(Formerly MRL Corporation Limited) ABN 50 007 870 760
ANNUAL REPORT
30 JUNE 2016
CORPORATE DIRECTORY
DIRECTORS
Warwick Grigor (Chairman)
Craig McGuckin (Managing Director) Peter R. Youd (Executive Director) Chris Banasik (Non-Executive Director)
COMPANY SECRETARY
Peter R. Youd
PRINCIPAL REGISTERED OFFICE IN AUSTRALIA
Suite 3
9 Hampden Road
Nedlands WA 6009
Telephone: +61 1300 660 448
Facsimile: +61 1300 855 044
Email: [email protected] Website: www.firstgraphite.com.au
STOCK EXCHANGE LISTING
The Company is listed on the Australian Securities Exchange Limited under the trading codes FGR, FGROA and FGROB
SHARE REGISTRY
Automic Registry Services Level 1, 7 Ventnor Avenue West Perth W.A. 6005
Telephone: +61 8 9324 2099
Facsimile: +61 8 9321 2337
AUDITOR
BDO Audit (WA) Pty Ltd 38 Station Street
Subiaco WA 6008
SOLICITORS - AUSTRALIA
Steinepreis Paganin Lawyers and Consultants Level 4,
The Read Buildings 16 Milligan Street
Perth WA 6000
SOLICITORS - SRI LANKA
Varners
Level 14, West Tower World Trade Centre Echelon Square Colombo 01
Sri Lanka
BANKERS
Westpac Banking Corporation Level 6
109 St Georges Terrace Perth WA 6000
2 First Graphite Ltd • ANNUAL REPORT 2016
TABLE OF CONTENTS
Corporate Directory 2 Table of Contents 3 Chairman's Report 4 Review of Operations 5 Overview of Operations 5 Exploration 6
Environment 6
Safety 6 Directors' Report 7 Remuneration Report (audited) 10 Auditor's Independence 16 Corporate Governance Statement 16 Auditor's Independence Declaration 17 Consolidated Statement of Profit or Loss and Other Comprehensive Income 18 Consolidated Statement of Financial Position 19 Consolidated Statement of Changes in Equity 20 Consolidated Statement of Cash Flows 21 Notes to the Consolidated Financial Statements 22
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Basis of Preparation 22
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Accounting policies 22
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Financial Risk Management 30
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Segment reporting 35
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Operating profit and finance income and expense 36
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Income tax 37
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Earnings per share 37
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Dividends paid and proposed 37
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Cash and cash equivalents 38
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Interests in other entities 38
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Exploration and evaluation assets 38
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Property, plant and equipment 39
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Trade and other payables 40
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Issued Capital 40
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Share based payments 42
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Reserves and accumulated losses 43
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Statement of cash flow reconciliation 44
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Commitments and contingencies 44
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Results of the parent company 45
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Events since the end of the financial year 46
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Related party transactions 46
22 Auditors' remuneration 46 Directors' Report 47 Independent Auditor's Report 48 Additional Securities Exchange Information 50
ANNUAL REPORT 2016 • First Graphite Ltd 3
CHAIRMAN'S REPORT
Dear Fellow Shareholder
The 2016 financial year has been one of significant achievements and "Firsts" for your Company.
During September and October 2015 the Company completed a Shareholder Purchase Plan and private placement which raised a total of $4.5m at $0.055 per share. In May 2016 the Company was able to complete a further strongly supported raising of $2.4m at $0.09 per share. These funds have enabled the Company to continue to pursue its stated goal of becoming a producer of high quality graphene from high grade Sri Lankan graphite.
Following extensive bench scale test work undertaken by the University of Adelaide, FGR constructed its first prototype commercial scale production unit for graphene. This unit was successfully commissioned during August and confirmed the scalability of the production process which has been developed by the Company. Having established the ability to produce graphene at very low cost, First Graphite is continuing its work at the University of Adelaide to identify commercial applications of graphene, thereby opening up new markets.
The board sees the production and commercialisation of graphene as providing the most significant driver for your Company's share price appreciation in the future.
The continued exploration efforts of the Company resulted in it being granted additional licences in November 2015 which meant it became the largest holder of graphite exploration licences in Sri Lanka. Drilling at the Aluketiya project provided an intersection of 1.72m of high grade vein graphite over 2.81m. This was the most significant intercept from any FGR drilling program and it is likely the most significant reported graphite intersection in Sri Lankan modern history. Subsequent analysis yielded Length Weighted Average (LWA) 98.41% Total Graphitic Carbon (TGCLOI) with results as high as 99.51% TGCLOI. In another first the Company brought an Australian geophysics company to Sri Lanka to conduct down hole electromagnetic surveys on previously drilled holes at Aluketiya and Pandeniya. These surveys were enormously successful and the results were released to the Australian Securities Exchange on 23 September 2016.
On a mining front the Company was granted an Industrial Mining Licence - A class (IML-A) over the Pandeniya project in April 2016. This was the first new underground graphite mining licence granted in 25 years. This was a clear demonstration of the ability of the Company to take a target area from exploration through to mining.
The future for your Company looks promising with ongoing progress of its own exploration and mining areas and the exciting developments in its graphene strategy.
In closing I would like to thank our shareholders for their continued support. The board would also like to express its thanks to our Managing Director, Mr Craig McGuckin, for his tireless and considerable efforts to advance the Company's projects and his inspirational leadership in building the Sri Lankan team. This team is also to be thanked for their considerable efforts.
The board looks forward to an exciting and rewarding 2016/17 financial year.
Warwick Grigor
Non-Executive Chairman 28 September 2016
4 First Graphite Ltd • ANNUAL REPORT 2016