More annual reports from Vital Metals Limited:
2023 ReportAnnual
Report
For The Year Ended
30 June 2021
Company Details
Directors
Evan Cranston - Non-Executive Chairman
Geoff Atkins - Managing Director
James Henderson - Non-Executive Director
Company Secretary
Ms Louisa Martino
Banker
National Australia Bank Ltd
Level 14
100 St Georges Tce
Perth, WA, 6005
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco, WA, 6008
Registered Office And Principal
Place Of Business
Level 5, 56 Pitt Street
Sydney, NSW, 2000
T +61 2 8823 3100
F +61 2 8004 8241
W www.vitalmetals.com.au
E vital@vitalmetals.com.au
Stock Exchange
The Company’s securities are quoted on
the official list of the Australian Securities
Exchange Limited (ASX code: VML)
Share Registry
Automic Registry Services
Level 2
267 St Georges Terrace
Perth, WA, 6000
T 1300 288 664
Contents
Chairman’s Letter
Review of Operations
Annual Mineral Resources Statement
Directors’ Report
Auditor’s Independence Declaration
Financial Statements
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 consolidated financial statements
Directors’ Declaration
Independent Auditor’s Report to the Members
ASX Additional Information
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4
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101
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108
Chairman’s
Letter
Dear Fellow Shareholders, I am
delighted to present the 2021
Annual Report for Vital Metals
Limited (ASX: VML), reflecting on
a year which has certainly been
transformational for our company
as we became Canada’s first – and
North America’s second – rare earth
producer at our Nechalacho project
in Northwest Territories (NWT).
Production is underway and ramping up
well at Nechalacho, with our ore sorter
now commissioned and performing above
expectations, having produced a high-
beneficiated product from a single pass
of low-grade stockpile material during
commissioning and training.
We are now starting to process material from
the medium and high-grade stockpiles. We
made the decision to adopt X-ray ore sorting
technology at Nechalacho as this has a much
lower environmental impact and it is pleasing
that we are now seeing the operational
benefits of this decision.
Another pleasing recent development was the
intersection of high-grade REO mineralisation
in the pit wall at North T which we are mining
in our first stage of operations at Nechalacho.
North T has an existing high-grade Mineral
Resource of 101,000 tonnes at 9.01% LREO
(comprised of a Measured Resource of 68,000
tonnes at 9.60% LREO and an Indicated
Resource of 33,000 tonnes at 7.80% LREO)1.
1 ASX Announcement 15 April 2020: Substantial Increase
in Resource Size and Grade at North-T Zone Nechalacho
To have achieved so
much during a period
that has continued to be
impacted by challenges
and uncertainty due to
the global pandemic is a
testament to the quality
of our management team
Evan Cranston, Chairman
2
This new material provides potential for Vital to
expand the North T pit beyond the current mine
plan in the future and we will undertake further
work on this during the next 12 months.
In parallel, we continue to execute our strategy
for growth at Nechalacho with drilling for a Stage
2 mine plan which would see us mine the much
larger Tardiff Zones. We’ve had encouraging
results on this through the year, with drilling
intersecting high-grade rare earth mineralisation
from all three Tardiff Zones.
We also received positive results from Stage 2
metallurgical testwork, which highlighted the
potential to continue a similar process flowsheet
as used in Stage 1 operations, with perhaps
the addition of an extra step in Stage 2 due to
the finer nature of Tardiff mineralisation. These
developments have been very encouraging for
our plans for a large-scale, long life REO operation
at Nechalacho.
Our planned acquisition of Quebec Precious
Metals Corporation’s interest in the Kipawa (68%)
and Zeus (100%) projects is an exciting next step
for Vital Metals, particularly at Kipawa where we
can optimise the 2013 Definitive Feasibility Study
to minimise capital and operating expenditure.
Our strategy is to identify the most efficient and
effective way to develop our projects and we see
opportunities to do this at Kipawa. I look forward
to seeing our progress on adding heavy rare
earths into our product suite in the year ahead.
The development of Nechalacho and the planned
acquisition of Kipawa and Zeus has set the
foundations for Vital Metals to become a strategic
player in the North American critical minerals
supply chain at a time when demand is increasing.
During the past year, shareholders have
continued to support Vital Metals, and this
enabled us to complete two important
capital raisings - $8 million in September
2020 to purchase the ore sorter and prepare
for operations, and a transformational $43
million placement in March 2021 which fully
funded construction, mining and operations at
Nechalacho, allowing production to commence.
We thank our existing shareholders for their
ongoing commitment and belief in Vital and
welcome new investors to our register.
Subsequent to year-end, we announced the
engagement of Ecoban Securities Corporation
(“Tectonic”) to serve as our North American
investor relations and capital markets
consultant and advisor.
Tectonic played a key role in the introduction
of strategic investors as part of the $43M
capital raise. Tectonic will assist Vital with
shareholder maintenance, introduction to
institutional investors and other relevant
market participants and potential strategic
investors and also provide advice and support
on US listing options.
It certainly has been a busy and productive
year for Vital and its Canadian subsidiary
Cheetah Resources Corp. to have achieved so
much during a period that has continued to be
impacted by challenges and uncertainty due
to the global pandemic is a testament to the
quality of our management team. I thank all
our management and staff who have worked
so hard over the past 12 months to help Vital
achieve its goal of becoming Canada’s first
rare earth producer and look forward to seeing
what we can achieve in the year ahead.
Yours sincerely
Evan Cranston, Chairman
3
Vital Metals | Annual Report 2021 Review of
Operations
Nechalacho Rare Earths Project, Canada
Vital’s focus during the reporting period continued to be the
development and exploration of its 100%-owned Nechalacho Rare
Earths Project in Yellowknife, Northwest Territories (“NWT”), Canada,
where it commenced mining and development at the North T Zone.
In late March, Vital announced the
commencement of mining operations at
Nechalacho, with the contract mining fleet
mobilising to site. Local mining contractor,
Det’on Cho Nahanni Construction commenced
operations at Nechalacho’s North T Zone
following mobilisation via the private
Nechalacho ice road, a 110km long, 1.1m thick
engineered ice road on the Great Slave Lake
from Dettah, Yellowknife Bay, NWT to the
Nechalacho Rare Earth Project on the Hearne
Channel in Chief Drygees Territory.
Vital and its subsidiary Cheetah Resources
Corp. held a ceremony on 20 March 2021
marking the commencement of mobilisation.
Commencement of mining followed the
signing of a definitive mining contract with
Det’on Cho Nahanni Construction in February
after a Memorandum of Understanding
executed in January 2020 established
Det’on Cho Nahanni Construction as the
preferred Mining Services Contractor (ASX
Announcement 23 January 2020).
Figure 1 - Vital’s
private ice road to the
Nechalacho project
4
Det’on Cho Nahanni Construction is 51% owned by
Det’on Cho Corporation, which is in turn owned by
the Yellowknives Dene First Nation. The scope of
work under the mining contract includes mining, site
clearing, preparation of retention pond, site roads,
ROM pad, plus crushing and screening.
Det’on Cho Nahanni Construction will mine the
North T Zone as a small open pit, with material
transported to Vital’s ore sorter on site at Nechalacho
for sorting. This will create a product suitable for
further processing off-site at Vital Metal’s rare earth
extraction plant, to be constructed in Saskatoon,
which will produce a mixed rare earth carbonate
product for sale to separation facilities.
Det’on Cho Nahanni Construction completed mining
and crushing during a single six-month campaign,
under the control and direction of Cheetah
Resources Corp. Mining activities are scheduled
for completion during the September quarter.
Mined ore will be stockpiled for use in ore
sorting operations, which will be undertaken by
Cheetah personnel during the summer periods
of 2021 to 2023.
It is anticipated that a second mining campaign
will be required in 2024 to replenish stockpiles.
Vital Metal’s strategy is to develop Nechalacho
in two stages. Stage 1 of the operations focuses
on the North T Zone resource (101,000 tonnes
at 9.01% LREO comprised of a Measured
Resource of 68,000 tonnes at 9.60% LREO
and an Indicated Resource of 33,000 tonnes
at 7.80% LREO)2 and Stage 2 will involve the
development of the much larger Tardiff deposit.
2 ASX Announcement 15 April 2020: Substantial Increase
in Resource Size and Grade at North-T Zone Nechalacho
5
Vital Metals | Annual Report 2021 Production Commences
On 6 July 2021, Vital announced it had
commenced rare earth production at Nechalacho
with mining contractor, Nahanni Construction
Limited completing the first ore blast on 28
June and ore mining on 29 June. Ore crushing
commenced on 30 June.
With achievement of this milestone, Vital
became Canada’s first rare earths producer
and only the second in North America. Vital
ramped up crushing and ore sorting during July.
Beneficiated material is being stockpiled for
transport to Vital’s extraction plant in Saskatoon.
Installation of the ore sorter is complete, and
commissioning occurred on 30 June 2021.
Vital commenced processing ore from North T
through the Nechalacho ore sorter during July as
part of commissioning and training operations.
Using only material from the low-grade stockpile
(~2-5% TREO), the ore sorter has produced a
high-grade beneficiated product from a single
pass. With a target concentrate specification
of above 35% TREO, a visual inspection of final
product and the ratio of rare earth minerals (red
bastnaesite) to waste (white quartz) indicates
that the ore sorter has performed as expected.
The immediate production of high-grade
product, from this material, has exceeded
expectations. Vital commenced processing
material from the high and medium grade
stockpiles in August.
Vital Metals and its 100% owned subsidiary,
Cheetah Resources Corp. held a ceremony on 21
July 2021, which included representatives from
the Yellowknives Dene First Nation (YKDFN)
26 March 2021
Commence
mining operations
29 June, 2021
Commenced
ore mining
29 June, 2021
Commenced
ore crushing
6 July, 2021
Commenced rare
earth production
6
Figure 2 - Overhead
image of site with ore
sorter in the foreground
and pit in the background
and local media outlets to witness rare earth
production at Nechalacho. Vital’s operation
at Nechalacho is the first time an indigenous
business is extracting mineral resources from
its own territory in Canada, with Det’on Nahanni
Construction Ltd, a YKDFN-owned business,
completing contract mining at the site.
Mining at Nechalacho’s North T pit has intersected
high-grade REO mineralisation in the northern
edge of the pit wall, which is not included in North
T’s existing high-grade Mineral Resource of 101,000
tonnes at 9.01% LREO (comprised of a Measured
Resource of 68,000 tonnes at 9.60% LREO and
an Indicated Resource of 33,000 tonnes at 7.80%
LREO3). This new material provides potential for
Vital to expand its operations in the North T pit
beyond the current mine plan.
3 ASX Announcement 15 April 2020: Substantial Increase
in Resource Size and Grade at North-T Zone Nechalacho
Figure 3 - Representatives
of Yellowknives Dene
First Nation joined in a
traditional ceremony at
Nechalacho
7
Vital Metals | Annual Report 2021 Drilling for Stage 2 Mine Plan
In February, Vital Metals announced it had entered a drilling
contract through its subsidiary, Cheetah Resources Corp.
with NorthTech Ltd, a Yellowknife-based drilling company.
The 1,800m drill program commenced to test three high-
grade targets in the Tardiff deposit and evaluate potential
expansion of the T Zone by targeting two additional zones,
Tardiff Zones 2 and 3, which lie adjacent to the planned
North T pit, where Vital Metals commenced production.
Drilling aims to enable Vital Metals to develop a mine plan
for the Nechalacho Stage 2 mine development, as well as
define additional resources in the vicinity of the current pit.
8
Tardiff Zone 1
Vital reported results from the drill program in May 2021, with close-spaced drilling at Zone 1 defining a
strong zone of higher-grade REO mineralisation with wide intersections greater than 2% total rare earth
oxides (TREO). The higher-grade mineralisation in Zone 1 was drilled on a 25m x 25m grid over a distance of
300m x 100m in all directions. Importantly, the highest grades were intersected on the most northern and
southern sections.
Significant intersections in Zone 1 included4
Hole Name
L21-551
L21-555
L21-559
L21-563
L21-564
L21-565
L21-566
From
(m)
35.75
36.0
15.3
11.4
16.0
11.5
15.5
Table 1 - Tardiff Zone 1 drill results
To
(m)
50.3
49.0
41.1
72.3
56.0
43.3
56.0
Interval
(m)
TREO Grade
(%)
14.55
13.0
25.8
60.9
40.0
31.8
40.5
2.48
3.12
2.56
1.92
2.54
4.35
2.35
4 ASX Announcement 26 May 2021: Vital Intersects broad high-
grade REO in near surface drilling at Tardiff Zone
9
Vital Metals | Annual Report 2021 Tardiff Zone 2
Drilling on Zone 2 was designed to get a better
understanding of high-grade REO mineralisation
that is not currently included in the 2019 resource
estimation. All holes were drilled to a maximum of
72m.
Vital drilled five drill holes at Tardiff Zone 2 to
investigate high-grade REO mineralisation identified
by drill holes drilled in the 1980s with minor follow-up
by Avalon in 2013. The 1980s drilling returned high-
grade assays but Vital’s experience of REO assaying
at Nechalacho in the 1980s found it was not accurate
for resource estimation.
REO assaying of the 1980s drill holes was sporadic
and much of the core had not been assayed for TREO
where high zirconium grades indicate high-grade
REO would have been in the core. Vital decided to
position five holes to get an understanding
of the thickness and grade of the REO
mineralisation in the Tardiff Zone 2 area.
All five holes drilled at Tardiff Zone 2
successfully intersected the REO mineralisation
and demonstrated similar grades and intercept
lengths to nearby historic drill holes. Pleasingly,
holes L21- 269 and L21-570 on the western side
shows the high-grade REO mineralisation is
open to the west and appears to be getting
thicker and higher grade to the west.
The 2021 drilling has shown there is potential
for a significant high-grade REO resource in
the Tardiff Zone 2 area and further drilling is
required to delineate the size and grade of this
zone of mineralisation4.
Interval
(m)
TREO Grade
(%)
22.6
13
5.2
2.8
3.5
25.1
19
4
1.54
1.53
2.36
3.92
1.88
3.03
2.05
1.12
Hole Name
From
(m)
L21-567
L21-567
L21-568
L21-568
L21-569
L21-569
L21-570
L21-571
3
37
3.8
16.6
8
24.9
12
11
To
(m)
25.6
50
9
19.4
11.5
50
31
15
Table 2 - Tardiff Zone 2 drill results
4 ASX Announcement 3 August 2021: Vital Intersects high-grade REO in
Tardiff Zones 2 & 3 including outside existing resource at Nechalacho
10
11
Vital Metals | Annual Report 2021 Tardiff Zone 3
Tardiff Zone 3 was drilled on a close spacing (25m
x 25m) to enable resource confidence levels to be
upgraded to allow mining and processing studies.
Historical drill holes from drilling programs by
Avalon Materials Inc between 2007 and 2013
targeted the heavy rare earth rich Basal Zone
(below the Vital Metals owned Upper Zone). The
targeting of the Basal Zone resulted in very poor
definition of the Upper Zone, as many of the holes
were drilled as fans from a single drill pad.
One of these fans of five holes delineated a high-
grade zone of REO mineralisation near the surface.
As the fan of five holes were drilled from one drill
pad, the high-grade mineralisation was only defined
over a small area of 25m x 30m and it was unknown
if the high grades extended beyond this small area.
Vital completed five holes to the north, south and
west of the historic fan of holes, aiming to increase
the size of the high-grade zone and understand the
extent and orientation of the high-grade zone.
Figure 4 - Section
at Tardiff Zone 3
12
All five drill holes at Tardiff Zone 3 successfully
intersected the higher-grade REO mineralisation,
with the high-grade mineralisation open in all
directions. It appears the high-grade zone strike is in
an east-west direction and dips to the south5.
Vital will plan further drilling to better understand
the potential of this zone of high-grade
mineralisation.
Results for the Tardiff Zone 1, 2 and 3 drilling
demonstrate that broad high-grade zones of
significant tonnages are present within the larger
Upper Zone, with the previous drilling programs
undertaken by Avalon being too wide to delineate
these zones and their extent.
In addition, the drilling program undertaken at
Tardiff Zone 2 indicate the potential for a significant
high-grade resource, which is not currently
contained within the Mineral Resource estimate.
Following the positive nature of these results,
coupled with the results achieved from the scouting
metallurgical testwork program, Vital will proceed to
define a mining and processing operation at Tardiff,
which will commence utilising Tardiff Zone 1 ore
before expanding into Zones 2 and 3.
As part of this program, Vital will undertake further
drilling for all three of the Tardiff Zones. The goals
of this program will be to delineate the boundaries
of the three Tardiff high-grade zones in addition to
identifying the relationships between the zones,
including whether they are in fact connected.
With several holes ending in high-grade
mineralisation, the future drill program will test the
full depth of the high-grade zones. Vital expects this
drilling to commence during the northern winter.
Hole Name
L21-572
L21-572
L21-573
L21-573
L21-574
L21-575
L21-576
L21-576
From
(m)
22.75
37
14.5
57.6
11
3.8
5.3
21
To
(m)
33
50
51.2
62
62
29.8
17
30.3
Table 3 - Tardiff Zone 3 drill results
5 ASX Announcement 3 August 2021: Vital Intersects high-grade REO in
Tardiff Zones 2 & 3 including outside existing resource at Nechalacho
Interval
(m)
TREO Grade
(%)
10.25
13
36.7
4.4
51
26
11.7
9.3
1.83
2.31
1.96
2.20
2.13
1.68
1.87
1.71
13
Vital Metals | Annual Report 2021 Drilling for Stage 2 Mine Plan
Staged strategy for Nechalacho
In February, Vital Metals announced it had entered a drilling
contract through its subsidiary, Cheetah Resources Corp.
with NorthTech Ltd, a Yellowknife-based drilling company.
The 1,800m drill program commenced to test three high-
grade targets in the Tardiff deposit and evaluate potential
In addition to rare
expansion of the T Zone by targeting two additional zones,
Tardiff Zones 2 and 3, which lie adjacent to the planned
earths, this zone also
North T pit, where Vital Metals commenced production.
contains zircon and
niobium grades, which
Drilling aims to enable Vital Metals to develop a mine plan
for the Nechalacho Stage 2 mine development, as well as
are comparable with
define additional resources in the vicinity of the current pit.
other polymetallic rare
earth projects
In Vital Metal’s strategy for Nechalacho, Stage 2
envisages the development of several high-grade
zones identified within the Tardiff (Upper Zone)
deposit. The Company previously announced this
deposit’s total resource of 95 million @ 1.46% TREO
comprised of a Measured Resource of 2.9Mt at 1.47%
TREO, an Indicated Resource of 1.5Mt at 1.51% TREO
and an Inferred Resource of 77.2Mt at 1.46% TREO6.
The Tardiff deposits are envisaged as providing the
resource for the long-term operation and expansion
of the project.
In addition to rare earths, this zone also contains
zircon and niobium grades, which are comparable
with other polymetallic rare earth projects and were
also the subject of feasibility test work previously
undertaken at Nechalacho by Avalon Advanced
Materials Inc.
Key features of the proposed Stage 2 operations are
as follows:
• Long-term/large-scale commercial operation
providing long-term security to the rare earth
supply chain;
• Fund expansion and the development of Tardiff
deposit through the sale of mixed RE carbonate
from the North T zone currently being mined; and
• Vital Metal’s Definitive Offtake Agreement with
REEtec (see below) provides the option for the
supply of up to 5,000t REO (ex-Cerium)/year for a
period of more than 10 years. Should this option
be exercised, this will be a cornerstone for Stage
2 operations at the Tardiff Zone.
Previous work on the Tardiff deposit identified
several high-grade targets, which contained similar
bastnaesite mineralisation to the North T resource.
6 ASX announcement 13 December 2019: Vital announces JORC 2012
Compliant Resources for the Nechalacho Rare earth Deposit
14
Positive results from Stage 2 metallurgical testwork
In June, Vital announced positive results from
metallurgical testwork completed on samples from
the Tardiff zone, which demonstrated the potential
to continue a similar process flowsheet in Stage 2 at
Nechalacho, with the introduction of an additional
beneficiation process due to the finer nature of rare
earth mineralisation at Tardiff. A similar process
flowsheet in Stage 2 has the potential to produce a
beneficiated product with a REO grade greater than
35%.
Vital aims to mine the much larger Tardiff Zone,
which has a total resource of 95 million tonnes @
1.46% total rare earth oxides (TREO) comprised
of a Measured Resource of 2.9Mt at 1.47% TREO,
an Indicated Resource of 1.5Mt at 1.51% TREO and
an Inferred Resource of 77.2Mt at 1.46% TREO (1.3
million tonnes of contained TREO)7 after North
T, during Stage 2 of the development strategy.
Development of the Tardiff Zone is targeted for
commencement in 2025.
In its metallurgical scouting test program, Vital
aimed to test the amenability of ore from the Tardiff
Zone 1 area to the North T zone process flowsheet.
Using a 770kg sample taken from Tardiff Zone 1,
the program tested grindability, ore sorting via
X-ray transmission, several separation methods –
heavy liquid, gravity and magnetic as well as, acid
leaching.
The sample also underwent flotation testwork,
which is not part of the Stage 1 flowsheet, and
returned promising results. A report on the testwork
concluded the sample demonstrated amenability to
each step of the Stage 1 process flow sheet.
The results of the scouting testwork program
achieved results which were better than expected.
The composite sample demonstrated amenability
to each step of the North T process flow sheet. As
expected, due to the finer grain sizes at Tardiff than
at North T, the testwork indicated that a flotation
circuit, or some other additional beneficiation
technique, will likely be required to achieve the
required feed grade into the kiln. Flotation showed
great promise in terms of high REO grade, low
mass pull and reasonable REO recovery.
The best flowsheet may include, ore sorting, DMS
on +0.6 mm crushed ore to reduce the mass of ore
feeding the mill by ~50%, followed by milling of the
DMS concentrate and the -0.6 mm ore to a grind
size of 100% passing ~ 75 μm. The mill product
would then be upgraded to final concentrate
grade by flotation but could also include gravity
and/ or magnetic separation for certain process
streams.
Of note was that with optimisation, flotation
demonstrated the potential to achieve a 35% REO
grade as a standalone process treating ore with a
grade of 2.3% REO. When preconcentration steps
of ore sorting, HMS and shaking table circuits are
added, the testwork indicates that a grade of 7-8%
REO should be achievable going into the flotation
circuit. This should improve the final concentrate
grades and recoveries even further. Further
testwork on representative samples is required to
optimise this flowsheet, which Vital will commence
during the September 2021 quarter.
In addition to the beneficiation testwork, the
confirmation that Tardiff Zone 1 material will also
be amenable to the North T leaching process is
also extremely promising. The ability to maximise
the utilisation of existing processing infrastructure
provides the opportunity to greatly reduce capital
costs as we transition from processing North T ore
to Tardiff Zone 1 in Stage 2.
7 ASX announcement 13 December 2019: Vital announces JORC 2012
Compliant Resources for the Nechalacho Rare earth Deposit
15
Vital Metals | Annual Report 2021 Offtake agreement
In December 2020, Vital announced it had
signed a binding term sheet setting out in-
principle terms for an offtake and profit-sharing
agreement in respect of raw material from the
Nechalacho mine between the Company and
Norwegian REE separation company, REEtec
AS (“REEtec”). Vital’s definitive agreement
with REEtec was executed as announced on 2
February 2021.
Under the definitive Offtake Agreement, Vital
Metals will provide REEtec mixed rare earth
carbonate product containing an annual volume
of 1,000 REO (ex-Cerium) over five years. Both
parties have an option to increase this offtake
volume by up to 5,000 tonnes REO per annum
over 10 years (subject to a corresponding supply
agreement). Offtake volumes will be calculated
based on the quantities of rare earth contained
within a mixed rare earth carbonate product,
excluding any cerium (ex-Cerium), which
typically accounts for approximately 50% of total
rare earths.
Both companies agreed on a pricing mechanism
to secure each party a guaranteed minimum
payment, equal to their cost of production, plus
a share of the margin. The margin results from
the actual sales price achieved by REEtec less the
combined guaranteed minimum payments and
the transportation costs of finished products for
both Vital and REEtec.
The rights and obligations in the term sheet are
subject to both Vital and REEtec proceeding
with a final investment decision ("FID") for the
development of their respective commercial
plants (with raw material sourced from the
Nechalacho mine) and the completion of agreed
stages to delivery of product.
As part of its agreement with REEtec, Vital
produced a 12kg sample of rare earth carbonate in
accordance with customer acceptance protocols.
Vital worked with REEtec to finalise the rare earth
carbonate specification and associated process
flowsheet, which will minimise the combined Vital
and REEtec operating costs to produce separated
rare earth oxides.
Vital announced that REEtec had formally
accepted its rare earth carbonate sample
produced at Nechalacho, satisfying Stage 2:
Qualification of Specification, in May 2021.
16
Saskatoon rare earth extraction plant
In May, Vital announced it had signed a lease for its
rare earth extraction plant in Saskatoon, Canada,
where it will process materials from Nechalacho.
The lease provides Vital with a custom-built facility
to house the extraction plant and commences 1
November 2021.
An initial 10-year lease agreement between
Vital Metals’ subsidiary, Cheetah Resources
Saskatchewan Corp. and Northstar Innovative
Developments Inc. (“Northstar”) will see Vital
Metals’ extraction plant located adjacent to
Saskatchewan Research Council’s (SRC) rare earth
separation facility, creating a rare earth processing
hub in Saskatoon.
Northstar also owns the land where SRC is
developing its project. SRC’s rare earth processing
facility will be the first-of-its-kind in Canada and
will begin to establish a fully commercial Rare Earth
Element (REE) technology hub in Saskatchewan,
forming an industry model for future commercial
REE initiatives and supply chain development.
Vital expects to deliver its first product from
Nechalacho to Saskatoon in November 2021. Key
terms of Vital’s lease with Northstar can be found
in the ASX Announcement dated 21 May 2021.
The lease was signed after Vital entered into a
binding Term Sheet between Cheetah Resources
Corp. and SRC.
The Term Sheet provides that the parties will
negotiate and enter into two definitive agreements:
one for the design, procurement, construction
and commissioning of the Plant (the "EPCM
Agreement"); and a second for the operation of
the Plant (the "Processing Agreement") (together,
the "Definitive Agreements"), which will address
the scope of services, capital cost estimate, and
permits/approvals.
The plant is expected to be fully operational in late
2022 with construction anticipated to commence
in Quarter 4 2021.
17
Vital Metals | Annual Report 2021 Funding agreement with Canadian Northern Economic Development Agency
Vital’s Canadian subsidiary, Cheetah
Resources Corp. signed a funding agreement
with the Canadian Northern Economic
Development Agency (“CanNor”) for C$1.26
million relating to the Nechalacho ore sorter.
Cheetah will use the funding to demonstrate
the environmental, technical and economic
advantages of single step sensor-based
sorting of rare earth ore to produce a value-
added mixed rare earth concentrate in the
NWT, which it will transport to Saskatoon
and then ship to offtake partner, REEtec.
Compared to other REE beneficiation
processes, this scalable mechanically-
based process significantly reduces the
environmental footprint. It uses much less
diesel, little or no water, involves no additives
or chemicals, and eliminates tailings ponds
that typically accompany metal mining.
Cheetah is developing production capacity
to concentrate REE ore for export from
the NWT for downstream processing. It is
estimated that the project will create 22
jobs and expand and maintain seven others
during the demonstration phase.
The Canadian Northern Economic
Development Agency (CanNor) is the
Government of Canada’s Regional Economic
Development Agency for the Territories.
CanNor works with Northerners and
Indigenous peoples, communities, businesses,
organisations, other federal departments,
and other orders of government to help build
diversified and dynamic economies that
foster long-term sustainability and economic
prosperity across the Canadian territories –
Nunavut, Northwest Territories and Yukon.
Terms of the CanNor Repayable Contribution
are as follows:
• Amount of the repayable contribution:
C$1.26 million;
• Term of the repayable contribution: 10
years beginning in FY 2023/24;
•
Interest rate: 0%;
• Repayment terms: monthly instalments
over 10 years, commencing FY2023/24;
• Funds will be disbursed within the next
12 months, they are repayable at any
time without penalty, there is no security
associated with the repayable contribution
As at 30 June, no funds had been received
under the funding agreement.
18
Wigu Hill Project
Tanzania
Vital continued discussions
with the Tanzanian Government
regarding the issuance of a
Mining Licence (ML) for the Wigu
Hill rare earth project and is
working towards a meeting with
Government in Tanzania however,
this is currently impacted by
COVID-19 travel restrictions.
Nahouri Gold Project
Burkina Faso
Vital suspended all exploration
activity in Burkina Faso –
activities are yet to resume.
Aue Cobalt Project
Germany
There were no exploration
activities at Vital’s Aue project
during the period.
19
Vital Metals | Annual Report 2021 20
Annual Mineral
Resource Statement
The Company’s Mineral Resource
Statement has been complied and
is reported in accordance with the
Australasian Code of Reporting
of Exploration Results, Mineral
Resources and Ore Reserves (the
JORC 2012 edition) and Chapter 5 of
the ASX Listing Rules.
Vital’s governance arrangements and internal
controls for reporting its Mineral Resource Estimate
includes reporting on an annual basis and in
compliance with the 2012 Edition of JORC and the
ASX Listing Rules. The Competent Person is suitably
qualified and experienced, as defined in the 2012
Edition of JORC.
21
Vital Metals | Annual Report 2021 Nechalacho Rare Earths Project
As at 30 June 2021, the Nechalacho Rare Earths
Project has a Mineral Resource Estimates, as defined
in Tables 1 and 2 below. There have been no changes
to the Mineral Resource Estimates since the 2020
Annual Resource Statement.
The annual Mineral Resource Estimate in respect
of the Nechalacho Rare Earths Project is based on,
and fairly represents, information and supporting
documentation prepared by a competent person.
The Mineral Resource Estimate as a whole has,
as to the form and content in which it appears in
the Annual Report, been approved by Mr Brendan
Shand. Mr Shand is a Competent Person, a member
of the Australasian Institute of Mining and Metallurgy
and an employee of the Company. Mr Shand
has sufficient experience that is relevant to the
style of mineralisation and type of deposit under
consideration and to the activity being undertaken
to qualify as a Competent Person, as defined in the
2012 Edition of the ‘Australian Code for Reporting
of Exploration Results, Mineral Resources and Ore
Reserves’. Mr Shand consents to the inclusion in the
report of the matters based on his information in the
form and context in which it appears.
Confidence
category
Nd2O3
cut-off grade
%
Tonnage
%
REO
%
LREO
%
HREO
%
Nd2O3
%
PR6O11
%
Measured
Indicated
Inferred
Total
0.1
0.1
0.1
0.1
2.914
1.468
1.326
0.142
0.288
0.077
14.662
1.508
1.372
0.137
0.295
0.080
77.159
1.456
1.323
0.133
0.291
0.077
94.735
1.464
1.330
0.134
0.291
0.078
Table 4 – Nechalacho Rare Earths Project, Canada Mineral Resource
Estimates for the Tardiff Upper Zone – refer ASX release 13 December 2019
22
Confidence Category
Kilo Tonnes
Measured
Indicated
Total
68
33
101
LREO
(%)
9.60
7.80
9.01
LREO Tonnes
6,528
2,574
9,102
Table 5 – Nechalacho Rare Earths Project, Canada Mineral Resource
Estimates for the North T Deposit – refer ASX release 15 April 2020
23
Vital Metals | Annual Report 2021 Wigu Hill Project – Foreign Estimate
The Company has reported a high-grade NI43-101 resource of 3.3Mt at 2.6% REO in respect of its Wigu Hill
Project, Tanzania (refer ASX announcement 25 June 2019) as follows:
Zone
Tonnes
(m)
LREO5
(%)
La2O3
(%)
CeO2
(%)
Pr6O11
(%)
Nd2O3
(%)
Sm2O3
(%)
Twiga – NE
Twiga – SW
Tembo – NW
Tembo - SE
Total Inferred
Resource
1.6
0.5
0.9
0.2
3.3
2.6
3.6
2.2
2.2
0.98
1.33
0.78
0.69
1.26
1.71
1.09
1.1
2.6
0.96
1.27
0.1
0.13
0.23
0.01
0.3
0.02
0.09
0.23
0.02
0.1
0.1
0.27
0.01
0.24
0.02
Table 6 – Wigu Hill Project, Tanzania Foreign Estimate
(Cut-off of 1% LREO5) – refer ASX release 15 June 2019
Investors should note that the Mineral Resource
estimate for the Wigu Hill Rare Earth Project
is a foreign estimate and is not reported in
accordance with the JORC Code.
A competent person has not done sufficient
work to classify this foreign estimate as a mineral
resource in accordance with the JORC Code and
it is uncertain that following further exploration
or evaluation work that the foreign estimate will
be able to be reported as a mineral resource in
accordance with the JORC Code.
The Company has previously disclosed the
foreign estimate in compliance with ASX Listing
Rule 5.12 in the announcement dated 25 June
2019 titled, “Vital to Transform into Rare Earth
Oxide Developer” (“Announcement”).
The Company is not in possession of any new
information or data relating to the foreign estimate
that materially impacts on the reliability of the
estimate or the Company’s ability to verify the
foreign estimate in accordance with Appendix
5A (JORC Code). The Company confirms that
the supporting information provided in the
Announcement continues to apply and has not
materially changed.
The Company has not progressed evaluation of
the previously reported foreign estimate. The
Company will perform a revision of the historical
drilling information, to further ensure the integrity
of the data, followed by another estimation of the
resource, with updated classification based on
the level of information available. In addition, Vital
intends to conduct further drilling, bulk sampling,
geotechnical and hydrological testing.
24
Tenement Schedule
The Group’s tenement schedule is as follows:
Location
Canada
Burkina Faso
Germany
Tanzania
Tenement
Beneficial Interest
Nechalacho*
Nahouri
Kampala
Zeko
Aue
Wigu Hill**
100%
100%
100%
100%
100%
90%
* Vital owns 100% of the mineral rights of the Nechalacho Project above the 150 m elevation level
** Vital has signed a project development and option agreement to acquire Wigu Hill. The Company
has the right to acquire the licence upon the issuance of the licence by the Tanzanian Government
25
Vital Metals | Annual Report 2021 Compliance Statements
This Annual Report contains information
relating to Exploration Results extracted
from ASX market announcements reported
previously and published on the ASX platform
on 26 May 2021, 23 June 2021 and 3 August 2021.
The Company confirms that it is not aware of
any new information or data that materially
affects the information included in the original
market announcement.
This Annual Report contains information
relating to Mineral Resource Estimates in
respect of the Nechalacho Project extracted
from ASX market announcements reported
previously and published on the ASX platform
on 13 December 2019 and 15 April 2020. The
Company confirms that it is not aware of
any new information or data that materially
affects the information included in the original
market announcements and that all material
assumptions and technical parameters
underpinning the estimates in the original
market announcements continue to apply and
have not materially changed.
26
27
Vital Metals | Annual Report 2021 Directors’ Report
The Board of Directors present their report on the Consolidated entity
(referred to hereafter as the Group) consisting of Vital Metals Limited
and the entities it controlled at the end of, or during the year ended
30 June 2021.
Directors
The names and details of the Company’s directors in office during the financial year and until the date
of this report are as follows. Where applicable, all current and former directorships held in listed public
companies over the last three years have been detailed below. Directors were in office for this entire period
unless otherwise stated.
Names, qualifications, experience and special
responsibilities
Mr Evan Cranston
(appointed Chairman 4 August 2020)
Non-Executive Chairman
Mr Cranston is an experienced mining executive
with a background in corporate and mining law.
He is the principal of corporate advisory and
administration firm, Konkera Corporate and has
extensive experience in the areas of equity capital
markets, corporate finance, structuring, asset
acquisition, corporate governance and external
stakeholder relations. He holds both a Bachelor
of Commerce and Bachelor of Laws from the
University of Western Australia. Mr Cranston is a
former Non-Executive Director of New Century
Resources Limited (ASX: NCZ) and Boss Resources
Limited (ASX: BOE). He is currently Executive
Chairman of African Gold Ltd (ASX: A1G), Non-
Executive Director of Carbine Resources Limited
(ASX: CRB), Non-Executive Chairman of Firebird
Metals Limited (ASX: FRB) and Chairman and
Director of TSX-listed Benz Mining Corp
(TSX-V: BZ)
Mr Geoff Atkins
Managing Director
Mr Atkins is a Civil Engineer with over 20 years of
project and corporate development experience
across commercial, industrial, mining and
infrastructure sectors with responsibility for
driving projects from concept, through feasibility
and development to operational assets.
Mr Atkins is not a director of any other ASX-listed
Company.
Mr James Henderson (appointed 4 August 2020)
Non-Executive Director
Mr Henderson is currently Executive Chairman
of Transocean Group Pty Ltd, a corporate
advisory and private equity group focused on the
emerging company market. His expertise is in the
area of corporate strategy and structuring, capital
raising and commercial negotiation.
Mr Henderson has led teams on a variety of
28
transactions including mergers, acquisitions,
dispositions, takeovers, and capital raisings
particularly in Australia, Canada, the USA and
Africa and was a founding shareholder in Cheetah
Resources Pty Ltd.
Mr Henderson is also a Non-Executive Director of
Compass Gold Corporation (TSX-V: CVB).
Mr Francis Harper (resigned 4 August 2020)
Non-Executive Chairman
Mr Harper has extensive experience in West African
mining, having served as Chairman and as a major
shareholder of West African Resources Limited
between 2009 and 2015. He is also a founding
director of Blackwood Capital, which has raised
over $1 billion for smaller companies over the last
15 years.
Mr Harper is also non-executive Chairman of
Tietto Minerals Limited (ASX: TIE) and Chairman of
Predictive Discovery Ltd (ASX: PDI).
Mr Phillip Coulson (resigned 20 December 2020)
Non-Executive Director
Mr Coulson has over 18 years of corporate advisory
experience, having held senior advisory positions
at Mantagu Stockbrokers and Patersons Securities
Limited. He has promoted and advised numerous
companies in the identification and acquisition of
technology and resource projects.
Mr Coulson is not a director of any other ASX-listed
Company.
Mr Zane Lewis (resigned 4 August 2020)
Executive Director
Mr Lewis has over 20 years’ experience and
leadership of smallcap multinational companies. His
hands-on skillset includes corporate advisory, non-
executive director and Company Secretary roles at
several ASX-listed and unlisted companies as well
as, extensive international experience managing
a group of Software and Tech companies in USA,
Europe, Hong Kong, China and Australia.
Mr Lewis is a director of Lion Energy Limited (ASX:
LIO), Kingsland Global Ltd (ASX: KLO) and Fargo
Enterprises Ltd (ASX: FGO).
He was previously a director of Tap Oil Limited (ASX:
TAP), Flamingo AI Limited (ASX: FGO) and Fraser
Range Metals Limited (ASX: FRN).
Company Secretary
Ms Louisa Martino (appointed 1 July 2020)
Company Secretary
Ms Martino has a Bachelor of Commerce from the
University of Western Australia, is a member of
the Institute of Chartered Accountants Australia
& New Zealand (ICAA), a member of the Financial
Services Institute of Australasia (FINSIA) and a
fellow of the Governance Institute of Australia
(FGIA). She provides a number of listed companies
with company secretarial services and has worked
within corporate finance, assisting with company
compliance and capital raisings. Ms Martino holds
the position of Company Secretary for listed
companies, PYX Resources Ltd (NSX: PYX), Cokal
Ltd (ASX: CKA), Jadar Resources Ltd (ASX: JDR), and
Oklo Resources Ltd (ASX: OKU).
Principal Activities
The principal activities of the Group during the
year were mineral exploration and development in
Burkina Faso, Tanzania, Germany and Canada.
29
Vital Metals | Annual Report 2021 Directors’ Report
Corporate
Board and Management Changes
Capital Raisings
In August 2020, Vital announced changes to its
Board, as the Company progressed to rare earth
oxide production, with the appointment of Mr
James Henderson as a Non-Executive Director.
Mr Henderson is the founder and Chairman of
Transocean Group, which was established in
1987. He has more than 35 years’ experience in
providing financial advisory services in Australia
and overseas, across a wide range of industries
including medical devices, aged care, clean
energy and natural resources.
Upon the appointment of Mr Henderson, Mr
Francis Harper and Mr Zane Lewis retired as
Directors of the Company and Vital appointed
Mr Evan Cranston as Non-Executive Chairman,
replacing Mr Harper.
In December, Mr Phillip Coulson resigned as
a Director of the Company to focus on other
business interests.
Mr Sebastian Andre resigned as Company
Secretary, effective 30 June 2020. Vital appointed
Ms Louisa Martino as Company Secretary and
Chief Financial Officer, effective 1 July 2020.
In September 2020, Vital announced it had
received firm commitments to raise A$8.0
million (before costs) in new equity via a fully
committed share placement of 400 million shares
at $0.02/share to institutional, sophisticated and
professional investors (“Placement”).
Vital used net proceeds from the Placement to
progress the Company towards commencing
processing operations in Q2 CY2021 including
the purchase of the ore sorter, sampling and met
testwork, extraction plant EPCM and for general
working capital.
Strong demand for the Placement resulted in
additional funds being raised, which will be used
to accelerate further exploration work at the Tardiff
zone within the Company’s Nechalacho Project.
In March 2021, Vital completed a A$43 million
share placement to institutional, sophisticated and
professional investors to fund construction, mining
and operations for production at Nechalacho,
allowing production to commence on schedule in
Q2 CY21.
The Placement was undertaken at A$0.065 per
share with approximately 661.5 million new fully
paid ordinary shares issued (“Placement”). Vital
received strong support in the Placement, adding
new institutional investors to its register while
several existing investors increased their holdings.
30
COVID-19
As with other companies, COVID-19 has caused
some disruption to the Company’s activities,
however development activities continued with
the Company remaining focused on bringing the
Nechalacho Rare Earth Project into operation in
the shortest possible timeframe. The Company
has a focus on the welfare of its employees and
has implemented measures to ensure their well-
being including, health screening and temperature
monitoring, change in rosters, spatial distancing
protocols as well as, a change in flow of staff to and
from local communities.
As at 30 June 2021, the Company, its staff and
contractors based in Canada have been minimally
impacted by the COVID-19 pandemic and continue
to operate its programs as planned.
Management is actively monitoring the global
situation and its impact on the Group's financial
condition, liquidity, operations, suppliers, industry,
and workforce. Given the daily evolution of the
COVID-19 outbreak and the global responses to
curb its spread, the Group is not able to estimate
the effects of the COVID-19 outbreak on its results
of operations, financial condition, or liquidity for the
2021 financial year.
31
Vital Metals | Annual Report 2021 Directors’ Report
Financial Position
The Group’s net assets at 30 June 2021 were
$62,984,038 (30 June 2020: $15,743,525).
The Directors consider that the Group is in a
strong and stable financial position to continue
and grow its existing activities.
Financial Results
The Group recorded an operating loss for the
year of $4,745,906 (2020: loss of $4,578,593).
The 2021 result is consistent with the nature
and operations of the Group.
Significant Changes In State Of Affairs
Other than as disclosed in these Financial
Statements, no significant changes in the
state of affairs of the Group occurred during
the financial year.
32
Events Subsequent To Reporting Date
Kipawa and Zeus Heavy rare earth projects
Subsequent to year-end in August 2021, Vital
announced it had signed a binding term sheet
with Quebec Precious Metals Corporation (TSX-V:
QPM) for Vital to acquire QPM’s 68% interest in the
Kipawa exploration project and 100% interest in the
Zeus exploration project, both located in Quebec,
Canada for C$8 million payable over four years.
Joint Venture partner Investissement Québec (“IQ”)
holds the remaining 32% of the Kipawa project on a
contributing basis.
Kipawa is a heavy rare earths project, located 50km
from Temiscaming, with a Mineral Resource Estimate
of 15.5Mt of eudialyte at 0.434% TREO and 0.873 ZrO2,
6.3Mt of mosandrite at 0.391% TREO, 1.018% ZrO2,
5.1Mt of britholite at 0.286% TREO, 0.944% ZrO2, and
with a Proven and Probable Reserve Estimate of
19.8Mt at 0.411% TREO.
Investors should note that the terms, “Mineral
Resource”, “Mineral Reserve” and “Proven and
Probable Reserve” are as defined by the Canadian
Institute of Mining, Metallurgy and Petroleum
(“CIM”) as the CIM Definition Standards on Mineral
Resources and Mineral Reserves adopted by CIM
council. These estimates are foreign estimates
and are not reported in accordance with the Joint
Ore Reserves Committee’s Australasian Code for
Reporting of Mineral Resources and Ore Reserves
(the “JORC Code”). A competent person has not
done sufficient work to classify these estimates as a
mineral resource or ore reserve in accordance with
the JORC Code and it is uncertain that following
further exploration or evaluation work that the
foreign estimates will be able to be reported as a
mineral resource or ore reserve in accordance with
the JORC Code.
The Projects total 73 claims over 43km2 and lie in the
Grenville geological province, approximately 55km
south of the geological contact with the Superior
geological province. The lithologies consist mainly of
gneiss with a grade of metamorphism ranging from
the greenschist facies to the amphibolite-granulite
facies.
The Kipawa deposit is defined by three enriched
horizons within the “Syenite Complex”, which
contains some light rare earth oxides but primarily
heavy rare earth oxides. Since 2011, there have been
a total of 293 drill holes (24,571m) that were used to
prepare a feasibility study, which was completed by
Matamec Explorations Inc. in 2013.
Twelve heavy rare earth showings have been
identified on the Zeus project, some of which
contain niobium and tantalum.
33
Vital Metals | Annual Report 2021 Directors’ Report
TREO
(%)
0.529
0.387
0.312
0.434
0.396
0.379
0.431
0.391
0.309
0.284
0.264
0.286
Zone
Classification
Tones
Eudualite
Mosandrite
Britholite
Measured
6,024,000
Indicated
Inferred
7,790,000
1,678,000
Total
15,492,000
Measured
3,135,000
Indicated
2,790,000
Inferred
409,000
Total
6,334,000
Measured
Indicated
Inferred
1,278,000
2,725,000
1,088,000
Total
5,091,000
Table 7 - Kipawa Project Mineral Resources
Classification
Proven
Probable
Total
Table 8 - Kipawa Project Mineral Reserve
Tones
10,218,867
9,550,047
19,768,914
ZrO2
0.959
0.842
0.710
0.873
1.019
1.029
0.940
1.018
0.940
0.957
0.915
0.944
TREO
(%)
0.440
0.379
0.411
Investors should note that the Mineral Resource and Reserve estimate for the Kipawa Project are foreign
estimates and are not reported in accordance with the JORC Code. A competent person has not done
sufficient work to classify this foreign estimate as a mineral resource and reserve in accordance with
the JORC Code and it is uncertain that following further exploration or evaluation work that the foreign
estimate will be able to be reported as a mineral resource and reserve in accordance with the JORC Code.
The Company has previously disclosed the foreign estimates in compliance with ASX Listing Rule 5.12 in the
announcement dated 11 August 2021 titled, “Vital Metals Enters Agreement to Acquire Heavy Rare Earth
Projects” (“Announcement”). The Company is not in possession of any new information or data relating to
the foreign estimates that materially impacts on the reliability of the estimates or the Company’s ability to
verify the foreign estimates in accordance with Appendix 5A (JORC Code). The Company confirms that the
supporting information provided in the Announcement continues to apply and has not materially changed.
34
Engagement of Tectonic
Environmental Regulation
Vital entered into an agreement for the provision
of capital markets consulting and advisory services
with Ecoban Securities Corporation (“Tectonic”).
Tectonic shall serve as the Company’s North
American investor relations and capital markets
consultant and advisor. Tectonic played a key role
in the introduction of strategic investors to Vital
as part of the $43 million capital raise and with
the strategic importance of North American rare
earth production, the introduction of dedicated US
market support will be of increasing importance to
the future growth of Vital Metals.
Funding agreement with Canadian Northern
Economic Development Agency
In accordance with Item 6 of the Funding
Agreement, the Group is currently completing
documentation and it is expected that funds will be
received in November 2021.
Dividends
No dividends were paid or declared during the
financial year. No recommendation for payment of
dividends has been made.
Likely Developments and Expected Results of
Operations
The Group will be entering into mining activities
from July 2021 in the North T zone and intends to
continue its exploration and development activities
in Tardiff Zones 2 and 3 in Canada and other
projects, whilst assessing opportunities to acquire
further suitable projects for exploration as they arise.
The impact of COVID-19 on the Company going
forward, including its financial condition cannot
be reasonably estimated at this stage and will be
reflected in the Group’s 2022 interim and annual
financial statements.
The Group is subject to significant environmental
regulation in respect to its exploration and
development activities.
The Group aims to ensure the appropriate standard
of environmental care is achieved, and in doing
so, that it is aware of and is in compliance with
all environmental legislation. The directors of the
Group are not aware of any breach of environmental
legislation for the year under review.
Insurance of Directors and Officers
The Company has entered into an agreement to
indemnify all directors and officers against any
liability arising from a claim brought by a third party
against the Company. The agreement provides for
the Company to pay all damages and costs which
may be awarded against the officer or director.
During the period the Company has paid an
insurance premium in respect of a Directors’ and
Officers’ Liability Insurance Contract. The insurance
premium relates to liabilities that may arise from
an Officer’s position, with the exception of conduct
involving a wilful breach of duty or improper use of
information or position to gain personal advantage.
The officers covered by the insurance policies are
the Directors, Company Secretary and Officers of
the Company. The contract of insurance prohibits
the disclosure of the nature of the liabilities and the
amount of the premium.
Legal Proceedings
The Company was not a party to any legal
proceedings during the year.
Proceedings on Behalf of the Group
No person has applied for leave of Court to bring
proceedings on behalf of the company or intervene
in any proceedings to which the Company is a party
for the purpose of taking responsibility on behalf of
the Company for all or any part of those proceedings.
35
Vital Metals | Annual Report 2021 Directors’ Report
Non-Audit Services
During the year, BDO provided consulting services in relation to Benchmark and Executive Remuneration.
Since year-end, BDO IFRS Advisory have provided services in respect of identifying leases in the Company’s
Nechalacho mining services contract. The Group has not provided any indemnity to the Auditors.
Directors’ Interests in Securities of the Group
As at the date of this report, the interests of the Directors in the shares, options and other performance
securities of Vital Metals Limited were:
Director
Evan Cranston
Geoff Atkins
James Henderson
Shares Under Option
Ordinary Shares
16,528,998
93,449,547
208,296,342
Options
180,000,000
90,000,000
60,000,000
At the date of this report, the Group had on issue 4,154,233,084 ordinary shares and 431,833,334 options over
ordinary shares.
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Date Options Granted
Expiry Date
Exercise Price
Number Under Option
3 Sept 2018
19 July 2022
22 October 2019
22 October 2024
22 October 2019
22 October 2024
22 October 2019
22 October 2024
24 December 2020
24 December 2023
24 December 2020
31 January 2025
24 December 2020
31 January 2025
24 December 2020
31 January 2025
31 January 2020
31 January 2025
31 January 2020
31 January 2025
31 January 2020
31 January 2025
$0.015
$0.02
$0.025
$0.03
$0.03
$0.02
$0.025
$0.03
$0.02
$0.025
$0.03
Total
11,333,334
110,000,000
110,000,000
110,000,000
5,000,000
6,000,000
6,000,000
6,000,000
22,500,000
22,500,000
22,500,000
431,833,334
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to
participate in any share issue of any other body corporate.
36
Performance Shares
In 2019, Vital Metals issued 800 million Performance Shares in accordance with the terms of Vital’s acquisition
of Cheetah Resources Pty Ltd (Cheetah Resources) (ASX announcement dated 25 June 2019). The purpose of
the Performance Shares, which were issued to the original Cheetah Resources’ shareholders, was to link part
of the consideration for the acquisition of Cheetah Resources to certain key performance criteria.
Commencement of commercial mining operations at the Nechalacho8 or Wigu Hill projects is a key
performance criterion for the conversion of all Performance Shares into fully paid ordinary shares in the
capital of the Company (Shares). Consequently, all Performance Shares converted to shares on a 1:1 basis on
commencement of mining operations.
Vital Metals’ Directors and key shareholders holding ~70% of the Performance Shares have agreed to be
voluntarily escrowed until 29 September 2021.
Directors’ Meetings
The table below sets out the number of Directors’ meetings held during the period and the number of
meetings attended by each as a Director.
Director
Evan Cranston
Geoff Atkins
James Henderson
Phillip Coulson
Francis Harper
Zane Lewis
Number of Meetings held while in office
Meetings attended
7
7
6
4
1
1
7
7
6
4
1
1
Corporate Governance Statement
Pursuant to the ASX Listing Rules, the Company’s Corporate Governance Statement will be released in
conjunction with this report. The Company’s Corporate Governance Statement is available on the Company’s
website at: https://www.vitalmetals.com.au/corporate/corporate-governance/
8 Previously referred to as “Thor Lake Project”
37
Vital Metals | Annual Report 2021 Directors’ Report
Audited Remuneration Report
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001. The Directors and Key Management Personnel for the year ended 30 June 2021 were:
Name
Evan Cranston
Position for the year ended 30 June 2021
Non-Executive Chairman
Francis Harper (resigned 4 August 2020)
Non-Executive Chairman
Geoff Atkins
Managing Director
James Henderson (appointed 4 August 2020)
Non-Executive Director
Philip Coulson (resigned 20 December 2020)
Non-Executive Director
Zane Lewis (resigned 4 August 2020)
Executive Director
Anthony Hadley
Chief Operating Officer
Remuneration Policy
Fixed Compensation
Remuneration of Directors and Executives is
referred to as compensation throughout this
report. Key Management Personnel including
Directors of the Company and other executives
have authority and responsibility for planning,
directing and controlling the activities of the
Group. Compensation levels for Directors and
Key Management Personnel of the Group are
competitively set to attract and retain appropriately
qualified and experienced directors and executives.
The Board is responsible for compensation policies
and practices. The Board, where appropriate, seeks
independent advice on remuneration policies and
practices, including the compensation packages
and terms of employment. No such advice was
sought in the current year.
The compensation structures explained below are
designed to attract suitably qualified candidates,
reward the achievement of strategic objectives,
and achieve the broader outcome of creation
of value for shareholders. The compensation
structures take into account a number of factors,
including length of service and the particular
experience of the individual concerned.
38
Fixed compensation consists of base
compensation (which is calculated on a total cost
basis and includes any FBT charges related to
employee benefits including motor vehicles) as
well as, employer contributions to superannuation
funds. Compensation levels are reviewed annually
by the Board where applicable.
Share–based compensation
Share options are granted to key employees
as the Directors believe that this is the most
appropriate method of aligning performance to
the interests of shareholders. The Directors feel
that it appropriately links the long-term incentives
of key employees to the interest of shareholders.
The ability to exercise the options is conditional
on continued service for a period as determined
by the Board upon each issuance of options. The
Group does not have a policy that prohibits those
that are granted share-based payments as part
of their remuneration from entering into other
arrangements that limit their exposure to losses
that would result from share price decreases.
Employment Contracts of Directors and Executives
As at 30 June 2021, all Directors and all executives, have formal contracts with the Company.
The terms during the past year and as at the date of this report are set out as follows:
Name
Position
Evan Cranston
Non-Executive Chairman
Francis Harper
(resigned 4 August 2020)
Non-Executive Chairman
Geoff Atkins
Managing Director
James Henderson
(appointed 4 August 2020)
Philip Coulson
(resigned 20 December 2020)
Zane Lewis
(resigned 4 August 2020)
Non-Executive Director
Non-Executive Director
Executive Director
Anthony Hadley
Chief Operating Officer
1 Includes expense for options issued on appointment
2 Includes expense for options issued under Employee Incentive Plan
Annual Remuneration FY 2021
$
60,000
3,333
270,000
1,774,6581
18,817
6,667
496,1142
Geoff Atkins
The Managing Director, Geoff Atkins is under
a consulting agreement that commenced on 1
October 2019. The terms of the contract include:
• Annual consulting fee of $270,000; and
• An incentive component comprising
90,000,000 options in 3 equal tranches to
purchase fully paid ordinary shares in the
Company with the following key terms:
• Options were approved by shareholders
at General Meeting held 16 October 2019;
• Exercise Prices Tranche 1-$0.02, Tranche
2-$0.025, Tranche 3-$0.03
• Expiry date of 5 years from date of issue
The duration of the consultancy agreement
is for a minimum of 3 years. Mr Atkins may
resign from his position and thus terminate the
consultancy by giving 3 months’ written notice.
The Company may terminate the consultancy
agreement by providing 3 months’ written
notice or providing payment in lieu of the
notice period (based on the consulting fee).
The Company may terminate the contract at
any time without notice if serious misconduct
has occurred. Where termination with cause
occurs, the Managing Director is only entitled
to that portion of remuneration (consultancy
fee) and only up to the date of termination.
39
Vital Metals | Annual Report 2021 Directors’ Report
Anthony Hadley
The Chief Operating Officer, Tony Hadley is an employee of the Company under an executive
agreement signed on 7 February 2020. Under the terms of the contract:
• A salary package of $280,000 per annum plus statutory superannuation; and
• An incentive component comprising 3 tranches of 6,000,000 options each to purchase fully paid
ordinary shares in the company with the following key terms:
• Exercise Price of Tranche 1-$0.02, Tranche 2-$0.025, Tranche 3-$0.03
• Expiry date of 31 January 2025
• Options to vest as follows:
• Tranche 1 -6,000,000 options vest 1 year from date of issue
• Tranche 2 -6,000,000 options vest 2 years from date of issue
• Tranche 3 -6,000,000 options vest 3 years from date of issue.
The duration of the consultancy agreement will continue until the agreement is validly terminated
in accordance with its terms. Mr Hadley may resign from his position and thus terminate the
agreement by giving 3 months’ written notice.
The Company may terminate the agreement by providing 3 months’ written notice or providing
payment in lieu of the notice period (based on the fixed component of Mr Hadley’s remuneration
including any accrued statutory leave liabilities).
Non-Executive directors
Total compensation for all Non-Executive Directors, last voted upon by shareholders at the 2007
AGM, is not to exceed $400,000 per annum.
The remuneration policy for Non-Executive Directors remains unchanged.
40
Company performance, shareholder wealth and directors’ and executives’ remuneration
No relationship exists between shareholder wealth, director and executive remuneration and Company
performance due to the infant stage of the Company’s operations.
Historical Information
The table below shows the gross revenue, losses and earnings per share for the last five years for the
listed entity.
2021
($)
2020
($)
2019
($)
2018
($)
2017
($)
Net profit/(loss)
(4,745,906)
(4,578,593)
3,225,692
(3,253,430)
(4,961,426)
Share price at year end (cents)
Earnings/(loss) per share (cents)
4.8
(0.16)
1.0
(0.23)
1.2
0.18
1.0
(0.21)
1.1
(0.82)
Details of remuneration
The Key Management Personnel of the Group are the Directors and Chief Operating Officer. Given the
size and nature of operations of the Group, there are no other employees who are required to have their
remuneration disclosed in accordance with the Corporations Act 2001.
41
Vital Metals | Annual Report 2021 Directors’ Report
Remuneration of Key Management Personnel
Details of the remuneration provided to the Key Management Personnel of the Group are set out in the
following table:
Short term
Salary and Fees
$
Short Term
Bonus1
$
Post-
employment
Superannuation
$
Termination
$
Share-Based
Payments
Options2
$
Total
$
Performance
related
%
Directors of Vital Metals Limited
Evan Cranston (Non-Executive Chairman) (appointed 22 October 2019)
2021
2020
60,000
41,613
–
–
–
–
Geoff Atkins (Managing Director) (appointed 22 October 2019)
2021
2020
270,000
–
202,500
100,000
–
–
James Henderson (Non-Executive Director) (appointed 4 August 2020)
2021
2020
36,667
–
–
–
–
–
Phillip Coulson (Non-Executive Director) (resigned 20 December 2020)
2021
2020
18,817
90,000
–
–
–
–
Zane Lewis (Executive Director) (resigned 4 August 2020)
2021
2020
6,667
120,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60,000
1,522,611
1,564,224
–
270,000
761,306
1,063,806
1,737,991
1,774,658
–
–
–
–
–
–
18,817
90,000
6,667
120,000
–
–
–
–
–
–
–
–
–
–
1. Mr Geoff Atkins was paid a bonus of $100,000 following the successful completion of the acquisition of
Cheetah Resources Pty Ltd by the company.
2. The fair value of the options is calculated at the date of grant using a Black Scholes option valuation model,
or share price up-and-in barrier model and allocated to each reporting period evenly over the period from
the grant date to vesting date. The value disclosed is the fair value of the options recognised in this reporting
period. The options of the Directors of Vital Metals Limited vested fully in the reporting period they were
issued, those of Key Management Personnel vest over three years.
42
Short term
Salary and Fees
$
Short Term
Bonus1
$
Post-
employment
Superannuation
$
Termination
$
Share-Based
Payments
Options2
$
Total
$
Performance
related
%
Mark Strizek (Managing Director) (resigned 24 January 2019)
2021
2020
–
25,000
–
–
–
–
Peter Cordin (Non-Executive Director) (resigned 25 September 2019)
2021
2020
–
12,177
–
–
–
1,157
Francis Harper (Non- Executive Director) (resigned 4 August 2020)
2021
2020
3,333
40,000
Other Key Management Personnel
Anthony Hadley (COO)
2021
2020
280,000
93,333
–
–
–
–
–
–
26,600
8,867
Total Key Management Personnel compensation
2021
2020
675,484
–
26,600
624,622
100,000
10,023
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25,000
–
13,333
3,333
40,000
496,114
102,200
1,927,505
2,629,589
2,283,917
3,018,563
There were no options or performance rights granted to Key Management Personnel as
compensation during the reporting period, other than those set out below.
–
–
–
–
–
–
–
–
–
–
43
Vital Metals | Annual Report 2021 Directors’ Report
Options and Performance Rights granted as compensation
Options and performance rights are issued at no cost to Directors and Executives as part of their
remuneration. The options and performance rights are not issued based on performance criteria, but are
issued to increase goal congruence between Executives, Directors and Shareholders.
There were no performance rights issued during the year. Options issued to Key Management Personnel
during the year were as follows:
Grant Date
Exercise
Price
Number
Granted
Number
Vested
Expiry Date Volatility
Fair Value
per security
at grant
date
(cents)
Exercised
Number
Options
2021 Financial Year
James Henderson
24/12/2020
$0.02
20,000,000
20,000,000
22/10/2024
100%
James Henderson
24/12/2020
$0.025
20,000,000
20,000,000
22/10/2024
100%
James Henderson
24/12/2020
$0.03
20,000,000
20,000,000
22/10/2024
100%
Anthony Hadley
24/12/2020
$0.02
6,000,000
Anthony Hadley
24/12/2020
$0.025
6,000,000
Anthony Hadley
24/12/2020
$0.03
6,000,000
–
–
–
31/01/2025
100%
31/01/2025
100%
31/01/2025
100%
2020 Financial Year
Geoff Atkins
22/10/2019
$0.02
30,000,000
30,000,000
22/10/2024
100%
Geoff Atkins
22/10/2019
$0.025
30,000,000
30,000,000
22/10/2024
100%
Geoff Atkins
22/10/2019
$0.03
30,000,000
30,000,000
22/10/2024
100%
Evan Cranston
22/10/2019
$0.02
60,000,000
60,000,000
22/10/2024
100%
Evan Cranston
22/10/2019
$0.025
60,000,000
60,000,000
22/10/2024
100%
Evan Cranston
22/10/2019
$0.03
60,000,000
60,000,000
22/10/2024
100%
2.98
2.89
2.82
2.97
2.89
2.82
0.89
0.85
0.81
0.89
0.85
0.81
–
–
–
–
–
–
–
–
–
–
–
–
Exercise of options and performance rights granted as compensation
During the reporting period, there were 28,750,000 shares issued on the exercise of options and performance
rights previously granted as compensation, and there were no modifications to the terms of previously
granted options.
44
Additional disclosures relating to Key Management Personnel
Shareholding
The numbers of shares in the Company held during the financial year by each Director of Vital Metals Limited
and other Key Management Personnel of the Group, including their personally-related parties, are set out
below.
2021
Balance at start of
the year
Received during
the year on the
exercise of
options
Received on
exercise of
options / rights
Other changes
during the year
Balance at end of
the year
Directors of Vital Metals Limited
Ordinary shares
Evan Cranston
Geoff Atkins
James Henderson
Francis Harper
Phillip Coulson
Zane Lewis
16,528,998
31,149,849
79,432,1146
18,234,725
167,100,000
8,000,000
Performance Shares – Tranche 12
Geoff Atkins
James Henderson
Performance Shares – Tranche 23
Geoff Atkins
James Henderson
31,149,849
79,432,114
31,149,849
79,432,114
Other Key Management Personnel
Anthony Hadley
–
Notes
1. Balance at resignation
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
28,750,000
–
–
–
–
–
–
–
16,528,998
62,299,698
93,449,5474
128,864,228
208,296,3425
–
–
–
18,234,7251
195,850,0001
8,000,0001
(31,149,849)
(79,432,114)
(31,149,849)
(79,432,114)
–
2. Tranche 1 Performance Shares each converted to one share in the Company (refer Note 3 below)
3. The Tranche 2 Performance Shares each converted to one share in the Company upon commencement of mining
operations at the Nechalacho Project or Wigu Hill Project within 3 years of the issue of the Tranche 1 Performance Shares.
Where the Tranche 2 Milestone is satisfied, the Tranche 1 Milestone is automatically deemed to have been satisfied.
4. 62,299,698 shares are held in escrow until 29 September 2021
5.
158,864,228 shares are held in escrow until 29 September 2021
6. Balance at appointment
–
–
–
–
–
45
Vital Metals | Annual Report 2021 Directors’ Report
Option and Performance Rights holding
The numbers of performance rights and options over ordinary shares in the Company held during the
financial year by each Director of Vital Metals Limited and other Key Management Personnel of the Group,
including their personally-related parties, are set out below:
2021
Balance at start
of the year
Granted as
compensation
Exercised
Expiry
Balance at end
of the year
Vested and
exercisable
Directors of Vital Metals Limited
Options
Evan Cranston
Geoff Atkins
180,000,000
90,000,000
–
–
James Henderson
–
60,000,000
Francis Harper
28,750,000
–
–
–
–
–
–
–
(28,750,000)
–
–
–
–
–
–
–
–
180,000,000
180,000,000
90,000,000
90,000,000
60,000,000
60,000,000
28,750,0001
28,750,000
–1
28,750,0002
–
–
–
–
18,000,000
–
18,000,000
28,750,000
28,750,000
Performance Shares
Phillip Coulson
Zane Lewis
Other Key Management
Personnel
Options
Anthony Hadley
Notes
1. Balance at resignation
2. Balance at resignation. Post resignation, these performance rights vested and have converted to ordinary shares.
Loans to Key Management Personnel
There were no loans to Key Management Personnel during the year (2020: nil).
Other transactions with Key Management Personnel
Mr James Henderson was appointed a Director on 4 August 2020. Mr Henderson is also a Director
of Transocean Securities Pty Ltd and Transocean Administration Services Pty Ltd, of which a total of
$20,071 was paid in relation to rent and reimbursement of business expenses incurred during the year.
There were no other transactions with Key Management Personnel during the year other than salaries
and wages, as disclosed in the remuneration report.
Engagement of remuneration consultants
The Group did not employ the services of any remuneration consultants in respect of remuneration
for the financial year ended 30 June 2021. During the financial year, the Company engaged BDO
Reward (WA) Pty Ltd to review the Key Management Personnel remuneration for the year ended 30
June 2022 for a fee of $20,250.
46
Securities Trading Policy
The Company’s Securities Trading Policy provides guidance on acceptable transactions in dealing in the
Company’s various securities, including shares, debt notes and options. The Company’s Securities Trading
Policy defines dealing in company securities to include:
a. Subscribing for, purchasing or selling Company Securities or entering into an agreement to do any of those
things;
b. Advising, procuring or encouraging another person (including a family member, friend, associate,
colleague, family company or family trust) to trade in Company Securities; and
c. Entering into agreements or transactions which operate to limit the economic risk of a person’s holdings
in Company Securities.
The Securities Trading Policy details acceptable and unacceptable times for trading in Company Securities
including, detailing potential civil and criminal penalties for misuse of “inside information”. The Directors must
not deal in Company Securities without providing written notification to the Chairman. The Chairman must
not deal in Company Securities without the prior approval of the Chief Executive Officer. The Directors are
responsible for disclosure to the market of all transactions or contracts involving the Company’s shares.
Voting and comments made at the Company's 2020 Annual General Meeting ('AGM')
At the 2020 AGM, 91.17% 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.
End of Audited Remuneration Report.
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 on page 48.
This report has been made in accordance with a resolution of the Board of Directors pursuant to
s.298 (2) of the Corporations Act 2001.
Signed in accordance with a resolution of the directors
Evan Cranston
Chairman
Sydney: 30 September 2021
47
Vital Metals | Annual Report 2021 Auditor’s Independence Declaration
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
Declaration of Independence by Neil Smith to the Directors of Vital Metals Limited
As lead auditor of Vital Metals Limited for the year ended 30 June 2021, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Vital Metals Limited and the entities it controlled during the period.
Neil Smith
Director
BDO Audit (WA) Pty Ltd
Perth, 30 September 2021
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of
BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are
members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
48
49
Vital Metals | Annual Report 2021 Consolidated Statement of Profit or Loss and Other
Comprehensive Income for the Year Ended 30 June 2021
Continuing Operations
Sundry income
Other income and expense
Exploration and evaluation expenditure
Administration expenses
Depreciation
Note
2021
$
1.1
309,309
309,309
(10,752)
2020
$
41,413
41,413
–
(134,161)
(172,658)
(2,439,911)
(1,908,899)
(206,259)
(75,895)
Share based payments expense
8.1
(2,267,157)
(2,502,918)
Total expenses
Loss from continuing operations
Finance income
Finance costs
Net finance income
Loss before income tax
Income tax expense
Loss after income tax
(5,058,240)
(4,660,370)
(4,748,931)
(4,618,957)
8,886
(5,861)
3,025
44,736
(4,371)
40,364
(4,745,906)
(4,578,593)
1.2
–
–
(4,745,906)
(4,578,593)
Loss from discontinued operations net of tax
–
–
Net loss for the year
Other comprehensive income
(4,745,906)
(4,578,593)
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences for foreign operations
99,329
301,869
Other comprehensive income for the year, net of income tax
99,329
301,869
Total comprehensive loss for the year
(4,646,577)
(4,276,724)
50
Loss attributable to
Owners of the Company
Total Comprehensive Loss attributable to:
Owners of the Company
Loss per share and for loss attributable to the ordinary equity
holders of the company:
Diluted loss per share for loss attributable to the ordinary equity
holders of the company:
1.3
1.3
Note
2021
$
2020
$
(4,745,906)
(4,578,593)
(4,745,906)
(4,578,593)
(4,646,577)
(4,276,724)
(4,646,577)
(4,276,724)
(0.16) cents
(0.23) cents
(0.16) cents
(0.23) cents
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes
51
Vital Metals | Annual Report 2021 Consolidated Statement of Financial Position
as at 30 June 2021
Current Assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total Current Assets
Non-Current Assets
Note
2.1
5.1
2021
$
2020
$
34,906,990
1,756,773
1,306,814
–
391,116
56,000
36,213,804
2,203,889
Property, plant and equipment
3.1
3,162,089
1,527,769
Right of use asset
Exploration and evaluation expenditure
Mine under development
Total Non-Current Assets
Total Assets
Current Liabilities
167,829
91,928
3.2
3.3
13,291,395
12,467,416
12,938,011
–
29,559,324
14,087,113
65,773,128
16,291,002
Trade and other payables
2.2
2,280,163
446,947
Financial liabilities
Provisions
Total Current Liabilities
Non-Current Liabilities
Financial liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
65,991
344,925
80,425
6,130
2,691,079
533,502
98,011
98,011
13,975
13,975
2,789,090
547,477
62,984,038
15,743,525
4.1
4.2
107,265,582
57,645,649
7,568,463
5,201,977
(51,850,007)
(47,104,101)
62,984,038
15,743,525
The above Consolidated Statement of Financial Position should be read in conjunction with the
accompanying notes.
52
Consolidated Statement of Changes in Equity
for the Year Ended 30 June 2021
Contributed
Equity
$
Share-based
Payment
Reserve
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
$
Balance at 1 July 2020
57,645,649
4,890,659
311,318
(47,104,101)
15,743,525
Loss for year
Transferred to accumulated losses
Other comprehensive income
Exchange differences on translation of
foreign operation
Total other comprehensive income
Total comprehensive loss for the year
Transactions with owners in their
capacity of owners
–
–
–
–
–
–
Contributions of equity, net of transaction
costs
49,619,933
–
–
–
–
–
–
–
Share based payments
–
2,267,157
–
–
–
99,329
99,329
(4,745,906)
(4,745,906)
–
–
(4,745,906)
(4,745,906)
–
–
99,329
99,329
99,329
(4,745,906)
(4,646,577)
–
–
–
–
49,619,933
2,267,157
Balance at 30 June 2021
107,265,582
7,157,816
410,647
(51,850,007)
62,984,038
The above Consolidated Statement of Changes in Equity should be read in conjunction with the
accompanying notes.
53
Vital Metals | Annual Report 2021 Consolidated Statement of Changes in Equity
for the Year Ended 30 June 2021
Contributed
Equity
$
Share-based
Payment
Reserve
$
Convertible
Note
Reserve
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
$
Balance at 1 July 2019
52,845,649
2,387,741
Loss for year
Transferred to accumulated losses
Other comprehensive income
Disposal of reserves from
discontinued operations
Exchange differences on
translation of foreign operation
Total other comprehensive
income
Total comprehensive loss
for the year
Transactions with owners in
their capacity of owners
–
–
–
–
–
–
–
Contributions of equity, net of
transaction costs
4,800,000
–
–
–
–
–
–
–
–
Share based payments
–
2,502,918
Balance at 30 June 2020
57,645,649
4,890,659
–
–
–
–
–
–
–
–
–
–
–
9,449
(42,525,508)
12,717,331
–
–
–
–
301,869
301,869
(4,578,593)
(4,578,593)
–
–
(4,578,593)
(4,578,593)
–
–
–
301,869
301,869
301,869
(4,578,593)
(4,276,724)
–
–
–
–
4,800,000
2,502,918
311,318
(47,104,101)
15,743,525
The above Consolidated Statement of Changes in Equity should be read in conjunction with the
accompanying notes.
54
Consolidated Statement of Cash Flows
for the Year Ended 30 June 2021
Cash Flow From Operating Activities
Payments for exploration and evaluation costs
Payments to suppliers and employees
Government incentive received
Interest received
Interest paid
Note
2021
$
2020
$
(134,161)
(172,658)
(2,373,531)
(1,902,708)
309,309
8,886
(5,861)
41,413
44,736
(4,371)
Net cash outflow in operating activities
2.1
(2,195,358)
(1,993,588)
Cash Flow From Investing Activities
Loan to Cheetah Resources Pty Ltd prior to acquisition
–
(3,953,428)
Payments for exploration expenditure
Payments for mine under development
Payments for property, plant and equipment
Cash acquired on acquisition of Cheetah Resources Pty Ltd
Payments to acquire exploration and evaluation asset
Payments for rent bond
Proceeds from sale of shares
Payments for security deposit on permits
(6,523,613)
(2,490,098)
(5,632,054)
–
(1,768,730)
(1,510,976)
–
–
93,859
(899,483)
(292,005)
(43,700)
45,249
–
–
(95,680)
Net cash outflow in investing activities
(14,171,153)
(8,899,506)
Cash Flow From Financing Activities
Proceeds from share issues
Options exercised
Cost of share capital issued
Repayment of lease liability
51,000,000
1,605,000
(2,985,067)
–
–
–
(103,205)
(55,008)
Net cash from/(used in) financing activities
49,516,728
(55,008)
Net increase/(decrease) in cash held
Cash at beginning of the year
Foreign exchange variances on cash
33,150,217
(10,948,102)
1,756,773
12,708,796
–
(3,921)
Cash at end of the year
2.1
34,906,990
1,756,773
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
55
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
About This Report
The principal accounting policies adopted in the
preparation of these financial statements are set out
below. These policies have been consistently applied
to all the years presented, unless otherwise stated.
The financial statements are for the consolidated
entity consisting of Vital Metals Limited and its
subsidiaries. The financial statements are presented
in Australian dollars, which is also the parent
entity’s functional currency. Vital Metals Limited
is a company limited by shares, domiciled and
incorporated in Australia. The financial statements
were authorised for issue by the directors on 30
September 2021. The Directors have the power to
amend and reissue the financial statements.
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 and
the Corporations Act 2001. Vital Metals Limited is
a for-profit entity for the purpose of preparing the
financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Vital
Metals Limited Group also comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
(ii) New accounting standards and interpretations
New, revised or amended Accounting Standards and
Interpretations adopted by the Group
The Group has adopted all of the new, revised or
amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards
Board (“AASB”) that are mandatory for the current
reporting period. The adoption of these Accounting
Standards and Interpretations did not have any
significant impact on the financial performance or
position of the Group during the financial year.
(iii) Early adoption of standards
The Group has not elected to apply any
pronouncements before their operative date in the
financial reporting period beginning 1 July 2020.
(iv) New and amended standards not yet adopted
by the Group
Certain new accounting standards and
interpretations have been published that are not
mandatory for the 30 June 2020 reporting period.
The directors have not early adopted any of these
new amended standards and interpretations.
The directors are in the process of assessing the
impact of the applications of the standard and its
amendment to the extent relevant to the financial
statement of the Group.
(v) Historical cost convention
These financial statements have been prepared
under the historical cost convention.
Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of Vital
Metals Limited (“Company” or “parent entity”) as at
30 June 2021 and the results of all subsidiaries for the
year then ended. Vital Metals Ltd and its subsidiaries
together are referred to in these financial statements
as the Group or the consolidated entity.
Subsidiaries are all entities (including special purpose
entities) over which the Group has control. The Group
controls an entity when it is exposed to, or has the
right 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.
56
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
The acquisition method of accounting is used to
account for business combinations by the Group.
Intercompany transactions, balances and
unrealised gains on transactions between
Group companies 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.
Impairment of assets
Assets, except for deferred tax 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.
The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets
are grouped at the lowest levels for which there
are separately identifiable cash inflows which are
largely independent of the cash inflows from other
assets or groups of assets (cash-generating units).
Non-financial assets that suffered an impairment
are reviewed for possible reversal of the impairment
at each reporting date.
Financial instruments
Financial assets and financial liabilities are
recognised in the Group’s statement of financial
position when the Group becomes a party to the
contractual provisions of the instrument.
Financial instruments (except for trade receivables)
are initially measured at fair value plus transaction
costs, except where the instrument is classified
“at fair value through profit or loss”, in which case
transaction costs are expensed to profit or loss
immediately.
Classification and subsequent measurement
Financial assets
Financial assets are subsequently measured at:
• amortised cost;
•
fair value through other comprehensive income;
or
•
fair value through profit or loss.
A financial asset that meets the following conditions
is subsequently measured at amortised cost:
•
•
the financial asset is managed solely to collect
contractual cash flows; and
the contractual terms within the financial asset
give rise to cash flows that are solely payments
of principal and interest on the principal amount
outstanding on specified dates.
A financial asset that meets the following conditions
is subsequently measured at fair value through other
comprehensive income:
•
•
the contractual terms within the financial asset
give rise to cash flows that are solely payments
of principal and interest on the principal amount
outstanding on specified dates; and
the business model for managing the financial
assets comprises both contractual cash flows
collection and the selling of the financial asset.
By default, all other financial assets that do not meet
the measurement conditions of amortised cost and
fair value through other comprehensive income are
subsequently measured at fair value through profit
or loss.
The initial designation of the financial instruments to
measure at fair value through profit or loss is a one-
time option on initial classification and is irrevocable
until the financial asset is derecognised.
57
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Financial liabilities
Financial liabilities are subsequently measured at:
All of the following criteria need to be satisfied for
derecognition of financial asset:
• amortised cost; or
•
fair value through profit or loss.
A financial liability is measured at fair value through
profit and loss if the financial liability is:
• a contingent consideration of an acquirer in a
business combination to which AASB 3: Business
Combinations applies;
• held for trading; or
•
initially designated as at fair value through profit
or loss.
All other financial liabilities are subsequently
measured at amortised cost using the effective
interest method.
Derecognition
Derecognition refers to the removal of a previously
recognised financial asset or financial liability from
the statement of financial position.
Derecognition of financial assets
A financial asset is derecognised when the holder's
contractual rights to its cash flows expires, or
the asset is transferred in such a way that all the
risks and rewards of ownership are substantially
transferred.
•
the right to receive cash flows from the asset has
expired or been transferred;
• all risk and rewards of ownership of the asset have
been substantially transferred; and
•
the Group no longer controls the asset (i.e. the
Group has no practical ability to make a unilateral
decision to sell the asset to a third party).
On derecognition of a financial asset measured at
amortised cost, the difference between the asset's
carrying amount and the sum of the consideration
received and receivable is recognised in profit or loss.
On derecognition of a debt instrument classified as
at fair value through other comprehensive income,
the cumulative gain or loss previously accumulated
in the investment revaluation reserve is reclassified
to profit or loss.
On derecognition of an investment in equity which
was elected to be classified under fair value through
other comprehensive income, the cumulative gain
or loss previously accumulated in the investment
revaluation reserve is not reclassified to profit or loss,
but is transferred to retained earnings.
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (i.e.
when the obligation in the contract is discharged,
cancelled or expires). An exchange of an existing
financial liability for a new one with substantially
modified terms, or a substantial modification
to the terms of a financial liability is treated as
an extinguishment of the existing liability and
recognition of a new financial liability.
58
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
The difference between the carrying amount of the
financial liability derecognised and the consideration
paid and payable, including any non-cash assets
transferred or liabilities assumed, is recognised in
profit or loss.
In measuring the expected credit loss, a provision
matrix for trade receivables was used taking into
consideration various data to get to an expected
credit loss (i.e. diversity of customer base,
appropriate groups of historical loss experience, etc).
Recognition of expected credit losses in financial
statements
At each reporting date, the Group recognises the
movement in the loss allowance as an impairment
gain or loss in the statement of profit or loss and
other comprehensive income.
The carrying amount of financial assets measured at
amortised cost includes the loss allowance relating
to that asset.
Assets measured at fair value through other
comprehensive income are recognised at fair
value, with changes in fair value recognised in
other comprehensive income. Amounts in relation
to change in credit risk are transferred from other
comprehensive income to profit or loss at every
reporting period.
For financial assets that are unrecognised (e.g. loan
commitments yet to be drawn, financial guarantees),
a provision for loss allowance is created in the
statement of financial position to recognise the loss
allowance.
Impairment
The Group recognises a loss allowance for expected
credit losses on financial assets that are measured
at amortised cost or fair value through other
comprehensive income.
Loss allowance is not recognised for:
• financial assets measured at fair value through
profit or loss;
• or equity instruments measured at fair value
through other comprehensive income.
The Group uses the simplified approach to
impairment, as applicable under AASB 9: Financial
Instruments:
Simplified approach
The simplified approach does not require tracking of
changes in credit risk at every reporting period, but
instead requires the recognition of lifetime expected
credit loss at all times. This approach is applicable to:
•
trade receivables or contract assets that result
from transactions within the scope of AASB 15:
Revenue from Contracts with Customers and
which do not contain a significant financing
component; and
•
lease receivables.
59
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Share based payments
(ii) Share-based payments
The Group provides benefits to employees (including
directors) of the Group in the form of share-based
payment transactions, whereby employees render
services in exchange for shares or rights over shares
(‘equity-settled transactions’) - refer to Note 8.1.
The cost of these equity-settled transactions with
employees is measured by reference to the fair value
at the date at which they are granted. The fair value
is determined by an internal valuation using an
appropriate option pricing model.
The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity,
over the period in which the performance conditions
are fulfilled, ending on the date on which the
relevant employees become fully entitled to the
award (‘vesting date’).
The cumulative expense recognised for equity-
settled transactions at each reporting date until
vesting date reflects (i) the extent to which the
vesting period has expired and (ii) the number of
options that, in the opinion of the directors of the
Group, will ultimately vest. This opinion is formed
based on the best available information at reporting
date. No adjustment is made for the likelihood
of market performance conditions being met as
the effect of these conditions is included in the
determination of fair value at grant date.
No expense is recognised for awards that do not
ultimately vest, except for awards where vesting is
conditional upon a market condition.
Where an equity-settled award is cancelled, it is
treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is
recognised immediately. However, if a new award is
substituted for the cancelled award, and designated
as a replacement award on the date that it is
granted, the cancelled and new award are treated as
if they were a modification of the original award.
Key estimates and judgements
Impact of 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 company based on
known information. 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 company unfavourably as at the reporting
date or subsequently as a result of the Coronavirus
(COVID-19) pandemic.
Other key estimates and judgements
Depreciation rates
(Note 3.1)
Deferred exploration and evaluation costs
(Note 3.2)
Production start date
Impairment of assets
Share based payments
(Note 3.3)
(Note 3.3)
(Note 8.1)
60
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Contents of the Notes to the Consolidated Financial Statements
1.
Financial Performance
1.1. Income And Expenses
1.2. Income Tax
1.3. Loss Per Share
1.4. Segment Information
2. Working Capital Provisions
2.1. Cash and Cash Equivalents
2.2. Trade and Other Payables
3.
Invested Capital
3.1. Property, Plant and Equipment
3.2. Exploration and Evaluation
3.3. Mine Under Development
4.
Capital Structure and Financing Activities
4.1. Contributed Equity
4.2. Reserves
4.3. Dividends
Risk
5.1. Financial Risk Management
Group Structure
6.1. Subsidiaries
Unrecognised Items
7.1. Commitments
7.2. Contingencies
5.
6.
7.
7.3. Events Occurring after the Reporting Period
8.
Other Information
8.1. Share-Based Payments
8.2. Related Party Transactions
8.3. Parent Entity Financial Information
8.4. Remuneration Of Auditiors
8.5. Other Accounting Policies
62
62
62
66
67
68
68
69
70
70
72
76
78
78
81
82
83
83
89
89
90
90
90
91
93
93
97
98
99
99
61
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
1. Financial Performance
1.1 Income and Expenses
The following significant Income and expense items not
separately highlighted in the Statement of Profit or Loss and Other
Comprehensive Income are relevant in explaining the financial
performance:
Income
Government incentives
Personnel expenses
Wages and salaries
Annual leave
Superannuation
Total personnel expenses
1.2 Income Tax
(a) The major components of income tax are:
Statement of Profit or Loss and Other Comprehensive Income
Current income tax
Current income tax benefit
Deferred income tax
Relating to origination and reversal of temporary differences
Unused tax losses not recognised as deferred tax asset
Tax rebate from R&D activities
Income tax benefit reported in the Statement of Profit or Loss and
Other Comprehensive Income
The aggregate amount of income tax attributable to the financial
period differs from the amount calculated on the operating loss. The
differences are:
2021
$
2020
$
309,309
41,413
980,987
1,096,639
23,589
31,359
6,130
28,466
1,035,935
1,131,235
2021
$
2020
$
–
–
–
–
–
–
–
–
–
–
Accounting loss before taxation
(4,745,906)
(4,578,593)
Prima facie tax benefit at the Australian tax rate of 30% (2020: 30%)
(1,423,772)
(1,373,578)
62
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Add tax effect of
Non-deductible items
Foreign operations not brought to account
Less tax effect of:
Capital raising costs
Non-assessable government payments
2021
$
2020
$
720,395
141,546
(46,418)
(17,576)
750,875
9,187
(41,871)
–
Tax losses not brought to account
625,825
655,386
Income tax expense
(b) Deferred income tax: Statement of Financial Position
Deferred income tax at 30 June relates to the following
Deferred tax liabilities
Property, plant and equipment – depreciation
Accrued income
Exploration expenses
Right of use asset
Set-off against tax assets
Deferred tax assets
–
–
–
–
3,937
(3,937)
–
–
–
–
663,317
–
(663,317)
–
Tax value of losses carried forward
10,737,632
8,571,535
Set-off of deferred tax liability
Accrued expenses
Asset impairments
Employee benefits
Other prepayments/capital expenditure
Right of use liability
(3,937)
(663,317)
–
1,839
2,404,020
7,559
23,170
4,193
–
–
59,903
–
Non-recognition of deferred tax assets
(13,172,637)
(7,969,960)
–
–
63
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
(c) Tax losses
At 30 June 2021, the Consolidated Entity has $10,737,632 (2020: $8,571,785) of taxable losses that are
available for offset against future taxable profits of the consolidated entity, subject to the loss recoupment
requirements in the Income Tax Assessment Act 1997.
No deferred tax asset has been recognised in the Statement of Financial Position in respect of the amount of
these losses, as it is not presently probable future taxable profits will be available against which the Company
can utilise the benefit.
Unrecognised deferred tax assets
Tax losses – revenue (at 30%)
(d) Tax consolidation legislation
2021
$
2020
$
10,737,632
8,571,535
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated Group
with effect from 3 October 2005 and are therefore taxed as a single entity from that date. The head entity
within the tax-consolidated group is Vital Metals Limited.
The controlled entities have been fully compensated for all deferred tax assets and liabilities transferred to
Vital Metals Limited on the date of forming a tax consolidated group. The entities have also entered into a
tax sharing and compensation agreement where the wholly owned entities reimburse Vital Metals Limited
for any current income tax payable or receivable by Vital Metals Limited in respect of their activities. The
group has decided to use the “separate taxpayer within group” approach in accordance with UIG 1052 to
account for the current and deferred tax amounts amongst the entities within the consolidated group.
(e) Corporate Tax Rate
In 2018, the government enacted a change in the eligibility to access the lower income tax rate for small
business entities of 26%. Vital Metals Ltd does not satisfy these requirements and is therefore subject to
the corporate tax rate of 30%.
64
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Accounting policy
Current tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted
at the end of the reporting period in the countries where the Company’s subsidiaries operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, the deferred income tax is not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the reporting date and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying
amount and tax bases of investments in controlled entities where the parent entity is able to control the
timing of the reversal of the temporary differences and it is probable that the differences will not reverse
in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax for the year
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
65
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
1.3. Loss Per Share
Basic loss per share – cents per share
Diluted loss per share – cents per share
2021
$
(0.16)
(0.16)
2020
$
(0.23)
(0.23)
The following reflects the loss and share data used in the calculations of
basic loss per share and diluted loss per share:
Net loss
(4,745,906)
(4,578,593)
Weighted average number of shares outstanding
Weighted average number of ordinary shares used in calculating basic
loss per share:
2,891,485,852
2,019,871,563
Weighted average number of ordinary shares used in calculating
diluted loss per share:
2,891,485,852
2,019,871,563
Classification of securities
Diluted loss per share is calculated after classifying all options on issue and all ownership-based
remuneration scheme shares remaining uncovered at 30 June 2021 that are dilutive as potential
ordinary shares. As at 30 June 2021, the company has on issue a total of 443,083,334 options over
unissued capital. Diluted loss per share has been calculated excluding the dilutionary effect of the
options as the group made a loss for the year and the impact would be to reduce the loss per share.
Conversions, calls, subscriptions or issues after 30 June 2021
There have been no other changes to securities on issue since 30 June 2021.
Accounting Policy
Earnings per share
Basic earnings per share is determined by dividing the profit from ordinary activities after related
income tax expense and after preference dividends by the weighted average number of ordinary
shares outstanding during the 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.
66
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
1.4. Segment Information
The consolidated entity has three reportable segments being mineral exploration and prospecting for
minerals in Australia, Canada, Burkina Faso and Tanzania.
The following is an analysis of the Group’s revenue and results by reportable segment:
Australia
Canada
Burkina Faso
Tanzania Consolidated Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
$
$
$
Segment income
58,587
41,413
250,722
Interest revenue
8,886
44,736
–
Total revenue
67,473
86,149
250,722
$
–
–
–
Segment loss
(3,819,194)
(3,459,701)
(792,551)
(1,088,269)
Net loss before tax
(3,819,194)
(3,459,701)
(792,551)
(1,088,269)
$
–
–
–
–
–
$
–
–
–
$
–
–
–
$
–
–
–
$
$
309,309
41,413
8,886
44,736
318,194
86,149
(30,623)
(134,161)
(169,158) (4,745,906) (4,578,593)
(30,623)
(134,161)
(169,158) (4,745,906) (4,578,593)
Segment assets
37,633,400
1,704,737 28,104,179 14,550,716
35,549
35,549
Segment liabilities
101,977
350,100
2,730,051
240,315
(42,938)
(42,938)
–
–
– 65,773,128 16,291,002
– 2,789,090
547,477
Accounting Policy
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the full Board of Directors.
The Group has identified four reportable segments being activities undertaken in Australia, Burkina
Faso, Tanzania and Canada. These segments include the activities associated with the determination and
assessment of the existence of commercially economic reserves, from the Group’s mineral assets in these
geographic locations.
Segment performance is evaluated based on the operating profit or loss or cash flows and is measured in
accordance with the Group’s accounting policies.
67
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
2. Working Capital Provisions
2.1. Cash and Cash Equivalents
Cash at bank
Cash held as security deposits
2021
$
2020
$
34,020,139
1,756,773
886,851
–
Cash and cash equivalents as shown in the statement of financial
position and the statement of cash flows
34,906,990
1,756,773
Reconciliation of Loss after Income Tax to net cash flows from
operating activities:
Loss after income tax
(4,745,906)
(4,578,593)
Non-cash flows from continuing operations
Depreciation
Share based payments
Other Adjustments
206,259
75,895
2,267,157
2,502,917
(Profit)/ Loss on sale of non-current assets
10,752
–
Changes in assets and liabilities
(Increase) / decrease in receivables
Increase / (decrease) in payables
Increase / (decrease) in provisions
153,035
(110,588)
23,933
(57,590)
57,653
6,130
Net cash (used in) operating activities
(2,195,358)
(1,993,588)
Accounting Policy
For the purpose of the statement of cash flows, cash includes cash on hand and in banks and at call
deposits with banks or financial institutions.
Non-Cash Investing and Financing Activities
During the 2020 financial year, the Group acquired Cheetah Resources Pty Ltd by the issue of Ordinary
Shares and Performance Shares in the Company. This includes the initial recognition of the Right to Use
Asset. Full details of the acquisition of Cheetah Resources Pty Ltd are set out in Note 3.2.
68
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
2.2. Trade and Other Payables
Current
Trade creditors and other payables
Accrued expenses
2021
$
2020
$
1,601,178
678,985
329,303
117,644
2,280,163
446,947
Carrying value is considered to approximate fair value. Refer to Note 5.1 for the Group’s interest rate and
liquidity risk.
Accounting Policy
Trade creditors and other payables are recognised when the consolidated entity becomes obliged to
make future payments resulting from the purchase of goods and services.
69
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
3. Invested Capital
3.1. Property, Plant and Equipment
Software
At cost
Accumulated depreciation
Plant and equipment
At cost
Accumulated Depreciation
Motor vehicles
At cost
Accumulated depreciation
Fixtures and Fittings
At cost
Accumulated depreciation
Capital Works in Progress
At cost
2021
$
2020
$
115,182
(52,321)
62,861
2,845,506
(29,972)
2,815,534
76,730
(21,519)
55,211
257,374
(28,891)
228,483
78,482
(20,929)
57,553
32,496
(4,814)
27,682
37,089
(2,003)
35,086
–
–
–
–
1,407,448
Total property, plant & equipment – written down value
3,162,089
1,527,769
Capital Works in Progress represents capital items (ultimately plant and equipment) that has been ordered
and partly paid for at the Reporting Date, but where the asset has not been received and is still being
constructed at the Reporting Date.
The remaining expenditure commitment relating to the Capital Works in Progress is disclosed in Note 7.1.
70
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Movements in carrying amounts
2021
Software
$
Plant and
Equipment
$
Motor
Vehicles
$
Fixtures
and
Fittings
$
Capital
Works in
Progress
$
Total
Opening net book value
57,553
27,682
35,086
–
1,407,448
1,527,769
Additions
Transfers
36,700
1,405,562
39,641
257,374
-
1,739,277
–
1,407,448
–
–
(1,407,448)
-
Depreciation Expense
(31,392)
(25,158)
(19,516)
(28,891)
Balance at 30 June 2021
62,861
2,815,534
55,211
228,483
2020
Opening net book value
–
–
–
Additions
78,482
32,496
37,089
Depreciation Expense
(20,929)
(4,814)
(2,003)
Balance at 30 June 2020
57,553
27,682
35,086
–
–
–
–
–
–
–
(104,957)
3,162,089
–
1,407,448
1,555,514
–
(27,746)
1,407,448
1,527,769
Key estimates and judgements (PPE)
The estimations of useful lives, residual values and depreciation methods require management judgements
and are regularly reviewed. If they need to be modified, the depreciation expense is accounted for
prospectively from the date of the assessment until the end of the revised useful life (for both the current and
future years).
Accounting Policy
Each class of property, including software, plant and equipment and motor vehicles is carried at cost less,
where applicable, any accumulated depreciation and impairment. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Capital Works in Progress are measured at cost until the capital works are completed and underlying
equipment is delivered and installed for use. At the Reporting Date, management will consider there is any
circumstance that has arisen that would require any adjustment to the carrying value of the capital works in
progress.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are
included in the statement of profit or loss and other comprehensive income.
71
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Depreciation
Depreciation is provided on a straight-line basis on all property, plant and equipment. This is done over the
useful lives of the asset to the Company commencing from the time the asset is held ready for use.
The depreciation periods used for each class of depreciable assets are:
Class of fixed asset
Depreciation period
Software
Plant and equipment
Motor vehicles
2-3 years
2-10 years
3 years
3.2. Exploration and Evaluation
Costs carried forward in respect of areas of interest in the
exploration and evaluation phases:
Opening net book amount
12,467,416
–
Acquisition of Cheetah Resources (refer below)
–
9,573,102
2021
$
2020
$
Exploration expenditure
Exploration expenditure – written off
Transferred to mine under development
Closing net book amount
The closing balances relate to the following areas of interest
Nechalacho Project, Canada
6,875,674
3,066,972
(134,161)
(172,658)
(5,917,534)
–
13,291,395
12,467,416
13,291,395
12,467,416
13,291,395
12,467,416
Acquisition of Cheetah Resources
On the 16 October 2019, shareholders approved the acquisition of Cheetah Resources Pty Ltd, which
holds the Nechalacho Project. Exploration and evaluation expenditure in relation to areas of interest in
Canada are capitalised.
72
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
The acquisition of Cheetah Resources Pty Ltd occurred on 16 October 2019, which was the day of approval.
The acquisition has been treated as an asset acquisition via the issue of equity under AASB 2 Share Based
Payments (“AASB 2”). The below outlines the consideration and identifiable assets and liabilities acquired at
the date of acquisition:
Consideration:
400,000,000 Ordinary Shares
Total Consideration
Assets and Liabilities acquired
Cash
Trade and other receivables
Financial asset
Exploration Asset
Property, plant and equipment
Creditors
Loan
Other Liabilities
Closing Balance
$
4,800,000
4,800,000
93,859
81,529
55,995
9,573,102
6,517
(173,913)
(3,937,606)
(899,483)
4,800,000
Included in the consideration paid to the vendors are fully paid ordinary and performance shares issued
to an entity related to the Managing Director, Mr. Geoff Atkins:
• 31,149,849 Fully Paid Ordinary Shares
• 31,149,849 Performance Shares (Tranche 1)
• 31,149,849 Performance Shares (Tranche 2)
73
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Key estimates and judgements
Asset acquisition
Accounting Policy
Asset acquisition
When an asset acquisition does not constitute a
business combination, the assets and liabilities
are assigned a carrying amount based on their
relative fair values in an asset purchase transaction
and no deferred tax will arise in relation to the
acquired assets and assumed liabilities as the initial
recognition exemption for deferred tax under AASB
112 applies. No goodwill will arise on the acquisition
and transaction costs of the acquisition will be
included in the capitalised cost of the asset. Assets
acquired during the period were evaluation assets.
Deferred exploration and evaluation costs
Exploration and evaluation costs related to areas of
interest are carried forward to the extent that:
• The rights to tenure of the areas of interest are
current and the Group controls the area of interest
in which the expenditure has been incurred, and
• Such costs are expected to be recouped through
successful development and exploitation of the
area of interest, or alternatively by its sale, or
• Exploration and evaluation activities in the area
of interest have not at the reporting date reached
a stage which permits a reasonable assessment
of the existence or otherwise of economically
recoverable reserves, and active and significant
operations in, or in relation to, the area of interest
are continuing.
The Group has determined that the acquisition
of Cheetah Resources is deemed to be an asset
acquisition not a business combination. In assessing
the requirements of AASB 3 Business Combinations,
the Group has determined that the assets acquired
do not constitute a business. The assets acquired
consists of mineral exploration tenements. When
an asset acquisition does not constitute a business
combination, the assets and liabilities are assigned
a carrying amount based on their relative fair values
in the purchase transaction and no deferred tax will
arise in relation to the acquired asset as the initial
recognition exemption for deferred tax under AASB
112 applies. No goodwill will arise on the acquisition
and transaction costs of the acquisition.
The Group also assessed the probability of the
conditions being met for the conversion of the
Tranche A and Tranche B Performance shares as 0%
at the date of acquisition.
Exploration and evaluation expenditure
The recoverability of the carrying amount of the
exploration and evaluation assets is dependent
on the successful development and commercial
exploitation, or alternatively, sale of the respective
area of interest.
The Group reviews the carrying value of exploration
and evaluation expenditure on a regular basis to
determine whether economic quantities of reserves
have been found or whether further exploration
and evaluation work is underway or planned to
support continued carry forward of capitalised
costs. This assessment requires judgement as to the
status of the individual projects and their estimated
recoverable amount.
74
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Exploration and evaluation costs include the
acquisition of rights to explore; topographical,
geological, geochemical and geophysical studies;
exploratory drilling, trenching and sampling; and
associated activities relating to the evaluation of
the technical feasibility and commercial viability
of extracting the mineral resource. General
and administrative costs are included in the
measurement of exploration and evaluation costs
where they are directly related to operational
activities in a particular area of interest.
The above accounting policy requires certain
estimates and assumptions on future events
and circumstances, in particular whether an
economically viable extraction operation can be
established. These estimates and assumptions
may change as new information becomes available
and could have a material impact on the carrying
value of deferred exploration and evaluation costs.
Exploration and evaluation assets are assessed and
reviewed at each reporting date for impairment,
where facts and circumstances suggest that the
carrying amount of the assets may exceed its
recoverable amount. If the recoverable amount
is less than the carrying amount, the asset is
written down to its recoverable amount and an
impairment loss recognised.
At each reporting date the Group undertakes
an assessment of the carrying amount of its
exploration and evaluation assets. As a result of
this review, exploration expenditure of $134,161
(2020: $172,658) on the Wigu Hill Project was
written off and has been recognised in the
Statement of Profit or Loss as the project does not
have the rights to tenure.
75
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
3.3. Mine Under Development
Mine under Development
Balance at the start of the year
Transferred from deferred exploration and evaluation costs
Additions
Balance at the end of the year
2021
$
2020
$
5,917,534
7,020,477
12,938,011
–
–
–
The Group commenced production with ore crushed at Nechalacho on 1 April 2021. It is expected that full
production rates at the North T zone are to be achieved in July 2021.
It is important to note, ore stockpiles are generally physically measured or estimated and valued at the lower
of cost and net realisable value however, the Group has determined that there was no material carrying
amount in one day of production.
Accounting Policy
Mine under development includes aggregate
expenditure in relation to mine construction,
mine development, exploration and evaluation
expenditure where a development decision has
been made and acquired mineral interests.
Expenditure incurred in constructing a mine by, or
on behalf of, the Group is accumulated separately
for each area of interest in which economically
recoverable reserves and resources have been
identified. This expenditure includes direct costs
of construction, drilling costs and removal of
overburden to gain access to the ore, borrowing
costs capitalised during construction and an
appropriate allocation of attributable overheads.
allocation of overheads and where applicable
borrowing costs capitalised during development.
Once mining of the area of interest can commence,
the aggregated capitalised costs are classified under
non-current assets as mines in production or an
appropriate class of property, plant and equipment.
The Group undertakes regular impairment reviews
incorporating an assessment of recoverability of
cash generating assets. Cash generating assets
relate to specific areas of interest in the Group’s
mine property assets. The recoverable value of
specific areas of interest are assessed by value in
use calculations determined with reference to the
projected net cash flows estimated under the Life of
Mine Plan. As at 30 June 2021, the Group determined
that there were no impairment indicators.
Mines under development are accumulated
separately for each area of interest in which
economically recoverable reserves have been
identified and a decision to develop has occurred.
This expenditure includes all capitalised exploration
and evaluation expenditure in respect of the area of
interest, direct costs of development, an appropriate
Significant judgements and estimates
Production start date
The Group assesses the stage of each mine under
development to determine when a mine moves
into the production phase, this being when the
76
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
mine is substantially complete and ready for its
intended use. The Group considers various relevant
criteria to assess when the production phase is
considered to have commenced. At this point, all
related amounts are reclassified from ‘Mines under
development’ to ‘Mines in production’. Some of the
criteria used to identify the production start date
include, but are not limited to:
1. Level of capital expenditure incurred compared
with the original development cost estimate;
2. Completion of a reasonable period of testing of
the mine plant and equipment;
3. Ability to produce metal in saleable form (within
specifications);
4. Ability to sustain ongoing production of metal;
and
5. Positive cash flow position from operations.
When a mine development project moves into
the production phase, the capitalisation of certain
mine development costs and pre-production
revenues cease and costs are either regarded as
forming part of the cost of inventory or expensed,
except for costs that qualify for capitalisation
relating to mining asset additions or improvements
or mineable reserve development. It is also at this
point that amortisation commences. At 30 June
2021, the North T Zone is not considered to be at
this stage and therefore, remains as a development
asset with no amortisation charge.
Recoverability of mine under development
The Group undertakes an impairment review to
determine whether any indicators of impairment
are present. Where indicators of impairment exist,
an estimate of the recoverable amount of the Cash
Generating Unit (CGU) is made. An impairment loss
is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets
are grouped at the lowest levels for which they
are separately identifiable cash flows. Where
an impairment loss subsequently reverses,
the carrying amount of the asset, other than
goodwill, is increased to the revised estimate of
its recoverable amount, but only to the extent the
increased carrying amount does not exceed the
carrying amount that would have been determined
had no impairment loss been recognised in
prior years. A reversal of an impairment loss is
recognised immediately in profit or loss.
Prior to transition to mine development, the Group
assesses for impairment to confirm recoverability
of costs capitalised during the exploration and
evaluation phase.
An impairment indicator assessment was
undertaken for all operations at reporting date and
it was concluded that no indicators were identified,
which would give rise to impairment.
Assessments of the recoverable amounts require
the use of estimates and assumptions such as
reserves, resources, mine lives, discount rates,
exchange rates, commodity prices, grade of
ore mined, recovery percentage, operating
performance, costs and capital estimates.
Significant judgements and estimates
At each reporting date, the Group undertakes an
assessment of these assets and considers whether
there are any external impairment indicators
resulting from changes in metal prices, foreign
exchange, forecast operating costs and discounted
rate.
77
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
4. Capital Structure and Financing Activities
4.1. Contributed Equity
(a) Issued and paid up capital
Fully paid ordinary shares
2021
$
2020
$
107,265,582
57,645,649
2021
Number
of shares
2020
Number
of shares
2021
$
2020
$
(b) Movements in shares on issue
Beginning of the year
2,142,611,289
1,742,611,288
57,645,649
52,845,649
Issued during the year
Issue of shares on capital raisings
1,061,538,462
Issue of shares on exercise of options
150,083,333
Issue of shares in conversion
of performance shares
800,000,000
–
–
–
Issue of shares on acquisition (i)
–
400,000,000
51,000,000
1,605,000
–
–
–
–
–
4,800,000
Transaction costs on capital raisings
–
–
(2,985,067)
–
End of the year
4,154,233,084 2,142,611,289
107,265,582
57,645,649
4,154,233,084
2,142,611,289
110,250,649
57,645,649
(i) Issue of shares on 22 October 2019 relating to the acquisition of Cheetah Resources Pty Ltd. Refer Note 3.2. These shares were issued
at a price of $0.012 per share.
78
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
(c) Movements in options on issue
Beginning of the financial year
Issued during the year
• Exercisable at 3 cents and expiring 24 December 2023*
• Exercisable at 2 cents and expiring 31 January 2024*
• Exercisable at 2.5 cents and expiring 31 January 2024*
• Exercisable at 3 cents and expiring 31 January 2024*
• Exercisable at 2 cents and expiring 22 October 2024
• Exercisable at 2.5 cents and expiring 22 October 2024
• Exercisable at 3 cents and expiring 22 October 2024
Number of options
2021
$
2020
$
472,166,667
163,598,492
5,000,000
20,000,000
20,000,000
20,000,000
–
–
–
–
–
–
–
90,000,000
90,000,000
90,000,000
• Exercisable at 2 cents and expiring 31 January 2025*
6,000,000
22,500,000
• Exercisable at 2.5 cents and expiring 31 January 2025*
6,000,000
22,500,000
• Exercisable at 3 cents and expiring 31 January 2025*
6,000,000
22,500,000
Exercised during the year
• Exercised at 2 cents and expiring 30 April 2021
• Exercised at 2.3 cents and expiring 30 April 2021
• Exercised at 1 cent and expiring 17 November 2021
• Exercised at 1.5 cents and expiring 19 July 2022
Expired/cancelled during the year
(50,000,000)
(7,500,000)
(18,750,000)
(16,333,333)
–
–
–
–
• Exercisable at 1.2 cents and expiring 24 November 2019
–
(28,931,825)
• Options expired 30 April 2021
End of the financial year
(19,500,000)
–
443,083,334
472,166,667
* Of the total 83,000,000 options issued during the period, 60,000,000 were issued to Director James Henderson and 18,000,000 were
issued to Mr Anthony Hadley.
79
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
(d) Terms and condition of contributed equity
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the
Company in proportion to the number of and amounts paid on the shares held. On a show of hands every
holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a
poll each share is entitled to one vote. Ordinary shares have no par value and the Company does not have a
limited amount of authorised capital.
(e) Capital risk management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future developments of the business. The Board’s focus has been to raise sufficient
funds through equity (via rights issues and placements) to fund exploration and evaluation activities. There
were no changes in the Group’s approach to capital management during the year. Neither the Company nor
any of its subsidiaries are subject to externally imposed capital requirements.
Management also monitor capital through the assessment of adequate working capital. The working capital
as at 30 June 2021 is shown below:
Current assets
Current liabilities
Working capital
Accounting Policy
Ordinary shares are classified as equity
2021
$
2020
$
36,213,804
2,203,889
(2,376,218)
(533,502)
33,837,586
1,670,387
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares
or options for the acquisition of a business are not included in the cost of acquisition as part of the purchase
consideration.
If the entity reacquires its own equity instruments, e.g. as the result of a share buyback, those instruments are
deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or
loss and the consideration paid including any directly attributable incremental costs (net of income taxes) is
recognised directly in equity.
80
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
4.2. Reserves
Share based payment reserve
Opening balance
Movement for the year
Closing balance
Foreign Currency Translation Reserve
Opening balance
Movement for the year
Closing balance
Total Reserves
(i) Share based payment reserve
2021
$
2020
$
4,890,659
2,387,741
2,267,157
2,502,918
7,157,816
4,890,659
311,318
99,329
410,647
9,449
301,869
311,318
7,568,463
5,201,977
The share-based payments reserve is used to recognise the fair value of options issued. Refer to Note
8.1 for details.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign
currency translation reserve, as described below. The reserve is recognised in profit or loss when the
net investment is disposed of.
Accounting Policy
(i) Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is Vital Metals
Limited’s functional and presentation.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end exchange rates of monetary
assets and liabilities, denominated in foreign currencies, are recognised in profit or loss.
81
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
(iii) Foreign operations
The assets and liabilities of foreign operations are translated to the functional currency as exchange rates
at the reporting date. The income and expenses of foreign operations are translated to Australian dollars
at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and presented in the
foreign currency translation reserve in equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign
entities are recognised in other comprehensive income. When the settlement of a monetary item
receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future,
foreign exchange gains and losses arising from such a monetary item are considered to form part of a net
investment in a foreign operation and are recognised in other comprehensive income, and are presented
in the translation reserve in equity. When a foreign operation is sold or any borrowings forming part of
the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as
part of the gain or loss on sale.
4.3. Dividends
No dividends were paid during the financial year. No recommendation for payment of dividends has
been made.
82
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
5. Risk
5.1. Financial Risk Management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and
interest rate 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.
Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for
all board members to be involved in this process. The Managing Director, with the assistance of senior
management as required, has responsibility for identifying, assessing, treating and monitoring risks and
reporting to the board on risk management.
(a) Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations.
Financial instruments other than receivables that potentially subject the Group to concentrations of
credit risk consist principally of cash deposits. The Group places its cash deposits with high credit quality
financial institutions, being in Australia one of the major Australian (big four) banks. Cash holdings in
other countries are not significant. The Group’s cash deposits are all on call or in term deposits and
attract a rate of interest at normal short-term money market rates.
The Group’s exposure to credit risk is low and limited to cash and cash equivalents and other receivables.
All cash and cash equivalents $34,906,990 as at 30 June 2021 (2020: $1,756,773) are held with financial
institutions that have a AAA credit rating (Standard & Poor’s).
The maximum exposures to credit risk are the amounts as shown in the Statement of Financial Position.
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a
lifetime expected loss allowance for all trade receivables. 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.
Trade and other receivables
Trade Debtors
Security and other deposits
Other
2021
$
2020
$
21,161
201,610
1,084,043
1,306,814
17,187
139,380
234,549
391,116
Cash at bank and short-term bank deposits
AAA rating
34,906,990
1,756,773
83
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
(b) Cash flow interest rate risk
The Group’s exposure to the risks of changes in market interest rates, foreign exchange rates, and equity
prices will affect the Consolidated Entity’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
The Group is exposed to fluctuations in foreign exchange rates of the Canadian Dollar in respect of its
operations in Canada and CFA Franc in relation to its activities in Burkina Faso. The group maintains
minimal working capital in Canada and Burkina Faso and only transfers cash funds as required, as such
the Consolidated Statement of Financial Position exposure at any point in time is not significant. Foreign
exchange risk will also arise from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency and net investments in foreign
operations.
The Group is also exposed to fluctuations in interest rates in relation to its cash deposits and commodity
prices in relation to the carrying value of its exploration and evaluation assets. The Group monitors all of the
above-mentioned risks and takes action as required.
The Group’s exposure to interest rate risk, and the effective weighted average interest rate for each class of
financial asset and financial liability is set out below:
Fixed Interest Rate Maturing
Weighted
Average
Effective
Interest Rate
Variable
Interest Rate
Within 1 Year
1-5 Years
Non-Interest
Bearing
Consolidated
Total
2021
$
2021
$
2021
$
2021
$
2021
$
2021
$
0.25
34,906,990
–
–
–
–
–
34,906,990
–
–
–
–
–
–
–
–
–
–
–
–
–
34,906,990
1,306,814
1,306,814
1,306,814
36,213,804
2,280,163
2,280,163
2,280,163
2,280,163
Financial assets
Cash at bank
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
84
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Fixed Interest Rate Maturing
Weighted
Average
Effective
Interest Rate
Variable
Interest Rate
Within 1 Year
1-5 Years
Non-Interest
Bearing
Consolidated
Total
2020
$
2020
$
2020
$
2020
$
2020
$
2020
$
Financial assets
Cash at bank
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
0.25
1,593,380
–
–
–
–
–
1,593,380
–
–
–
–
–
–
–
–
–
–
–
–
163,393
1,756,773
391,116
391,116
554,509
2,147,889
446,947
446,947
446,947
446,947
At 30 June 2021, if interest rates had changed by -/+ 25 basis points from the weighted average rate for the
period with all other variables held constant, post-tax loss for the Group would have been $78,365 higher/
lower (2020: -/+ 25 basis points, $3,983 higher/lower) as a result of lower/higher interest income from cash and
cash equivalents.
Sensitivity Analysis
At the reporting date, the variable interest profile of the Group’s interest-bearing financial instruments were:
Financial assets
0.25% (2020- 0.25%) increase
0.25% (2020- 0.25%) decrease
2021
$
2020
$
31,346,023
1,593,380
78,365
78,365
3,983
3,983
85
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
(c) Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring
sufficient cash and marketable securities are available to meet the current and future commitments of the
Group. Due to the nature of the Group’s activities, being mineral exploration, the Group has limited access to
credit facilities, with the primary source of funding being equity raisings. The Board of Directors constantly
monitor the state of equity markets in conjunction with the Group’s current and future funding requirements,
with a view to initiating appropriate capital raisings as required.
The financial liabilities of the Group are confined to trade and other payables as disclosed in the statement
of financial position. All trade and other payables are due within 12 months of the reporting date. All other
financial liabilities were fully repaid during the year.
The following are the contractual maturities of trade and other payables.
Group:
at 30 June
2021
Less than
6 months
$
6 – 12
months
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Total
contractual
cash flows
$
Carrying
amount
(assets) /
liabilities
$
Trade and
other payables
Financial
liabilities
2,245,921
15,566
18,676
–
65,992
–
–
–
–
–
2,280,163
2,280,163
65,992
65,992
Group:
at 30 June
2020
Less than
6 months
$
6 – 12
months
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
Total
contractual
cash flows
$
Carrying
amount
(assets) /
liabilities
$
Trade and
other payables
Financial
liabilities
446,947
–
–
80,425
–
–
–
–
–
–
446,947
446,947
80,425
80,425
86
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
(d) Foreign Exchange Risk
A risk arises when future commercial transactions and recognised assets and liabilities are denominated in a
currency other than the consolidated entity’s functional currency.
The Group operates internationally, with its major assets being held in Burkina Faso, Tanzania and Canada,
and is exposed to foreign exchange risk arising from currency exposures to the Euro, FCFA (fixed to the Euro),
Tanzanian Shilling and Canadian Dollar. Historically, given the level of expenditure and available funding,
the Group considered its exposure to foreign exchange risk was manageable and hedging policies were
not adopted. The Company, through the Managing Director and the Financial Officer regularly monitor
movements in the foreign currencies that the Company is exposed to. If appropriate, and from time to time,
the Company may enter into forward foreign exchange contract to minimise its exposure to foreign exchange
risks. The Company also has foreign currency denominated accounts that are utilised to manage this risk.
The Company did not enter into any new forward foreign exchange contracts during the year.
The Board considers policies relating to foreign currency exposure from time to time and, based on available
funding, proposed exploration programs and foreign currency exposures, may or may not decide to enter in
further forward foreign exchange contracts. The Board will continue to review its position in respect of foreign
exchange risk management and will adopt suitable policies as required.
The carrying value of foreign currency denominate monetary assets and liabilities as at the reporting date are
as follows:
Assets
Liabilities
CAD
Euro/CFA
2021
AUD
3,371,196
15,620
2020
AUD
110,459
15,620
2021
AUD
2,610,815
16,593
2020
AUD
586,815
16,593
Foreign Currency Sensitivity Analysis
The Group is mainly exposed to CAD, CFA and Tanzanian Shilling. The following table details the Group’s
sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies.
10% is the sensitivity rate that represents management’s assessment of the reasonably possible change in
foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated
monetary items and adjusts their translation at the year-end for a 10% change in foreign currency rates. A
positive number below indicates an increase in profit where the Australian dollar strengthens 10% against the
relevant currency. For a 10% weakening of the Australian dollar against the relevant currency, there would be
a comparable impact on the profit, and the balances below would be negative.
87
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Financial Assets
+10% Appreciation
-10% Depreciation
Financial Liabilities*
+10% Appreciation
-10% Depreciation
CAD Dollars
CFA
2021
AUD
337,120
(337,120)
261,081
(261,081)
2020
AUD
11,046
(11,046)
58,682
(58,682)
2021
AUD
1,562
(1,562)
1,659
(1,659)
2020
AUD
1,562
(1,562)
1,659
(1,659)
* Note – the majority of the balance of financial liabilities relates to capitalised exploration expenditure. Therefore, the variations in
the balance as shown in the sensitivity analysis would not impact the profit or loss, but rather the carrying value of the capitalised
exploration expenditure.
Forward Foreign Exchange Contracts
As at 30 June 2021 there were no outstanding forward foreign exchange contracts (2020: Nil).
(e) Fair value of financial instruments
The carrying amounts of all financial assets and liabilities approximate their respective net fair values
at reporting date.
Fair value estimation
Fair values have been determined for measurement and/or disclosure purposes based on the
following methods. Where applicable, further information about the assumptions made in
determining fair values is disclosed in the notes specific to that asset or liability.
Trade and other receivables
Fair value, which is determined for disclosure purposes, is estimated as the present value of future
cash flows, discounted at the market rate of interest at the reporting date.
Trade and other payables
Fair value, which is determined for disclosure purposes, is calculated based on the present value of
future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
Borrowings
Fair value, which is determined for disclosure purposes, at the time of for establishing the financial
liability and based on the present value of the remaining cash flows, discounted at the assessed
weighted average cost of capital.
88
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
6. Group Structure
6.1. Subsidiaries
The consolidated financial statements include the financial statements of the ultimate parent entity Vital
Metals Limited and the subsidiaries listed in the following table:
Name of Entity
Country of Incorporation
Equity Interest
Cheetah Resources Pty Ltd
NWT Rare Earths Ltd
Cheetah Resources Corp.
Australia
Canada
Canada
Cheetah Resources Saskatchewan Corp. Canada
Vital Metal Burkina Sarl
Burkina Faso
Kisaki Mining Company Limited
United Republic of Tanzania
2021
2020
100%
50%
100%
100%
100%
90%
100%
50%
100%
100%
100%
90%
89
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
7. Unrecognised Items
7.1. Commitments
Expenditure Commitments
(a) Capital expenditure commitments
2021
$
2020
$
• Within one year
951,854
689,939
• Later than one year but not later than five years
(b) Mineral tenement commitments
• Within one year
• Later than one year but not later than five years
–
–
–
–
–
–
951,854
689,939
7.2. Contingencies
There are two royalties in place relating to the Nechalacho Project:
1. A 3% net smelter return royalty.
a) the royalty holder has agreed to waive their right to the royalty for the first five (5) years following
commencement of commercial production at the Nechalacho Project; and
b) the royalty holder has also agreed to grant Cheetah an option to pay C$2,000,000 at any time during
the eight (8) year period following the acquisition of the Nechalacho Project to cancel the royalty.
2. The Murphy Royalty which is a 2.5% net smelter return royalty held by a third party. Vital holds an option to
purchase the royalty for an inflation adjusted fixed amount estimated to currently be C$1,500,000.
The Group has obtained several licence permits in Canada on the commencement of operations
at Nechalacho. In accordance with these permits, the Group must meet all requirements for waste
management, spillage contingency, water management etc., with reclamation costs estimated at $839,631
(C$782,368). The Group holds $839,631 as a deposit in favour of the Canadian Department of Lands as a
reclamation security in respect of the permits held. Should the Group not meet all permit requirements in
relation to rehabilitation, these funds will be accessed directly by the Canadian Department of Lands to meet
the Group’s obligations.
90
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
7.3. Events Occuring After The Reporting Period
Kipawa and Zeus Heavy rare earth projects
Subsequent to year-end in August 2021, Vital
announced it had signed a binding term sheet
with Quebec Precious Metals Corporation (TSX-V:
QPM) for Vital to acquire QPM’s 68% interest in the
Kipawa exploration project and 100% interest in the
Zeus exploration project, both located in Quebec,
Canada for C$8 million payable over four years.
Joint Venture partner Investissement Québec (“IQ”)
holds the remaining 32% of the Kipawa project on a
contributing basis.
Kipawa is a heavy rare earths project, located 50km
from Temiscaming, with a Mineral Resource Estimate
of 15.5Mt of eudialyte at 0.434% TREO and 0.873 ZrO2,
6.3Mt of mosandrite at 0.391% TREO, 1.018% ZrO2,
5.1Mt of britholite at 0.286% TREO, 0.944% ZrO2, and
with a Proven and Probable Reserve Estimate of
19.8Mt at 0.411% TREO.
Investors should note that the terms, “Mineral
Resource”, “Mineral Reserve” and “Proven and
Probable Reserve” are as defined by the Canadian
Institute of Mining, Metallurgy and Petroleum
(“CIM”) as the CIM Definition Standards on Mineral
Resources and Mineral Reserves adopted by CIM
council. These estimates are foreign estimates
and are not reported in accordance with the Joint
Ore Reserves Committee’s Australasian Code for
Reporting of Mineral Resources and Ore Reserves
(the “JORC Code”). A competent person has not
done sufficient work to classify these estimates as a
mineral resource or ore reserve in accordance with
the JORC Code and it is uncertain that following
further exploration or evaluation work that the
foreign estimates will be able to be reported as a
mineral resource or ore reserve in accordance with
the JORC Code.
The Projects total 73 claims over 43km2 and lie in the
Grenville geological province, approximately 55km
south of the geological contact with the Superior
geological province. The lithologies consist mainly of
gneiss with a grade of metamorphism ranging from
the greenschist facies to the amphibolite-granulite
facies.
The Kipawa deposit is defined by three enriched
horizons within the “Syenite Complex”, which
contains some light rare earth oxides but primarily
heavy rare earth oxides. Since 2011, there have been
a total of 293 drill holes (24,571m) that were used to
prepare a feasibility study, which was completed by
Matamec Explorations Inc. in 2013.
Twelve heavy rare earth showings have been
identified on the Zeus project, some of which
contain niobium and tantalum.
Engagement of Tectonic
Vital entered into an agreement for the provision
of capital markets consulting and advisory services
with Ecoban Securities Corporation (“Tectonic”).
Tectonic shall serve as the Company’s North
American investor relations and capital markets
consultant and advisor. Tectonic played a key role
in the introduction of strategic investors to Vital as
part of the $43 million capital raise and with the
strategic importance of North American rare earth
production, the introduction of dedicated US market
support will be of increasing importance to the
future growth of Vital Metals.
Funding agreement with Canadian Northern
Economic Development Agency
In accordance with Item 6 of the Funding
Agreement, the Group is currently completing
documentation and it is expected that funds will be
received in November 2021.
91
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
COVID-19
The Company, its staff and contractors based in Canada have been minimally impacted by the COVID-19
pandemic and continue to operate its programs as planned.
Management is actively monitoring the global situation and its impact on the Group's financial condition,
liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak
and the global responses to curb its spread, the Group is not able to estimate the effects of the COVID-19
outbreak on its results of operations, financial condition, or liquidity for the 2021 financial year.
Other than the above, there has not been any matter or circumstance that has arisen since the end of the
financial year, that has significantly affected or may significantly affect the operations of the Group, the
results of those operations, or the state of affairs of the Group in future financial years.
92
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
8. Other Information
8.1. Share-Based Payments
(a) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Share Based Payments
Options issued to directors
Options issued to Employee/Consultant
2021
$
2020
$
1,737,991
2,283,917
529,166
219,001
2,267,157
2,502,918
The fair value of options issued were calculated by using a Black-Scholes pricing model applying the
following inputs.
Directors
Directors
Directors
Directors
Directors
Directors
Grant dated
16/10/2019
16/10/2019
16/10/2019
26/11/2020
26/11/2020
26/11/2020
Number issued
90,000,000 90,000,000 90,000,000 20,000,000 20,000,000 20,000,000
Share price at grant date
$0.13
$0.13
$0.13
$0.036
$0.036
$0.036
Exercise price
$0.020
$0.025
$0.030
$0.020
$0.025
$0.030
Life of options (years)
Vesting life (years)1
5
–
5
–
5
–
4
–
4
–
4
–
Expected share price volatility
100%
100%
100%
117.83%
117.83%
117.83%
Weighted average risk free
interest rate
0.77%
0.77%
0.77%
0.29%
0.29%
0.29%
Fair value per option
$0.0089
$0.0085
$0.0081
$0.0298
$0.0289
$0.0282
Note:
1. No implied service condition therefore, these options vest immediately
93
Vital Metals | Annual Report 2021 $0.03
$0.03
3
–
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
Employee/
Employee/
Employee/
Employee/
Employee/
Employee/
Employee/
Consultant
Consultant
Consultant
Consultant
Consultant
Consultant
Consultant
Grant dated
21/11/2019
21/11/2019
21/11/2019
26/11/2020
26/11/2020
26/11/2020
24/12/2020
Number Issued
22,500,000
22,500,000
22,500,000
6,000,000
6,000,000
6,000,000
5,000,000
Share price at grant date
$0.13
$0.13
$0.13
$0.036
$0.036
$0.036
Exercise price
$0.020
$0.025
$0.030
$0.020
$0.025
$0.030
Life of options (years)
Vesting life (years)2
Expected share price
volatility
Weighted average risk free
interest rate
5
1
5
2
5
3
4
1
4
2
4
3
100%
100%
100%
117.83%
117.83%
117.83%
117.36%
0.84%
0.84%
0.84%
0.29%
0.29%
0.29%
0.34%
Fair value per option
$0.0090
$0.0084
$0.0082
$0.0298
$0.0289
$0.0282
$0.0208
Note:
2. These options have a service condition and therefore, vest over the vesting life
Historical volatility has been used as the basis for determining expected share price volatility as it assumed
that this is indicative of future trends, which may not eventuate.
The fair value and grant date of the options is based on historical exercise patterns, which may not eventuate
in the future.
For service provider options the value of the service received was unable to be measured reliably and
therefore the value was measured by reference to the fair value of the options issued.
94
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
(b) Options
Set out below are summaries of the options granted
Number of
options
2021
Weighted
average
exercise price
(cents)
Consolidated
2020
Number of
options
Weighted
average exercise
price
(cents)
Outstanding at the beginning
of the year
472,166,667
1.70
163,598,492
Granted
Expired
83,000,000
(19,500,000)
Outstanding at year-end
443,083,334
Exercisable at year-end
380,083,334
Un-exercisable at year-end
63,000,000
2.50
2.30
2.40
2.40
2.50
337,500,000
(28,931,825)
472,166,667
404,166,667
67,500,000
1.70
2.50
1.20
1.70
1.70
2.50
The weighted average remaining contractual life of share options outstanding at the end of the financial year
was 3.18 years (2020: 4.11 years), and the exercise price ranges from 1.5 to 3.0 cents.
Options exercised during the year resulted in 92,583,333 shares (2020: Nil) being issued at an average price of
$1.70 each.
The range of exercise prices for options outstanding at the end of the year is $0.01 to $0.03 (2020: $0.01 to
$0.03).
(c) Performance shares
On 16 October 2019, the Company issued 800,000,000 performance shares which convert to one ordinary
share upon completion of the following milestones:
• 400,000,000 Performance Shares (Tranche 1) with a fair value of $4,800,000 that will convert to one Share
on the Company entering into binding offtake for a minimum of 1,000 kgs of contained REO in respect of
the Nechalacho Project or Wigu Hill Project within 2 years of the Acquisition completion date; and
• 400,000,000 Performance Shares (Tranche 2) with a fair value of $4,800,000 that will each convert to one
Share on the Company commencing mining operations at the Nechalacho Project or Wigu Hill Project
within 3 years of the issue of the Tranche 1 performance shares. Where this Tranche 2 milestone is satisfied,
the Tranche 1 milestone will automatically be deemed to have been satisfied.
95
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
The Company assessed the probability of conditions
being met at 0% in relation to Tranche 1 and 0% in
relation to Tranche 2 as at the date of acquisition. The
performance shares issued as part of the acquisition
will not be remeasured at each reporting period.
At the commencement of commercial mining
operations at Nechalacho during the year, the
800,000,000 Performance Shares were converted
to ordinary shares on a 1:1 basis. At 30 June 2021, nil
Performance Shares are on issue (2020: 800,000,000
Performance Shares).
Accounting Policy
The costs 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 consolidated entity receives the services
that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
Equity-settled and cash-settled share-based
compensation benefits are provided to employees.
Key estimates and judgements
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 costs 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 Group has an Incentive Option Scheme
(“Scheme”) for executives and employees of the
Group. In accordance with the provisions of the
Scheme, as approved by the shareholders at the
November 2020 annual general meeting, executives
and employees may be granted options at the
discretion of the directors.
Each share option converts into one ordinary share
of Vital Metals Limited on exercise. No amounts are
paid or are payable by the recipient on receipt of the
option. The options carry neither rights of dividends
nor voting rights. Options may be exercised at any
time from the date of vesting to the date of their
expiry.
Options issued to directors are not issued under the
Scheme but are subject to approval by shareholders.
96
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
8.2. Related Party Transactions
• Evan Cranston (appointed 22 October 2019)
(a) Parent entity
• Geoff Atkins (appointed 22 October 2019)
The ultimate parent entity within the Group is Vital
Metals Limited.
• Phillip Coulson (resigned 20 December 2020)
(b) Subsidiaries
• Francis Harper (resigned 4 August 2020)
Interests in subsidiaries are set out in Note 6.1.
• Zane Lewis (resigned 4 August 2020)
(c) Key Management Personnel disclosures
Directors and other Key Management Personnel
•
James Henderson (appointed 4 August 2020)
Other Key Management Personnel consisted of:
The directors of Vital Metals Limited during the
financial year were:
• Anthony Hadley
Compensation of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Termination
Share-based payments
Other transactions:
2021
$
2020
$
675,484
724,622
26,600
10,023
–
–
1,927,505
2,283,917
2,629,589
3,018,563
Mr James Henderson was appointed a director on 4 August 2020. Mr Henderson is also a Director of
Transocean Securities Pty Ltd, Transocean Administration Services Pty Ltd and Transocean Services Pty
Ltd, of which a total of $20,071 was paid in relation to rent and reimbursement of business expenses
incurred during the year.
Performance Shares issued in 2019 to Mr Atkins (Tranche 1: 31,149,849 and Tranche 2: 31,149,849) and Mr
Henderson (Tranche 1: 79,432,114 and Tranche 2: 79,432,114) converted to ordinary shares on a 1:1 basis
on commencement of mining operations at the Nechalacho Project. The ordinary shares are held in
escrow until 29 September 2021.
Other disclosures regarding Key Management Personnel are made in the remuneration report on
pages 38 to 47.
97
Vital Metals | Annual Report 2021 Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
8.3. Parent Entity Financial Information
The following information relates to the parent entity, Vital Metals Limited, as at 30 June 2021. The information
presented here has been prepared using accounting policies consistent with those presented in this report.
2021
$
2020
$
31,649,974
1,612,809
3,289,290
3,100,000
31,860,211
14,013,067
66,799,475
18,725,876
101,976
96,273
–
–
101,976
96,273
107,265,583
57,645,649
7,157,816
4,890,659
(47,725,899)
(43,906,705)
66,697,500
18,629,603
(3,819,194)
(3,460,913)
–
–
(3,819,194)
(3,460,913)
–
–
Assets
Current assets
Non-current assets
Inter-company loan
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Profit/(loss) for the year
Other comprehensive income
Total comprehensive Profit/(loss)
Contingent liabilities and commitments
There are no parent company guarantees in place at the Reporting date.
98
Notes to the Consolidated Financial Statements
for the Year Ended 30 June 2021
8.4. Remuneration Of Auditors
Amounts received or due and receivable by BDO
• Audit and review of financial statements by BDO Audit (WA) Pty Ltd
• Other amounts received or due and receivable by BDO Reward (WA)
Pty Ltd
Total remuneration
2021
$
2020
$
77,814
19,882
46,214
–
97,696
46,214
During the year, BDO Reward (WA) Pty Ltd were engaged to complete a remuneration review of Key
Management Personnel for the year ended 30 June 2022.
8.5. Other Accounting Policies
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except
where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these
circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the
expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the
statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash
flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are
classified as operating cash flows.
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Vital Metals | Annual Report 2021 100
Directors’ Declaration
Vital Metals Limited And Its Controlled Entities
ABN 32 112 032 596
Directors’ Declaration
In the directors’ opinion:
1. the consolidated financial statements comprising the statement of profit or loss and other comprehensive
income, statement of financial position, statement of changes in equity, statement of cash flows and
accompanying notes set out on pages 56 to 99 are in accordance with the Corporations Act 2001, including
a. complying with Australian Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and,
b. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its
performance for the financial year ended on that date;
2. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
3. the remuneration disclosures included in the Directors' Report (as part of the audited Remuneration
Report), for the year ended 30 June 2021, comply with Section 300A of the Corporations Act 2001; and:
The Notes to the Consolidated Financial Statements confirm that the financial statements also comply with
International Financial Reporting Standards as issued by the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Evan Cranston
Chairman
Sydney: 30 September 2021
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Vital Metals | Annual Report 2021 Independent Auditor's Report
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
Independent Auditor's Report
To the members of Vital Metals Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Vital Metals Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2021, 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 report, 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 2021 and of its financial
performance for the year ended on that date; and
ii. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
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 Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the time
of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of
BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are
members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent
member firms. Liability limited by a scheme approved under Professional Standards Legislation.
102
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.
Carrying value of exploration and evaluation assets
Key audit matter
How the matter was addressed in our audit
At 30 June 2021 the carrying value of the capitalised
exploration and evaluation asset was disclosed in
Note 3.2.
As the carrying value of the exploration and
evaluation asset represents a significant asset of
the Group, we considered it necessary to assess
whether any facts or circumstances exist to
suggest that the carrying amount of this asset may
exceed its recoverable amount.
Our procedures included, but were not limited to:
• Obtaining a schedule of the area of interest held
by the Group and assessing whether the rights to
tenure of the area of interest remained current at
balance date;
• Verifying, on a sample basis, exploration and
evaluation expenditure capitalised during the
year for compliance with the recognition and
measurement criteria of AASB 6;
This was determined to be a key audit matter
due to the significant judgement applied in
determining the treatment of exploration
expenditure in accordance with Australian
Accounting Standard AASB 6
Exploration for and Evaluation of Mineral Resources
(“AASB 6”).
• Considering the status of the ongoing exploration
programmes in the respective areas of interest
by holding discussions with management, and
reviewing the Company’s exploration budgets, ASX
announcements and director’s minutes;
• Considering whether any area of interest had
reached a stage where a reasonable assessment of
economically recoverable reserves existed;
• Considering whether any facts or circumstances
existed to suggest impairment testing was
required; and
• Assessing the adequacy of the related disclosures
in Note 3.2 to the Financial Statements.
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Vital Metals | Annual Report 2021 Independent Auditor's Report
Carrying value of mines under development
Key audit matter
How the matter was addressed in our audit
At 30 June 2021 the carrying value of mines under
development was disclosed in Note 3.3.
Our procedures included, but were not limited to:
• Analysing management’s commodity price
assumptions against external market information
to determine whether a significant change would
impact the value of the asset;
• Challenging the appropriateness of management’s
discount rate used in the financial model in
conjunction with our internal valuation experts;
• Challenging management sensitivity assessment
by performing our own sensitivity analysis in
respect of the key assumptions to indicate if there
would be a significant change to the value of the
asset; and
• Assessing the adequacy of the related disclosures
in Note 3.3 to the Financial Statements.
As the carrying value of mines under development
represents a significant asset of the Group, we
considered it necessary to assess whether any facts
or circumstances exist to suggest that the carrying
amount of this asset may exceed its recoverable
amount.
The recoverable value of mine properties is
impacted by various key estimates and judgements
in particular:
• Ore Reserves and estimates;
• Discount rate;
• Assumed commodity prices;
• Capitalisation of mining costs; and
• Mine planning.
The Group is also required to assess for indicators
of impairment at each reporting period. The
assessment of impairment indicators in relation
to the mine assets requires management to make
significant accounting judgements and estimates
which includes discount rates, commodity price
and ore reserve estimates.
This was determined to be a key audit matter
due to the significant judgement applied in
determining the recoverable value of the asset in
accordance with Australian Accounting Standard
AASB 136 Impairment of Assets (“AASB 136”).
104
Other information
The directors are responsible for the other information. The other information comprises the information
contained in financial report for the year ended 30 June 2021, but does not include the financial report and
our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the Group’s
Annual Report, which is expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and 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 identified above 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 on the other information that we obtained prior to the date of this
auditor’s report, 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. When we read the Group’s Annual Report, if
we conclude that there is a material misstatement therein, we are required to communicate the matter
to the directors and will request that it is corrected. If it is not corrected, we will seek to have the matter
appropriately brought to the attention of users for whom our report is prepared.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with 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.
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Vital Metals | Annual Report 2021 Independent Auditor's Report
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 in pages 38 to 47 of the directors’ report for the year
ended 30 June 2021.
In our opinion, the Remuneration Report of Vital Metals Limited, for the year ended 30 June 2021, 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.
BDO Audit (WA) Pty Ltd
Neil Smith
Director
Perth, 30 September 2021
106
107
Vital Metals | Annual Report 2021 ASX Additional Information
ASX Additional Information As at 11 October 2021
The Australian Securities Exchange Limited, in respect of listed public companies, requires the
following information:
1. Shareholding
(a) Distribution of shareholders as at 11 October 2021 - fully paid ordinary shares
Number of
Shareholers
Percentage of
Holders
Number of Shares
Percentage of
Shares
102
37
1,138
0.9%
0.3%
9.6%
17,193
119,433
9,616,875
6,828
57.6%
299,474,114
0.0%
0.0%
0.2%
7.2%
3,753
11,858
31.6%
3,856,255,469
92.6%
100.0%
4,165,483,084
100.0%
Size of Holding
1-1,000 shares
1,001 - 5,000 shares
5,001 – 10,000 shares
10,000 – 100,000
shares
100,001 shares and
over
Total
(b) Marketable Parcels
The number of shareholdings less than a marketable parcel is 717 holders with 4,396,068 shares as at 11
October 2021. The required marketable parcel is $500 (8,475 shares).
(c) Substantial Shareholders
As at 11 October 2021 there were two substantial shareholders who had notified the Company in accordance
with section 671B of the Corporations Act 2001 as having a substantial interest of 5% or more in the
Company’s voting securities.
Substantial Shareholder
Number of Securities
Voting Power
Thebes Offshore Master Fund, LP (“Thebes”)
and Luxor Capital Group (“Luxor Capital”)
Transocean Private Investments Pty Ltd atf
Transocean Private Investment Trust
230,769,231
208,296,342
5.58%
5.04%
108
(d) Voting Rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction. There are no voting
rights attached to any class of options, Performance Rights or Performance Shares on issue.
(e) On-market Buy-Back
Currently there is no on-market buy-back of the Company’s securities.
(f) Top Twenty Shareholders of Vital Metals Limited – Ordinary Shares
HSBC Custody Nominees (Australia) Limited
HSBC Custody Nominees (Australia) Limited
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