Annual Financial Report
Year ended 30 June 2022
Suvo Strategic Minerals Limited
Corporate Directory
30 June 2022
Corporate Directory
Directors
Henk Ludik
Aaron Banks
Oliver Barnes
Ian Wilson
Company secretary
Chris Achurch
Registered office
Principal place of business
Share register
Auditors
Solicitors
Level 11
40 The Esplanade
Perth WA 6000
Phone: (08) 9389 4495
3610 Glenelg Hwy
Pittong VIC 3360
Phone: (03) 5344 6688
Automic Registry Services Pty Ltd
Level 5
191 St Georges Terrace
Perth WA 6000
Phone: 1300 288 664
RSM Australia Partners
Level 32
2 The Esplanade
Perth WA 6000
Phone: (08) 9261 9100
Hamilton Locke
Level 27
152-158 St Georges Terrace
Perth WA 6000
Phone: (08) 6311 9160
Stock exchange listing
Suvo Strategic Minerals Limited’s shares are listed on the Australian Securities
Exchange (ASX code: SUV)
Website
www.suvo.com.au
Corporate Governance Statement www.suvo.com.au/investors/corporate-governance/
2
Suvo Strategic Minerals Limited
Chairman’s Letter
30 June 2022
Chairman’s Letter
Dear Shareholder
On behalf of the Board, I am pleased to present the 2022 Annual Report to shareholders.
Suvo Strategic Minerals hit several strategic milestones during the year ended 30 June 2022, setting the Company up for
future growth.
Suvo recently signed a binding supply contract with the minerals division of Global Fortune 500 company Xiamen C&D. Suvo
is supplying C&D with 20 tonnes of two hydrous kaolin products from the Company’s 100 per cent owned Pittong operation in
Victoria.
C&D will use the products for various commercial-scale trials, and it represents the next step towards a potential commercial
offtake agreement. Discussions on sales price for a suite of potential full-scale commercial orders with C&D continue to
advance, and the Company looks forward to providing an update in due course.
Suvo also continues to position itself to take advantage of the global supply deficit for kaolin. This was front of mind with the
plant upgrade and optimisation review which is now complete, validating a ~60,000 tonnes per annum processing capacity.
This upgrade will see Pittong capable of producing roughly 50,000 tonnes per annum of hydrous kaolin, representing an 83%
utilisation rate on the forecast ~60,000 nameplate capacity, and based on the Company’s proposed operating hours.
The Company expects to nearly double the 25,700 tonnes of kaolin produced over the 30 June 2022 financial year. In addition
to lifting production, and importantly, Suvo have also identified opportunities to lower operating costs, resulting in an
anticipated four-fold increase in production guidance FY24 EBITDA.
The Suvo team continue to work tirelessly to further unlock other kaolin related markets, including metakaolin applications for
emerging opportunities in carbon reducing green cement.
Importantly, a number of strategic research and development partnerships are now in place and we remain focussed on how
the emerging green cement industry can play a key role in meeting the global challenge of reducing greenhouse gas emissions
and limiting the impacts of climate change.
The Company has also made significant progress at our Eneabba Silica Sands project in Western Australia, securing a land
access agreement with the landowner occupying the granted tenure adjacent to the project’s maiden Inferred JORC Resource
of 216 million tonnes.
The privately owned cleared farmland will help negate native vegetation clearing permits and has the potential to significantly
reduce project timelines. Further, there is sufficient power and water available to support development of a silica sand project
at Eneabba including road and rail access direct to Geraldton Port only 2kms from the western boundary of the tenement.
This agreement provides certainty for the Company’s upcoming drilling campaign, aimed at determining a JORC Compliant
Indicated Resource.
Finally, I am pleased to have been recently appointed as Executive Chairman and would like to take this opportunity to thank
not only my fellow Board members, but also the loyal Suvo Shareholders for the support they have shown me since my arrival
as Non-Executive Chairman in March this year.
We are only at the start of this journey together, and I am committed to delivering on Suvo’s potential as we look to build on
the momentum gained in recent months to grow the Company in the months and years ahead.
Yours faithfully
�
Henk Ludik
Executive Chairman
3
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of Suvo Strategic Minerals Limited (referred to hereafter as the 'Suvo' or the 'Company') and the
entities it controlled at the end of, or during, the year ended 30 June 2022.
Directors
The following persons were Directors of Suvo during the whole of the financial year and up to the date of this report, unless
otherwise stated:
Mr Henk Ludik
Mr Aaron Banks
Mr Oliver Barnes
Dr Ian Wilson
Mr Robert Martin
Mr Leonard Troncone
Executive Chairman (appointed 22 August 2022)
Non-Executive Chairman (appointed 14 March 2022)
Executive Director
Non-Executive Director (appointed 14 March 2022)
Non-Executive Director
Executive Chairman (resigned 14 March 2022)
Non-Executive Director (resigned 29 July 2021)
Principal activities
The principal activities of the Group during the year were refined Kaolin production in Victoria and mineral exploration in
Western Australia.
Review of operations
In March 2022, the Company successfully completed a A$7.5 million placement backed by new and existing institutional and
sophisticated investors to accelerate the Pittong plant expansion. The Company receipted a further A$0.57 million from the
Company’s Share Purchase Plan “SPP” which followed the placement.
Shortly after the completion of the capital raising and the Company completing its Executive and Board transition, the Pittong
plant upgrade optimisation review commenced. This was a critical work stream for Suvo, and its outcomes would ensure that
the Company has methodically analysed every facet of the Pittong plant expansion.
Subsequent to year end, the Pittong plant upgrade optimisation review was completed validating a ~60,000 tonnes per
annum processing capacity.
For the year ended 30 June 2022 total production was ~25,700 dry tonnes (2021: ~25,000). The production rate for the 2021
and 2022 financial years display the consistency of the plant operations on an annual basis and following findings from the
plant upgrade optimisation review, the Company has a high degree of certainty that the nameplate capacity of ~60,000
tonnes per annum could be achieved through a combination of equipment upgrades and process optimisation, subject to the
plant being continuously operated 24/7.
The plant upgrade and optimisation comes at a capital cost of A$2.3m. Capital works are expected to be completed by end
of Q3 FY 2023. At completion of the upgrade the Pittong operation is expected to produce ~50,000 tonnes per annum of
hydrous kaolin which represents an 83% utilisation rate based on the ~60,000 tonnes per annum name plate capacity, which
is based on the Company’s proposed operating hours.
Post upgrade, the Company expects to achieve significant efficiencies in processing costs by lowering its power and gas
usage per tonne produced and gaining economies of scale with its fixed costs. The Company expects to reduce its AISC
from A$592/t to A$359/t from FY2024 representing a 39% decrease.
Furthermore, the Company has forecasted an EBITDA of A$8.3m in FY2024. This is a substantial increase with the Pittong
operation generating A$2.2m EBITDA in the current financial year and A$1.5m in the previous financial year.
In May 2022, Suvo signed a non-binding cooperation agreement with C&D logistics Group Co Ltd “C&D”, a subsidiary of
Global Fortune 500 company Xiamen C&D. The agreement will see Suvo and C&D seek to negotiate a Sales and Purchase
(Offtake) Agreement in good faith. The products delivered under any offtake agreement could be produced from the
Company’s existing Pittong operation and/or other kaolin projects.
Subsequent to the year end, Suvo signed a legally binding contract for the delivery of two hydrous kaolin products from its
Pittong operations to be used in commercial-scale trials by C&D.
Pending the results of this commercial-scale trial contract in relation to product sourced from Pittong, Suvo and C&D will
continue to negotiate a Sales and Purchase Agreement in good faith.
4
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Shortly after the Calix agreement was signed, Suvo produced a bulk sample of high reactivity metakaolin “HRM” from its 100
percent owned Gabbin kaolin deposit in Western Australia. The sample was prepared by global cement technology specialist
FLSmitdh using its flash calciner, at its Bethlehem laboratory in the United States.
While the commonly defined indicator of acceptable performance of HRM is based on a 90 per cent total of silicon dioxide,
aluminum oxide and iron oxide, the Gabbin HRM product was measured at 97.8 per cent, showing equivalent or better quality
than other metakaolin products currently sold.
Cement production is estimated to contribute 8 per cent of global CO2 emissions, about the same carbon footprint as the
global car fleet. Metakaolin is a supplementary cementitious replacement for clinker, a key ingredient in cement production.
Studies have shown that increasing the percentage of metakaolin used in cement has the potential to reduce the carbon
intensity of cement by up to 40 per cent.
The Company’s earnings growth strategy aims to increase the weighted average value of products sold from Pittong along
with diversifying the product basket toward premium end markets such as the cosmeceutical and pharmaceutical sectors,
whilst also creating new markets and products such as metakaolin.
HRM is currently imported to Australia at $US530/t to $US840/t and at present there is no onshore production. Suvo could
potentially enjoy first mover advantage as the only commercial scale hydrous kaolin operation in Australia.
Subsequent to the year end, the Pittong mining license (MIN5408) renewal application was approved by Victoria’s Earth
Resource Regulation, Department of Jobs, Precincts and Regions (DJRP).
Approval by the regulator extends the Pittong mining license to December 2045. Together with Trawalla, the total JORC
Indicated Resource is 13.64 million tonnes which validates a multi decade mine life, thus supporting the Company’s
expansion plans.
The Company also made significant progress with its 100 per cent owned Eneabba Silica Sands project in Western Australia,
securing a land access agreement with the landowner occupying the granted tenure adjacent to the project’s maiden Inferred
JORC Resource of 216 million tonnes. This agreement was signed subsequent to the year end.
The privately owned cleared farmland will help negate native vegetation clearing permits and may sufficiently reduce
timelines.
Further, there is sufficient power and water available to support development of a silica sand project, with road access and
rail line direct to Geraldton Port only 2kms from the western boundary of the tenement.
This agreement provides certainty for the Company’s upcoming drilling campaign, aimed at determining a JORC Compliant
Indicated Resource.
The Company also announced the proposed acquisition of mining tenement E70/4981, a highly perspective silica sand
project near Muchea, north of Perth, Western Australia, subject to the necessary approvals, including shareholder approval.
The Muchea Project is strategically located adjacent to Brand Highway with rail connections to the Kwinana port facility for
bulk handling. The Project adjoins VRX Silica’s (ASX:VRX) Muchea Silica Sand Projects western boundary and is a
continuation of the aeolian dune systems located within the VRX project.
Suvo’s Muchea Project provides Suvo the potential to explore for high quality silica sand, targeting different end user markets
to the Company’s existing portfolio of assets.
Suvo aims to progress this project and to test its potential to provide material suitable to meet the stringent requirements for
high end materials including inputs for specialty glass for solar panels and mobile phones, as well as high-capacity lithium-
ion (Li-ion or LIB) rechargeable batteries.
5
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
On 26 July 2022, the Company announced that it had successfully completed the renewal of its Pittong mining license which
has been approved by Victoria’s Earth Resources Regulation, Department of Jobs, Precincts and Regions.
On 15 August 2022, the Company signed a legally binding supply contract for the delivery of 20 tonnes of two high quality
hydrous kaolin products from Pittong to be used in commercial-scale trials by C&D Logistics Group Co Ltd. This binding
contract is an important next step for the Company and another step closer to a commercial offtake agreement with C&D.
On 22 August 2022, Henk Ludik was appointed as Executive Chairman of the Company having previously served as Non-
Executive Chairman.
On 26 August 2022, the Company announced the completion of the Pittong plant upgrade optimisation review. The
independent review has confirmed the plant capacity expansion will be capable of delivering a name plate processing
capacity of ~60,000 tonnes per annum under certain operating conditions, with a forecast completion date of end Q3 FY
2023 (Q1 CY 2023), most of which the Company intends to satisfy by the forecast completion date.
Post upgrade, the Company expects to achieve significant efficiencies in processing costs by lowering its power and gas
usage per tonne produced and gaining economies of scale with its fixed costs. The Company expects to reduce its AISC
from A$592/t to A$359/t from FY2024 representing a 39% decrease. Forecast EBITDA is A$8.3m in FY 2024.
On 31 August 2022, the Company signed a land access agreement in relation to its Eneabba Silica Sands Project. The
Company has negotiated access to drill an area that is not under crop which will allow a more streamlined and less onerous
process in its pursuit towards the potential development of a Silica Sand operation at Eneabba. The cleared area of
approximately 250 hectares negates the need for environmental clearing permits, and with key infrastructure already
available (Road access, 3 phase power and water and rail line direct to Geraldton Port), project timelines may be significantly
reduced. The agreement provides certainty for Suvo’s upcoming drilling campaign, aimed at determining a JORC Compliant
Indicated Resource and scheduled to commence in Q4 CY2022.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and whilst it has had no significant impact on the Group up
to 30 June 2022, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The
situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries,
such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be
provided.
Apart from matters discussed above, no other matter or circumstance has arisen since 30 June 2022 that has significantly
affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in
future financial years.
Likely developments and expected results of operations
The Group intends to continue its exploration, development and production activities on its existing operations and projects
and to acquire further suitable projects as opportunities arise.
6
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Environmental regulation
The Group is subject to and is compliant with all aspects of environmental regulation of its exploration and mining activities.
The Directors are not aware of any environmental law that is not being complied with.
Climate change risk
Suvo acknowledges the scientific consensus of a changing global climate and supports the Intergovernmental Panel on
Climate Change (IPCC) position that continued increases in greenhouse gas emissions could precipitate major social and
economic consequences.
Suvo is currently updating its governance framework to include climate-related risks with the Board actively considering these
risks in its decision-making. Suvo’s management has begun implementing climate strategy and risk management
considerations into its management and reporting systems.
A Climate-related Risk & Opportunities Policy will be implemented during the 2023 financial year after which Suvo will
commence reporting climate-related financial disclosures aligned to the Task Force on Climate-related Financial Disclosures
recommendations.
Information on directors
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years): None
None
Special responsibilities:
None
Interests in shares:
None
Interests in options:
None
Interests in performance rights:
Henk Ludik
Executive Chairman (appointed 22 August 2022)
Mr Ludik is a mining engineer with a career spanning over 20 years in mining with
expertise in engineering, feasibility, mine optimisation, ESG and corporate finance. Mr
Ludik has worked on a number of landmark transactions in the resource sector since
2006. Mr Ludik holds a BEng in Mining Engineering, MSc in Oil and Gas Engineering
and an MBA.
Evolution Energy Minerals Limited (ASX:EV1)
Name:
Title:
Experience and expertise:
Aaron Banks
Executive Director
Aaron Banks is a specialist business consultant with over 20 years’ experience in
contract negotiations and business development including senior roles in sales,
marketing and construction management. In 2015 as founder & Managing Director of
Australian Silica Pty Ltd, Mr Banks discovered one of the largest high grade silica sand
resources in the world.
Whilst on the Board of Australian Silica he successfully negotiated the sale of Muchea
Silica Sand Project to Ventnor Resources Limited that pivoted the former base metals
explorer to the emerging silica sand producers known today as VRX Silica (ASX:VRX).
In 2020 he vended his private companies into what is Suvo Strategic Minerals today.
Aaron has an extensive background in industrial minerals and has focused on
developing emerging assets globally.
Other current directorships:
None
Former directorships (last 3 years): None
None
Special responsibilities:
72,564,516
Interests in shares:
None
Interests in options:
14,166,667
Interests in performance rights:
7
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Name:
Title:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years): Alterra Ltd (ASX:1AG)
Special responsibilities:
Interests in shares:
Interests in options:
Interests in performance rights:
None
None
None
None
Oliver Barnes
Non-Executive Director (appointed 14 March 2022)
Oliver Barnes has over 25 years’ experience in natural resources and asset
development with expertise in carbon, rural development, ESG and clean technology
commercialisation. Mr Barnes was previously the Managing Director of an ASX listed
land and water developer and held a senior role with an ASX listed phosphate
technology company. He holds a Bachelor of Science in Agriculture Business
Management.
None
Name:
Title:
Experience and expertise:
Ian Wilson
Non-Executive Director
Dr. Wilson is an economic geologist with over forty five years’ international experience
in industrial minerals. He has held key technical and management positions in a major
publicly listed mining and construction enterprise, was a Senior Scientific Officer in what
is now the British Geological Survey, and has been an independent consultant since
2001. His experience spans the range from exploration and resource estimation to
project development and production, and includes global and regional marketing for a
wide variety of industrial minerals, including kaolin, halloysite, calcium carbonate, talc,
bentonite, barytes, magnesite, and others. He has authored many articles in peer-
reviewed journals and has been a regular contributor to Industrial Minerals magazine
for over 17 years.
He was formerly Secretary of the Mineralogical Society of London (Clay Minerals
Group) and has been the convenor of several international conferences on clay
minerals. In 2009 he was awarded the Hal William Hardinge Award by SME in
recognition of his services to the industrial minerals industry.
Other current directorships:
None
Former directorships (last 3 years): None
None
Special responsibilities:
None
Interests in shares:
500,000
Interests in options:
766,666
Interests in performance rights:
Name:
Title:
Experience and expertise:
Robert Martin
Executive Chairman (resigned 14 March 2022)
Mr Martin has over 20 years’ experience across the mining services, supply chain and
capital market sectors. Mr Martin operated a highly successful mining services
company which became a leading provider of products and services to the mining
industry and operated globally with offices across Australia and internationally. After 7
years of growth on growth revenue, profitability and expansion into multiple countries,
Mr Martin’s company was acquired by a prominent Perth business. Mr Martin now runs
a family office in Western Australia with a focus on investing and supporting emerging
private and public businesses.
Other current directorships:
Not applicable as no longer a director
Former directorships (last 3 years): Not applicable as no longer a director
Not applicable as no longer a director
Special responsibilities:
Not applicable as no longer a director
Interests in shares:
Not applicable as no longer a director
Interests in options:
Not applicable as no longer a director
Interests in performance rights:
8
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Name:
Title:
Experience and expertise:
Leonard Troncone
Non-Executive Director (resigned 29 July 2021)
Mr Troncone is a senior finance executive with over 35 years’ hands-on experience in
the Australian corporate environment, with experience gained in a range of industries
including mining, mineral exploration, mine development and oil and gas, diversified
engineering, manufacturing and construction,
financial services and private
investment. Mr Troncone holds a Bachelor of Business degree from Curtin University
of Technology (formerly the Western Australian Institute of Technology).
Other current directorships:
Not applicable as no longer a director
Former directorships (last 3 years): Not applicable as no longer a director
Not applicable as no longer a director
Special responsibilities:
Not applicable as no longer a director
Interests in shares:
Not applicable as no longer a director
Interests in options:
Not applicable as no longer a director
Interests in performance rights:
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Chris Achurch (B Com, CA) holds the role of Company Secretary (appointed 1 August 2021). Mr Achurch spent 10 years in
public practice. Mr Achurch then spent over 2 years as CFO and Joint Company Secretary at Kalium Lakes Limited, before
his resignation to join Perth based Investment Banking and Corporate Advisory firm, Westar Capital Limited. Mr Achurch
provides company secretarial, corporate advisory and general consulting services to a number of ASX listed clients. Justyn
Stedwell stepped down as Company Secretary on 1 August 2021.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the
year ended 30 June 2022, and the number of meetings attended by each director were:
Full board
Remuneration Committee1 Audit and Risk Committee1
Attended
Held
Attended
Held
Attended
Held
Nomination and
Aaron Banks
Henk Ludik
Ian Wilson
Oliver Barnes
Robert Martin
Leonard Troncone
7
2
7
2
5
-
7
2
7
2
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Refer to Company’s Corporate Governance statement.
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant
committee.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance
with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all Directors.
9
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward
governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to attract,
motivate and retain high performance and high quality personnel.
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors'
fees and payments are reviewed annually by the Board. The chairman's fees are determined independently to the fees of
other non-executive directors based on comparative roles in the external market. The chairman is not present at any
discussions relating to the determination of his own remuneration.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the 2016 Annual General Meeting where the shareholders approved a
maximum annual aggregate remuneration of $350,000.
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which
has both fixed and variable components.
The executive remuneration has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Board based on individual and business unit performance, the overall performance of the Group and comparable market
remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits where it does not create any
additional costs to the Group and provides additional value to the executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the performance hurdles
of executives. STI payments are granted to executives based on specific annual targets and key performance indicators
('KPI's') being achieved.
10
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
The long-term incentives ('LTI') include share-based payments. Shares are awarded to executives over a period greater than
one year based on long-term incentive measures.
Use of remuneration consultants
During the financial year ended 30 June 2022, the Group did not engage a remuneration consultant.
Voting and comments made at the company's 2021 Annual General Meeting ('AGM')
At the 2021 AGM, 99.89% of the votes received supported the adoption of the remuneration report for the year ended 30
June 2021. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in the following tables.
The key management personnel of the Group consisted of the following persons:
●
●
●
●
●
●
●
Henk Ludik - Executive Chairman (appointed 22 August 2022), Non-Executive Chairman (appointed 14 March 2022)
Aaron Banks - Executive Director
Oliver Barnes - Non-Executive Director (appointed 14 March 2022)
Ian Wilson - Non-Executive Director
Robert Martin - Executive Chairman (resigned 14 March 2022)
Leonard Troncone - Non-Executive Director (resigned 29 July 2021)
Bojan Bogunovic - Chief Financial Officer (appointed 1 October 2021)
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
other4
$
Total
$
2022
Executive
Directors:
Aaron Banks
Robert Martin
Non-Executive
Directors:
Ian Wilson
Henk Ludik1
Oliver Barnes1
Leonard
Troncone2
Other
KMP:
Bojan Bogunovic3
208,000
287,833
-
50,000
46,348
14,000
14,000
4,455
-
-
-
-
142,500
717,136
-
50,000
-
-
-
-
-
-
-
-
20,800
-
-
-
-
445
14,250
35,495
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
433,014
-
661,814
337,833
34,641
-
-
80,989
14,000
14,000
-
4,900
143,342
300,092
610,997 1,413,628
1
2
3
4
Salary represents the period 14 March 2022 to 30 June 2022.
Salary represents the period 1 July 2021 to 29 July 2021.
Salary represents the period 1 October 2021 to 30 June 2022.
Equity settled performance rights.
11
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
2021
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
Executive
Directors:
Robert Martin1
Aaron Banks1
Leonard
Troncone2,3
Kobi Ben-Shabat4
Non-Executive
Directors:
Ian Wilson5
Leonard
Troncone2
Anthony Brown
John Paitaridis
188,467
220,000
299,633
37,740
37,194
3,500
-
-
786,534
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,000
28,667
-
-
350
-
-
51,017
-
-
-
-
-
-
-
-
61,103
87,290
107,000
-
356,570
329,290
-
-
-
-
328,300
37,740
-
66,280
103,474
-
-
-
148,393
13,375
-
-
17,225
-
-
186,655 1,172,599
1
2
3
4
5
Salary represents the period 30 July 2020 to 30 June 2021.
Leonard Troncone was appointed as a Non-Executive Director on 30 July 2020. On 1 September 2020, Leonard was
appointed as an Executive Director.
The employment of Leonard Troncone as an Executive Director ceased effective 22 June 2021. Leonard Troncone’s
remuneration includes a $133,967 termination payment. Leonard Troncone remained a Non-Executive Director until 29
July 2021.
Salary represents the period 1 July 2020 to 30 July 2020.
Salary represents the period 1 September 2020 to 30 June 2021.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Executive Directors:
Aaron Banks
Robert Martin
Non-Executive Directors:
Ian Wilson
Henk Ludik
Oliver Barnes
Leonard Troncone
Other KMP:
Bojan Bogunovic
Fixed remuneration
2021
2022
At risk - STI
At risk - LTI
2022
2021
2022
2021
35%
100%
57%
100%
100%
100%
73%
53%
36%
-
-
22%
52%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
65%
-
43%
-
-
-
27%
47%
64%
-
-
78%
48%
-
A cash bonus of $50,000 was payable to Robert Martin at the end of the current financial year. No cash bonuses were paid
in the previous financial year.
12
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Aaron Banks
Executive Director
30 July 2020
Open
Base salary of $240,000 plus superannuation guarantee. The salary will be reviewed
annually by the Company in accordance with the policy of the Company for the annual
review of salaries. 3-month termination notice by either party, the Company may at any
time pay a cash bonus, non-solicitation and non-compete clauses.
Bojan Bogunovic
Chief Financial Officer (appointed 1 October 2021)
1 October 2021
Open
Base salary of $190,000 plus superannuation guarantee. The salary will be reviewed
annually by the Company in accordance with the policy of the Company for the annual
review of salaries. 3-month termination notice by either party, the Company may at any
time pay a cash bonus, non-solicitation and non-compete clauses.
Robert Martin
Executive Chairman (resigned 14 March 2022)
30 July 2020
Resigned 14 March 2022
Consultancy fee of $26,667 plus superannuation and GST per month. The fee will be
reviewed annually in accordance with the Company’s policies and procedures. 4 month
termination notice by either party, the Company may at any time pay a cash bonus,
non-solicitation and non-compete clauses.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Performance rights
During the year, 15,600,000 performance rights were issued to Directors. The performance rights convert into fully paid
ordinary shares in the capital of the Company upon achievement of the following milestones:
a. One third of the performance rights will convert into ordinary shares on a one-for-one basis upon achieving
refined Kaolin production of at least 25kt across any 12-month period commencing on or after the date of issue
and ending within 5 years after the date of issue.
b. One third of the performance rights will convert into ordinary shares on a one-for-one basis upon achieving
refined Kaolin production of at least 27.5kt across any 12-month period commencing on or after the date of issue
and ending within 5 years after the date of issue.
c. One third of the performance rights will convert into ordinary shares on a one-for-one basis upon achieving
refined Kaolin production of at least 30kt across any 12-month period commencing on or after the date of issue
and ending within 5 years after the date of issue.
13
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
During the year, 1,800,000 performance rights were issued to other key management personnel. The performance rights
convert into fully paid ordinary shares in the capital of the Company upon achievement of the following milestones:
a. One third of the performance rights will convert into ordinary shares on a one-for-one basis upon achieving
refined Kaolin production of at least 25kt across any 12-month period commencing on or after the date of issue
and ending within 5 years after the date of issue.
b. One third of the performance rights will convert into ordinary shares on a one-for-one basis upon achieving 12
months continuous service from the date of issue.
c. One third of the performance rights will convert into ordinary shares on a one-for-one basis upon achieving 18
months continuous service from the date of issue.
For remuneration purposes the value is the number of performance rights granted, multiplied by the share price at date of
grant. As of 30 June 2022, an expense of $610,997 has been recognised in relation to the performance rights issued to
Directors and other key management personnel. These performance rights have not converted to ordinary shares as at the
date of this report.
Additional information
The earnings of the Group for the three years to 30 June 2022 are summarised below:
Sales revenue
EBITDA
EBIT
Loss after income tax
2022
$
2021
$
2020
$
13,957,078
(1,348,513)
(1,888,438)
(1,951,007)
6,510,970
(1,671,660)
(2,238,073)
(2,220,638)
-
(1,546,584)
(1,546,584)
(1,546,584)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic loss per share (cents per share)
2022
2021
2020
0.04
-
(0.32)
0.15
-
(0.43)
0.02
-
(0.19)
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each Director and other members of key management
personnel of the Group, including their personally related parties, is set out below:
Balance at Received
as part of
the start of
the year
remuneration Additions
Ordinary shares
Henk Ludik
Aaron Banks
Oliver Barnes
Ian Wilson
Robert Martin
Leonard Troncone
Bojan Bogunovic
1
Balance at resignation as director.
-
-
-
-
-
-
-
-
-
72,564,516
-
-
15,555,161
250,000
-
88,369,677
14
Disposals/
other
Balance at
the end of
the year
-
-
-
- 72,564,516
-
-
-
-
-
-
-
- 15,555,1611
-
250,0001
-
-
-
-
-
- - 88,369,677
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Option holding
The number of options over ordinary shares in the Company held during the financial year by each Director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Options over ordinary shares
Henk Ludik
Aaron Banks
Oliver Barnes
Ian Wilson
Robert Martin
Leonard Troncone
Bojan Bogunovic
1
Balance at resignation as director.
Balance at
the start of Granted as
the year
remuneration Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
500,000
10,000,000
1,250,000
-
11,750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
-
- 10,000,0001
1,250,0001
-
-
-
- 11,750,000
Performance rights
The number of performance rights in the Company held during the financial year by each Director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Balance at
the start of Granted as
the year
remuneration Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Performance rights
Henk Ludik
Aaron Banks
Oliver Barnes
Ian Wilson
Robert Martin
Leonard Troncone
Bojan Bogunovic
-
-
20,000,000
7,500,000
-
-
500,000
600,000
12,000,000
7,500,000
8,000,000
-
1,800,000
-
40,500,000 17,400,000
-
-
(166,667)
-
-
(6,666,667) 20,833,3331
-
-
-
933,3332
-
(4,000,000) 15,500,0003
-
8,000,0003
-
-
1,800,000
-
-
- (10,833,334) 47,066,666
1
2
3
Subsequent to the reporting period, 6,666,666 of these performance rights lapsed.
Subsequent to the reporting period 166,667 of these performance rights lapsed.
Balance at resignation as director.
Other transactions with key management personnel and their related parties
During the financial year, payments for consultancy services from Wilco Holdings Pty Ltd and ESG-F Pty Ltd (Director-related
entities of Henk Ludik and Oliver Barnes) of $296,740 were made. Amounts owing to related parties as at 30 June 2022
were $70,230 for consultancy services and $185,333 for director fees. All transactions were made on normal commercial
terms and conditions and at market rates.
The Company also announced the proposed acquisition of mining tenement E70/4981 (owned by Director Aaron Banks), a
highly perspective silica sand project near Muchea, north of Perth, Western Australia. As at the date of this report, the
proposed acquisition is still subject to the necessary approvals, including shareholder approval. Terms and conditions of the
proposed transaction were announced on 20 January 2022.
This concludes the remuneration report, which has been audited.
15
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Shares under option
Unissued ordinary shares of Suvo Strategic Minerals Limited under option at the date of this report are as follows:
Grant date
30-Jul-2020
30-Jul-2020
24-Nov-2020
23-Dec-2020
24-Mar-2022
Expiry date
30-Jul-2023
30-Jul-2023
30-Jul-2023
31-Dec-2023
30-Jun-2023
Exercise
price
Number
under option
$0.03 90,616,903
$0.03 11,250,000
$0.03
500,000
$0.15 12,000,000
$0.15 30,751,680
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
Shares issued on the exercise of options and performance rights
No shares were issued on the exercise of options or performance rights during the year ended 30 June 2022.
Indemnity and insurance of officers
The Company has indemnified the Directors and executives of the Company for costs incurred, in their capacity as a Director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the Directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company
or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to 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 part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 27 to the financial statements.
The Directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The Directors are of the opinion that the services as disclosed in note 27 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risks and rewards.
●
16
Suvo Strategic Minerals Limited
Directors' Report
30 June 2022
Directors’ Report
Officers of the company who are former partners of RSM Australia Partners
There are no officers of the Company who are former partners of RSM Australia Partners.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this Directors' report.
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
�
Henk Ludik
Executive Chairman
13 September 2022
Perth
17
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Suvo Strategic Minerals Limited for the year ended 30 June
2022, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 13 September 2022
TUTU PHONG
Partner
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of Suvo Strategic Minerals Limited
Annual mineral resource statement
Shareholder information
20
21
22
23
24
56
57
61
63
General information
The financial statements cover Suvo Strategic Minerals Limited as a consolidated entity consisting of Suvo Strategic Minerals
Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian
dollars, which is Suvo Strategic Mineral Limited's functional and presentation currency.
Suvo Strategic Minerals Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its
registered office and principal place of business are:
Registered office
Level 11
40 The Esplanade
Perth WA 6000
Principal place of business
3610 Glenelg Hwy
Pittong VIC 3360
A description of the nature of the Group’s operations and its principal activities are included in the directors' report, which is
not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 13 September 2022. The
Directors have the power to amend and reissue the financial statements.
19
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Consolidated statement of profit or loss and other
comprehensive income
Profit or loss from continuing operations
Revenue
Cost of sales
Gross profit before depreciation and amortisation
Depreciation and amortisation relating to kaolin production
Gross profit from operations
Other income
Administration and other corporate expenses
Foreign exchange profit/(loss)
Other depreciation and amortisation expenses
Share based payments expense
Loss before income tax expense from continuing operations
Income tax expense
Loss after income tax expense from continuing operations
Loss after income tax expense for the year
Other comprehensive income
Items that may be reclassified through profit or loss
Total other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
Loss for the year is attributable to:
Owners of Suvo Strategic Minerals Limited
Total comprehensive loss for the year is attributable to:
Continuing operations
Owners of Suvo Strategic Minerals Limited
Consolidated
Note
2022
$
2021
$
5
6
7
8
13,957,078
(10,856,820)
3,100,258
(287,661)
2,812,597
220,281
(4,025,143)
28,949
(252,264)
(735,427)
(1,951,007)
6,510,970
(4,647,084)
1,863,886
(494,054)
1,369,832
39,246
(2,714,106)
(26,703)
(72,359)
(816,548)
(2,220,638)
-
-
(1,951,007)
(2,220,638)
(1,951,007)
(2,220,638)
-
-
(1,951,007)
(2,220,638)
(1,951,007)
(2,220,638)
(1,951,007)
(1,951,007)
(2,220,638)
(2,220,638)
Loss per share for loss attributable to owners of Suvo Strategic Minerals
Limited
Basic and diluted loss per share (in cents)
9
(0.32)
(0.43)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
20
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Consolidated statement of financial position
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Income tax
Total current assets
Non-current assets
Property, plant and equipment
Mine properties
Mineral interest acquisition and exploration expenditure
Right-of-use assets
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Lease liabilities
Total current liabilities
Non-current liabilities
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Restated
Note
2022
$
2021
$
10
11
12
13
14
15
16
17
18
19
20
21
8,844,336
2,039,517
1,896,215
488,562
-
13,268,630
5,876,550
2,561,676
1,305,634
206,832
153,769
10,104,461
4,631,652
2,002,842
5,591,674
611,985
129,226
12,967,379
1,429,803
2,003,726
4,436,938
264,134
-
8,134,601
26,236,009
18,239,062
3,407,957
731,102
407,927
4,546,986
1,825,682
1,048,201
141,546
3,015,429
2,504,467
499,955
3,004,422
2,718,594
145,227
2,863,821
7,551,408
5,879,250
18,684,601
12,359,812
22
23
24
38,732,317
6,376,923
(26,424,639)
31,191,948
5,641,496
(24,473,632)
18,684,601
12,359,812
Comparative information has been restated in Note 14 and Note 20 as required by Accounting Standards
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
21
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Consolidated statement of changes in equity
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2020
18,978,136
3,589,660 (22,252,994)
314,802
Loss after income tax expense for the year
Other comprehensive loss for the year, net of
tax
Total comprehensive loss for the year
Transactions with owners in their capacity as
owners:
Shares issued
Shares issue costs
Share-based payments
-
-
-
-
(2,220,638)
(2,220,638)
-
-
-
-
(2,220,638)
(2,220,638)
14,323,494
(2,109,682)
-
-
- -
2,051,836 -
- 14,323,494
(2,109,682)
2,051,836
Balance at 30 June 2021
31,191,948
5,641,496 (24,473,632) 12,359,812
Consolidated
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2021
31,191,948
5,641,496 (24,473,632) 12,359,812
Loss after income tax expense for the year
Other comprehensive loss for the year, net of
tax
Total comprehensive loss for the year
Transactions with owners in their capacity as
owners:
Shares issued
Share issue costs
Share based payments
-
-
-
-
(1,951,007)
(1,951,007)
-
-
-
-
(1,951,007)
(1,951,007)
8,066,350
(525,981)
-
-
-
-
-
735,427 -
8,066,350
(525,981)
735,427
Balance at 30 June 2022
38,732,317
6,376,923 (26,424,639) 18,684,601
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
22
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Consolidated statement of cash flows
Cash flows from operating activities
Receipts in the course of operations
Payments to suppliers and employees
Income taxes received/(paid)
Interest received
Interest paid
Grants received
Consolidated
Note
2022
$
2021
$
14,553,843
(14,947,751)
153,769
11,611
(45,694)
32,471
5,769,156
(6,812,751)
(153,769)
1,200
-
-
Net cash used in operating activities
25
(241,751)
(1,196,164)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for exploration and evaluation
Payments for mine properties
Payments to acquire entities
Cash received from acquisitions of entities
Cash received from acquisition of assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Repayment of lease liabilities
Net cash received from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
3
3
(2,690,160)
(954,305)
(348,934)
-
-
-
(400,614)
(1,226,499)
-
(3,083,602)
1,194,647
64,670
(3,993,399)
(3,451,398)
8,066,347
(525,978)
(337,433)
11,000,000
(726,000)
(98,921)
7,202,936
10,175,079
2,967,786
5,876,550
-
5,527,517
349,033
-
Cash and cash equivalents at the end of the financial year
10
8,844,336
5,876,550
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
23
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss and certain classes of property, plant and
equipment.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 30.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Suvo Strategic Minerals
Limited ('Company' or 'Parent') as at 30 June 2022 and the results of all subsidiaries for the year then ended. Suvo Strategic
Minerals Limited and its subsidiaries together are referred to in these annual financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group 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 entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the Group. Losses
incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.
24
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises
the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Foreign currency translation
As stated in the “Basis of preparation’, the financial statements are presented in Australian dollars, which is Suvo Strategic
Mineral Limited's functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars 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 financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange
for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a
customer; identifies the performance obligations in the contract; determines the transaction price which takes into account
estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance
obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and
recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer
of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are recognised as a refund liability.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
25
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Sale of kaolin and other minerals
Sale of kaolin and other minerals is recognised at the point of sale, which is where the customer has taken delivery of the
goods, the risks and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as
revenue are net of sales returns and trade discounts.
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
●
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
●
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.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Suvo Strategic Minerals Limited (the 'Parent') and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The Parent and each subsidiary in the tax consolidated group
continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate
taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the Parent also recognises the current tax liabilities (or assets) and
the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
Discontinued operations
A discontinued operation is a component of the Group that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to
dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately on the face of the statement of profit or loss and other
comprehensive income.
26
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Current and non-current classification
Assets and liabilities are presented in the consolidated statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group’s
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement
of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 60
to 90 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Contract assets
Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group is
yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment
purposes.
Customer acquisition costs
Customer acquisition costs are capitalised as an asset where such costs are incremental to obtaining a contract with a
customer and are expected to be recovered. Customer acquisition costs are amortised on a straight-line basis over the term
of the contract.
Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained or which are not
otherwise recoverable from a customer are expensed as incurred to profit or loss. Incremental costs of obtaining a contract
where the contract term is less than one year is immediately expensed to profit or loss.
Customer fulfilment costs
Customer fulfilment costs are capitalised as an asset when all the following are met: (i) the costs relate directly to the contract
or specifically identifiable proposed contract; (ii) the costs generate or enhance resources of the Group that will be used to
satisfy future performance obligations; and (iii) the costs are expected to be recovered. Customer fulfilment costs are
amortised on a straight-line basis over the term of the contract.
27
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Right of return assets
Right of return assets represents the right to recover inventory sold to customers and is based on an estimate of customers
who may exercise their right to return the goods and claim a refund. Such rights are measured at the value at which the
inventory was previously carried prior to sale, less expected recovery costs and any impairment.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and delivery costs, direct
labour, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal
operating capacity, and, where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory
are determined after deducting rebates and discounts received or receivable.
Cost is determined on the following basis:
a. Work in progress and finished goods on hand is valued on an average total production cost method
b. Ore stockpiles are valued at the average cost of mining and stockpiling the ore, including haulage
c. Raw materials are valued at average cost
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
Property, plant and equipment
Land is measured at fair value, based on periodic valuations by external independent valuers. The valuations are undertaken
more frequently if there is a material change in the fair value relative to the carrying amount. Any accumulated depreciation
at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the
revalued amount of the asset. Increases in the carrying amounts arising on revaluation of land are credited in other
comprehensive income through to the revaluation surplus reserve in equity. Any revaluation decrements are initially taken in
other comprehensive income through to the revaluation surplus reserve to the extent of any previous revaluation surplus of
the same asset. Thereafter the decrements are taken to profit or loss.
Buildings are stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Buildings
Plant and equipment
3-40 years
2-5 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation
surplus reserve relating to the item disposed of is transferred directly to retained profits.
28
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the
lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for
any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms
of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as
incurred.
Exploration and evaluation assets
Exploration and evaluation expenditure in relation to separate areas of interest for which rights of tenure are current is carried
forward as an asset in the statement of financial position where it is expected that the expenditure will be recovered through
the successful development and exploitation of an area of interest, or by its sale; or exploration activities are continuing in
an area and activities have not reached a stage which permits a reasonable estimate of the existence or otherwise of
economically recoverable reserves. Where a project or an area of interest has been abandoned, the expenditure incurred
thereon is written off in the year in which the decision is made.
Mining assets
Capitalised mining development costs include expenditures incurred to develop new ore bodies to define further
mineralisation in existing ore bodies, to expand the capacity of a mine and to maintain production. Mining development also
includes costs transferred from exploration and evaluation phase once production commences in the area of interest.
Amortisation of mining development is computed by the units of production basis over the estimated proved and probable
reserves. Proved and probable mineral reserves reflect estimated quantities of economically recoverable reserves which can
be recovered in the future from known mineral deposits. These reserves are amortised from the date on which production
commences. The amortisation is calculated from recoverable proven and probable reserves and a predetermined percentage
of the recoverable measured, indicated and inferred resource. This percentage is reviewed annually.
Restoration costs expected to be incurred are provided for as part of development phase that give rise to the need for
restoration.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group’s obligation to transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the Group has transferred the goods or services to the customer.
29
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Refund liabilities
Refund liabilities are recognised where the Group receives consideration from a customer and expects to refund some, or
all, of that consideration to the customer. A refund liability is measured at the amount of consideration received or receivable
for which the Group does not expect to be entitled and is updated at the end of each reporting period for changes in
circumstances. Historical data is used across product lines to estimate such returns at the time of sale based on an expected
value methodology.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or
a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset
is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Provisions
Provisions are recognised when the Group has a present (legal or constructive) obligation as a result of a past event, it is
probable the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of
money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
30
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine
whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other
vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and
best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable
inputs.
31
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where
applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the Group assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the Group remeasures its previously held equity interest in the
acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount is
recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value
of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's
previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
32
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Suvo Strategic Minerals Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2022. The Group has not yet
assessed the impact of these new or amended Accounting Standards and Interpretations.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have,
on the Group based on known information. This consideration extends to the nature of the products and services offered,
customers, supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in specific
notes, there does not currently appear to be either any significant impact upon the financial statements or any significant
uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19) pandemic.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes
model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to note 7 for further
information.
33
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement. Net realisable value
tests are performed at least annually and represent the estimated future sales price of the product based on prevailing prices,
less estimated costs to complete production and bring the product to sale.
Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the contained tonnes
based on assay data, and the estimated recovery percentage based on the expected processing method. Stockpile tonnages
are verified by periodic surveys. The Group reviews the carrying value of stockpile inventories regularly to ensure that their
cost does not exceed net realisable value.
Rehabilitation provision
A provision has been made for the present value of anticipated costs for future rehabilitation of land explored or mined. The
Group’s mining and exploration activities are subject to various laws and regulations governing the protection of the
environment. The Group recognises management's best estimate for assets retirement obligations and site rehabilitations in
the period in which they are incurred. Actual costs incurred in the future periods could differ materially from the estimates.
Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates could affect the
carrying amount of this provision.
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the Group will commence commercial production
in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources. Key
judgements are applied in considering costs to be capitalised which includes determining expenditures directly related to
these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only
capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest.
Factors that could impact the future commercial production at the mine include the level of reserves and resources, future
technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the
extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which
this determination is made.
Amortisation
The Group uses the concept of life of mine to determine the amortisation of mine properties. In determining life of mine, the
Group prepares ore reserve estimation in accordance with JORC 2012, guidelines prepared by the Joint Ore Reserves
Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council
of Australia. The estimate of these proved and probable ore reserves, by their very nature, require judgements, estimates
and assumptions. Where the proved and probable reserve estimates need to be modified, the amortisation expense is
accounted for prospectively from the date of assessment until the end of the revised mine life (for both current and future
years).
Business combinations
As discussed in note 1, business combinations are initially accounted for on a provisional basis. The fair value of assets
acquired, liabilities and contingent liabilities assumed are initially estimated by the Group taking into consideration all
available information at the reporting date. Fair value adjustments on the finalisation of the business combination accounting
is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and
liabilities, depreciation and amortisation reported.
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations
or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously
estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written
down.
34
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 3. Business combination
On 1 January 2021, Suvo Strategic Minerals Limited acquired the holding Company of the Australian Kaolin operations of
Imerys S.A., Mircal Australia Pty Ltd, and its two wholly owned subsidiaries, Kaolin Australia Pty Ltd (the owner of the Pittong
and Lal Lal mines and Trawalla deposit) and Imerys Minerals Australia Pty Ltd (the owner of the Pittong processing plant).
The mining operations are located west of the township of Ballarat, Victoria, and consist of Australia’s only operating wet
kaolin processing plant, two active kaolin mine deposits and one unused mine deposit.
As part of the conditions to acquire the business, Suvo Strategic Minerals Limited changed the names of the two group
entities. Imerys Minerals Australia Pty Ltd was renamed Suvo Minerals Australia Pty Ltd and Mircal Australia Pty Ltd was
renamed Suvo Australia Pty Ltd. The third group entity, Kaolin Australia Pty Ltd retained its name.
Management has determined that this acquisition meets the definition of a business within AASB 3 Business Combinations.
This transaction has therefore been accounted for as a business combination.
Acquisition agreement
Per the Share Purchase Agreement, the consideration payable was A$2.00 million subject to completion adjustments. A$2.00
million was paid on 31 December 2020. The final payment occurred on 21 June 2021 upon completion of all balance sheet
adjustments bringing the total consideration paid to A$3.08 million.
Details of the purchase consideration and the net assets acquired
Purchase consideration paid by Suvo Strategic Minerals Limited to acquire Mircal Australia
Pty Ltd and its wholly owned subsidiaries:
Cash consideration paid on acquisition date
Deferred cash consideration paid during the period subject to all Balance Sheet adjustments
The fair value of assets and liabilities recognised as a result of the acquisition are outlined
below:
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Property, plant and equipment
Mine properties
Total assets
Trade and other payables
Other current liabilities
Other non-current liabilities
Total liabilities
Net assets
1 January
2021
$
2,000,000
1,083,602
3,083,602
1 January
2021
$
1,194,647
2,308,947
1,054,611
116,998
1,499,407
2,153,567
8,328,177
1,901,310
652,359
2,690,906
5,244,575
3,083,602
The acquisition was accounted for on a provisional basis at 30 June 2021. During the current year, new information was
obtained about fact and circumstances that existed at the date of acquisition. As such, the accounting for the acquisition was
revised.
35
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Measurement period adjustment and comparative information restatement
During the year ended 30 June 2022, the Company finalised its assessment of the assets and liabilities acquired. This
resulted in a decrease to the provision for rehabilitation and a decrease in the corresponding rehabilitation asset in the
Consolidated Statement of Financial Position. From the total adjustment of $1,197,328, $424,112 was adjusted at 30 June
2021 based on the facts and circumstances that existed, before an additional adjustment of $773,215 during the year ended
30 June 2022. The 30 June 2021 figures are restated as disclosed in note 14 and note 20.
Extract of line items impacted are disclosed below.
Amortisation of mine properties has been adjusted in the current year as outlined in note 14.
Reported
1-Jan-2021 Adjustments 1-Jan-2021
$
Restated
$
$
Mine properties
Total assets
Other current liabilities
Other non-current liabilities
Total liabilities
Net assets
Note 4. Operating segments
3,297,797
9,472,407
(1,144,230)
(1,144,230)
2,153,567
8,328,177
599,261 53,098 652,359
3,888,234 (1,197,328) 2,690,906
6,388,805 (1,144,230) 5,244,575
3,083,602
-
3,083,602
Identification of reportable operating segments
The Group is organised into one operating segment, being mining and exploration operations. This operating segment is
based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating
Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.
The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted
for internal reporting to the CODM are consistent with those adopted in the financial statements.
The information reported to the CODM is on a monthly basis.
Types of products and services
The principal products and services of the kaolin production operating segment are the manufacture and sale of refined
kaolin in Australia and overseas.
Major customers
During the year ended 30 June 2022 approximately $4,697,338 (2021: $2,764,542) of the Group’s external revenue was
derived from sales to two major Australian paper producers.
36
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Operating segment information
Corporate Exploration
Kaolin
& Evaluation Production
$
$
$
30 June 2022
Total
$
Revenue
Sales to external customers
Total segment revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Loss before income tax expense
Income tax expense
Loss after income tax expense
Assets
Segment assets
Liabilities
Segment liabilities
Revenue
Sales to external customers
Total segment revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Loss before income tax expense
Income tax expense
Loss after income tax expense
Assets
Segment assets
Liabilities
Segment liabilities
-
-
- 13,957,078 13,957,078
- 13,957,078 13,957,078
(3,553,986)
(8,492)
2,219,817
(1,342,661)
(539,925)
5,759
(74,180)
(1,951,007)
-
(1,951,007)
6,007,325
5,619,554 14,609,130 26,236,009
1,051,410
282,811
6,217,187
7,551,408
Corporate
Exploration
& Evaluation Production
Kaolin
$
$
$
30 June 2021
Total
$
-
-
-
-
6,510,970
6,510,970
6,510,970
6,510,970
(3,051,631)
(64,138)
1,464,182
(1,651,587)
(566,413)
8,250
(10,888)
(2,220,638)
-
(2,220,638)
3,535,462
4,420,490 10,283,110 18,239,062
417,814
82,380
5,379,056
5,879,250
37
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 5. Revenue
Revenue from contracts with customers
Sale of goods
Revenue from continuing operations
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Geographical regions
Australia
China
Japan
Rest of the World
Note 6. Administration and other corporate expenses
Employee expenses
Legal fees
Accounting fees
Compliance fees
Other administration costs
Consolidated
2022
$
2021
$
13,957,078
6,510,970
13,957,078
6,510,970
Consolidated
2022
$
2021
$
8,009,032
2,348,098
642,664
2,957,284
4,281,226
747,591
306,212
1,175,941
13,957,078
6,510,970
Consolidated
2022
$
2021
$
1,523,277
164,427
240,511
237,672
1,859,256
1,067,484
242,864
257,049
112,853
1,033,856
4,025,143
2,714,106
38
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 7. Share based payments expense
Shares issued to key management personnel1
Options issued to key management personnel1
Options issued to advisors1
Performance rights issued to key management personnel1
Performance rights issued to others1
Options issued to lead and co-lead managers2
Consolidated
2022
$
2021
$
-
-
-
610,997
124,430
735,427
148,393
186,655
481,500
-
-
816,548
-
1,383,681
735,427
2,200,229
1 Share based payments expensed to the consolidated statement of profit or loss and other comprehensive income
2 Share based payments capitalised to the consolidated statement of financial position as cost of raising capital
Options
During the year, 30,751,680 free-attaching options were issued.
Set out below is a summary of the movement in options during the financial year:
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
10-May-2019
30-Jul-2020
30-Jul-2020
30-Jul-2020
30-Jul-2020
24-Nov-2020
23-Dec-2020
24-Mar-2022
4-Sep-2022
30-Jul-2023
30-Jul-2023
30-Jul-2023
30-Jul-2023
30-Jul-2023
31-Dec-2023
30-Jun-2023
$0.08 5,166,670 -
-
-
-
-
-
-
- 30,751,680
119,533,573 30,751,680
$0.03 10,000,000
1,250,000
$0.03
$0.03 45,000,000
$0.03 45,616,903
$0.03
500,000
$0.15 12,000,000
$0.15
- - 5,166,670
- 10,000,000
-
1,250,000
- 45,000,000
- 45,616,903
-
500,000
- 12,000,000
- 30,751,680
- 150,285,253
-
-
-
-
-
-
-
-
Weighted average exercise price
$0.04
$0.15
$0.00
$0.00
$0.07
Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
10-May-2019
30-Jul-2020
30-Jul-2020
24-Nov-2020
23-Dec-2020
24-Mar-2022
4-Sep-2022
30-Jul-2023
30-Jul-2023
30-Jul-2023
31-Dec-2023
30-Jun-2023
2022
2021
Number
Number
5,166,670
5,166,670
90,616,903 90,616,903
11,250,000 11,250,000
500,000
12,000,000 12,000,000
-
30,751,680
500,000
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.07 years (2021:
2.13 years).
150,285,253 119,533,573
39
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Performance rights
Set out below is a summary of the movement in performance rights during the financial year:
Balance at
the start of
the year
Granted
Exercised
Expired/
lapsed/
other
Balance at
the end of
the year
Key management personnel
Others
40,500,000 17,400,000
3,000,000
-
40,500,000 20,400,000
- (13,500,000) 44,400,000
-
-
3,000,000
- (13,500,000) 47,400,000
On 7 August 2021, 13,500,000 performance rights lapsed with no corresponding dollar impact. Movements in equity reserves
during the year relate to performance rights granted during the year.
For the performance rights granted during the current year, the valuation model inputs used to determine the fair value at
the grant date, are as follows:
Grant date
Expiry date
Tranche
Total
Fair value
at grant date
Issue
date
Vesting
period
Expiry
period
5-Oct-21
17-Nov-21
5-Oct-21
17-Nov-21
5-Oct-21
17-Nov-21
5-Oct-21
16-Nov-21
5-Oct-21
16-Nov-21
24-Nov-26
24-Nov-26
24-Nov-26
24-Nov-26
24-Nov-26
24-Nov-26
24-Nov-26
24-Nov-26
24-Nov-26
24-Nov-26
A
A-1
B
B-1
C
C-1
D
D-1
E
E-1
1,100,000
5,200,000
500,000
5,200,000
500,000
5,200,000
600,000
750,000
600,000
750,000
$0.15
$0.15
$0.15
$0.15
$0.15
$0.15
$0.15
$0.14
$0.15
$0.14
24-Nov-21
24-Nov-21
24-Nov-21
24-Nov-21
24-Nov-21
24-Nov-21
24-Nov-21
24-Nov-21
24-Nov-21
24-Nov-21
12 months
12 months
24 months
24 months
24 months
24 months
12 months
12 months
18 months
18 months
60 months
60 months
60 months
60 months
60 months
60 months
12 months
12 months
18 months
18 months
Performance milestones
Performance rights Tranche A and Tranche A-1 will convert into ordinary shares on a one-for-one basis upon the satisfaction
of the following milestones:
a. achieving refined Kaolin production of at least 25kt across any 12-month period commencing on or after the date of
issue and ending within 5 years after the date of issue.
Performance rights Tranche B and Tranche B-1 will convert into ordinary shares on a one-for-one basis upon the satisfaction
of the following milestones:
a. achieving refined Kaolin production of at least 27.5kt across any 12-month period commencing on or after the date
of issue and ending within 5 years after the date of issue.
Performance rights Tranche C and Tranche C-1 will convert into ordinary shares on a one-for-one basis upon the satisfaction
of the following milestones:
a. achieving refined Kaolin production of at least 30kt across any 12-month period commencing on or after the date of
issue and ending within 5 years after the date of issue.
Performance rights Tranche D and Tranche D-1 will convert into ordinary shares on a one-for-one basis upon the satisfaction
of the following milestones:
a. 12 months continuous service from date of issue.
Performance rights Tranche E and Tranche E-1 will convert into ordinary shares on a one-for-one basis upon the satisfaction
of the following milestones:
a. 18 months continuous service from date of issue.
From 20,400,000 performance rights issued during the year, 17,400,000 performance rights were issued to key management
personnel.
40
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 8. Income tax expense
Income statement
Current income tax
Current income tax charge
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax expense/benefit reported in the income statement
Tax reconciliation
Consolidated
2022
$
2021
$
-
-
-
-
-
-
Accounting profit/(loss) before tax from continuing operations
(1,951,007)
(2,220,638)
At statutory tax rate of 25% (2021: 26%)
Non-deductible expenses
Tax losses and temporary differences not recognised
Income tax expense/benefit
Deferred tax assets
Inventories
Property, plant and equipment
Trade and other payables
Provisions
Lease liabilities
Blackhole expenditure
Foreign exchange loss
Tax losses
Net off deferred tax liabilities
Net deferred tax asset not recognised
Deferred tax assets
Deferred tax liabilities
Other assets
Mineral interest acqusition and exploration expenditure
Right-of-use assets
Net off deferred tax liabilities
Deferred tax liabilities
(487,752)
211,502
276,250
(577,366)
233,302
344,064
-
-
841
-
30,067
808,892
226,971
426,516
124
1,509,527
(517,986)
(2,484,952)
-
-
130,412
15,080
271,240
55,842
445,564
-
631,214
(26,534)
(1,522,818)
-
(56,000)
(308,989)
(152,996)
517,985
-
-
-
(26,534)
26,534
-
A potential deferred tax asset, attributable to tax loss incurred in the current period, amounts to approximately $2,484,952 and
has not been brought to account at reporting date because the Directors believe it is inappropriate to regard realisation of the
deferred tax asset as probable at this point in time. This benefit will only be obtained if:
•
the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the loss incurred;
the Group continues to comply with the conditions for deductibility imposed by law; and
•
• no changes in tax legislation adversely effects the Group in realising the benefit from the deductions for the loss
incurred.
41
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 9. Loss per share
Loss used in calculating loss per share
Loss after income tax attributable to owners of Suvo strategic Minerals Limited
Basic and diluted loss per share
Weighted average number of ordinary shares
Weighted average number of ordinary shares used in calculating basic and diluted loss per
share
Note 10. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Cash in term deposit - restricted1
Consolidated
2022
$
2021
$
(1,951,007)
(2,220,638)
(1,951,007)
(2,220,638)
Cents
Cents
(0.32)
(0.43)
Number
Number
614,367,846
520,994,915
614,367,846 520,994,915
Consolidated
2022
$
2021
$
400
6,686,936
2,157,000
400
4,985,150
891,000
8,844,336
5,876,550
1 Restricted cash includes a $2,086,000 rehabilitation bond, a $40,000 bank card guarantee and a $31,000 rental guarantee.
Note 11. Current assets - trade and other receivables
Trade receivables
Other receivables
Consolidated
2022
$
2021
$
2,039,517
2,039,517
2,561,676
2,561,676
-
-
2,039,517
2,561,676
Allowance for expected credit losses
The Group has recognised a loss of $Nil in the profit or loss in respect of the expected credit losses for the year ended 30
June 2022.
In relation to the ageing of receivables, 92% (2021: 91%) of trade receivables are current, with 6% (2021: 9%) being 0 to
30 days overdue and 2% (2021: nil) being 31 to 60 days overdue.
42
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 12. Current assets - inventories
Raw materials
Packaging
Work in progress
Finished goods
Consolidated
2022
$
2021
$
1,037,907
324,217
74,101
459,990
765,457
208,972
72,587
258,618
1,896,215
1,305,634
The Group has assessed the impact of COVID-19 on the net realisable value of inventories. The majority of the Group’s
inventories have no specific risk of obsolescence and as a result no specific write down was recognised.
Note 13. Non-current assets - property, plant and equipment
Land and buildings - at fair value (land) and at cost (buildings)
Less: Accumulated depreciation on buildings
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Consolidated
2022
$
2021
$
798,934
(289,100)
509,834
798,934
(93,405)
705,529
222,926 222,926
(10,963)
211,963
(32,891)
190,035
4,087,577 653,139
(155,794) (140,828)
3,931,783 512,311
4,631,652
1,429,803
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2020
Assets acquired
Additions
Depreciation expense1
Balance at 30 June 2021
Additions
Disposals
Depreciation expense1
Balance at 30 June 2022
Land and
buildings
$
Leasehold
Plant and
Improvements equipment
$
$
Total
$
-
569,774
229,160
(93,405)
705,529
-
222,926
-
(10,963)
211,963
-
715,445
171,454
(374,588)
512,311
-
1,508,145
400,614
(478,956)
1,429,803
-
-
(195,695)
-
-
(21,928)
3,436,380
(1,275)
(15,633)
3,436,380
(1,275)
(233,256)
509,834
190,035
3,931,783
4,631,652
1 Depreciation expense will not match the depreciation and amortisation relating to kaolin production expense in the
Consolidated Statement of Profit or Loss and Other Comprehensive Income as the above depreciation expense relates to
all classes of property, plant and equipment, whilst the depreciation and amortisation related to kaolin production expense
includes amortisation of mining reserves but excludes certain equipment, such as office equipment.
43
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 14. Non-current assets - mine properties
Mining properties - at cost
Consolidated
2022
$
2021
$
2,002,842
2,003,726
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2020
Assets acquired
Change in present value of rehabilitation provision
Amortisation expense
Balance at 30 June 2021
Adjustment under provisional accounting (note 3)
Balance at 30 June 2021
Transfer from mineral interest acquisition and exploration expenditure
Additions
Adjustment under provisional accounting (note 3)
Change in present value of rehabilitation provision
Amortisation expense
Balance at 30 June 2022
Mining
Reserves
$
Rehabilitation
Asset
$
Total
$
-
624,110
-
(27,000)
597,110
-
597,110
-
2,711,943
(424,112)
(108,000)
2,179,831
(773,215)
1,406,616
-
3,336,053
(424,112)
(135,000)
2,776,941
(773,215)
2,003,726
92,555
256,379
-
-
92,555
-
164,492
-
108,000
108,000
(263,130)
(263,130)
(126,231) (68,457) (102,801)
819,813
1,183,029
2,002,842
Note 15. Non-current assets - mineral interest acquisition and exploration expenditure
Mineral interest acquisition and exploration expenditure - at cost
5,591,674
4,436,938
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
2022
$
2021
$
Consolidated
Balance at 1 July 2020
Assets acquired
Additions
Balance at 30 June 2021
Transfer to mine properties
Additions
Balance at 30 June 2022
44
Exploration
and
evaluation
$
-
2,896,179
1,540,759
4,436,938
(92,555)
1,247,291
Total
$
-
2,896,179
1,540,759
4,436,938
(92,555)
1,247,291
5,591,674
5,591,674
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
The Company holds 5 exploration licences through Mt Marshall Kaolin Pty Ltd (Gabbin Kaolin project) and 4 exploration
licences through Watershed Enterprise Solutions Pty Ltd (Eneabba Silica Sands project).
No impairment has been recognised for the year ended 30 June 2022.
Note 16. Non-current assets - right-of-use assets
Office space - right-of-use
Less: Accumulated depreciation
Equipment - right-of-use
Less: Accumulated depreciation
Motor vehicles - right-of-use
Less: Accumulated depreciation
Consolidated
2022
$
2021
$
608,898
(135,311)
473,587
-
-
-
228,769
(90,371)
138,398
194,560
(37,828)
156,732
39,308
(24,183)
15,125
119,594
(27,317)
92,277
611,985
264,134
Additions to the right-of-use assets during the year were $718,073.
The Group leases its office space and has motor vehicles under lease agreements of three years. On renewal, the terms of
the leases are renegotiated. The Group also leases equipment which are either short-term or low-value leases, so have been
expensed as incurred and not capitalised as right-of-use assets.
Note 17. Current liabilities - trade and other payables
Trade payables
Accruals
Other payables
Note 18. Current liabilities - provisions
Annual leave
Long service leave
Other provisions
Sales rebate
45
Consolidated
2022
$
2021
$
2,251,141
912,450
244,366
1,431,779
117,420
276,483
3,407,957
1,825,682
Consolidated
2022
$
2021
$
372,381
342,971
15,750
-
319,390
310,000
230,395
188,416
731,102
1,048,201
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 19. Current liabilities - lease liabilities
Lease liability
Consolidated
2022
$
2021
$
407,927
141,546
407,927
141,546
The Group leases its office space and has motor vehicles under lease agreements of three years. On renewal, the terms of
the leases are renegotiated. Refer to note 31 for further information on financial instruments.
Note 20. Non-current liabilities - provisions
Long service leave
Rehabilitation
Consolidated
2022
$
2021
$
53,809
2,450,658
33,294
2,685,300
2,504,467
2,718,594
Rehabilitation
The provision represents the present value of estimated costs for future rehabilitation of land explored or mined by the Group
at the end of the exploration or mining activity.
Movements in rehabilitation provision
Movements in the rehabilitation provision during the current and previous financial year, are set out below:
Consolidated
Balance at 1 July 2020
Provision acquired
Additional provisions recognised
Unwinding of discount
Balance at 30 June 2021
Adjustment under provisional accounting (note 3)
Balance at 30 June 2021
Additional provisions recognised
Unwinding of discount
Balance at 30 June 2022
Rehabilitation
$
Total
$
-
3,848,323
(424,112)
34,304
3,458,515
(773,215)
2,685,300
-
3,848,323
(424,112)
34,304
3,458,515
(773,215)
2,685,300
(263,128)
28,486
(263,128)
28,486
2,450,658
2,450,658
On 1 January 2021, the Company acquired the holding Company of the Australian Kaolin operations of Imerys S.A., Mircal
Australia Pty Ltd, and its two wholly owned subsidiaries, Kaolin Australia Pty Ltd (the owner of the Pittong and Lal Lal mines
and Trawalla deposit) and Imerys Minerals Australia Pty Ltd (the owner of the Pittong processing plant). From this transaction,
the Company acquired a provision of $3,848,323 for the site rehabilitation at the Pittong and Lal Lal mines and Trawalla
deposit. In accordance with accounting standards, the provision has been present valued at 30 June 2022, to $2,450,658.
46
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 21. Non-current liabilities - lease liabilities
Lease liability
Refer to note 31 for further information on financial instruments.
Note 22. Equity - issued capital
Consolidated
2022
$
2021
$
499,955
145,227
499,955
145,227
Consolidated
2022
Shares
2021
Shares
2022
$
2021
$
Ordinary shares - fully paid
680,407,120 585,508,922 38,732,317 31,191,948
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Shares issued - Directors
Share cancellation
Shares issued - Acquisition
Shares issued - Public offer
Shares issued - Placement
Share issue costs
Balance
Shares issued - Placement
Shares issued - Share purchase plan
Share issue costs
30 Jun 2020
30 Jul 2020
30 Jul 2020
30 Jul 2020
30 Jul 2020
31 Dec 2020
30 Jun 2021
7 Mar 2022
3 May 2022
112,338,245
7,419,677
(3,000,000)
158,750,000
250,000,000
60,001,000
-
585,508,922
88,235,294
6,662,904
-
Balance
30 Jun 2022
680,407,120
-
0.020
-
0.020
0.020
0.100
-
0.085
0.085
18,978,136
148,393
-
3,175,000
5,000,000
6,000,100
(2,109,681)
31,191,948
7,500,000
566,347
(525,978)
38,732,317
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company
does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide
returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost
of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
47
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current Company's share price at the time of the investment. The Group is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The capital risk management policy remains unchanged from the 30 June 2021 Annual Report.
Note 23. Equity - reserves
Share based payments reserve
Consolidated
2022
$
2021
$
6,376,923
5,641,496
6,376,923
5,641,496
Share based payments reserve
The reserve is used to recognise increments and decrements in the fair value of share based payments.
Movements in reserves
Movements in equity reserves during the current and previous financial year are set out below:
Performance
Rights
$
Options
$
Total
$
- 3,589,660
-
-
3,589,660
2,051,836 2,051,836
5,641,496
5,641,496
735,427
-
735,427
735,427
5,641,496
6,376,923
Consolidated
2022
$
2021
$
(24,473,632) (22,252,994)
(2,220,638)
-
(1,951,007)
-
(26,424,639) (24,473,632)
Consolidated
Balance at 1 July 2020
Share based payments
Balance at 30 June 2021
Share based payments (note 7)
Balance at 30 June 2022
Note 24. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Dividends paid
Accumulated losses at the end of the financial year
48
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 25. Reconciliation of loss after income tax to net cash from operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Share based payments
Foreign exchange differences
Unwinding of the discount on provisions
Change in operating assets and liabilities:
Change in trade and other receivables
Change in inventories
Change in other assets
Change in trade and other payables
Change in provision for income tax
Change in other provisions
Net cash outflows from operating activities
Non-cash investing and financing activities
Additions to the right-of-use assets
Change in present value of rehabilitation provision
Settlement of asset acquisition through the issue of shares
Share based payments
Consolidated
2022
$
2021
$
(1,951,007)
(2,220,638)
539,925
735,427
566,413
816,548
- -
34,304
28,486
522,159 (161,035)
(590,581) (251,023)
(158,935) (75,836)
1,010,232 377,149
153,769 (153,769)
(128,277)
(531,226)
(241,751)
(1,196,164)
Consolidated
2022
$
2021
$
567,833 -
(263,130) -
3,175,000
-
1,383,681
-
304,703
4,558,681
Note 26. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Share based payments
Consolidated
2022
$
2021
$
767,136
35,495
610,997
786,534
51,017
335,048
1,413,628
1,172,599
49
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 27. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by RSM Australia Partners, the auditor
of the Company, its network firms and unrelated firms:
RSM Australia Partners
Audit or review of the financial statements
Independent expert report
Review of employee share scheme and notice of meeting
BDO Audit (WA) Pty Ltd, BDO Israel
Audit or review of the financial statements
Eligible project expenditure report
BDO Corporate Finance (WA) Pty Ltd
Review of options valuations for notice of meeting
Note 28. Related party transactions
Parent entity
Suvo Strategic Minerals Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 29.
Consolidated
2022
$
2021
$
70,000
20,000
1,800
91,800
-
-
-
-
-
-
-
-
102,800
5,000
107,800
2,000
91,800
109,800
Key management personnel
Disclosures relating to key management personnel are set out in note 26 and the remuneration report included in the
directors' report.
Transactions with related parties
During the financial year, payments for consultancy services from Wilco Holdings Pty Ltd and ESG-F Pty Ltd (Director-related
entities of Henk Ludik and Oliver Barnes) of $296,740 were made.
The Company announced the proposed acquisition of mining tenement E70/4981 (owned by Director Aaron Banks), a highly
perspective silica sand project near Muchea, north of Perth, Western Australia. As at the reporting date, the proposed
acquisition is still subject to the necessary approvals, including shareholder approval. Terms and conditions of the proposed
transaction were announced on 20 January 2022.
Receivable from and payable to related parties
There were no receivables from related parties at the current and previous reporting date. As at 30 June 2022, $70,230 for
consultancy services and $185,333 for director fees were outstanding to related parties (2021: $10,070).
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
50
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 29. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries
in accordance with the accounting policy described in note 1.
Name
Watershed Enterprise Solutions Pty Ltd
Mt Marshall Kaolin Pty Ltd
Suvo Australia Pty Ltd
Suvo Minerals Australia Pty Ltd
Kaolin Australia Pty Ltd
Far North Minerals Pty Ltd1
1
The subsidiary is dormant
Note 30. Parent entity information
Principal place of business /
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Ownership interest
2021
2022
%
%
100% 100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Parent
2022
$
2021
$
(3,779,950)
(3,111,107)
(3,779,950)
(3,111,107)
Parent
2022
$
2021
$
5,291,593
3,236,290
17,016,599 11,887,157
733,377
258,375
1,051,410
417,814
38,732,317 31,191,948
5,641,496
(29,144,051) (25,364,101)
6,376,923
15,965,189 11,469,343
Loss after income tax
Total comprehensive loss
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
51
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity and some of its subsidiaries are party to a deed of cross guarantee under which each company guarantees
the debts of the others.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022 (30 June 2021: $Nil).
Capital commitments - Property, plant and equipment
The parent entity had committed $Nil for property, plant and equipment as at 30 June 2022 (30 June 2021: $213,800).
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 1, except for the
following:
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
indicator of an impairment of the investment.
Note 31. Financial instruments
Financial risk management objectives
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk and price risk), credit
risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to
measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of foreign
exchange and other price risks and ageing analysis for credit risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures,
controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group’s operating units. Finance
reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The Group undertakes certain transactions (export sales) denominated in foreign currency and is exposed to foreign currency
risk through foreign exchange rate fluctuations.
The Group has elected not to enter into hedging contracts as receipts in foreign currency (USD) were not material during the
financial year. The Group will continue to monitor foreign currency risk and take the appropriate course of action as required.
The Group held cash of US$268,515 as at 30 June 2022 (2021: US$262,805).
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The group is not exposed to interest rate risk as it does not have any borrowings.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting
appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to
credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of
those assets, as disclosed in the consolidated statement of financial position and notes to the financial statements. The
Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through
the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative
across all customers of the Group based on recent sales experience, historical collection rates and forward-looking
information that is available.
52
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
Consolidated - 2022
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Consolidated - 2021
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
2,251,141
1,156,816
-
-
-
-
5.94%
407,927
3,815,884
384,939
384,939
115,016
115,016
-
-
-
-
2,251,141
1,156,816
907,882
4,315,839
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
1,431,779
393,903
-
-
-
-
4.55%
141,546
1,967,228
119,851
119,851
25,376
25,376
-
-
-
-
1,431,779
393,903
286,773
2,112,455
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 32. Contingent assets and liabilities
The Group had no contingent assets or liabilities at the current and previous reporting date.
53
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
Note 33. Commitments
Capital commitments
Committed at the reporting date but not recognised as liabilities, payable:
Property, plant and equipment
Rent, rates and minimum tenement expenditure for next 12 months
Note 34. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 July 2020
Net cash used in financing activities
Acquisition of leases
Balance at 30 June 2021
Net cash used in financing activities
Acquisition of leases
Balance at 30 June 2022
Consolidated
2022
$
2021
$
-
475,546
213,800
316,173
475,546
529,973
Lease liability
$
Total
$
-
(98,921)
385,694
286,773
-
(98,921)
385,694
286,773
(337,433)
958,542
(337,433)
958,542
907,882
2,450,658
Note 35. Matters subsequent to the end of the financial year
On 26 July 2022, the Company announced that it had successfully completed the renewal of its Pittong mining license which
has been approved by Victoria’s Earth Resources Regulation, Department of Jobs, Precincts and Regions.
On 15 August 2022, the Company signed a legally binding supply contract for the delivery of 20 tonnes of two high quality
hydrous kaolin products from Pittong to be used in commercial-scale trials by C&D Logistics Group Co Ltd. This binding
contract is an important next step for the Company and another step closer to a commercial offtake agreement with C&D.
On 22 August 2022, Henk Ludik was appointed as Executive Chairman of the Company having previously served as Non-
Executive Chairman.
On 26 August 2022, the Company announced the completion of the Pittong plant upgrade optimisation review. The
independent review has confirmed the plant capacity expansion will be capable of delivering a name plate processing
capacity of ~60,000 tonnes per annum under certain operating conditions, with a forecast completion date of end Q3 FY
2023 (Q1 CY 2023), most of which the Company intends to satisfy by the forecast completion date.
Post upgrade, the Company expects to achieve significant efficiencies in processing costs by lowering its power and gas
usage per tonne produced and gaining economies of scale with its fixed costs. The Company expects to reduce its AISC
from A$592/t to A$359/t from FY2024 representing a 39% decrease. Forecast EBITDA is A$8.3m in FY 2024.
On 31 August 2022, the Company signed a land access agreement in relation to its Eneabba Silica Sands Project. The
Company has negotiated access to drill an area that is not under crop which will allow a more streamlined and less onerous
process in its pursuit towards the potential development of a Silica Sand operation at Eneabba. The cleared area of
approximately 250 hectares negates the need for environmental clearing permits, and with key infrastructure already
available (Road access, 3 phase power and water and rail line direct to Geraldton Port), project timelines may be significantly
reduced.
The agreement provides certainty for Suvo’s upcoming drilling campaign, aimed at determining a JORC Compliant Indicated
Resource and scheduled to commence in Q4 CY2022.
54
Suvo Strategic Minerals Limited
Annual Financial Statements
30 June 2022
Notes to the financial statements
The impact of the Coronavirus (COVID-19) pandemic is ongoing and whilst it has had no significant impact on the Group up
to 30 June 2022, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The
situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries,
such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be
provided.
Apart from matters discussed above, no other matter or circumstance has arisen since 30 June 2022 that has significantly
affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in
future financial years.
55
Suvo Strategic Minerals Limited
Director’s Declaration
30 June 2022
Director’s Declaration
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group’s financial position as at 30 June
2022 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
�
___________________________
Henk Ludik
Executive Chairman
13 September 2022
Perth
56
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
SUVO STRATEGIC MINERALS LIMITED
Opinion
We have audited the financial report of Suvo Strategic Minerals Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including
a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying 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 2022 and of its financial
performance for the year then ended; 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 those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We 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.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
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.
Business combination - Refer to Note 3 in the financial statements
Key Audit Matter
How our audit addressed this matter
The Group acquired Suvo Australia Pty Ltd (formerly
known as Mircal Australia Pty Ltd) on 1 January 2021.
the business
The measurement period
combination ended during the year ended 30 June
2022.
for
The accounting for this acquisition is a key audit matter
due to the material nature of the acquisition, the
related estimates and judgement associated with the
identification and determination of the fair value of net
assets and liabilities acquired and the final purchase
consideration.
Our audit procedures included:
Obtaining the purchase agreement and other
associated documents to obtain an understanding
of the transaction and the related accounting
consideration;
Reviewing new information obtained during the
measurement period since acquisition;
Assessing the fair values of the identified assets
the
liabilities acquired at
the end of
and
measurement period; and
Assessing the adequacy of the disclosures in the
financial statements.
Impairment consideration for mine properties and property, plant and equipment - Refer to Note 13 and
14 in the financial statements
As at 30 June 2022, the Group has capitalised mine
properties and property, plant and equipment
amounting
its Kaolin
production cash generating unit (CGU).
Our audit procedures included:
Understanding the nature of mine properties and
property, plant and equipment that relate to the CGU;
and
to $6,634,494 relating
to
Critically assessing and evaluating management’s
assessment that no indicators of impairment existed
in relation to the CGU as at 30 June 2022.
The consideration of whether these assets in this CGU
were impaired was determined to be a key audit matter
due to the significant judgment involved in determining
whether there are any indicators of impairment and, if
so, judgments applied to determine and quantify any
impairment loss.
Mineral interest acquisition and exploration expenditure - Refer to Note 15 in the financial statements
As at 30 June 2022, the Group has capitalised mineral
interest acquisition and exploration expenditure with a
carrying value of $5,591,674.
Our audit procedures included:
Obtaining evidence that the Group has valid rights
to explore in the specific area of interest;
We determined this to be a key audit matter due to the
significant management
in
assessing the carrying value of the asset including:
judgments
involved
Determination of whether expenditure can be
associated with finding specific mineral resources
and the basis on which that expenditure is
allocated to an area of interest;
Determination of whether exploration activities
have progressed to the stage at which the
existence of an economically recoverable mineral
reserve may be assessed; and
Assessing whether any indicators of impairment
are present and, if so, judgments applied to
determine and quantify any impairment loss.
Agreeing a sample of additions to supporting
documentation and assessing whether the amounts
capitalised during the year comply with Australian
Accounting Standards and relate to the area of
interest;
Assessing
and
evaluating management’s
assessment that no indicators of impairment existed
for those tenements where the Group has current
rights of tenure;
and
Assessing
evaluating management’s
determination
that exploration and evaluation
activities have not yet reached a stage where the
existence or otherwise of economically recoverable
reserves may be reasonably determined; and
Enquiring with management and reviewing budgets
and other documentation as evidence that active
and significant operations in, or relation to, the area
of interest will be continued in the future.
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 2022 but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2022.
In our opinion, the Remuneration Report of Suvo Strategic Minerals Limited, for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 13 September 2022
TUTU PHONG
Partner
Suvo Strategic Minerals Limited
Annual Mineral Resource Statement
Annual Mineral Resource Statement
1. Mineral Resource Estimate
A summary of the Mineral Resources at Suvo Strategic Minerals Limited’s projects and operations as at 30 June 2022 is
shown in Table 1 and Table 2 below. The Mineral Resource estimation was carried out by CSA Global Pty Ltd, resulting in
the estimation of Indicated and Inferred Mineral Resources.
Table 1 Kaolin Mineral Resources Statement (as at 30 June 2022)
Category
Gabbin Project (White Cloud Kaolin Project)1
Indicated
Inferred
Total
Trawalla Deposit2
Indicated
Inferred
Total
Pittong Operations3
Indicated
Inferred
Total
White
ISO
Kaolinised Brightness %
Granite (Mt)
(457nm)
Yield
<45um
%
26.9
45.6
72.5
9.9
2.8
12.7
3.7
2.0
5.7
80.4
80.6
80.5
81.0
79.8
80.8
81.3
79.1
80.5
41.3
41.1
41.2
27.7
28.3
27.8
35.5
33.0
34.6
Kaolin
(Mt)
11.1
18.8
29.9
2.8
0.8
3.6
1.3
0.7
2.0
1 The Gabbin (White Cloud Kaolin Project) Mineral Resource estimate was completed by CSA Global Pty Ltd (CSA) on behalf
of Suvo. The Mineral Resource estimate was announced on 25 March 2021. As no mining activity occurred during the period
25 March 2021 to 30 June 2022 there has been no movement in the Mineral Resource estimate.
2 The Trawalla Mineral Resource estimate was completed by CSA Global Pty Ltd (CSA) on behalf of Suvo. The Mineral
Resource estimate was announced on 22 September 2021. As no mining activity occurred during the period 22 September
2021 to 30 June 2022 there has been no movement in the Mineral Resource estimate.
3 The Pittong Mineral Resource estimate was completed by CSA Global Pty Ltd (CSA) on behalf of Suvo. The Mineral
Resource estimate was announced on 1 March 2022. Whilst mining activity has been undertaken during the period between
1 March 2022 and 30 June 2022, the depletion to the Mineral Resource since the estimate date is immaterial and the
Company confirms that there has been no material change to the Mineral Resource estimate announced on 1 March 2022.
Table 2 Silica Sands Mineral Resources Statement (as at 30 June 2022)
Category
Eneabba Project (Nova Silica Sands Project)4
Silica Sand - Glass (-0.6 + 0.15mm)
Silica Flour (-0.15 + 0.075mm)
Silica Sand - Coarse (-1mm + 0.6mm)
Product
Tonnes
Mt
132
60
24
SiO2
%
99.2
97.0
99.0
Al2O3
%
0.4
1.1
0.5
Fe2O3
%
0.1
0.4
0.1
TiO2
%
0.0
0.7
0.1
4 The Eneabba (Nova Silica Sands Project) Mineral Resource estimate was completed by CSA Global Pty Ltd (CSA) on
behalf of Suvo. The Mineral Resource estimate was announced on 12 October 2021. As no mining activity occurred during
the period 12 October 2021 to 30 June 2022 there has been no movement in the Mineral Resource estimate.
61
Suvo Strategic Minerals Limited
Annual Mineral Resource Statement
Annual Mineral Resource Statement
2. Material changes and resource statement comparison
A comparison table between the 2021 and 2022 Mineral Resource estimates in shown in table 3 below.
Table 3 Kaolin Mineral Resource comparison between 2021 and 2022
White
ISO
Category
Gabbin Project (White Cloud Kaolin Project)1
Indicated
Inferred
Estimate as at 30 June 2022
Indicated
Inferred
Estimate as at 30 June 2021
The updated estimation represented no change.
Kaolinised Brightness %
Granite (Mt)
(457nm)
26.9
45.6
72.5
26.9
45.6
72.5
80.4
80.6
80.5
80.4
80.6
80.5
Yield
<45um
%
41.3
41.1
41.2
41.3
41.1
41.2
Kaolin
(Mt)
11.1
18.8
29.9
11.1
18.8
29.9
The Trawalla and Pittong JORC compliant Mineral Resource estimates were announced on 22 September 2021 and 1 March
2022 respectively. Accordingly, no such comparison is applicable for the year ended 30 June 2021.
The Eneabba (Nova Silica Sands Project) JORC compliant Mineral Resource estimate was announced on 12 October 2021.
As such no comparison is applicable for the year ended 30 June 2021.
3. Competent Persons Statement
This Annual Mineral Resources Statement (Kaolin) is based on, and fairly reflects, information compiled by Dr Ian Wilson
who is the joint Overall Competent Person for the Company and who is a member of IOM3, a Recognised Professional
Organisation. Dr Ian Wilson has sufficient experience relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of
the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Dr
Ian Wilson is a full-time employee of Ian Wilson Consultancy Ltd and also a Non-Executive Director of Suvo Strategic
Minerals Limited. Dr Ian Wilson receives board fees in relation to his directorship. Dr Ian Wilson consents to the inclusion of
the information in the release in the form and context in which it appears.
This Annual Mineral Resources Statement (Silica Sands) is based on, and fairly reflects, information compiled by Mr
Murray Lines who is the joint Overall Competent Person for the Company and who is a member of the Australian Institute of
Mining and Metallurgy. Mr Lines has sufficient experience relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2012 Edition of
the “Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves” (JORC Code). Mr
Lines is a full-time employee of Stratum Resources and is a consultant to Suvo Strategic Minerals Limited and receives
consultant fees in relation to his work on commercial terms. Mr Lines consents to the inclusion of the information in the
release in the form and context in which it appears.
4. Mineral Resource Governance
The Company currently does not have a formal governance arrangement and internal control process for the reporting and
review of its Mineral Resource Estimates, other than those prescribed for the initial estimation of Mineral Resource estimates
in the JORC Code. The Company is of the view that a formal governance arrangement and internal control process is not
required at this stage on the basis that each of the Mineral Resource Estimates are less than 18 months old as at 30 June
2022 and that there has been no material depletion to the Pittong Operations between 1 March 2022 and 30 June 2022. The
Company will consider whether a formal governance arrangement and internal control process is required prior to 30 June
2023.
62
Suvo Strategic Minerals Limited
Shareholder information
Shareholder information
The shareholder information set out below was applicable as at 12 September 2022.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Ordinary shares
% of total
Number
of holders
142
585
369
1,089
652
2,837
shares
issued
0.01%
0.27%
0.43%
6.54%
92.75%
100.00%
Holding less than a marketable parcel
-
-
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
AARON PETER BANKS
MR ROBERT KINGSLEY FITZGERALD
RATDOG PTY LTD
CITICORP NOMINEES PTY LIMITED
MR ROBERT MARTIN
MR CHRISTOPHER JAMES WEED & MRS JANET ELIZABETH BROCKMAN
MR KOBI BEN SHABATH
SUNSET CAPITAL MANAGEMENT PTY LTD
BEARAY PTY LIMITED
SSELKROW PTY LTD
PRIMERO GROUP LIMITED
SANDTON CAPITAL PTY LTD
ALWAYS HOLDINGS PTY LTD
MR CHRISTOPHER JAMES WEED & MRS JANET ELIZABETH BROCKMAN
CROFT LIFESTYLE FUND PTY LTD
PETER FRANCIS BOYLE NOMINEES PTY LTD
MR YEHUDA COHEN
PROPEL HOLDINGS PTY LTD
MR REBLAZE SINGAPORE PTE LTD
MR ORI ACKERMAN
Number held
72,564,516
17,500,000
16,127,348
13,557,308
13,030,258
12,725,000
11,378,159
11,233,528
10,733,997
9,350,000
7,852,941
7,500,000
7,336,992
6,820,000
6,511,689
5,791,944
5,570,856
5,100,000
5,000,000
4,970,000
shares
issued
10.66%
2.57%
2.37%
1.99%
1.92%
1.87%
1.67%
1.65%
1.58%
1.37%
1.15%
1.10%
1.08%
1.00%
0.96%
0.85%
0.82%
0.75%
0.73%
0.73%
250,654,536
36.82%
63
Suvo Strategic Minerals Limited
Shareholder information
Shareholder information
Unquoted equity securities
Options expiring 31 December 2023 at $0.15
Options expiring 30 July 2023 at $0.03
Options expiring 30 July 2023 at $0.03 (restricted)
Options expiring 30 June 2023 at $0.15
Performance rights (restricted)
Performance rights
Performance rights - Tranche A
Performance rights - Tranche B
Performance rights - Tranche C
Performance rights - Tranche D
Performance rights - Tranche E
Number
Number
of holders
on issue
12,000,000 6
1
11
200
3
1
4
3
3
2
2
500,000
101,866,903
30,751,680
13,333,333
166,666
3,800,000
3,200,000
3,200,000
850,000
850,000
Substantial holders
As at 12 September 2022, the Company had received substantial shareholder notices from the following shareholders:
AARON PETER BANKS
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
% of total
Number held
72,564,516
shares
issued
10.66%
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
Tenements
Description
White Cloud Kaolin Project
White Cloud Kaolin Project
White Cloud Kaolin Project
White Cloud Kaolin Project
White Cloud Kaolin Project
Nova Silica Sands Project
Nova Silica Sands Project
Nova Silica Sands Project
Nova Silica Sands Project
Pittong Project
Pittong Project
Pittong Project
E = Exploration License
M = Mining Lease
Tenement
number
E70/5039
E70/5332
E70/5333
E70/5334
E70/5517
E70/5324
E70/5001
E70/5322
E70/5323
M5408
M5409
M5365
Interest
owned %
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
64