Announcement PDF ABN 24 610 035 535 Annual Report - 30 June 2023 Annual Report - 30 June 2023 Corporate Directory Directors Evan Cranston - Non-executive Chairperson Peter Allen - Managing Director Ashley Pattison - Non-executive Director Wei Li - Finance Director Brett Grosvenor - Non-executive Director Company secretary Mr Alex Neuling Registered office Unit 38, 460 Stirling Highway Peppermint Grove WA 6011 Share registry Automic Registry Pty Ltd Level 5, 191 St Georges Terrace Perth WA 6000 Auditor Grant Thornton Audit Pty Ltd Level 43, 152-158 St Georges Terrace Perth WA 6000 Solicitors Steinepreis Paganin Lawyers & Consultants Level 4, The Read Building 16 Milligan Street Perth WA 6000 Bankers National Australia Bank Level 4 (UB4440), 800 Bourke Street Docklands VIC 3008 Australia Stock exchange listing Firebird Metals Limited securities are listed on the Australian Securities Exchange (ASX code: FRB) Corporate Governance Statement is available on the Company's website at www.firebirdmetals.com.au/corporate-governance/ Website www.firebirdmetals.com.au 2 Annual Report - 30 June 2023 Table of Contents Directors' report Auditor's independence declaration Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Directors' declaration Independent auditor's report to the members of Firebird Metals Limited Shareholder information 3 4 18 19 20 21 22 23 37 38 41 Annual Report - 30 June 2023 Directors' report The Directors present their report, together with the financial statements, on Firebird Metals Limited (referred to hereafter as the 'Company') for the year ended 30 June 2023. Directors The following persons were directors of Firebird Metals Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Evan Cranston - Non-executive Chairperson Peter Allen - Managing Director Ashley Pattison - Non-executive Director Wei Li - Finance Director Brett Grosvenor - Non-executive Director Company Secretary Alexander Neuling Principal activities During the financial year the principal activities of the Company consisted of: • Exploration of Oakover Manganese Project; and • Exploration of other manganese projects in the East Pilbara Manganese Province. Dividends There were no dividends paid or declared during the current financial year. Review of operations Operational update Firebird Metals’ 100% owned project portfolio, led by the flagship Oakover Project, is located in the East Pilbara manganese province of Western Australia and boasts a total Resource of 234Mt 1 , with exciting exploration and development growth upside. The importance of manganese within EV’s, due to its cost reduction abilities without reducing energy density and range, along with demand for battery grade manganese sulphate, has seen strong growth over the past year and highlights the critical need for projects like Oakover to become operational. With a limited number of advanced ASX manganese developers, Firebird is in a strong position to develop Oakover and supply a high-quality product into a growing and supply-constrained market. Flagship Oakover Project (100% FRB) Firebird’s has continued to grow Oakover exponentially throughout FY23 through the delivery of a major upgrade to the Indicated Resource and overall Project Mineral Resource, completed a Manganese Concentrate Scoping Study, lodgement of the Mining Licence Application and the production of battery grade manganese sulphate. A Scoping Study completed by Firebird at Oakover highlighted the outstanding long-term potential of the Project as a manganese operation. The potential of Oakover to become a tier-one manganese operation was further strengthened through the production of >99.8% purity manganese sulphate monohydrate crystal, which confirmed Oakover ore can be processed into battery grade HPMSM2. HPMSM production and optimisation work continued throughout the remainder of the year to further enhance process design and product quality, with results feeding into the HPMSM Scoping Study. Following the completion of the 82-hole 2,822m infill drilling program at the Jay Eye and Karen deposits, Firebird delivered an upgrade to the Project’s Indicated Resource from 58.7Mt to 105.8Mt1, representing an uplift of 80%. This upgrade contributed to the growth of the total Oakover Mineral Resource from 172.3Mt to 176.7Mt1. Firebird completed the lodgement of the MLA for the Oakover Project, representing another milestone in the development of the Project as the Company continues to execute its accelerated strategy to produce manganese concentrate and HPMSM. 1 2 For full details refer ASX Announcements dated 10/3/2022 and 23/3/2023 For full details refer ASX Announcement dated 30/1/23 4 Annual Report - 30 June 2023 Directors' report During the year, the Company completed a $3.5m placement over two tranches, with funds dedicated to growing Oakover which has subsequently enabled the progress of the aforementioned programs. Wandanya (100% FRB) Firebird strengthened its manganese portfolio through the acquisition of the Wandanya Project, located 50km southwest of world class Woodie-Woodie Manganese Operation. As an advanced exploration project, Wandanya provides Firebird with a near-term, high-grade, Direct Shipping Ore (DSO) opportunity. With a large amount of historical exploration work completed and mineralisation specifications in line with what is required for a DSO operation, Firebird’s plans include further drilling and development work to delineate a Mineral Resource, which can be immediately supplied into a growing end user market for manganese. Financial results and financial position The loss for the Company after providing for income tax amounted to $952,132 (30 June 2022: 1,173,251). The net assets of the Company increased by $2,448,230 to $6,389,469 (30 June 2022: $3,941,239). The Company’s working capital, being current assets less current liabilities was $1,093,685 at 30 June 2023 (2022: $473,935). During the year the Company had a negative cash flow from operating activities of $718,796 and $1,686,828 from investing activities (2022: $1,002,192 from operating activities and $2,241,238 from capitalised exploration and evaluation activities). During the financial year, operating expenses increased following an increase in activity. Administrative and corporate expenses were $1,120,260 (2022: $968,849). Significant changes in the state of affairs There were no significant changes in the state of affairs of the company during the financial year. Matters subsequent to the end of the financial year Subsequent to the end of the Financial Year, Firebird completed an updated Scoping Study to produce manganese concentrate following the significant increase to the Indicated MRE. The Board assessed two production scenarios in the Study, both utilising DMS beneficiation, to determine the most efficient and profitable path forward at Oakover. Scenario one assessed the requirements, economics and production profile of full-stage production from year-one, where ~4Mt would be processed and ~1.2Mt kt of 30-32% Mn concentrate would be produced annually. Scenario two evaluated a two-stage ramp-up to full production, with stage one being an initial lower capex option, comprised of ~1.5Mt annual processing for first 3 years and following this, stage two would commence where ~4Mt would be processed annually for the following 17 years. In the first three years, Oakover would produce ~500kt of 30% Mn concentrate annually and then ramp up to ~1.2 Mt kt of 30-32% Mn concentrate annually. Following assessment of both scenarios, the Firebird Board made the decision to progress with scenario one, which will see full-scale production commence from year-one. The results generated from scenario one confirmed Oakover as a long-life operation with strong project economics and an estimated 18-year Life of Mine3. Importantly, results from the Study have set a strong platform for the Company to successfully deliver on its vision to become a global leader in the manganese industry, combining mining and downstream processing with a dedication to the advancement of Li-ion battery sector. Likely developments and expected results of operations The likely developments in the Company’s operations in future years and the expected result from those operations are dependent on exploration success in the various exploration areas in which the Company currently holds an interest. The ability of the Company to fund the ongoing operations also remains a key dependency. 3 For full details of the Scoping Study refer ASX Announcement dated 30/08/2023 5 Annual Report - 30 June 2023 Directors' report Operating and financial risk The Company’s activities have inherent risk and the Board is unable to provide certainly of the expected results of activities, or that any or all of the likely activities will be achieved. The material business risks faced by the Company that could influence the Company’s future prospects, and the Company manages these risks, are detailed below: Operational risks The Company may be affected by various operational factors. In the event that any of these potential risks eventuate, the Company’s operational and financial performance may be adversely affected. No assurances can be given that the Company will achieve commercial viability through the successful exploration and/or mining of its tenement interests. Until the Company is able to realise value from its projects, it is likely to incur ongoing operating losses. The operations of the Company may be affected by various factors, including failure to locate or identify mineral deposits, failure to achieve predicted grades in exploration and mining, operational and technical difficulties encountered in mining, insufficient or unreliable infrastructure such as power, water and transport, difficulties in commissioning and operating plant and equipment, unanticipated metallurgical problems which may affect extraction costs, adverse weather conditions, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment. The Company’s Mineral Resource estimates are made in accordance with the 2012 edition of the JORC Code. Mineral resources are estimates only. An estimate is an expression of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. The tenements are at various stages of exploration, and potential investors should understand that mineral exploration and development are speculative and high-risk undertakings that may be impeded by circumstances and factors beyond the control of the Company. There can be no assurance that exploration of the Tenements, or any other exploration properties that may be acquired in the future, will result in the discovery of an economic mineral resource. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. There is no assurance that exploration or project studies by the Company will result in the definition of an economically viable mineral deposit or that the exploration tonnage estimates, and conceptual project developments discussed in this Prospectus are able to be achieved. In the event the Company successfully delineates economic deposits on any Tenement, it will need to apply for a mining lease to undertake development and mining on the relevant Tenement. There is no guarantee that the Company will be granted a mining lease if one is applied for and if a mining lease is granted, it will also be subject to conditions which must be met. Further capital requirements The Company’s projects may require additional funding in order to progress activities. There can be no assurance that additional capital or other types of financing will be available if needed to further exploration or possible development activities and operations or that, if available, the terms of such financing will be favourable to the Company. Native title and Aboriginal Heritage There are areas of the Company’s projects over which legitimate common law and/or statutory Native Title rights of Aboriginal Australians exist. Where Native Title rights do exist, the Company must obtain the consent of the relevant landowner to progress the exploration, development and mining phases of operations. Where there is an Aboriginal Site for the purposes of the Aboriginal Heritage legislation, the Company must obtain consents in accordance with the legislation. The Company’s activities are subject to Government regulations and approvals The Company is subject to certain Government regulations and approvals. Any material adverse change in government policies or legislation in Western Australia and Australia that affect mining, processing, development and mineral exploration activities, export activities, income tax laws, royalty regulations, government subsidiaries and environmental issues may affect the viability and profitability of any planned exploration or possible development of the Company’s portfolio of projects. 6 Annual Report - 30 June 2023 Directors' report Global conditions General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund those activities. General economic conditions, laws relating to taxation, new legislation, trade barriers, movements in interest and inflation rates, currency exchange controls and rates, national and international political circumstances (including outbreaks in international hostilities, wars, terrorist acts, sabotage, subversive activities, security operations, labour unrest, civil disorder, and states of emergency), natural disasters (including fires, earthquakes and floods), and quarantine restrictions, epidemics and pandemics, may have an adverse effect on the Company’s operations and financial performance, including the Company’s exploration, development and production activities, as well as on its ability to fund those activities. General economic conditions may also affect the value of the Company and its market valuation regardless of its actual performance. Environmental regulation The Company holds participating interests in a number of exploration tenements. The various authorities granting such tenements require the tenement holder to comply with the terms of the grant of the tenement and all directions given to it under those terms of the tenement. To the best of the Directors' knowledge, the Company has adequate systems in place to ensure compliance with the requirements of all environmental legislation described above and are not aware of any breach of those requirements during the financial year and up to the date of the Directors' report. Competent Persons Statements / JORC Compliance Statement This announcement contains references to Exploration Results and Mineral Resource Estimates, which have been extracted from previous ASX announcements as referenced. For full details of Exploration Results and Mineral Resource Estimates in this release that have been previously announced, refer to those announcements. For details of the Company’s previous scoping study for the Oakover project, which the updated study replaces, refer to the Company’s announcement dated 20 July 2022. The Company confirms that it is not aware of any new information or data that materially affects the information included in the said announcements, and in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. Information on directors Name: Title: Qualifications: Experience and expertise: Mr Evan Cranston Non-executive Chairperson BComm. LLB 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. Other current directorships: ^ Benz Mining Corp. (BNZ.ASX) (appointed 17 September 2020) Vital Metals Limited (VML.ASX) (appointed 22 October 2019) African Gold Limited (A1G.ASX) (appointed 22 March 2018) Former directorships (last 3 years)* Boss Energy Limited (formerly Boss Resources Limited) (resigned 5 June 2020) New Century Resources Limited (resigned 9 July 2020) Carbine Resources Limited (CRB.ASX) (resigned 31 May 2023) Special responsibilities: None Interests in shares: 497,230 fully paid ordinary shares (via related entities) Interests in unlisted options: 2,000,000 unlisted options (exercise Price $0.30, Expiry 10/3/24) 2,000,000 unlisted incentive options (exercise Price $1.00, Expiry 30/11/26) 7 Annual Report - 30 June 2023 Directors' report Name: Title: Experience and expertise: Mr Peter Allen Managing Director Mr Allen is a mining executive with more than 20 years’ experience in marketing of manganese, lithium and a range of other commodities. He previously held the MD of Marketing for Consolidated Minerals Limited which operates Woodie Woodie mine in WA and Nsuta Manganese mine in Ghana. He assisted manganese focused explorer Element 25 (ASX.E25) and Gulf Manganese Corporation (ASX.GMC) with PFS & product marketing. More recently, he was the marketing manager for AVZ Minerals (ASX.AVZ), a company focused on the Manono lithium project. Other current directorships: ^ None Former directorships (last 3 years)* None Special responsibilities: None Interests in shares: 450,000 fully paid ordinary shares (via related entities) Interests in performance rights: 2,100,000 (expiry 5 years from issue) Interests in unlisted options: 2,000,000 unlisted incentive options (exercise Price $1.00, Expiry 30/11/26) 125,000 unlisted options (exercise Price $0.30, Expiry 2/12/24) Name: Title: Qualifications: Experience and expertise: Mr Ashley Pattison Non-executive Director BBus Accounting & Business Law Mr Pattison qualifies as a Chartered Accountant with over 20 years’ experience in the resource sector across corporate finance, strategy and project operations. Having lived and worked in several countries, he has gained substantial exposure to exploration and producing operations in Australia and South America. He has also held senior executive positions including as Managing Director of a number of listed and private mining companies over the past 10 years and also as CEO of a listed mining service company. Other current directorships: ^ Industrial Minerals Limited (ASX.IND) (appointed 23 February 2021) Macro Metals Limited (ASX.M4M) (appointed 30 November 2021) Former directorships (last 3 years)* Firefly Resources Limited (ASX.FFR) (resigned 13 April 2022) Special responsibilities: None Interests in shares: 1,608,880 fully paid ordinary shares (via related entities) Interests in unlisted options: 1,500,000 unlisted options (exercise Price $0.30, Expiry 10/3/24) 2,000,000 unlisted incentive options (exercise Price $1.00, Expiry 30/11/26) Name: Title: Qualifications: Experience and expertise: Mr Wei Li Finance Director MPAcc & CA Mr Li is a Chartered Accountant with extensive professional experience in the resource industry, international trade, capital markets, project managing initial public offers and spin-outs and financial accounting. Mr Li’s experience includes being employed by, and acting as, Director and Chief Financial Officer for several companies, predominantly in the resources sector. Prior to these roles, he managed a private base metal exploration company in the Northern Territory and assisted in commissioning a A$150 million Electrolytic Manganese Dioxide (EMD) plant in Hunan China. Other current directorships: ^ None Former directorships (last 3 years)* None Special responsibilities: None Interests in shares: 1,066,010 fully paid ordinary shares (via related entities) Interests in Performance rights: 1,200,000 (expiry 5 years from issue) Interests in unlisted options: 2,000,000 unlisted incentive options (exercise Price $1.00, Expiry 30/11/26) 125,000 unlisted options (exercise Price $0.30, Expiry 2/12/24) 8 Annual Report - 30 June 2023 Directors' report Name: Title: Qualifications: Experience and expertise: Other current directorships: ^ Former directorships (last 3 years)* Special responsibilities: Interests in shares: Interests in unlisted options: Mr Brett Grosvenor Non-executive Director B Eng. MBA Mr Grosvenor is an experienced mining executive with over 25 years’ experience in the Mining and Power industry. Holding a dual tertiary qualification in Engineering and a Master in Business, Mr Grosvenor was most recently the Director of Development of Primero Group, where he led development of projects from an initial concept through to contract delivery and operation. Throughout his time in the mining and minerals sector he has been involved in the development of medium to large CAPEX EPC projects and ensuring the optimal balance across design, construction and operation. Perpetual Resources (ASX.PEC) (appointed 10 September 2020) Firetail Resources Limited (ASX.FTL) (appointed 5 April 2022) Primero Group Limited (ASX.PGX) (delisted 26 February 2021) None 250,000 fully paid ordinary shares 2,000,000 unlisted incentive options (exercise Price $1.00, Expiry 30/11/26) 125,000 unlisted options (exercise Price $0.30, Expiry 2/12/24) ^'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. *'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Meetings of directors The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2023, and the number of meetings attended by each director were: Full Board Attended Held Mr Evan Cranston Mr Peter Allen Mr Ashley Pattison Mr Wei Li Mr Brett Grosvenor 3 3 3 3 3 Held: represents the number of meetings held during the time the director held office. Company Secretary Mr Alexander Neuling BSc., FCA(ICAEW), FCIS Mr Neuling is a chartered accountant and chartered company secretary with over 20 years corporate and financial experience, including more than 15 years as company secretary, CFO &/or a director of various ASX listed companies in the Oil & Gas, Mineral Exploration, Biotech Mining Services sectors. Prior to these roles, Alex worked at Deloitte in London and in Perth. 9 3 3 3 3 3 Annual Report - 30 June 2023 Remuneration report (audited) Introduction The Directors of Firebird Metals Limited present the Remuneration Report (the Report) for the Company for the year ended 30 June 2023. This Report forms part of the Directors’ Report and has been audited in accordance with section 300A of the Corporations Act 2001. The Report details the remuneration arrangements for Firebird Metals Limited’s key management personnel (KMP): • Non-executive directors (NEDs) • Executive directors and senior executives (collectively the executives). KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the major activities of the Company. The table below outlines the KMP of the Company during the financial year ended 30 June 2023. Unless otherwise indicated, the individuals were KMP for the entire financial year. NAME Evan Cranston Peter Allen Ashley Pattison Wei Li Brett Grosvenor Alexander Neuling POSITION Non-executive Chairperson Managing Director Non-Executive Director Finance Director Non-executive Director Company Secretary Appointed on 18 March 2021 Appointed on 1 March 2021 Appointed on 15 January 2021 Appointed on 15 January 2021 Appointed on 1 March 2022 Appointed on 18 March 2021 Remuneration Governance The Board has decided there are no efficiencies to be gained from forming a separate remuneration committee and hence the current board members carry out the roles that would otherwise be undertaken by a remuneration committee with each director excluding themselves from matters in which they have a personal interest. The Board considers and recommends compensation arrangements for the non-executive chairperson, directors and senior executives; remuneration policies and practices; retirement and termination policies and practices; Company share schemes and other incentive schemes; Company superannuation arrangements and remuneration arrangements for members of the Board. The Board obtains professional advice where necessary to ensure that the Company attracts and retains talented and motivated directors, executives and employees who can enhance Company performance through their contributions and leadership. Remuneration Framework The Board recognises that the Company’s performance and ultimate success in project delivery depend very much on its ability to attract and retain highly skilled, qualified and motivated people in an increasingly competitive remuneration market. At the same time, remuneration practices must be transparent to shareholders and be fair and competitive, taking into account the nature and size of the organisation and its current stage of development. The approach to remuneration has been structured with the following objectives: • to attract and retain a highly skilled executive team at the current stage in the Company’s project development and who are motivated and rewarded for successfully delivering the short and long-term objectives of the Company, including successful project delivery; • to link remuneration with performance, based on long-term objectives and shareholder return, as well as critical short-term objectives which are aligned with the Company’s business strategy; • to set clear goals and reward performance for successful project development in a way which is sustainable, including in respect of health and safety, environment and community-based objectives; • to be fair and competitive against the market; • to preserve cash where necessary for exploration, by having the flexibility to attract, reward or remunerate executives with an appropriate mix of equity-based incentives; • to reward individual performance and Company performance thus promoting a balance of individual performance and teamwork across the executive management team and the organisation; and • to have flexibility in the mix of remuneration, including offering a balance of conservative long-term incentive instruments such as options to ensure executives are rewarded for their efforts, but also share in the upside of the Company’s growth and are not adversely affected by tax consequences. 10 Annual Report - 30 June 2023 Remuneration report (audited) The remuneration framework provides a mix of fixed and variable “at risk” remuneration and a blend of short and longterm incentives. The remuneration for executives has three components: • Fixed remuneration, inclusive of superannuation and allowances; • Short Term Incentives (“STI”) under a performance-based cash bonus incentive plan; and • Long Term Incentives (“LTI”) through participation in the Company’s shareholder approved equity incentive plans. These three components comprise each executive’s total annual remuneration. Executive Director Remuneration Fixed Remuneration All executives receive a fixed base cash salary and other associated benefits. All executives also receive a superannuation guarantee contribution required by Australian legislation which was 10.5% at 30 June 2023. No executives receive any other retirement benefits. Fixed remuneration of executives will be set by the Board each year and is based on market relativity and individual performance. In setting fixed remuneration for executives, individual performance, skills, expertise and experience are also taken into account to determine where the executive’s remuneration should sit within the market range. Where appropriate, external remuneration consultants will be engaged to assist the Board to ensure that fixed remuneration is set to be consistent with market practices for similar roles. Fixed remuneration for executives will be reviewed annually to ensure each executive’s remuneration remains fair and competitive. However, there is no guarantee that fixed remuneration will be increased in any service contracts for executives. Short Term Incentives The executive directors and other executives are eligible to earn short-term cash bonuses upon achievement of significant performance-based outcomes aligned with the Company’s strategic objectives at that time. These performance-based outcomes are considered to be an appropriate link between executive remuneration and the potential for the creation of shareholder wealth. Given the Company’s recent listing, no short-term incentives were paid during the year. Long Term Incentives The objective of the LTI plan is to reward executives and directors in a manner which aligns this element of remuneration with the creation of shareholder wealth. As such LTIs are made to executives and directors who are able to influence the generation of shareholder wealth and thus have an impact on the Company’s performance. The Company prohibits di