Flinders Mines Limited

ABN 46 091 118 044

Financial Report

for the half-year ended 31 December 2020

Flinders Mines Limited

Half-Year Report

31 December 2020

Contents Page

Corporate Directory

3

Directors' Report

4

Auditors Independence Report

6

Financial Statements

7

Directors' Declaration

15

Independent Auditor's Report to the Members

16

2

Flinders Mines Limited

Corporate Directory

For the half-year ended 31 December 2020

Corporate Directory

Board of Directors

Neil Warburton

Independent Non-Executive Chair

The Hon. Cheryl Edwardes, AM

Independent Non-Executive Deputy Chair

James Gurry

Independent Non-Executive Director

Michael Wolley

Non-Executive Director

Evan Davies

Non-Executive Director

Amy Jiang

Non-Executive Director

Officers

Andrew Whitehead

General Manager

Joint Company Secretary

Sarah Wilson

Shannon Coates

Registered Office

45 Ventnor Avenue

West Perth WA 6005

Telephone: 08 9389 4483

Email:info@flindersmines.com

Website:www.flindersmines.com

Share Registry

Computershare Investor Services Pty Ltd

Level 11, 172 St Georges Terrace

Perth WA 6000

Telephone: 08 9323 2000

Website:www.computershare.com.au

Auditors

KPMG

235 St Georges Terrace

Perth WA 6000

Securities Exchange Listing

Shares in Flinders Mines Limited are quoted on the Australian Securities Exchange under trading code FMS.

3

Flinders Mines Limited

Directors' Report

For the half-year ended 31 December 2019

Directors' Report

Your Directors present their report on the Consolidated Entity comprising Flinders Mines Limited (the Company or Flinders) and its controlled entities (the Group) for the half-year ended 31 December 2020.

Directors

The following persons held office as Directors of Flinders Mines Limited from the start of the financial year to the date of this report, unless otherwise stated.

Name

Title

Appointment

Neil Warburton

Non-Executive Chairman

19

October 2016

The Hon. Cheryl Edwardes AM

Non-Executive Deputy Chair

17

June 2019

Michael Wolley

Non-Executive Director

19

October 2016

Evan Davies

Non-Executive Director

19

October 2016

James Gurry

Non-Executive Director

18

September 2019

Amy Jiang

Non-Executive Director

5 March 2021

Company Secretary

Ms Sarah Wilson was appointed as Company Secretary on 20 November 2018 and on 30 August 2019, Ms Shannon Coates was appointed as Joint Company Secretary.

Operating Results and Financial Position

The net loss after income tax for the half-year was $0.811 million (2019: $4.448 million).

Review of Operations

Corporate

PIOP Farm-In Agreement

On 4 September 2020, the Company announced that all conditions precedent to the Farm-In Agreement with BBI Group Pty Ltd (BBIG) had been completed and that the BBIG would be able to continue advancing the feasibility studies for the development of the Company's Pilbara Iron Ore Project (PIOP) and perform its other obligations under the Farm-In Agreement for its initial 10% voting interest in the incorporated joint venture vehicle, PIOP Mine Co NL. The Company retains 100% economic ownership of PIOP Mine Co NL until a final investment decision is made under the Farm-In Agreement.

Following completion of the Farm-In Agreement, BBIH Pty Limited (BBIH), a wholly owned subsidiary of BBIG, was appointed Manager of the PIOP.

The Company's independent Directors remain as Directors of PIOP Mine Co NL along with a nominee from BBIG.

NBIO Proposal from BBIG

On 14 December 2020, the Company announced that it had received a non-binding indicative offer (NBIO) from BBIG in relation to a potential ownership restructuring opportunity of the infrastructure associated with the Company's PIOP.

BBIG approached the Company to commence a discussion about a potential transaction that would result in the Group retaining 100% ownership of the PIOP as well as 100% of BBIG's port and rail infrastructure assets. BBIG has proposed that the development of the BBIG infrastructure and the PIOP mine as an integrated project within one corporate group would better facilitate financing of the project development.

Subsequent to period end, the Company announced that it had entered into a Funding Agreement with BBIG, whereby BBIG had agreed to provide funding support of up to $1.0 million to the Company for third party costs incurred by the Company in progressing discussions with BBIG on the NBIO.

The funding is to be provided in three equal instalments in January, March and April 2021. The funding is only repayable if an agreement is executed and subsequently completed, on the latter of the completion date and 31 December 2021.

Going Concern

The Independent Auditor's Report contains an emphasis of matter paragraph in relation to going concern. Refer to Note 2(e) of the Financial Statements.

4

Flinders Mines Limited

Directors' Report

For the half-year ended 31 December 2019

Pilbara Iron Ore Project, Western Australia

During the period from completion of the Farm-In Agreement, BBIH, as Manager, carried out a range of activities associated with the advancement of the PIOP feasibility study including:

  • developing further understanding of the PIOP ore body (resource definition);
  • maturing the development of a preferred mine plan;
  • laboratory based metallurgical test work to better determine ore product design specification and planning associated with a larger field based, next phase metallurgical test work program;
  • continued development on determining the optimum location and layout of the ore processing facility at the PIOP;
  • updating safety management framework, plans and procedures in support of recommencing field activities in early calendar year 2021 to incorporate requirements of the pending Work Health and Safety Bill 2019; and
  • completion of rehabilitation activities at Anvil and planning for future rehabilitation at Blacksmith.

Canegrass Project, Western Australia

During the period ending 31 December 2020, the Company engaged CSA Global Pty Ltd to design and execute an exploration programme that included both soil sampling and a drilling programme.

Soil sampling programme

A soil geochemical sampling programme was completed within E58/520, E58/521 and E58/522, which included several rock samples of potentially gold bearing quarts float and selected soil samples and rock samples within E58/236 and E58/282. The soil sampling within E58/520 and E58/522 targeted potentially gold bearing structural trends south of the Honeypot gold prospect. The soil sampling within E58/521 was designed to test for possible platinum group metals across the interpreted contact between the upper and middle units of the Windimurra Igneous Complex.

Drill programme

Ten RCP drill holes over E58/232 and E58/282 were completed, which were designed to infill and test for shallower higher-gradevanadium-titanium magnetite (VTM) zones within the Mineral Resource VTM mineralisation.

Results of the programme were announced to the ASX on 21 January 2021.

Events Subsequent to the End of the Reporting Period

On 15 January 2021, the Group announced that it had entered into a Funding Agreement with BBI Group Pty Ltd (BBIG) whereby BBIG have agreed to provide funding of up to $1.0 million to the Company for third party costs incurred by the Company in progressing discussions with BBIG in relation to the potential ownership restructuring opportunity of the infrastructure associated with the Pilbara Iron Ore Project (Transaction).

The funding is to be provided in three equal instalments in January, March and April 2021. The January and March 2021 instalments have already been received. The funding is only repayable if a Transaction is executed and completed with BBIG on the later of the completion date and 31 December 2021.

On 5 March 2021, the Company announced the appointment of Ms Amy Jiang, as a nominee Non-Executive Director of the Company's second largest shareholder, OCJ Investment (Australia) Pty Ltd.

Rounding

The amounts contained in the financial report have been rounded to the nearest $1,000 (unless otherwise stated) pursuant to the option available to the Company under ASIC Instrument 2016/191. The Company is an entity to which this class order applies.

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 the following page.

This report is made in accordance with a resolution of Directors.

Neil Warburton

Non-Executive Chairman

Perth, Western Australia

16 March 2020

5

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Flinders Mines Limited published this content on 16 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 April 2021 13:11:06 UTC.