel are as follows:
Key Management
Personnel and
Position Held
William Johnson
(Managing
Director)
Current Base
Salary/Fees
per annum
$208,000
plus employer
superannuatio
n contributions
(currently
9.5% of base
salary)
Relevant
Date(s)
22 April 2013
(date of
employment
agreement)
11 March 2013
(commencement
date)
1 May 2015
(date of effect of
current
remuneration)
Other Current Terms
• Standard annual leave (20 days) and personal/sick leave (10
days paid) entitlements plus entitlement to long service leave
of 60 days after 7 years of service with an additional 5 days
after each year of service thereafter.
• One month’s notice of termination by the Company or
employee. Immediate termination without notice if employee
commits any serious act of misconduct.
• Permitted to be a Non-Executive Director of no more than 2
public companies provided that it does not compromise ability
to devote the care and attention to the Company’s affairs
required by the position.
• Entitlement to cash short-term incentive (STI) payments in
respect of up to 30% of annual base salary, as set by the Board
(having regard
the Remuneration and
Nomination Committee) – no STI was defined in respect of the
2018/2019 financial year and as at the date of this report.
to advice
from
(5) Other Benefits Provided to Key Management Personnel
No Key Management Personnel has during or since the end of the financial year, received or become
entitled to receive a benefit, other than a remuneration benefit as disclosed above, by reason of a
contract made by the Company or a related entity with the Director or with a firm of which he is a
member, or with a Company in which he has a substantial interest.
(6)
Engagement of Remuneration Consultants
to provide remuneration
The Company has not engaged any remuneration consultants
recommendations in relation to Key Management Personnel during the year. The Board has
established a policy for engaging external Key Management Personnel remuneration consultants
which includes, inter alia, that the Non-Executive Directors on the Remuneration Committee be
responsible for approving all engagements of and executing contracts to engage remuneration
consultants and for receiving remuneration recommendations from remuneration consultants regarding
Key Management Personnel. Furthermore, the Company has a policy that remuneration advice
provided by remuneration consultants be quarantined from Management where applicable.
(7)
Shares held by Key Management Personnel
The number of ordinary shares in the Company held by Key Management Personnel is set below:
Key Management Personnel
Farooq Khan
William Johnson
Victor Ho
Malcolm Richmond
Matthew Hammond
Note:
Balance at
30 June 2019
750,803
349,273
-
-
-
Received as part
of remuneration
-
-
-
-
-
Net Other
Change
-
-
-
-
-
Balance at
30 June 2020
750,803
349,273
-
-
-
The disclosures of shareholdings above are in accordance with the accounting standards which require disclosure of shares held directly,
indirectly or beneficially by each key management person, a close member of the family of that person, or an entity over which either of
these persons have, directly or indirectly, control, joint control or significant influence (as defined under Accounting Standard AASB 124
Related Party Disclosures)
ANNUAL REPORT | 84
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
REMUNERATION REPORT
(8)
Voting and Comments on the Remuneration Report at the 2019 AGM
At the Company’s most recent (2019) AGM, a resolution to adopt the prior year (2019) Remuneration
Report was put to a vote and passed unanimously on a show of hands with the proxies received also
indicating majority (96.8%) support in favour of adopting the Remuneration Report.34 No comments
were made on the Remuneration Report at the 2019 AGM.
This concludes the audited Remuneration Report.
34 Refer Strike’s ASX Announcement dated 28 November 2019: Results of 2019 Annual General Meeting
ANNUAL REPORT | 85
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
DIRECTORS’ REPORT
DIRECTORS’ AND OFFICERS’ INSURANCE
The Company insures Directors and Officers against liability they may incur in respect of any wrongful acts
or omissions made by them in such capacity (to the extent permitted by the Corporations Act 2001 (Cth))
(D&O Policy). Details of the amount of the premium paid in respect of the insurance policies are not disclosed
as such disclosure is prohibited under the terms of the contract.
DIRECTORS’ AND OFFICERS’ DEEDS
In addition to the rights of indemnity provided under the Company’s Constitution (to the extent permitted by
the Corporations Act 2001 (Cth)), the Company has also entered into a deed with each of the Directors and
the Company Secretary (Officer) to regulate certain matters between the Company and each Officer, both
during the time the Officer holds office and after the Officer ceases to be an officer of the Company, including
the following matters:
•
•
The Company’s obligation to indemnify an Officer for liabilities or legal costs incurred as an officer of
the Company (to the extent permitted by the Corporations Act 2001 (Cth)); and
Subject to the terms of the deed and the Corporations Act 2001 (Cth), the Company may advance
monies to the Officer to meet any costs or expenses of the Officer incurred in circumstances relating
to the indemnities provided under the deed and prior to the outcome of any legal proceedings brought
against the Officer.
LEGAL PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of a court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of such proceedings. The Company was not a party to any such proceedings during and
since the financial year.
AUDITORS
Details of the amounts paid or payable to the Auditors for audit and non-audit services provided during the
financial year are set out below:
Auditor
Rothsay Auditing
Audit & Review Fees
$
14,000
Non-Audit Services
$
-
Total
$
14,000
Rothsay Auditing did not provide any non-audit services during the financial year.
Rothsay Auditing continues in office in accordance with Section 327 of the Corporations Act 2001 (Cth).
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act
2001 (Cth) forms part of this Directors Report and is set out on page 88. This relates to the Auditor’s Report,
where the Auditors state that they have issued an independence declaration.
ANNUAL REPORT | 86
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
DIRECTORS’ REPORT
EVENTS SUBSEQUENT TO BALANCE DATE
The Directors are not aware of any matters or circumstances at the date of this Directors’ Report, other than
those referred to in this Directors’ Report or the financial statements or notes thereto (in particular Note 23),
that have significantly affected or may significantly affect the operations, the results of operations or the state
of affairs of the Company in subsequent financial years.
Signed for and on behalf of the Directors in accordance with a resolution of the Board,
Farooq Khan
Chairman
18 September 2020
William Johnson
Managing Director
ANNUAL REPORT | 87
The Directors
Strike Resources Limited
Level 2
31 Ventnor Avenue
West Perth WA 6005
Dear Directors
In accordance with Section 307C of the Corporations Act 2001 (the "Act") I hereby declare that to the best
of my knowledge and belief there have been:
(i) no contraventions of the auditor independence requirements of the Act in relation to the audit of
the 30 June 2020 financial statements; and
(ii) no contraventions of any applicable code of professional conduct in relation to the review.
This declaration is in respect of Strike Resources Limited and the entities it controlled during the year.
Daniel Dalla CA (Lead auditor)
Partner
Rothsay Auditing
Dated 18 September 2020
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2020
REVENUE
Interest revenue
Other
Dividend revenue
Other income
Foreign exchange gain
TOTAL REVENUE AND INCOME
EXPENSES
Exploration and evaluation expenses
Net loss on financial assets at fair value through profit or loss
Personnel expenses
Corporate expenses
Occupancy expenses
Finance expenses
Foreign exchange loss
Administration expenses
Note
2
3
2020
$
2019
$
11,412
35,281
12,288
50,316
-
101,112
159,151
10,917
74,016
306,461
(194,441)
(133,395)
(499,886)
(304,768)
(83,234)
(3,200)
(90,261)
(953,112)
(21,362)
(524,647)
(426,574)
(60,546)
(8,969)
-
(166,544)
(186,344)
LOSS BEFORE INCOME TAX
(1,401,713)
(1,875,093)
Income tax expense
LOSS FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Other Comprehensive Income, Net of Tax
5
-
-
(1,401,713)
(1,875,093)
Exchange differences on translation of foreign operations
(8,140)
77,344
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(1,409,853)
(1,797,749)
LOSS PER SHARE FOR LOSS ATTRIBUTABLE TO THE ORDINARY
EQUITY HOLDERS OF THE COMPANY:
Basic and diluted loss per share (cents)
6
(0.83)
(1.24)
The accompanying notes form part of these consolidated financial statements
ANNUAL REPORT | 89
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
as at 30 June 2020
CURRENT ASSETS
Cash and cash equivalents
Financial assets at fair value through profit or loss
Receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Exploration and evaluation expenditure
Property, plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
2020
$
2019
$
7
8
11
12
13
14
15
3,241,161
164,083
57,494
5,833
1,289,411
1,340,686
166,391
4,000
3,468,571
2,800,488
1,016,713
4,158
348,956
3,502
1,020,871
352,458
4,489,442
3,152,946
244,412
9,961
112,307
5,685
254,373
117,992
254,373
117,992
4,235,069
3,034,954
151,049,893
148,439,925
15,065,961
15,074,101
(161,880,785)
(160,479,072)
4,235,069
3,034,954
The accompanying notes form part of these consolidated financial statements
ANNUAL REPORT | 90
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
for the year ended 30 June 2020
Issued capital
Currency
translation
reserve
Share-based
payments
reserve
Accumulated
losses
$
$
$
$
Total
$
BALANCE AT 1 JUL 2018
148,439,925
1,763,731
13,233,026
(158,603,979)
4,832,703
Loss for the year
Other comprehensive income
Total comprehensive loss for the
year
-
-
-
-
77,344
77,344
-
-
-
(1,875,093)
(1,875,093)
-
77,344
(1,875,093)
(1,797,749)
BALANCE AT 30 JUN 2019
148,439,925
1,841,075
13,233,026
(160,479,072)
3,034,954
BALANCE AT 1 JUL 2019
148,439,925
1,841,075
13,233,026
(160,479,072)
3,034,954
Loss for the year
Other comprehensive income
Total comprehensive loss for the
year
Transactions with owners
in their capacity as owners:
-
-
-
-
(8,140)
(8,140)
Issue of shares
Cost of issued shares
14
14
2,781,000
(171,032)
-
-
-
-
-
-
-
-
(1,401,713)
(1,401,713)
-
-
(8,140)
-
(1,401,713)
(1,409,853)
-
-
2,781,000
(171,032)
BALANCE AT 30 JUN 2019
151,049,893
1,832,935
13,233,026
(161,880,785)
4,235,069
The accompanying notes form part of these consolidated financial statements
ANNUAL REPORT | 91
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
CONSOLIDATED STATEMENT
OF CASH FLOWS
for the year ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Payments for exploration and evaluation
Other receipts - ATO
Other income received
2020
$
2019
$
(811,431)
(1,166,933)
(862,198)
(561,484)
50,000
316
-
-
NET CASH USED IN OPERATING ACTIVITIES
7(a)
(1,623,313)
(1,728,417)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Dividends received
Payment for share investments
Proceeds from realisation of share investments
Payment for purchases of plant and equipment
11,412
12,288
35,281
101,112
(279,362)
(3,536,739)
1,322,569
3,971,840
(3,411)
(3,330)
NET CASH USED IN INVESTING ACTIVITIES
1,063,496
568,164
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of shares
Cost of issuing shares
NET CASH PROVIDED BY FINANCING ACTIVITIES
14
14
2,781,000
(171,032)
2,609,968
-
-
-
NET INCREASE/ (DECREASE) IN CASH HELD
2,050,151
(1,160,253)
Cash and cash equivalents at beginning of financial year
1,289,411
2,361,403
Effect of exchange rate changes on cash held
(98,401)
88,261
CASH AND CASH EQUIVALENTS AT END
OF FINANCIAL YEAR
7
3,241,161
1,289,411
The accompanying notes form part of these consolidated financial statements
ANNUAL REPORT | 92
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
1.
ABOUT THIS FINANCIAL REPORT
(c)
1.1
Background
the consolidated
financial report covers
financial
This
statement of the consolidated entity consisting of Strike
Resources Limited (ASX:SRK) (the Company or SRK), its
subsidiaries and investments in associates (the Consolidated
Entity or Strike). The financial report is presented in the
Australian currency.
Strike Resources Limited is a company limited by shares
incorporated in Australia and whose shares are publicly traded
on the Australian Securities Exchange (ASX).
These
financial statements have been prepared on a
streamlined basis where key information is grouped together
for ease of understanding and readability. The notes include
information which is required to understand the financial
statements and is material and relevant to the operations,
financial position and performance of the Consolidated Entity.
Information is considered material and relevant if, for example:
(a)
(b)
(c)
(d)
the amount in question is significant because of its size
or nature;
it is important for understanding the results of the
Consolidated Entity;
it helps to explain the impact of significant changes in
the Consolidated Entity’s business; or
it relates to an aspect of the Consolidated Entity’s
operations
future
performance.
that may be
important
to its
The notes to the financial statements are organised into the
following sections:
(d)
(e)
(f)
(a)
line
Key Performance: Provides a breakdown of the key
individual
statement of
comprehensive income that is most relevant to
understanding performance and shareholder returns
for the year:
items
the
in
Notes
2
3
4
5
6
Revenue
Expenses
Segment information
Income tax expense
Loss per share
(b)
Financial Risk Management: Provides information
about
the Consolidated Entity’s exposure and
management of various financial risks and explains
how these affect the Consolidated Entity’s financial
position and performance:
Notes
7
8
9
10
Cash and cash equivalents
Financial assets at fair value through
profit or loss
Financial risk management
Fair value measurement of financial
instruments
Other Assets and Liabilities: Provides information
on other balance sheet assets and liabilities that do
not materially affect performance or give rise to
material financial risk:
Notes
11
12
13
Receivables
Exploration and evaluation expenditure
Payables
Capital Structure: This section outlines how the
Consolidated Entity manages its capital structure and
related financing costs (where applicable), as well as
capital adequacy and reserves. It also provides
details on the dividends paid by the Company:
Notes
14
15
16
Issued capital
Reserve
Capital risk management
Consolidated Entity Structure: Provides details and
disclosures relating to the parent entity of the
Consolidated Entity, controlled entities, investments
in associates and any acquisitions and/or disposals of
businesses in the year. Disclosure on related parties
is also provided in the section:
Notes
17
18
19
Parent entity information
Investment in controlled entities
Related party transactions
Other: Provides information on items which require
disclosure to comply with Australian Accounting
Standards and other regulatory pronouncements
however, are not
in
understanding the financial performance or position of
the Consolidated Entity:
considered
significant
Notes
20
21
22
23
Auditors' remuneration
Commitments
Contingencies
Events occurring after the reporting
period
Significant and other accounting policies that summarise the
measurement basis used and presentation policies and are
relevant to an understanding of the financial statements are
provided throughout the notes to the financial statements.
1.2
Basis of Preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting Standards,
other authoritative pronouncements of
the Australian
Accounting Standards Board, Australia Accounting
Interpretations and the Corporations Act 2001 (Cth). The
Company is a for-profit entity for the purpose of preparing the
financial statements.
Compliance with
Standards (IFRS)
International Financial Reporting
The consolidated financial statements of the Consolidated
Entity comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards
Board (IASB).
ANNUAL REPORT | 93
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
Reporting Basis and Financial Statement Presentation
1.7
Leases
The financial report has been prepared on a going concern
basis and is based on historical costs modified by the
revaluation of financial assets and financial liabilities for which
the fair value basis of accounting has been applied.
The principal accounting policies adopted in the preparation of
these financial statements have been consistently applied to
all the years presented, unless otherwise stated.
1.3
Principles of Consolidation
The consolidated financial statements incorporate the assets
and liabilities of the Company as at 30 June 2020 and the
results of its subsidiaries for the year then ended. The
Company and its subsidiaries are referred to in this financial
report as Strike or the Consolidated Entity.
All inter-company balances and transactions between entities
in the Consolidated Entity, including any unrealised profits or
losses, have been eliminated on consolidation.
1.4
Comparative Figures
Where required by the Accounting Standards, comparative
figures have been adjusted to conform to changes in
presentation for the current financial period.
1.5
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred is
not recoverable from the Australian Tax Office. In these
circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense.
Receivables and payables in the balance sheet are shown
inclusive of GST. Cash flows are presented in the Statement
of Cash Flows on a gross basis, except for the GST component
of investing and financing activities, which are disclosed as
operating cash flows.
1.6
Impairment of Assets
At each reporting date, the Consolidated Entity reviews the
carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets
have been impaired. If such an indication exists, the
recoverable amount of the asset, being the higher of the
asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of the
asset’s carrying value over its recoverable amount is expensed
to the profit or loss. Impairment testing is performed annually
for goodwill and intangible assets with indefinite lives. Where
it is not possible to estimate the recoverable amount of an
individual asset,
the
recoverable amount of the cash-generating unit to which the
asset belongs
the Consolidated Entity estimates
the
lease commencement,
At
the Consolidated Entity
recognises a right-of-use asset and associated lease liability
for the lease term. The lease term includes extension periods
where the Consolidated Entity believes it is reasonably certain
that the option will be exercised.
The right-of-use asset is measured using the cost model where
cost on initial recognition comprises of the lease liability, initial
direct costs, prepaid lease payments, estimated cost of
removal and restoration less any lease incentives received.
The right-of-use asset is depreciated over the lease term on a
straight-line basis and assessed for impairment in accordance
with the impairment of assets accounting policy.
The lease liability is initially measured at the present value of
the remaining lease payments at the commencement of the
lease. The discount rate is the rate implicit in the lease,
however where this cannot be readily determined then the
Consolidated Entity’s incremental borrowing rate is used.
Subsequent to initial recognition, the lease liability is measured
at amortised cost using the effective interest rate method. The
lease liability is remeasured whether there is a lease
modification, change in estimate of the lease term or index
upon which the lease payments are based (e.g. CPI) or a
change in the Consolidated Entity’s assessment of lease term.
Where the lease liability is remeasured, the right-of-use asset
is adjusted to reflect the remeasurement or is recorded in profit
or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
Exceptions to lease accounting
The Consolidated Entity has elected to apply the exceptions to
lease accounting for both short-term leases (i.e. leases with a
term of less than or equal to 12 months) and leases of
low-value assets. The Consolidated Entity recognises the
payments associated with these leases as an expense on a
straight-line basis over the lease term.
1.8
New, revised or amending Accounting Standards
and Interpretations adopted
The Consolidated Entity has adopted all of the new, revised or
amending Accounting Standards and Interpretations issued by
the AASB that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or
Interpretations that are not mandatory have not been early
adopted. These are not expected to have a material impact on
the Consolidated Entity’s financial statements.
ANNUAL REPORT | 94
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
2.
REVENUE
The Consolidated Entity's operating loss before income tax includes the
following items of revenue:
Revenue
Interest revenue
Other
Dividend revenue
Other income
Foreign exchange gain
2020
$
2019
$
11,412
11,412
12,288
50,316
-
35,281
35,281
101,112
159,151
10,917
74,016
306,461
Accounting policy
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Consolidated
Entity and the revenue can be reliably measured. The following specific recognition criteria must also be met
before revenue is recognised:
(i) Sale of financial assets, goods and other assets
Revenue from the sale of financial assets, goods or other assets is recognised when the Consolidated Entity
has passed control of the financial assets, goods or other assets to the buyer.
(ii)
Interest revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
(iii) Dividend revenue
Dividend revenue is recognised when the right to receive a dividend has been established. The Consolidated
Entity brings dividend revenue to account on the applicable ex-dividend entitlement date.
(iv) Other revenues
Other revenues are recognised on a accruals basis.
3.
EXPENSES
The Consolidated Entity's operating loss before income tax includes the
following items of expenses:
2020
$
2019
$
Net loss on financial assets at fair value through profit or loss
133,395
21,362
Exploration and evaluation expenses
Impairment loss
Other exploration and evaluation expenses
Personnel expenses
Salaries, fees and employee benefits
Occupancy expenses
Finance expenses
188,485
5,956
499,886
83,234
3,200
686,683
266,429
524,647
60,546
8,969
ANNUAL REPORT | 95
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
3.
EXPENSES (continued)
Corporate expenses
Professional fees
ASX and CHESS fees
ASIC fees
Accounting, taxation and related administration
Audit
Share registry
Other corporate expenses
Foreign exchange loss
Administration expenses
Insurance
Office administration
Travel, accommodation and incidentals
Depreciation
Other administration expenses
2020
$
2019
$
129,272
40,872
6,800
103,641
14,000
5,988
4,195
90,261
19,112
50,578
24,215
2,755
69,884
262,436
27,053
6,295
106,310
14,000
6,207
4,273
-
16,897
53,816
49,922
2,075
63,634
1,475,729
2,181,554
Accounting policy
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income,
except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or
are attributable to part of the net investment in a foreign operation. Foreign exchange gains or losses that relate to
borrowings are presented in the Consolidated Statement of Profit or Loss and Other Comprehensive Income within
finance costs. All other foreign exchange gains and losses are presented in the Consolidated Statement of Profit or
Loss and Other Comprehensive Income on a net basis within other income or operating expenses.
4.
SEGMENT INFORMATION
The operating segments are reported in a manner consistent with the internal reporting provided to the Managing
Director. The Managing Director is responsible for allocating resources and assessing performance of
the
operating segments and has considered the business and geographical perspectives of the operating results and
determined that the Consolidated Entity operates only in Australia, Peru and Argentina.
ANNUAL REPORT | 96
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
4.
SEGMENT INFORMATION (continued)
2020
Revenue
Other
Total segment revenues
Net loss on financial assets
at fair value through profit or loss
Exploration and evaluation expenses
Personnel expenses
Corporate expenses
Finance expenses
Depreciation expense
Other expenses
Total segment loss
Adjusted EBITDA
Total segment assets
Total segment liabilities
2019
Revenue
Other
Total segment revenues
Net loss on financial assets
at fair value through profit or loss
Exploration and evaluation expenses
Personnel expenses
Corporate expenses
Finance expenses
Depreciation expense
Other expenses
Total segment loss
Adjusted EBITDA
Argentina
$
-
-
-
-
-
-
-
-
-
-
-
-
343,857
-
-
-
-
-
-
-
-
-
-
-
-
-
Peru
$
-
-
-
-
1,444
-
123,603
1,104
-
136,053
(262,204)
(262,204)
48,194
102,273
-
14,174
14,174
-
257,969
-
240,780
7,016
-
35,105
(526,696)
(526,696)
Australia
$
11,412
Total
$
11,412
62,604
62,604
74,016
133,395
192,997
499,886
181,165
2,096
2,755
74,016
133,395
194,441
499,886
304,768
3,200
2,755
201,231
337,284
(1,139,509)
(1,401,713)
(1,142,264)
(1,404,468)
4,097,391
4,489,442
152,100
254,373
35,281
257,006
292,287
21,362
695,143
524,647
239,610
1,953
2,075
35,281
271,180
306,461
21,362
953,112
524,647
480,390
8,969
2,075
155,894
190,999
(1,348,397)
(1,875,093)
(1,346,313)
(1,873,009)
Total segment assets
Total segment liabilities
340,389
-
73,788
84,387
2,738,769
3,152,946
33,605
117,992
Accounting policy
The operating segments are reported in a manner consistent with the internal reporting provided to the Managing
Director. The Managing Director is responsible for allocating resources and assessing performance of
the
operating segments and has considered the business and geographical perspectives of the operating results and
determined that the Consolidated Entity operates only in Australia, Peru and Argentina.
ANNUAL REPORT | 97
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
5.
INCOME TAX EXPENSE
(a) The components of tax expense comprise:
Current tax
Deferred tax
2020
$
-
-
-
2019
$
-
-
-
(b)
The prima facie tax on operating loss before income tax is reconciled
to the income tax as follows:
Prima facie tax payable on operating loss before income tax at 27.5%
(2019: 27.5%)
(385,471)
(515,650)
Adjust tax effect of:
Non-deductible expenses
Movement in unrecognised temporary differences
Current year tax losses not recognised
7,948
23,363
(746,747)
(515,088)
1,124,270
1,007,375
Income tax attributable to entity
-
-
(c) Unrecognised deferred tax balances
Unrecognised deferred tax asset - revenue losses
Unrecognised deferred tax asset - other
8,772,764
4,238,211
8,278,713
4,238,211
13,010,975
12,516,924
Critical accounting judgement and estimate
Deferred tax assets have not been recognised as, in the Directors' opinion, it is not probable that future taxable
profit will be available against which the Consolidated Entity can utilise the benefits. The utilisation of revenue and
capital tax losses are subject to compliance with taxation legislation.
Accounting policy
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and for unused tax losses. The current income tax charge is calculated on the
basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the
Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is
also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by
the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or
the deferred income tax liability is settled.
ANNUAL REPORT | 98
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
5.
INCOME TAX EXPENSE (continued)
Accounting policy (continued)
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets
and liabilities are not recognised for temporary differences between the carrying amount and tax bases of
investments in foreign operations where the Company is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities, and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
Other Comprehensive Income or directly in equity. In this case, the tax is also recognised in Other Comprehensive
Income or directly in equity, respectively.
6.
LOSS PER SHARE
Basic and diluted loss per share
The following represents the loss and weighted average number of shares used
in the EPS calculations:
Net loss after income tax
Weighted average number of ordinary shares
2020
cents
(0.83)
2019
cents
(1.24)
(1,409,853)
(1,797,749)
Shares
Shares
169,072,520
145,334,268
Accounting policy
Basic earnings/loss per share is determined by dividing the operating result after income tax by the weighted
average number of ordinary shares on issue during the financial period.
Diluted earnings/loss per share adjusts the figures used in the determination of basic earnings/loss per share by
taking into account amounts unpaid on ordinary shares and any reduction in earnings/loss per share that will
probably arise from the exercise of options outstanding during the financial period.
7.
CASH AND CASH EQUIVALENTS
Cash at bank
Term deposits
2020
$
2019
$
3,191,068
1,264,411
50,093
25,000
3,241,161
1,289,411
ANNUAL REPORT | 99
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
7.
CASH AND CASH EQUIVALENTS (continued)
(a)
Reconciliation of operating loss after income tax to
net cash used in operating activities
Loss after income tax
Add non-cash items:
Depreciation
Write off of office equipment
Impairment of exploration and evaluation expenses
Unrealised movement in financial assets
Adjustment for movement in foreign exchange
Changes in assets and liabilities:
Receivables
Other current assets
Financial assets at fair value through profit or loss
Exploration and evaluation expenditure
Payables
Provisions
2020
$
2019
$
(1,401,713)
(1,875,093)
2,755
2,075
- 659
188,485
686,683
80,112
301,802
90,262
(10,917)
85,197
(1,833)
53,283
(856,243)
132,106
4,276
(138,941)
17,066
(280,441)
(454,206)
23,151
(255)
(1,623,313)
(1,728,417)
Accounting policy
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less and bank overdrafts. Bank overdrafts (if any) are shown
within short-term borrowings in current liabilities on the Statement of Financial Position.
8.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed securities at fair value
2020
$
164,083
2019
$
1,340,686
Accounting policy
instruments are initially measured at cost on trade date, which includes transaction costs, when the
Financial
related contractual rights or obligations exist. Subsequent to initial recognition, financial assets at fair value
through profit and loss acquired principally for the purpose of selling in the short term or if so designated by
management and within the requirements of AASB 9 (Financial
Instruments) will recognise its realised and
unrealised gains and losses arising from changes in the fair value of these assets in the Statement of Profit or Loss
and Other Comprehensive Income in the period in which they arise.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the balance sheet date which is the current bid
price.
ANNUAL REPORT | 100
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
9.
FINANCIAL RISK MANAGEMENT
instruments consist of deposits with banks, receivables and payables. The
The Consolidated Entity's financial
Consolidated Entity's financial instruments are subject to market (which includes interest rate and foreign exchange
risk), credit and liquidity risks.
The Board is responsible for the overall internal control framework (which includes risk management) but no cost-
effective internal control system will preclude all errors and irregularities. The system is based, in part, on the
appointment of suitably qualified management personnel. The effectiveness of the system is continually reviewed
by management and at least annually by the Board.
The financial receivables and payables of the Consolidated Entity in the table below are due or payable within 30
days. The Consolidated Entity holds the following financial assets and liabilities:
Cash and cash equivalents
Financial assets at fair value through profit or loss
Receivables
Payables
Net financial assets
(a) Market risk
Note
7
8
11
13
2020
$
3,241,161
164,083
57,494
2019
$
1,289,411
1,340,686
166,391
3,462,738
2,796,488
(244,412)
(112,307)
3,218,326
2,684,181
Market risk is the risk that the fair value and/or future cash flows from a financial instrument will fluctuate as a
result of changes in market factors. Market risk comprises of price risk from fluctuations in the fair value of
equities, foreign exchange risk from fluctuations in foreign currencies and interest rate risk from fluctuations in
market interest rates.
(i)
Price risk
The Consolidated Entity is exposed to equity securities price risk. This arises from investments held by
the Consolidated Entity and classified in the Statement of Financial Position at fair value through profit or
loss. The Consolidated Entity is exposed to commodity price risk in respect of its investments indirectly
via market risk and equity securities price risk.
The value of a financial instrument will fluctuate as a result of changes in market prices, whether those
changes are caused by factors specific to the individual
instrument, its issuer or factors affecting all
instruments in the market. The Consolidated Entity will be subject to market risk to the extent that it
invests its capital
in securities that are not risk free. This is reflected in the market price of these
securities which can and will fluctuate. The Consolidated Entity does not manage this risk through
entering into derivative contracts, futures, options or swaps.
Equity price risk is minimised through ensuring that investment activities are undertaken in accordance
with Board established mandate limits and investment strategies.
The Consolidated Entity has performed a sensitivity analysis on its exposure to equity securities price
risk for listed and unlisted financial assets at fair value through profit or loss. The analysis demonstrates
the effect on the current year results and equity which could result from a change in these risks. The
ASX/S&P 200 Accumulation Index was utilised as the benchmark for the investment portfolio.
ANNUAL REPORT | 101
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
9.
FINANCIAL RISK MANAGEMENT (continued)
(i)
Price risk (continued)
Impact on post-tax profit
Impact on equity
Increase 5%
Decrease 5%
(ii) Foreign exchange risk
2020
$
8,204
(8,204)
2019
$
67,034
(67,034)
2020
$
8,204
(8,204)
2019
$
67,034
(67,034)
The Consolidated Entity operates internationally and is exposed to foreign exchange risk arising from
various currency exposures, primarily with respect to the US dollar and Peruvian Nuevo Soles.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the Consolidated Entity's functional currency. The risk is measured
using sensitivity analysis and cash flow forecasting.
The Consolidated Entity has a policy of not hedging foreign exchange risk and therefore has not entered
into any hedging against movements in foreign currencies against
including
forward exchange contracts, as at the reporting date and is currently fully exposed to foreign exchange
risk.
the Australian dollar,
The Consolidated Entity's exposure to foreign exchange risk expressed in US dollars at the reporting
date are as follows:
Cash and cash equivalents
Payables
Net financial assets/(liabilities)
2020
USD
33,288
(70,641)
(37,353)
2019
USD
39,695
(34,007)
5,688
The Consolidated Entity has performed a sensitivity analysis on its exposure to exchange risk. The
management assessment is based upon an analysis of current and future market position. The analysis
demonstrates the effect on the current year results and equity when the Australian dollar strengthened
or weakened by 10% against the foreign currencies detailed above.
Increase 10%
Decrease 10%
Impact on post-tax profit
Impact on equity
2020
$
(3,735)
3,735
2019
$
569
(569)
2020
$
(3,735)
3,735
2019
$
569
(569)
(iii)
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market
interest rates. The Consolidated Entity's exposure to market risk for changes in interest rates relate
primarily to investments held in interest bearing instruments. The weighted average interest rate of the
cash at bank for the year for the table below is 0.35% (2019: 1.93%).
ANNUAL REPORT | 102
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
9.
FINANCIAL RISK MANAGEMENT (continued)
(ii)
Interest rate risk (continued)
Cash at bank
Term deposit
2020
$
2019
$
3,191,068
1,264,411
50,093
25,000
3,241,161
1,289,411
The following table illustrates the sensitivity of profit and equity to a reasonably possible change in
interest rates based on observation of current market conditions. The calculations are based on a
change in the average market interest rate and the financial instruments that are sensitive to changes in
interest rates.
Increase by 25bps
Decrease by 25bps
Impact on post-tax profit
Impact on equity
2020
$
8,103
(8,103)
2019
$
3,224
(3,224)
2020
$
8,103
(8,103)
2019
$
3,224
(3,224)
(b)
Liquidity risk
Liquidity risk is the risk that the Consolidated Entity will encounter difficulty in meeting obligations associated
with financial
liabilities. The Consolidated Entity has no borrowings. The Consolidated Entity's non-cash
investments can be realised to meet trade and other payables arising in the normal course of business. The
financial liabilities disclosed in the above table have a maturity obligation of not more than 30 days.
(c) Credit risk
Credit risk refers to the risk that a counterparty under a financial instrument will default (in whole or in part) on
its contractual obligations resulting in financial loss to the Consolidated Entity. Credit risk arises from cash
and cash equivalents and deposits with banks and financial institutions, including outstanding receivables and
committed transactions. Concentrations of credit risk are minimised primarily by the management carrying out
all market
transactions through recognised and creditworthy brokers and the monitoring of receivable
balances. The Consolidated Entity's business activities do not necessitate the requirement for collateral as a
means of mitigating the risk of financial loss from defaults.
The credit quality of the financial assets are neither past due nor impaired and can be assessed by reference
to external credit ratings (if available with Standard & Poor's) or to historical information about counterparty
default rates. The maximum exposure to credit risk at reporting date is the carrying amount of the financial
assets as summarised below:
Cash and cash equivalents
AA-
No external credit rating available
Receivables (due within 30 days)
No external credit rating available
2020
$
2019
$
3,192,021
1,232,048
48,194
56,105
3,240,215
1,288,153
57,494
166,391
ANNUAL REPORT | 103
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
10. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
Fair value hierarchy
AASB 13 (Fair Value Measurement) requires disclosure of fair value measurements by level of the following fair
value measurement hierarchy:
(i)
(ii)
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices); and
(iii)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Financial assets at fair value through
profit or loss:
Listed securities at fair value
Level 1
Level 2
Level 3
$
$
$
Total
$
2020
2019
164,083
1,340,686
-
-
-
-
164,083
1,340,686
There have been no transfers between the levels of the fair value hierarchy during the financial year.
(a) Valuation techniques
The fair value of the listed securities traded in active markets is based on closing bid prices at the end of the
reporting period. These investments are included in Level 1.
The fair value of any assets that are not traded in an active market are determined using certain valuation
techniques. The valuation techniques maximise the use of observable market data where it is available, or
independent valuation and rely as little as possible on entity specific estimates. If all significant inputs required
to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the
significant inputs is not based on observable market data, the instrument is included in Level 3.
(b) Fair values of other financial assets and liabilities
Cash and cash equivalents
Receivables
Payables
Note
7
11
13
2020
$
2019
$
3,241,161
1,289,411
57,494
3,298,655
(244,412)
3,054,243
166,391
1,455,802
(112,307)
1,343,495
Due to their short-term nature, the carrying amounts of cash, current receivables and current payables is
assumed to approximate their fair value.
11. RECEIVABLES
Receivable from sale of listed securities
Other receivables
2020
$
-
57,494
57,494
2019
$
135,252
31,139
166,391
ANNUAL REPORT | 104
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
11. RECEIVABLES (continued)
Risk exposure
The Consolidated Entity’s exposure to credit and interest rate risks is discussed in Note 9.
Accounting policy
AASB 9 (Financial Instruments) introduces a new expected credit loss (ECL) impairment model that requires the
Consolidated Entity to adopt an ECL position across the Consolidated Entity’s financial assets at 1 July 2018. The
Consolidated Entity’s receivables balance comprises deposits, GST refunds from the Australian Tax Office and
distributions from managed trusts.
At each reporting date, the Consolidated Entity reviews the carrying value of its financial assets based on the ECL
model under AASB 9, which proposes three approaches in assessing impairment:
(i)
the simplified approach (which will be applied to most trade receivables) which requires the recognition of
lifetime ECLs by considering forward-looking assumptions and information regarding expected future conditions
affecting historical customer default rates;
(ii) the general approach (which will be applied to most loans and debt securities) whereby ECL is recognised in
two stages. For credit exposures for which there has not been a significant increase in credit risk since initial
recognition, the Consolidated Entity will provide for credit losses that result from default events that are possible
within the next 12 months. For those credit exposures for which there has been a significant increase in credit risk
since initial recognition, a loss allowance will arise for credit losses expected over the remaining life of exposure,
irrespective of the timing of the default; and
(iii) For purchased or originated credit-impaired receivables, the fair value at initial recognition already takes into
account lifetime expected losses. At each reporting date, the Consolidated Entity updates its estimated cash flows
and adjusts the loss allowance accordingly.
The loss allowances for financial assets are based on the assumptions about risk of default and expected loss
rates. The Consolidated Entity uses judgement in making these assumptions and selecting the inputs to the
impairment calculation, based on the Consolidated Entity’s past history, existing market conditions as well as
forward looking estimates at the end of each reporting period. The Consolidated Entity has not recognised any
additional impairment to its current receivables or non-current receivables as a result of the application of AASB 9.
This is due to the fact that the Consolidated Entity does not consider that there are any further ECL to the current
carrying values of its current receivables or its non-current receivables.
12. EXPLORATION AND EVALUATION EXPENDITURE
Opening balance
Exploration and evaluation costs
Impairment loss
Closing balance
2020
$
348,956
856,242
(188,485)
1,016,713
2019
$
581,433
454,206
(686,683)
348,956
Critical accounting estimates and judgements
The Consolidated Entity has assessed the carrying amount of the exploration and evaluation in accordance with
AASB 6 (Exploration for and Evaluation of Mineral Resources). The ultimate recoverability of deferred exploration
and evaluation expenditure is dependent on the successful development or sale of the relevant area of interest.
ANNUAL REPORT | 105
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
12. EXPLORATION AND EVALUATION EXPENDITURE (continued)
Accounting policy
Exploration and evaluation expenditure incurred is initially capitalised in respect of each identifiable area of interest
where the Consolidated Entity has right of tenure. These costs are only carried forward to the extent that they are
expected to be recouped through the successful development of the area or where activities in the area have not
yet reached a stage that permits reasonable assessment of the existence or otherwise of economically-recoverable
reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in
which the decision to abandon the area is made.
Under AASB 6 (Exploration for and Evaluation of Mineral Resources), if facts and circumstances suggest that the
carrying amount of any recognised exploration and evaluation assets may be impaired, the Consolidated Entity
must perform impairment tests on those assets and measure any impairment in accordance with AASB 136
(Impairment of Assets). Any impairment loss is to be recognised as an expense. A regular review is undertaken of
each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area
of interest.
13. PAYABLES
Trade payables
Other creditors and accruals
2020
$
217,894
26,518
244,412
2019
$
89,417
22,890
112,307
Accounting policy
These amounts represent liabilities for goods and services provided to the Consolidated Entity prior to the end of
the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the
reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using
the effective interest method.
14.
ISSUED CAPITAL
2020
$
2019
$
207,134,268 (2019: 145,334,268) fully paid ordinary shares
151,049,893
148,439,925
Movement in fully paid ordinary shares
At 1 Jul 2019
Issue of shares at 4.5 cents
Cost of share issue
Issue of shares at 4.5 cents
Cost of share issue
At 30 Jun 2020
Date of issue
Number
of shares
$
145,334,268
148,439,925
18-Jul-19
21,800,000
981,000
(58,861)
5-Jun-20
40,000,000
1,800,000
207,134,268
151,049,893
(112,171)
Accounting policy
Ordinary shares are classified as equity. Fully paid ordinary shares carry one vote per share and the right to
dividends.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the
acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.
ANNUAL REPORT | 106
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
15. RESERVE
Share-based payments reserve
Foreign currency translation reserve
(a) Share-based payments reserve
2020
$
2019
$
13,233,026
13,233,026
1,832,935
1,841,075
15,065,961
15,074,101
The share-based payments reserve records the consideration (net of expenses) received by the Company on
the issue of options. In relation to options issued to Directors and employees for nil consideration, the fair
values of these options are included in the share-based payments reserve.
(b) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency
translation reserve as described in the accounting policy note below and accumulate in a separate reserve
within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
Accounting policy
Foreign currency translation reserve
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different
from the presentation currency are translated into the
presentation currency as follows:
(i)
(ii)
assets and liabilities for each statement of financial position presented are translated at the closing rate at the
date of that statement of financial position;
income and expenses for Consolidated Statement of Profit or Loss and Other Comprehensive Income are
translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income and expenses are translated at the
dates of the transactions), and
(iii) all resulting exchange differences are recognised in Other Comprehensive Income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recognised in Other
Comprehensive Income.
16. CAPITAL RISK MANAGEMENT
The Company's objectives when managing its capital are to safeguard its ability to continue as a going concern, so
that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain a
capital structure balancing the interests of all shareholders.
The Board will consider capital management initiatives as is appropriate and in the best interests of the Company
and shareholders from time to time, including undertaking capital raisings, share buy-backs, capital reductions and
selling assets to reduce debt.
The Consolidated Entity has no external borrowings.
ANNUAL REPORT | 107
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
17. PARENT ENTITY INFORMATION
The following information provided relates to the Company, Strike Resources
Limited, as at 30 June 2020.
Statement of profit or loss and other comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income for the year
2020
$
2019
$
(912,682)
(811,151)
-
-
(912,682)
(811,151)
Statement of financial position
Current assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Other
Non current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Options reserve
Accumulated losses
Equity
The parent entity does not have any contingent assets or liabilities.
18.
INVESTMENT IN CONTROLLED ENTITIES
Investment in controlled entities
Incorporated
Strike Finance Pty Ltd
Strike Australian Operations Pty Ltd
Strike Operations Pty Ltd
Strike Resources Peru S.A.C.
Apurimac Ferrum S.A.C.
Ferrum Trading S.A.C
Hananta S.A.
Australia
Australia
Australia
Peru
Peru
Peru
Argentina
3,192,295
162,283
63,038
3,793,871
7,211,487
1,233,306
1,334,422
152,708
2,675,269
5,395,705
152,100
152,100
33,605
33,605
7,059,387
5,362,100
151,049,893
148,439,924
13,233,025
13,233,025
(157,223,531)
(156,310,849)
7,059,387
5,362,100
Ownership interest
2020
100%
100%
100%
100%
100%
100%
90%
2019
100%
100%
100%
100%
100%
100%
90%
ANNUAL REPORT | 108
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2020
18.
INVESTMENT IN CONTROLLED ENTITIES (continued)
Accounting policy
Subsidiaries are all entities (including structured entities) over which the Consolidated Entity has control. The
Consolidated Entity controls an entity when the group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power to direct the activities of the
is transferred to the group. They are
entity. Subsidiaries are fully consolidated from the date on which control
deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Consolidated Entity.
Intercompany transactions, balances and unrealised gains on transactions in the Consolidated Entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
assets transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Consolidated Entity.
19. RELATED PARTY TRANSACTIONS
(a) Transactions with key management personnel
Refer to the Remuneration Report contained in the Directors' Report for details of the remuneration paid or
payable to each member of the Consolidated Entity's KMP for the year ended 30 June 2020. The total
remuneration paid to KMP of the Consolidated Entity during the year is as follows:
Directors
Short-term employee benefits
Post-employment benefits
Other KMP
Short-term employee benefits
Post-employment benefits
2020
$
405,500
35,079
50,000
4,750
495,329
2019
$
423,000
35,910
50,000
4,750
513,660
(b) Transactions with other related parties
No other related party transactions have been identified other than those disclosed above.
20. AUDITORS' REMUNERATION
During the year the following fees were paid for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Audit and review of financial statements
Rothsay Auditing
2020
$
14,000
2019
$
14,000
ANNUAL REPORT | 109
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
21.
COMMITMENTS
(a)
Lease Commitments
On 28 February 2020 the Consolidated Entity entered into a non-cancellable operating lease
agreement for (shared) office premises. The lease is for a period of 37 months term expiring on 31
March 2023. The Consolidated Entity may give notice to terminate the lease (without penalty) prior
to the second anniversary date. The office accommodation is shared with other companies, who
have agreed to share payment of the lease costs (including outgoings).
Exceptions to lease accounting
The Consolidated Entity has elected to apply the exceptions to lease accounting for both short-term
leases (i.e. leases with a term of less than or equal to 12 months) and leases of low-value assets.
The Consolidated Entity recognises the payments associated with these leases as an expense on a
straight-line basis over the lease term.
(b) Mining Tenements/Concessions – Annual Fees and Expenditure Commitments
(i)
Australian Tenements
The Consolidated Entity is required to pay annual lease rentals to the State Government and
meet minimum annual expenditure commitments (subject to successful applications for
exemption in relation thereto) in order to maintain rights of tenure over its granted Australian
mining tenements. The total amount of these commitments will depend upon the number and
area of granted mining tenements held/retained and whether and to what extent the
Consolidated Entity has been successful in obtaining exemption(s) from meeting annual
expenditure commitments.
(ii)
Peruvian Mineral Concessions
The Consolidated Entity is required to pay annual licence fees to the Peruvian Government in
respect of its granted Peruvian mineral concessions. The total amount of this commitment
will depend upon the number and area of concessions held/retained and the length of time of
each concession held.
22.
CONTINGENCIES
(a)
Directors' Deeds
The Consolidated Entity has entered into deeds of indemnity with Strike Resources Limited Directors,
indemnifying them against liability incurred in discharging their duties as Directors/officers of the
Consolidated Entity. As at the reporting date, no claims have been made under any such indemnities
and, accordingly, it is not possible to quantify the potential financial obligation of the Consolidated
Entity under these indemnities.
(b)
Paulsens East Tenement - Royalty
The Consolidated Entity has a liability to pay Orion Equities Limited (ASX:OEQ) a royalty of 2% of
gross revenues (exclusive of GST) from any commercial exploitation of any minerals from the
Paulsens East (Iron Ore) Project tenement (currently a Retention Licence RL 47/7 pending
conversion to a Mining Lease ML 47/1583) in Western Australia. This royalty entitlement stems from
the Consolidated Entity’s acquisition of a portfolio of tenements (including the Paulsens East
tenement) from Orion in September 2005. For further background details, refer also to Strike’s ASX
Announcements dated 20 September 2005: Acquisition of Uranium Tenements and 11 August 2008:
Acquisition of Outstanding Interests in Berau Coal and Paulsens East Iron Ore Projects.
(c)
Australian Native Title
The Consolidated Entity's tenements in Australia are (or may in the future be) subject to native title
rights of the traditional owners under the Native Title Act 1993 (Cth). Save as disclosed in Note 23,
it is not possible to quantify the impact that native title may have on the operations of the Consolidated
Entity in relation to these tenements.
ANNUAL REPORT | 110
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
22.
CONTINGENCIES (continued)
(d)
Government Royalties
The Consolidated Entity is liable to pay royalties to Government on production obtained from its
mineral tenements/concessions.
(e)
Deferred Payments from Settlement Agreement Relating to Apurimac Ferrum SAC
Pursuant to a settlement agreement dated 30 December 2012 whereby the Consolidated Entity
acquired the (50%) balance of equity interest in Apurimac Ferrum SAC (AF) (the holder of the
Apurimac and Cusco Projects) from D&C Pesca SAC, the Consolidated Entity has a series of
deferred payment obligations as outlined below.
The Consolidated Entity has payment obligations if certain milestones are achieved as follows:
(i)
(ii)
Resource Milestone Payment: US$2 million on the delineation of at least 500 Mt of JORC
Mineral Resources at an average grade of at least 55% Fe with at least 275 Mt of contained
iron having an average grade of at least 52.5% Fe, on the Apurimac Project mineral
concessions.
Approvals Milestone Payment: Up to US$3 million on AF receiving all formal government
environmental and community approvals for the construction and operation of an iron ore mine
and required infrastructure with a design capacity of at least 10Mtpa of iron ore product,
relating to the Apurimac Project mineral concessions.
(iii) Construction Milestone Payment: Up to US$5 million on formal approval of the AF Board
to commence construction of an iron ore project or the commencement of bulk earthworks for
an iron ore mine or processing plant, in either case with a design capacity of at least 10Mtpa
of iron ore product, relating to the Apurimac Project mineral concessions.
The Consolidated Entity has royalty payment obligations as follows:
(i)
(ii)
1.5% of the net profits from sales of iron ore mined and iron ore products produced from the
Apurimac and Cusco Project mineral concessions.
2% of the proceeds of sales of other metals (on a net smelter return basis) mined from the
Apurimac and Cusco Project mineral concessions.
Due to the inherent uncertainty surrounding the achievement and timing of the above
milestones/royalty triggers, the Consolidated Entity regards these future payment obligations as
contingencies.
For further background details, refer also to Strike’s ASX Announcement dated 31 December 2012:
Strike Moves to 100% Ownership of AF.
(f)
Legal Disputes Over Peru Mineral Concessions
The Consolidated Entity has successfully defended against a number of legal actions and claims
made by several Peruvian parties (that have had a contractual relationship with AF) relating to the
Consolidated Entity’s mineral concessions in Peru. Whilst there still remain some outstanding claims
and appeals, the Consolidated Entity believes that they will all eventually be dismissed, consistent
with previous decisions by the relevant Peruvian authorities.
For further background details, refer also to Strike’s ASX Announcement dated 1 May 2014: Strike
Wins Millenium Arbitration Case in Peru.
(g)
Deferred Payments Relating to Acquisition of Solaroz Lithium Project (Argentina)
In March 2019, the Consolidated Entity entered into an agreement to acquire a 90% shareholding in
Hananta S.A. (incorporated in Argentina) (Hananta). Hananta has, in turn, entered into an Option
and Purchase Agreement (Agreement) with the registered legal and beneficial owner (Owner) of
applications for exploitation concessions (totalling 12,000 ha) currently being processed before the
Administrative Mining Court of the Province of Jujuy (Mining Properties) which comprise the Solaroz
Lithium Brine Project (Solaroz) located in northern Argentina.
ANNUAL REPORT | 111
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the financial year ended 30 June 2020
22.
CONTINGENCIES (continued)
(g)
Deferred Payments Relating to Acquisition of Solaroz Lithium Project (Argentina) (continued)
Under the Agreement, Hananta will make a series of payments in cash and (at the election of the
Consolidated Entity, shares) over 4 years totaling US$6,590,000 to the Owner according to the
schedule below:
Hananta’s Payments to the Owner
On execution of the Agreement (paid in April 2019)
6 months after the approval of the Environmental Impact
Assessment (EIA) Report
12 months after EIA approval
18 months after EIA approval
30 months after EIA approval
42 months after EIA approval
Total
Cash
US$
140,000
120,000
Cash or Shares
US$
-
-
Total
US$
140,000
120,000
330,000
880,000
1,180,000
1,190,000
3,840,000
-
750,000
1,000,000
1.000.000
2,750,000
330,000
1,630,000
2,180,000
2,190,000
6,590,000
At the completion of the payments to the Owner, registered title to the Mining Properties will be
transferred to Hananta. The Consolidated Entity can elect to terminate Hananta’s Agreement with
the Owner at any time, with no penalty. Strike will fund 100% of the development costs for Solaroz
(including the abovementioned payments to the Owner) to the completion of a bankable feasibility
study, with such funding to be provided as loans to Hananta, to be repaid to the Consolidated Entity
as a priority prior to any distributions to shareholders. Thereafter, Hanaq Argentina S.A. (Hanaq) (as
the other 10% shareholder in Hananta) will contribute pro-rata or dilute. Hanaq can at any time elect
to convert its holding in Hananta to a 1% Net Smelter Royalty.
In light of the above circumstances, the Consolidated Entity regards these future payment obligations
as contingencies.
Further details are also contained in Strike’s ASX announcement dated 13 March 2019: Strike
Secures Solaroz Lithium Brine Project in Argentina’s Lithium Triangle.
23.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
(a)
Native Title Mining Agreement
On 14 August 2020, the Consolidated Entity entered into a Native Title Mining Agreement (Native
Title Agreement) with the PKKP Aboriginal Corporation RNTBC (PKKPAC). The PKKPAC holds
native title on trust for the benefit of the Puutu Kunti Kurrama and Pinikura People (PKKP), the
traditional owners of the land on which the Consolidated Entity’s Paulsens East Iron Ore Project is
located in the West Pilbara region of Western Australia. The Native Title Agreement provides an
agreed framework for Strike to undertake its mining activities (that minimises the impact on Aboriginal
Cultural Heritage with safeguards for the care and protection of the lands and rights of the PKKP)
and includes a package of financial and business development related benefits for the PKKP,
including upfront and milestone payments, a production payment based on the value of iron ore sales
(of between 0.5% to 1%, subject to the price of iron ore sales achieved), an annual training and
development allowance and opportunities for PKKP members to contract for the provision of certain
support operations related to the Paulsens East Iron Ore Project. The PKKPAC also consented to
the grant of the Project’s Mining Lease and ancillary Miscellaneous Licences (which are required to
support mining operations). Refer Strike’s ASX Announcement dated 17 August 2020: Native Title
Agreement Paves Way for Iron Ore Development.
(b)
Grant of Mining Lease
On 4 September 2020, the Mining Lease (M47/1583) for the Paulsens East Iron Ore Project was
formally granted by the Western Australian Department of Mines, Industry Regulation and Safety for
an initial term of 21 years. Refer Strike’s ASX Announcement dated 7 September 2020: Grant of
Mining Lease for Paulsens East Iron Ore Project.
No other matter or circumstance has arisen since the end of the financial year that significantly affected, or
may significantly affect, the operations of the Consolidated Entity, the results of those operations, or the
state of affairs of the Consolidated Entity in future financial periods.
ANNUAL REPORT | 112
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
(1)
The financial statements, comprising the Consolidated Statement of Profit or Loss and Other
Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of
Cash Flows, Consolidated Statement of Changes in Equity, and accompanying notes as set out on
pages 89 to 112 are in accordance with the Corporations Act 2001 (Cth) and:
(a)
(b)
comply with Australian Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting; and
give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2020 and
of their performance for the year ended on that date;
(2)
(3)
In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay
its debts as and when they become due and payable;
The Directors have been given the declarations required by section 295A of the Corporations Act 2001
(Cth) by the Managing Director (the person who, in the opinion of the Directors, performs the Chief
Executive Officer function) and Company Secretary (the person who, in the opinion of the Directors,
performs the Chief Financial Officer function); and
(4)
The Company has included in the notes to the Financial Statements an explicit and unreserved
statement of compliance with the International Financial Reporting Standards.
This declaration is made in accordance with a resolution of the Directors made pursuant to section 295(5) of
the Corporations Act 2001 (Cth).
Farooq Khan
Chairman
18 September 2020
William Johnson
Managing Director
ANNUAL REPORT | 113
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
STRIKE RESOURCES LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Strike Resources Limited (“the Company”) and its controlled entities
(“the Group”) which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended on that date and
notes to the financial statements, including a summary of significant accounting policies and the directors’
declaration of the Company.
In our opinion the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under these
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report
section of this report. We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (Including Independence
Standards) (the “Code”) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
STRIKE RESOURCES LIMITED (continued)
Key Audit Matter – Cash and Cash Equivalents
How our Audit Addressed the Key Audit Matter
The Group’s cash and cash equivalents make up
72% of total assets by value and are considered
to be the key driver of the Group’s operations
and exploration activities.
We do not consider cash and cash equivalents to
be at a high risk of significant misstatement, or
to be subject to a significant level of judgement.
However due to the materiality in the context of
the financial statements as a whole, this is
considered to be an area which had an effect on
our overall strategy and allocation of resources
in planning and completing our audit.
Key Audit Matter – Exploration and Evaluation
Expenditure
The Group incurred significant exploration and
evaluation expenditure during the year.
We do not consider exploration and evaluation
expenditure to be at a high risk of significant
misstatement, however due to the materiality in
the context of the financial statements as a
whole, this is considered to be an area which had
an effect on our overall strategy and allocation
of resources in planning and completing our
audit.
Our procedures over the existence of the Group’s
cash and cash equivalents included but were not
limited to:
Documenting and assessing the processes and
controls in place to record cash transactions;
Testing a sample of cash payments to
determine they were bona fide payments,
were properly authorised and recorded in the
general ledger; and
Agreeing significant cash holdings to
independent third-party confirmations.
We have also assessed the appropriateness of the
disclosures included in the financial report.
How our Audit Addressed the Key Audit Matter
Our procedures in assessing exploration and
evaluation expenditure included but were not
limited to the following:
We assessed the reasonableness of capitalising
exploration and evaluation expenditure in
accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources.
We tested a sample of exploration and
evaluation expenditure to supporting
documentation to ensure they were bona fide
payments; and
We documented and assessed the processes
and controls in place to record exploration and
evaluation transactions.
We have also assessed the appropriateness of the
disclosures included in the financial report.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
STRIKE RESOURCES LIMITED (continued)
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2020, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Directors’ Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with the Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or cease operations,
or have no realistic alternative but to do so.
Auditor’s Responsibility for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: www.auasb.gov.au/Home.aspx.
We communicate with the directors regarding, amongst other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
STRIKE RESOURCES LIMITED (continued)
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe those matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communications.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included in the directors’ report for the year ended 30 June 2020.
In our opinion the remuneration report of Strike Resources Limited for the year ended 30 June 2020 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Rothsay Auditing
Dated 18 September 2020
Daniel Dalla
Partner
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
LIST OF MINERAL CONCESSIONS
The following mineral concessions were held as at the end of the financial year (30 June 2020) and currently (save
as indicated below):
Paulsens East Tenement (Western Australia)
(Strike – 100%)
Tenement No.
Status Grant Date
Expiry Date
Area (blocks/Ha) Area (km²)
Retention Licence RL 47/7 Granted 4/12/2014
Pending conversion to
Mining Lease M 47/1583 (applied 28/8/2019)
381.87 Ha
~3.82
Mining Lease M 47/1583 Granted 4/9/2020
3/9/2041 (initial term of 21 years)
Apurimac Iron Ore Project (Peru)
(Strike – 100%)
Concession Name
Opaban I
Opaban III
Ferrum 1 *
Ferrum 4 *
Ferrum 8 *
Cristoforo 22
Ferrum 31
Ferrum 37 *
Wanka 01
Sillaccassa 1 *
Sillaccassa 2 *
Area
(Ha)
999
Province
Andahuaylas
Code
Title
990
Andahuaylas
Andahuaylas
5006349X01 No 8625-94/RPM Dec 16, 1994
5006351X01 No 8623-94/RPM Dec 16, 1994
010298304 No 00228-2005-INACC/J Jan 19, 2005
965
1,000 Andahuaylas/ Aymaraes 010298604 No 00230-2005-INACC/J Jan 19, 2005
010299004 No 00232-2005-INACC/J Jan 19, 2005
11053827
010165602 RP2849-2007-INGEMMET/PCD/PM Dec 13, 2007 11067786
010552807 RP 1266-2008-INGEMMET/PCD/PM May 12,
11076509
Andahuaylas
Andahuaylas
Andahuaylas
11053798
20001464
11053810
327
379
900
File No
20001465
2008
695
100
700
400
Andahuaylas
Andahuaylas
Andahuaylas
010621507 RP 1164-2008-INGEMMET/PCD/PM May 12,
2008
11076534
010208110 RP 3445-2010-INGEMMET/PCD/PM Oct 18,2010 11102187
010212508 RP 5088-2008-INGEMMET/PCD/PM Nov 19,
11084877
2008
Andahuaylas
010212608 RP 3183-2008-INGEMMET/PCD/PM Sept 8, 2008 11081449
Cusco Iron Ore Project (Peru)
(Strike – 100%)
Concession
Name
Area
(Ha)
Province
Code
Title
Flor de María *
907
Chumbivilcas
05006521X01 No 7078-95-RPM Dec 29, 1995
Delia Esperanza *
1,000
Chumbivilcas
05006522X01 No 0686-95-RPM Mar 31, 1995
El Pacífico II *
1,000
Chumbivilcas
05006524X01 No 7886-94/RPM Nov 25, 1994
File No.
20001742
20001743
20001746
* Strike has determined not to renew the annual fees and charges in respect of these concessions, which will now proceed to
forfeiture. The rationalisation of the Peru concessions occurred after a strategic review of each concession’s
exploration/resource prospects/potential vis a vis the costs of renewal and the development options associated with the
Apurimac and Cusco Projects
Solaroz Lithium Brine Project (Argentina)
(Strike – 90%)
Concession Name
Mario Ángel
Payo
Payo I
Payo 2
Chico I
Chico V
Chico VI
Silvia Irene
Area (Ha)
Province
543
990
1,973
2,193
835
1,800
1,400
2,465
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
File No
1707-S-2011
1514-M-2010
1516-M-2010
1515-M-2010
1229-M-2009
1312-M-2009
1313-M-2009
1706-S-2011
Burke Graphite Project (Queensland)
(Strike – ~70%)
Tenement No
Status
Grant Date
Expiry Date
Area (blocks/Ha)
Area (km²)
Burke EPM 25443
Corella EPM 25696
Granted
Granted
4/9/2014
2/4/2015
3/9/2019
1/4/2020
2 sub-blocks #
6 sub-blocks +
~6.58
~19.74
# 3 sub-blocks (~9km2) were relinquished as part of the 5 year renewal of EPM 25443
+ 5 sub-blocks (~15km2) were relinquished upon the 5 year renewal of EPM 25696
ANNUAL REPORT | 118
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ANNUAL MINERAL RESOURCES
STATEMENT
The following JORC Code (2004 and 2012 Editions) compliant Mineral Resources estimates are as at the end of
the financial year (30 June 2020) and currently (save as indicated below):
Paulsens East Iron Ore Project (Australia)
(Strike – 100%)
The Paulsens East Iron Ore Project has a JORC Code (2012 Edition) compliant Mineral Resource:
Mineral
Resources
Category
Indicated
Fe% Cut-Off Grade
>58
Million
Tonnes
9.6
Fe%
61.1
SIO2%
6.0
AL2O3%
3.6
P%
0.08
S%
0.01
LOI%
2.1
Refer Strike’s ASX Announcement dated: 4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated
Category at Paulsens East Iron Ore Project
Part of the JORC Indicated Mineral Resource has been converted to a maiden JORC Probable Ore
Reserve:
Ore Reserves Category
Fe% Cut-Off Grade Million Tonnes
Probable
>55
6.2
Fe% SIO2% AL2O3%
59.9
3.77
7.43
P%
0.086
Refer Strike’s ASX Announcement dated 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow
Generation and Financial Returns
Apurimac Iron Ore Project (Peru)
(Strike – 100%)
The Apurimac Project has a JORC Code (2012 Edition) compliant Mineral Resource of 269.4 Mt, consisting
of:
•
•
a 142.2 Mt Indicated Mineral Resource at 57.8% Fe; and
a 127.2 Mt Inferred Mineral Resource at 56.7% Fe.
Category
Indicated
Indicated
Inferred
Total Indicated and Inferred
Concession
Opaban 1
Opaban 3
Opaban 1
Density t/m3
4
4
4
Mt
133.71
8.53
127.19
269.4
Fe%
57.57
62.08
56.7
57.3
SiO2%
9.46
4.58
9.66
9.4
Al2O3%
2.54
1.37
2.7
2.56
P%
0.04
0.07
0.04
0.04
S%
0.12
0.25
0.2
0.16
Refer Strike’s ASX Announcement dated 20 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard.
Burke Graphite Project (Australia)
(Strike – ~70%)
The Burke Graphite Project has a JORC Code (2012 Edition) compliant Mineral Resource:
Category Weathering State
Oxide
Fresh
Inferred
Inferred
Total Oxide + Fresh
Mt
0.5
5.8
6.3
TGC (%)
14.0
16.2
16.0
Contained Graphite (Mt)
0.1
0.9
1.0
Density (t/m)
2.5
2.4
2.4
Note: The Mineral Resource was estimated within constraining wireframe solids defined above a nominal 5% TGC cut-off. The
Mineral Resource is reported from all blocks within these wireframe solids. Differences may occur due to rounding.
Refer also Grade Tonnage Data in Table 2 of CSA Global Pty Ltd’s Burke Graphite Project MRE Technical Summary dated 9
November 2017 (attached as Annexure A of Strike’s ASX Announcement dated 13 November 2017: Maiden Mineral Resource
Estimate Confirms Burke Project as One of the World’s Highest Grade Natural Graphite Deposits).
ANNUAL REPORT | 119
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ANNUAL MINERAL RESOURCES
STATEMENT
Compliance Notes
•
The Mineral Resources estimate in respect of the Paulsens East Iron Ore Project (above) was prepared and
first disclosed subsequent to the financial year ended 30 June 2019.
•
•
•
•
•
•
•
•
•
The Ore Reserves estimate in respect of the Paulsens East Iron Ore Project (above) was prepared and first
disclosed subsequent to the financial year ended 30 June 2020 (on 30 October 2020).
The Mineral Resources estimate in respect of the Apurimac Iron Ore Project (above) have not changed since
reported in last year’s (2019) Annual Report.
The Mineral Resources estimate in respect of the Burke Graphite Project (above) has not changed since
reported in last year’s (2019) Annual Report.
The Mineral Resources estimates in this Annual Mineral Resources Statement are based on, and fairly
represents, information and supporting documentation prepared by a Competent Person (recognised under
the JORC Code (2004 and 2012 Editions, as the case may be)).
The Annual Mineral Resources Statement as a whole (in respect of each of the Apurimac/Cusco Iron Ore
Projects, Paulsens East Iron Ore Project and the Burke Graphite Project) has been approved by the
Competent Persons named in the JORC Code Competent Persons’ Statements section of this Annual
Report (at pages 121 to 123) where further information concerning their qualifications and professional
memberships are also disclosed.
Due to the nature, stage and size of the Company’s existing operations, Strike believes there would be no
efficiencies gained by establishing a separate Mineral Reserves/Resources Committee responsible for
reviewing and monitoring the Company’s processes for calculating JORC Code compliant Mineral
Reserves/Resources. The Board as a whole has responsibility in this regard (with assistance from external
advisers as appropriate) including ensuring that appropriate internal controls are applied to such
calculations.
The Company ensures that any Mineral Reserve/Resource calculations are prepared by Competent Persons
and where appropriate, reviewed independently and verified (including estimation methodology, sampling,
analytical and test data).
The Company will report any future Mineral Reserves/Resources estimates in accordance with the 2012
JORC Code.
Subsequent to the financial year ended 30 June 2020, the Company did not renew the annual fees and
charges in respect of the mineral concessions comprising the Cusco Iron Ore Project (Peru) – as such, the
JORC Code (2004 Edition) compliant Mineral Resource in respect of the Cusco Project as at 30 June 2020
(below) (which had not changed since reported in last year’s (2019) Annual Report) is no longer applicable
as at the date of this report:
Cusco Iron Ore Project (Peru) *
The Cusco Project (Strike – 100%) had a JORC Code (2004 Edition) compliant Mineral Resource (as at 30
June 2020):
Category Concession
Inferred
Santo Tomas *
Density t/m3 Mt
Fe% SiO2% Al2O3%
4
104.4 32.62
0.53
3.19
P%
S%
0.035 0.53
The information in this JORC Resource table was prepared and first disclosed under the 2004 JORC Code (in Strike’s
ASX announcement dated 17 June 2011: Cusco Project – Resource Estimate). It has not been updated since to comply
with the 2012 JORC Code on the basis that the information had not materially changed since it was last reported.
* Strike has determined not to renew the annual fees and charges in respect of this concession, which will now proceed
to forfeiture. The rationalisation of this Peru concession occurred after a strategic review of the concession’s
exploration/resource prospects/potential vis a vis the costs of renewal and the development options associated with
the Apurimac and Cusco Projects
ANNUAL REPORT | 120
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
JORC CODE COMPETENT PERSONS’
COMPLIANCE STATEMENTS
JORC Code (2012) Competent Persons’ Compliance Statements - Paulsens East Iron Ore Project
(Western Australia)
(a)
(b)
(c)
(d)
The information in this document that relates to Mineral Resources and related Exploration
Results/Exploration Targets27 is based on information compiled by Mr Philip Jones (BAppSc (Geol), MAIG,
MAusIMM), who is a Member of the Australian Institute of Mining and Metallurgy (AusIMM) and the
Australian Institute of Geoscientists (AIG). Mr Jones is an independent contractor to Strike Resources
Limited. Mr Jones has sufficient experience that is relevant to the style of mineralisation and type of deposit
under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the
2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’ (the JORC Code). Mr Jones consents to the inclusion in this document of the matters based on
his information in the form and context in which it appears.
The information in this document that relates to Ore Reserves28 is based on information compiled by Mr
Harry Warries (MSc – Mine Engineering, FAusIMM), who is a Fellow of AusIMM. Mr Warries is the Principal
of Mining Focus Consultants Pty Ltd, a Consultant to Strike Resources Limited. Mr Warries has sufficient
experience that is relevant to the style of mineralisation and type of deposit under consideration and to the
activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the JORC
Code. Mr Warries consents to the inclusion in this document of the matters based on his information in the
form and context in which it appears.
The information in this document that relates to metallurgical sampling, metallurgical testing and
metallurgical results undertaken during 201929 is based on information compiled by Mr Philip Jones
(BAppSc (Geol), MAIG, MAusIMM), who is a Member of the AusIMM and AIG. Mr Jones is an independent
contractor to Strike Resources Limited. The information that relates to Processing and Metallurgy is based
on the work done by ALS Metallurgy Iron Ore Technical Centre (ALS IOTC) on a bulk sample collected
under the direction of Mr Jones and fairly represents the information compiled by him from the ALS IOTC
testwork reports. Mr Jones has sufficient experience that is relevant to the style of mineralisation and type
of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as
defined in the 2012 Edition of the JORC Code. Mr Jones consents to the inclusion in his document of the
matters based on his information in the form and context in which it appears.
The information in this document that relates to metallurgical sampling, metallurgical testing and
metallurgical results undertaken during 202030 is based on information compiled by Dr Michael J Wort
(FAusIMM CP(Met)), who is a Fellow of AusIMM and a Chartered Professional Engineer. Dr Wort is an
independent contractor to Strike Resources Limited. The information that relates to Processing and
Metallurgy is based on the work done by ALS IOTC on a bulk sample collected under the direction of Dr
Wort and fairly represents the information compiled by him from the ALS IOTC testwork reports. Dr Wort
has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration
and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the
JORC Code. Dr Wort consents to the inclusion in this document of the matters based on his information in
the form and context in which it appears.
27 Also refer Strike ASX Announcements dated 4 September 2019: Significant Upgrade of JORC Mineral Resource into Indicated
Category at Paulsens East Iron Ore Project and 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow
Generation and Financial Returns
28 Also refer Strike ASX Announcement dated 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow
Generation and Financial Returns
29 Also refer Strike ASX Announcements dated 10 October 2019: Outstanding Metallurgical Testwork Results at Paulsens East Iron Ore
Deposit Indicate 79% Lump Yield with Low Impurities and 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant
Cashflow Generation and Financial Returns
30 Also refer Strike ASX Announcement dated 30 October 2020: Paulsens East Feasibility Study Demonstrates Significant Cashflow
Generation and Financial Returns
ANNUAL REPORT | 121
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
JORC CODE COMPETENT PERSONS’
COMPLIANCE STATEMENTS
(e)
The information in this document that relates to Other Exploration Results and related Exploration
Targets (as applicable)31 is based on information compiled by Mr Hem Shanker Madan (Honours and
Masters Science degrees in Applied Science), who is a Member of AusIMM. Mr Madan is an independent
contractor to Strike Resources Limited and was formerly the Managing Director (September 2005 to March
2010) and Chairman (March 2010 to February 2011) of Strike Resources Limited. Mr Madan has sufficient
experience that is relevant to the style of mineralisation and type of deposit under consideration and to the
activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the JORC
Code. Mr Madan consents to the inclusion in this document of the matters based on his information in the
form and context in which it appears.
JORC Code (2012) Competent Person’s Compliance Statement - Apurimac Iron Ore Project (Peru)
The information in this document that relates to Mineral Resources32 is based on information compiled by Mr Ken
Hellsten, B.Sc. (Geology), who is a Fellow of AusIMM. Mr Hellsten was a principal consultant to Strike Resources
Limited and was also formerly the Managing Director of Strike Resources Limited (between 24 March 2010 and 19
January 2013). Mr Hellsten 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 JORC Code. Mr Hellsten consents to the inclusion in this document of the matters based
on his information in the form and context in which it appears.
JORC Code (2004) Competent Person’s Statement – Cusco Iron Ore Project (Peru)
The information in this document that relates to Mineral Resources33 is based on information compiled by Mr Ken
Hellsten, B.Sc. (Geology), who is a Fellow of AusIMM. Mr Hellsten was a principal consultant to Strike Resources
Limited and was also formerly the Managing Director of Strike Resources Limited (between 24 March 2010 and 19
January 2013). Mr Hellsten 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 2004 Edition of the JORC Code. Mr Hellsten consents to the inclusion in this document of the matters based
on his information in the form and context in which it appears.
JORC Code (2012) Competent Person’s Compliance Statement – Solaroz Lithium Brine Project
(Argentina)
The information in this document that relates to Exploration Targets34 is based on information compiled by Mr
Peter Smith (BSc (Geophysics) (Sydney) AIG ASEG), who is a Member of AIG. Mr Smith is a consultant to Strike
Resources Limited. Mr Smith 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 JORC Code. Mr Smith consents to the inclusion in this document of the matters based
on his information in the form and context in which it appears.
JORC Code (2012) Competent Persons’ Compliance Statements - Burke Graphite Project
(Queensland)
(a)
The information in this document that relates to Mineral Resources35 is based on information compiled by
Mr Grant Louw under the direction and supervision of Dr Andrew Scogings (both former employees of CSA
Global Pty Ltd). Dr Scogings takes overall responsibility for this information. Dr Scogings is a Member of
AIG and AusIMM and 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 JORC Code. Dr Scogings consents to the inclusion in this document of
the matters based on his information in the form and context in which it appears.
31 Also refer Strike ASX Announcements dated 14 October 2020: Discovery of High Grade Iron Rich Detritals at Surface at Paulsens
East, 15 July 2020: High-Grade Rock Chip Samples Confirm Resource Upside Potential at Paulsens East Iron Ore Project and 4
December 2019: High Grade Results Located 1.6km from 9.6Mt Resource at Paulsens East
32 Also refer Strike ASX Announcement dated 20 January 2015: Apurimac Mineral Resources Updated to JORC 2012 Standard
33 Also refer Strike ASX Announcement dated 17 June 2011: Cusco Project – Resource Estimate
34 Also refer Strike ASX Announcement dated 13 March 2019: Strike Secures Solaroz Lithium Brine Project in Argentina’s Lithium
Triangle
35 Also refer Strike ASX Announcement dated 13 November 2017: Maiden Mineral Resource Estimate Confirms Burke Project as One
of the World’s Highest-Grade Natural Graphite Deposits
ANNUAL REPORT | 122
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
JORC CODE COMPETENT PERSONS’
COMPLIANCE STATEMENTS
(b)
(c)
The information in this document that relates to metallurgical test work36 is based on information compiled
by Mr Peter Adamini, BSc (Mineral Science and Chemistry), who is a Member AusIMM. Mr Adamini is a
full-time employee of Independent Metallurgical Operations Pty Ltd, who has been engaged by Strike
Resources Limited to provide metallurgical consulting services. Mr Adamini 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 JORC Code. Mr
Adamini consents to the inclusion in this document of the matters based on his information in the form and
context in which it appears.
The information in this document that relates to Exploration Results (including the ground Electro-
Magnetic (EM) survey)37 is based on information compiled by Mr Peter Smith (BSc (Geophysics) (Sydney)
AIG ASEG), who is a Member of AIG. Mr Smith is a consultant to Strike Resources Limited. Mr Smith 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 JORC Code. Mr Smith consents to the inclusion in this document of the matters based on his
information in the form and context in which it appears.
Strike’s ASX Announcements may be viewed and downloaded
www.strikeresources.com.au or the ASX website: www.asx.com.au under ASX code “SRK”.
from
the Company’s website:
FORWARD LOOKING STATEMENTS
This document contains “forward-looking statements” and “forward-looking information”, including statements and
forecasts which include without limitation, expectations regarding future performance, costs, production levels or rates,
mineral reserves and resources, the financial position of Strike, industry growth and other trend projections. Often, but not
always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “is
expecting”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes”, or variations (including
negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”,
“might”, or “will” be taken, occur or be achieved. Such information is based on assumptions and judgements of
management regarding future events and results. The purpose of forward-looking information is to provide the audience
with information about management’s expectations and plans. Readers are cautioned that forward-looking information
involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or
achievements of Strike and/or its subsidiaries to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking information. Such factors include, among others, changes in
market conditions, future prices of minerals/commodities, the actual results of current production, development and/or
exploration activities, changes in project parameters as plans continue to be refined, variations in grade or recovery rates,
plant and/or equipment failure and the possibility of cost overruns.
Forward-looking information and statements are based on the reasonable assumptions, estimates, analysis and opinions
of management made in light of its experience and its perception of trends, current conditions and expected developments,
as well as other factors that management believes to be relevant and reasonable in the circumstances at the date such
statements are made, but which may prove to be incorrect. Strike believes that the assumptions and expectations reflected
in such forward-looking statements and information are reasonable. Readers are cautioned that the foregoing list is not
exhaustive of all factors and assumptions which may have been used. Strike does not undertake to update any forward-
looking information or statements, except in accordance with applicable securities laws.
36 Also refer Strike ASX Announcement dated 13 November 2017: Maiden Mineral Resource Estimate Confirms Burke Project as One
of the World’s Highest-Grade Natural Graphite Deposits
37 Also refer Strike ASX Announcements dated 21 April 2017: Jumbo Flake Graphite Confirmed at Burke Graphite Project, Queensland,
13 June 2017: Extended Intersections of High-Grade Graphite Encountered at Burke Graphite Project., 21 June 2017: Further High-
Grade Intersection Encountered at Burke Graphite Project, 16 October 2017: Test-work confirms the potential suitability of Burke
graphite for Lithium-ion battery usage and Graphene production, 13 November 2017: Maiden Mineral Resource Estimate Confirms
Burke Project as One of the World’s Highest-Grade Natural Graphite Deposits and 26 June 2018: Burke Graphite Project – New
Target Area Identified from Ground Electro-Magnetic Surveys
ANNUAL REPORT | 123
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ADDITIONAL ASX INFORMATION
as at 30 October 2020
CORPORATE GOVERNANCE STATEMENT
The Company has adopted the Corporate Governance Principles and Recommendations (3rd Edition, March 2014)
issued by the ASX Corporate Governance Council in respect of the financial year ended 30 June 2020.
Pursuant to ASX Listing Rule 4.10.3, the Company’s 2020 Corporate Governance Statement (dated on or about 2
November 2020) and ASX Appendix 4G (Key to Disclosures of Corporate Governance Principles and
Recommendations) can be found at the following URL on the Company’s Internet website:
http://strikeresources.com.au/corporate/corporate-governance/
ISSUED CAPITAL
Class of Security
Fully paid ordinary shares
DISTRIBUTION OF FULLY PAID ORDINARY SHARES
Spread of Holdings
1
- 1,000
1,001
5,001
- 5,000
- 10,000
10,001
- 100,000
100,001
- and over
TOTAL
Number of
Holders
350
589
319
590
198
2,046
UNMARKETABLE PARCELS
Spread of Holdings
-
5,681
1
5,682
-
over
TOTAL
Number of
Holders
960
1,086
2,046
Number of
Shares
143,444
1,766,774
2,605,925
22,760,042
179,858,083
207,134,268
Number of
Shares
2,023,335
205,110,933
207,134,268
Quoted on ASX
207,334,268
% of Total
Issued Capital
0.07%
0.85%
1.26%
10.99%
86.83%
100.00%
% of Total
Issued Capital
0.98%
99.02%
100.00%
An unmarketable parcel is considered, for the purposes of the above table, to be a shareholding of 5,681 shares or less
(being a value of $500 or less in total), based upon the Company’s closing share price of $0.088 on 30 October 2020.
VOTING RIGHTS
Subject to any rights or restrictions for the time being attached to any class or classes of shares (at present there
are none), at meetings of shareholders of the Company:
• Each shareholder entitled to vote may vote in person or by proxy or by power of attorney or, in the case of a
shareholder which is a corporation, by representative;
• Every person who is present in the capacity of shareholder or the representative of a corporate shareholder
shall, on a show of hands, have one vote; and
• Every shareholder who is present in person, by proxy, by power of attorney or by corporate representative
shall, on a poll, have one vote in respect of every fully paid share held by him.
ANNUAL REPORT | 124
30 JUNE 2020
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ADDITIONAL ASX INFORMATION
as at 30 October 2020
TOP 20 ORDINARY FULLY PAID SHAREHOLDERS
Rank Holder name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
BENTLEY CAPITAL LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MRS AMBREEN CHAUDHRI
ORION EQUITIES LIMITED
NORFOLK BLUE PTY LTD
IRIS SYDNEY HOLDINGS PTY LTD
MR VU QUANG MINH DANG + MRS THI KIM DAU NGUYEN
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MR HONGWEI YAO
MR FAROOQ KHAN
ACN 139 886 025 PTY LTD
MR NISCHAL DINESH JEENA
MR ZHOUFENG ZHANG
MR IANAKI SEMERDZIEV
BNP PARIBAS NOMINEES PTY LTD
MISS RIA JOANNE NEFF
MR HAN SWEE TAN
MRS LAY HOON LEE
D&C PESCA S.A.C.
LAVISH LIMOUSINES PTY LTD
TOTAL
Shares Held
52,553,493
26,687,000
10,629,063
10,000,000
5,250,000
4,800,000
3,133,314
2,871,760
2,344,515
1,813,231
1,760,780
1,670,000
1,239,556
1,235,000
1,159,854
1,127,646
1,111,600
1,111,600
1,081,027
1,000,000
% Issued
Capital
25.37
12.88
5.13
4.83
2.53
2.32
1.51
1.39
1.13
0.88
0.85
0.81
0.6
0.6
0.56
0.54
0.54
0.54
0.52
0.48
132,579,439
64.01%
SUBSTANTIAL SHAREHOLDERS
Substantial Shareholders
Registered Shareholder
Shares Held
% Voting Power
Bentley Capital Limited38
Windfel Properties Limited
and Associate 39
Ambreen Chaudhri 40
Orion Equities Limited41
Queste Communications Ltd42
Bentley Capital Limited
HSBC Custody Nominees
(Australia) Limited
Ambreen Chaudhri
Orion Equities Limited
Orion Equities Limited
52,553,493
25,825,000
10,629,063
10,000,000
10,000,000
25.37%
12.47%
5.13%
4.83%
4.83%
38 Refer Bentley’s ASX Announcement dated 5 June 2020: Notice of Change in Interests of Substantial Holder
39 Refer Notice of Change in Interests of Substantial Holder (Windfel Properties Limited) dated 9 June 2020
40 Refer Notice of Change in Interests of Substantial Holder (Database Systems Limited and Ambreen Chaudhri) dated 8 June 2020 and
released on ASX on 9 June 2020 and Notice of Ceasing to be a Substantial Holder (Database Systems Limited) dated 19 August 2020
and released on ASX on 20 August 2020 (updated to reflect current registered shareholding)
41 Refer Orion’s ASX Announcement dated 5 June 2020: Notice of Change in Interests of Substantial Holder
42 Refer Queste’s ASX Announcement dated 5 June 2020: Notice of Change in Interests of Substantial Holder; Orion is the registered
holder of Strike shares and Queste is taken under section 608(3)(b) of the Corporations Act to have a relevant interest in securities in
which Orion has a relevant interest by reason of having control of Orion
ANNUAL REPORT | 125
STRIKE RESOURCES LIMITED
A.B.N. 94 088 488 724
ASX Code : SRK
REGISTERED OFFICE
Level 2, 31 Ventnor Avenue
West Perth, Western Australia 6005
T | (08) 9214 9700
F | (08) 9214 9701
E | info@strikeresources.com.au
W | www.strikeresources.com.au
ADVANCED SHARE REGISTRY
W | www.advancedshare.com.au
Main Office
110 Stirling Highway
Nedlands, Western Australia 6009
Local T | 1300 113 258
T | (08) 9389 8033 F | (08) 6370 4203
E | admin@advancedshare.com.au
Sydney Office
Suite 8H, 325 Pitt Street
Sydney, New South Wales 2000
T | (02) 8096 3502