Announcement PDF Annual Report 2024 FIREBIRD METALS LIMITED UNIT 38, 460 STIRLING HIGHWAY PEPPERMINT GROVE, WA 6011 ABN 24 610 035 535 ASX FRB firebirdmetals.com.au Annual Report - 30 June 2024 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 Oonagh Malone 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 2024 Table of Contents Directors' report Auditor's independence declaration 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 Consolidated entity disclosure statement Directors' declaration Independent auditor's report to the members of Firebird Metals Limited Shareholder information Mineral resource statement Installation of pilot scale calcining unit at Hunan Firebird Battery Technologies’ Plant 3 4 20 21 22 23 24 25 42 43 44 48 50 Annual Report - 30 June 2024 Directors' report The Directors of Firebird Metals Limited (“Firebird” or “the Company”) present the Consolidated Financial Statements of the Company and its controlled entities (“Group” or “Consolidated Entity”) for the financial year ended 30 June 2024. Directors The names and details of the Company's Directors in office during the financial year and until the date of this report are set out below. Directors were in office for this entire period 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 Oonagh Malone (appointed 10 June 2024) Alexander Neuling (resigned 10 June 2024) Principal activities During the financial year the principal activities of the consolidated entity consisted of: • Exploration and development of Oakover Manganese Project; and • Exploration of other manganese projects in the East Pilbara Manganese Province. • Development of High Purity Manganese Sulphate (MnSO4) project in Hunan China. Dividends There were no dividends paid or declared during the current financial year. Review of operations Chinese LMFP Battery Strategy In September 2023, Firebird announced the next phase of strategic growth focused on positioning the Company to supply directly into the growing battery market through the supply of battery grade manganese sulphate (MnSO 4) and tetroxide (Mn3O4). The strategy has been established to provide Firebird with a unique opportunity to grow into a near-term, cost competitive battery-grade manganese sulphate producer, supplying into the rapidly expanding LMFP (Lithium, Manganese, Iron and Phosphate) battery market. Following several months of due diligence and multiple trips to China, the Firebird team identified Hunan Province, China as the desired location to build its Plant and establish operations. Hunan offers proximity to several of the world’s largest battery manufacturers, suppliers and partners. Additionally, the significant advantage of the Company’s proposed Plant location in Hunan, is being part of the Chinese circular industrial economy which provides numerous synergies that drive cost savings, meaning all key inputs, reagent, customers and consumers of by-products and residues from our production process are located in close proximity to our Plant. Quickly following the release of the LMFP growth strategy, Firebird raised A$8M through a oversubscribed Placement, which was headed by new cornerstone investor, Canmax Technologies Co., Ltd (Canmax). Canmax became the Company’s largest shareholder holding 9.99% and their investment further emphasise the importance of the downstream process strategy for Firebird and growing demand for critical cathode materials. Importantly, Firebird has attracted and assembled a proven and high-quality technical team in China, who are leaders in the development and production of high-purity manganese. Hunan Firebird Battery Technologies (HFBT), which is the Company’s subsidiary in China is headed up by Mr Wei Li (Managing Director), Mr Zhou (Chief Operating Officer) and Mr Tang (Operations Manager). Mr Zhou brings 20 years’ experience in battery grade manganese sulphate production and was a part-owner of a battery grade manganese sulphate plant and consulted to many existing plants in China. Mr Zhou has been involved the in development, optimisation and commercialisation of technologies for battery grade manganese sulphate processing 4 Annual Report - 30 June 2024 Directors' report (including patents). Mr Tang has significant experience in the design, engineering and operation of MVR and sulphate production. Led by this team, Firebird has made rapid progress in executing their strategy and delivered several key workstreams, led by the completion of a highly successful Feasibility Study (Study). In China, a Feasibility Study is completed first and forms the basis of engineering design, government permitting and financing activities. The Study contained a large portion of compliance and project economics assessment. The Study was completed by Hunan Chemical Engineering Design Institute Co., Ltd (HCEDI) and in accordance with Chinese regulations. The Study assessed the operational capabilities of producing 50 kt of high-purity manganese sulphate and 10 kt of battery-grade manganese tetroxide (equivalent to 75 kt of high-purity manganese sulphate capacity). The Study generated excellent outcomes and confirmed the exciting opportunity for Firebird to become a low-cost producer of high-purity manganese sulphate. Key results from the Study outlined a very low CAPEX of US$83.5 million and a highly competitive OPEX of approximately US$609 per metric tonne (mt) for battery-grade MnSO4. These results were underpinned by the major competitive advantage of the Company’s strategic Plant location within the Chinese industrial ecosystem, which provided significant cost-saving and operational synergies. In January 2024, Firebird announced the completion of construction (ahead of schedule and under budget) and commencement of operations at its R&D Centre in Hunan. Samples of high-purity manganese sulphate and manganese tetra oxide have been produced for potential customers and offtake parties. The Centre is also used to complete testing on several other potential manganese rich precursor cathode active materials (pCAM). In March 2024, the Company signed a strategic cooperation agreement with China National Chemistry Southern Construction and Investment Co Ltd (China Chem), for the development and construction of the Company’s Plant. The Strategic Cooperation Agreement outlined that each party will use their respective strengths to collaborate on Firebird’s battery-grade manganese sulphate strategy covering investment, financing, engineering, construction, operational management, industrial research and development, and ultimately the production of battery grade manganese sulphate. Following this agreement, Firebird announced substantial low-cost financing support for the construction and commissioning of the Plant, through combined indicative and non-binding agreements for up to US$56M, accounting for approximately 60% of estimated financing requirements. The agreements included: • • • Non-binding indicative offer from China Construction Bank (Jinshi Division) to provide to a maximum of 50% of estimated plant CAPEX requirements of US$83.5 million (subject to conditions precedents), at very attractive terms, plus 70% of required estimated working capital of US$10.6 million; Non-binding agreement with China Chem to provide up to 20% of construction and installation costs (approximately US$35 million) on a deferred payment basis, interest-free and repayable 12 months after the commencement of commercial production; and Binding Agreement with Jinshi local Government to receive a 62.5% rebate (totaling ~US$4.2 million) on the ~US$6.8 million land purchase. Rebate has been accounted within total CAPEX requirements Throughout the following months, Firebird received key government permits for the construction of the Plant, including the critical safety energy and environmental permits. The efficient receipt of these permits highlights the strong in-country support Firebird has to establish operations. In June 2024, HFBT entered into an agreement with Zhongji Sunward Technology Co, Ltd (Sunward), a leading engineering and large-scale comprehensive design research company in China. This agreement granted Sunward the rights to use HFBT’s unique energy recycling calcining system (patent pending) in Sunward kilns. Firebird and Sunward signed a development agreement, with Sunward co-funding and evaluating the commercialisation of HFBT’s unique energy-saving rotary kiln system. Sunward, a leading producer of rotary tunnel kilns used in many chemical plants across China, is well-positioned to bring this innovative technology to market. Firebird designed the calcining unit, which has the potential to reduce energy usage by 80% and further enhance the cost-efficiency of the Company’s proposed Plant. 5 Annual Report - 30 June 2024 Directors' report The new calcining unit has broad industrial applications and Sunward agreed to pay Firebird a 5% royalty on future sales revenue from all calciners sold that incorporate HFBT’s energy-saving rotary system. Importantly, Firebird retained the right to collaborate with other manufacturers, ensuring flexibility and broader market penetration for this technology. Sunward committed to funding 50% of the Pilot Plant's cost, estimated at US$200,000, with Firebird funding the remaining 50%. Sunward is responsible for the detailed engineering design and manufacturing of the pilot plant. Firebird continues to target a Final Investment Decision (FID) on the battery-grade manganese sulphate plant in late H2 2024 and following this, will be ready to immediately commence construction of the plant, with completion projected to take ~12-15 months and operations expected to commence in late 2025. Oakover The ongoing development of the Oakover Project, located in Western Australia, remained a critical pillar of Firebird’s manganese battery materials strategy throughout the year. Since listing in 2021, Firebird has delivered significant and rapid progress at Oakover, with key development and environment studies progressing as planned. It is intended that, once Oakover is in production, ore from the Project will be used to feed the Company’s battery grade manganese sulphate plant in China. Financial results and financial position The loss for the consolidated entity after providing for income tax amounted to $4,693,517 (30 June 2023: $952,132). The net assets of the consolidated entity increased by $6,248,886 to $12,638,355 (30 June 2023: $6,389,469). The consolidated entity’s working capital, being current assets less current liabilities was $5,176,725 at 30 June 2024 (2023: $1,093,685). During the year the consolidated entity had a negative cash flow from operating activities of $2,164,389 and $1,746,741 from investing activities (2023: $718,796 from operating activities and $1,686,828 from capitalised exploration and evaluation activities). During the financial year, operating expenses increased following an increase in activity. Administrative and corporate expenses were $2,245,592 (2023: $1,120,260). Significant changes in the state of Affairs A fully owned Chinese subsidiary “Hunan Firebird Battery Technology Co., Ltd” (HFRB) was established on 1 November 2023. Since HFRB’s incorporation, the Company signed agreement with Jinshi Government laying out requirements to establish 50,000 t/a High Purity Manganese Sulphate (MnSO4) & 10,000 t/a Battery Grade Manganese Tetroxide (Mn3O4) Project (Equivalent of 72,500 t/a MnSO4). The agreement also includes land & tax incentives for HFRB. HFRB acquired a patented technology on crystallisation reactor design & process which will enable HFRB’s processing cost to be in the lowest quartile in the industry. In addition to the patent, HFRB also engaged industry leading expert Mr Zhou Qiyun and his team to be technical executives. HFRB engaged Hunan Chemical Engineering Design Institute (HCEDI) to prepare Feasibility Report (Chinese) & all required engineering design & most permitting reports to ensure the project is designed to the highest standards. Soon after establishment of HFRB, a R&D Centre was established. Testing of various input material to feed into plant design and testing new & improved processing techniques are also part of the R&D Centre uses. HFRB also signed Strategic Cooperation Agreement with China Chemical to develop our Manganese Sulphate Plant. The Strategic Cooperation Agreement states the parties will use their respective strengths to collaborate on the project; covering investment, financing, engineering construction, operational management, industrial research and development, and the production of battery-grade manganese sulphate and tetroxide. There have been no other changes in the state of affairs of the consolidated entity other than those outlined in the Review of Operations Matters subsequent to the end of the financial year Subsequent to the end of the Financial Year, Firebird has negotiated an agreement with Macro Metals Ltd (“Macro”) with respect to the Wandanya (E46/1456 and E46/1457), Disraeli (E46/1389) and Midgengadge (E45/5906) tenements whereby Macro will spend $150,000 within 12 months on exploration and development and must complete at least 10 RC drill holes, with 100m to be drilled on each of the tenements, to earn an 80% interest. 6 Annual Report - 30 June 2024 Directors' report The Company’s 20% interest will be free carried until such time Macro makes a decision to mine, at which point Macro and the Company will enter into an incorporated joint venture. The Company retains the ability to transfer its 20% interest in the Tenements into a 1% royalty. The agreement also allows for Firebird to earn 1% sales commission (based on Free on Board revenue). Completion of the transaction is conditional upon due diligence to the absolute satisfaction of Macro and any necessary regulatory or third party consents or approvals required before close of business on 30 September 2024 (or such time as otherwise agreed). The Agreement otherwise contains terms and conditions considered standard for agreements of this nature. Mr Evan Cranston is a Director of both Firebird and Macro, however, it is noted that Mr Cranston has not been involved in the negotiation of deal terms. Mr Cranston has agreed to take the recommendation of the non-conflicted directors. Likely developments and expected results of operations The likely developments in the consolidated entity’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 consolidated entity currently holds an interest. The ability of the consolidated entity to fund the ongoing operations also remains a key dependency. Operating and financial risk The consolidated entity’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 Consolidated entity that could influence the consolidated entity’s future prospects, and the consolidated entity manages these risks, are detailed below: Operational risks The consolidated entity may be affected by various operational factors. In the event that any of these potential risks eventuate, the consolidated entity’s operational and financial performance may be adversely affected. No assurances can be given that the consolidated entity will achieve commercial viability through the successful exploration and/or mining of its tenement interests. Until the consolidated entity is able to realise value from its projects, it is likely to incur ongoing operating losses. The operations of the consolidated entity 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 consolidated entity’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 consolidated entity. 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 consolidated entity 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 consolidated entity 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 consolidated entity 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. 7 Annual Report - 30 June 2024 Directors' report Further capital requirements The consolidated entity’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 consolidated entity. Native title and Aboriginal Heritage There are areas of the consolidated entity’s projects over which legitimate common law and/or statutory Native Title rights of Aboriginal Australians exist. Where Native Title rights do exist, the consolidated entity 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 consolidated entity must obtain consents in accordance with the legislation. The consolidated entity’s activities are subject to Government regulations and approvals The consolidated entity 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 consolidated entity’s portfolio of projects. Global conditions General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the consolidated entity’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 consolidated entity’s operations and financial performance, including the Consolidated entity’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 consolidated entity and its market valuation regardless of its actual performance. Environmental regulation The consolidated entity 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 consolidated entity 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. 8 Annual Report - 30 June 2024 Directors' report 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. (ASX. BNZ) (appointed 17 September 2020) Macro Metals Limited (ASX.M4M) (appointed 5 March 2024) African Gold Limited (ASX.A1G) (appointed 22 March 2018) Former directorships (last 3 years)* Carbine Resources Limited (CRB.ASX) (resigned 31 May 2023) Vital Metals Limited (ASX.VML) (resigned 15 February 2023) Special responsibilities: None Interests in shares: 497,230 fully paid ordinary shares (via related entities) Interests in unlisted options: 2,000,000 unlisted incentive options (exercise price $1.00, expiry 30/11/26) 2,000,000 unlisted incentive options (exercise price $0.30, expiry 6/12/28) 2,000,000 unlisted incentive options (exercise price $0.40, expiry 6/12/28) 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: 1,470,000 fully paid ordinary shares (via related entities) Interests in performance rights: 1,400,000 (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) 4,000,000 unlisted incentive options (exercise price $0.30, expiry 6/12/28) 4,000,000 unlisted incentive options (exercise price $0.40, expiry 6/12/28) 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) Former directorships (last 3 years)* Firefly Resources Limited (ASX.FFR) (resigned 13 April 2022) Macro Metals Limited (ASX.M4M) (resigned 5 March 2024) Special responsibilities: None Interests in shares: 2,195,088 fully paid ordinary shares (via related entities) Interests in unlisted options: 2,000,000 unlisted incentive options (exercise price $1.00, expiry 30/11/26) 1,000,000 unlisted incentive options (exercise price $0.30, expiry 6/12/28) 1,000,000 unlisted incentive options (exercise price $0.40, expiry 6/12/28) 9 Annual Report - 30 June 2024 Directors' report 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: 4,746,010 fully paid ordinary shares (via related entities) Interests in Performance rights: 800,000 (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) 4,000,000 unlisted incentive options (exercise price $0.30, expiry 6/12/28) 4,000,000 unlisted incentive options (exercise price $0.40, expiry 6/12/28) 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 Masters 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) Carbine Resources Limited (ASX.CRB)(appointed 7 September 2023) Primero Group Limited (ASX.PGX) (delisted 26 February 2021) None 650,000 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) 1,000,000 unlisted incentive options (exercise price $0.30, expiry 6/12/28) 1,000,000 unlisted incentive options (exercise price $0.40, expiry 6/12/28) ^'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. 10 Annual Report - 30 June 2024 Directors' report Meetings of directors The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2024, and the number of meetings attended by each director were: Full Board Attended Held Mr Evan Cranston Mr Peter Allen Mr Ashley Patti