Speciality Metals International Limited Annual Report 2020

Speciality Metals International Limited Annual Report 2020 31 Page | 31 DIRECTORS’ REPORT Financial Performance The loss for the consolidated Group for the financial year after tax amounted to $3,015,680 (2019 profit of $3,808,863). This result was primarily brought about by an increase in operating costs associated with the commencement of operations at Mt Carbine Quarries and Tailings Retreatment Project. The Group has created value for shareholders via the acquisition on 28 June 2019 of Mt Carbine Quarries Pty Ltd an entity that owns and operated the Mt Carbine Quarries and holds Mining Leases ML 4867 and ML 4919. This acquisition also resulted in the Company entering into an unincorporated joint venture with CRONIMET Australia Pty Ltd for the development of the Mt Carbine Tungsten Tailings and Stockpile Projects. The Company finalised the commissioning of the Mt Carbine Tailings Retreatment Plant and commenced production during the second half of 2020 with the first concentrate shipment being despatched during June 2020. The Company’s wholly owned subsidiary, Mt Carbine Quarrying Operations Pty Ltd (the operator of the Mt Carbine Quarries), was also awarded a purchase order for ~$4 Million (including GST) for the supply of quarry materials for a major road construction project in Far North Queensland. The revenues from this order are expected to be realised during the second half of the 2020 calendar year. The Company will continue to evaluate its NSW Exploration Licences in conjunction with the development and commercialisation of its tungsten assets in Far North Queensland. Financial Position In accordance with the Company’s accounting policy, the recoverability of the carrying amounts of Deferred Exploration and Evaluation Expenditure were reassessed during the 2020 financial year with the deferred exploration and evaluation expenditure associated with its Chilean Exploration Concessions being impaired in full following the Company’s decision not to pursue further exploration activities within Chile. Separately to this, exploration and evaluation costs of $212,753 were capitalised for the 2020 financial year. The carrying value of the exploration assets as at 30 June 2020 is $6,896,994 (2019: $6,834,416). At 30 June 2020, the Group had a net working capital surplus of $2,558,501 (2019: $531,722 deficit). The increase was due largely to the increase in cash assets from the capital raisings undertaken during the 2019-2020 financial year. As the Group is an exploration and development entity, ongoing exploration and development activities are reliant on future capital raisings. During the year, the Company raised $6,997,038 (after share issue costs) from a number of placements. I NDEMNIFICATION AND I NSURANCE OF O FFICERS AND A UDITORS Indemnification The Company has not, during or since the end of the financial period, in respect of any person who is or has been an Officer of the Company or a related body corporate indemnified or made any relevant agreement for indemnifying against a liability incurred as an Officer, including costs and expenses in successfully defending legal proceedings. Insurance Premiums During the financial period the Company has paid premiums to insure each of the Directors and Officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct whilst acting in the capacity of a Director or Officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The premiums paid are not disclosed as such disclosure is prohibited under the terms of the insurance contract .