Globe Metals & Mining : December 2021

For personal use only

GLOBE METALS & MINING LIMITED

ABN 33 114 400 609

AND CONTROLLED ENTITIES

Half Year Financial Report

31 December 2021

GLOBE METALS & MINING LIMITED

ABN 33 114 400 609

AND CONTROLLED ENTITIES

CONTENTS

only	DIRECTORS' REPORT
	AUDITOR'S INDEPENDENCE DECLARATION
	CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
	CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For personal use	CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DIRECTORS' DECLARATION
INDEPENDENT AUDITOR'S REVIEW REPORT

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GLOBE METALS & MINING LIMITED

ABN 33 114 400 609

AND CONTROLLED ENTITIES

DIRECTORS' REPORT

For personal use only

The directors of Globe Metals & Mining Limited ('Globe' or 'the Company') submit the financial report of the Company and its controlled entities for the half year ended 31 December 2021.

DIRECTORS

The names of Directors who held office during or since the end of the half year:

Alice Wong	Chairperson
Alistair Stephens	Managing Director, Deputy Chairperson and CEO (resigned on 9 January 2022)
William Hayden	Non-Executive Director (resigned 31 December 2021)
Bo Tan	Non-Executive Director
Ricky Lau	Non-Executive Director
Michael Barrett	Non-Executive Director	(appointed on 17 December 2021)
Michael Choi OAM	Non-Executive Director	(appointed on 17 December 2021)

Directors have held office for the entire period up to the date of this report unless otherwise stated.

COMPANY SECRETARY

Michael Fry

RESULTS

The result for the half year ended 31 December 2021 attributable to members of Globe was a net loss after tax of $1.093 million (2020: $0.844 million).

REVIEW OF OPERATIONS

During the half year ending 31 December 2021, Globe's main operational focus was on the advancement of its Kanyika Niobium Project in Malawi (Africa). In addition, it also carried out research and development into metallurgical applications that resulted in the filing of patents, one of which is provisional as at the date of this report.

Kanyika Niobium Project

The Kanyika Niobium Project is located in central Malawi, ~260kms north of the capital city of Lilongwe, and is host to a large niobium and tantalum resource; the 5th largest un-developed niobium resource in the world.

During the half year ending 31 December 2021, Globe's wholly owned subsidiary, Globe Metals & Mining (Africa) Limited (GMMA) was granted a Large Scale Mining Licence LML0216/21 for the Project. LML0216/21 is valid for twenty-five (25) years and entitles GMMA the exclusive right to prospect for and mine minerals in the licence area on the terms and conditions attaching to the licence.

The attaining of the mining licence is a major step forward for Globe, ending a wait of approximately seven years.

Feasibility Study Results and Project Economics

With tenure attained pursuant to the grant of LML0216/21, Globe publicly released the results of its Feasibility Study and Project economics, with Globe advising that the Project had an expected capital cost of US$250 million, and was expected to generate US$5.6 billion over its 23-year mine life with a net present value of US$1 billion (pre-tax) at a discount rate of 8% per annum.

The results of the Feasibility Study highlight a robust project with strong financial returns.

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For personal use only

GLOBE METALS & MINING LIMITED

ABN 33 114 400 609

AND CONTROLLED ENTITIES

DIRECTORS' REPORT (Continued)

Study highlights are:

• Kanyika is positioned to be the first niobium mine in Africa and the first new producer in 50 years.
• Over 90% of niobium is used in the manufacture of High Strength Alloy Steels. Steel production is growing year on year. Intensity of usage in steel is rising rapidly as markets, and in particular China, moves towards the manufacture of higher quality steels.
• Niobium's unique characteristics make it central to many of the world's past, present and future technologies with scientists and manufacturers only now beginning to imagine the range of technological applications for niobium.
• Niobium is critical to military, aerospace, space and medical industries and becoming increasingly important in quantum electronics, in the manufacture of semiconductors and in the electrical vehicle industry.
• Globe will target high-end,high-value applications for niobium.
• A mine life of ~ 23 years with capability to extend mine life to 38 years subject to the conversion of inferred resources through further drilling.
• The Feasibility Study is based on material assumptions outlined in this announcement. Globe considers the material assumptions to be based on reasonable grounds, there is no certainty that they will prove correct or that the range of outcomes indicated will be achieved.
• Average annual production of 3,250 tonnes of niobium and 140 tonnes of tantalum.
• High metal recoveries of ~75% for niobium and ~73% for tantalum
• Patented metallurgical advancements (commercial in confidence) provide competitive advantage allowing substantially simpler beneficiation with greater recovery and lower process OPEX.
• Pre-productioncapital costs of ~USD250m.
• KNP will generate revenues of USD5.6B over its 23-year mine life, valued at a base price of US$55/kg for Nb2O5 and US$410/kg for Ta2O5 mostly as Tantalum K-Salts.
• Net Present Value of US$1B (pre-tax) at a discount rate of 8% per annum.
• Internal Rate of Return of ~50% (pre-tax).
• Payback period of ~ 1.5 years (from first production).
• All approvals in place to commence construction upon funding and relocation of affected persons.

Globe initially commenced its feasibility study in 2009 and suspended further work in 2012 whilst it undertook further studies and awaited issue of a mining licence. In 2018, Globe commenced updating and finalising the technical components of the engineering program in light of the changing outlook for the mining and resources industry, and feedback from the Government of Malawi on anticipated progress of the mining licence.

As part of the update of the feasibility study, Globe obtained updated capital and operating cost estimates and updated its financial model for revised capital costs, revenues and operating costs in order to determine key metrics including but not limited to project revenue, profitability and payback.

The quality of the engineering studies for a large proportion of the plant design qualifies the project as a Class 3, FEL3 standard under AACE1 practices with components at Class 4, FEL2. Since the study has been completed a significant time has passed related to the negotiations on the Development Agreement with the Government, resulting in the associated quotations and related cost estimates being outdated and requiring update. Parts of the plant where intellectual property has enhanced project metrics are at prefeasibility status where a capital estimate has been allocated but the quantum is not significant to total capital costs but is material to operations.

1 "Association for the of Advancement of Cost Engineering" that is referencing practice for the AUSIMM Cost Estimation handbook Monograph 27.

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GLOBE METALS & MINING LIMITED

ABN 33 114 400 609

AND CONTROLLED ENTITIES

DIRECTORS' REPORT (Continued)

For personal use only

As a consequence, to take the Project forward, the Company must now prepare detailed front end engineering designs for the mine and refinery, incorporating recent study results, and finalise its product suite in order to progress to marketing and financing.

Mine Development Agreement

The Mine Development Agreement remains unsigned at the date of this publication.

• The Project's published economics are dependent upon the execution of the Mine Development
  Agreement with the Government of the Republic of Malawi for the Project materially on the same terms and conditions as reflected in the draft Mine Development Agreement tabled with the Malawi Government in November 2020. As at the date of this report, the Malawi Government has put forward no changes to the draft Mine Development Agreement. Relevantly, the Malawi Government has verbally advised Globe that the Mine Development Agreement will soon be executed; a sentiment it has expressed publicly and is reflected in journalist articles appearing in local Malawi newspapers.
• The Mine Development Agreement sets out the key terms and conditions under which Globe can engage in mining at Kanyika and the fiscal regime applicable to GMMA and the project.
• The Mine Development Agreement carries conditions regarding sustainable development and economic, social and environmental investment. Its aim is to ensure that, whilst Globe may generate a profit from its investment and know-how, the Republic of Malawi and its people benefit as well.

A key outcome of the project is the flow of financial, community and social benefits to the Malawian people and communities. Over the life of the operation, the commercial model forecasts a government mineral royalty of 5% that will earn the Malawi Government an estimated US$86.5M, a 0.45% community mineral royalty, and other community social responsibility programs and community development agreement programs that will generate additional local opportunities.

The key aspects of the draft Development Agreement are as follows:

1. Globe has the right to mine niobium (Nb), tantalum (Ta), and deleterious uranium (U) and to establish and operate a Processing Facility to be located in the Mining Area;

1. The Government of the Republic of Malawi to receive, at no cost, a non-diluting ten per cent (10%) equity interest in KNP.

1. The Government of the Republic of Malawi is entitled to purchase, at Fair Market Value, a further a ten per cent (10%) equity interest in KNP, that is capable of being diluted in the event that the Government does not meet any call by the Company for additional equity funding.

1. The Government of the Republic of Malawi to receive a royalty of 5% on mineral concentrate sales at mine gate as prescribed for Minerals under the Taxation Act.

1. The Kanyika Community to receive a royalty of 0.45% on mineral concentrate sales at mine gate as prescribed under the Mines and Minerals Act (2018).

1. Globe to be subject to the provisions of the Taxation Act, the Value Added Tax Act, the Customs & Excise Act and any other applicable Tax Laws except that Globe to be exempt from import duty and import excise and shall be zero rated for VAT on imports and capital goods, consumables and services; excepting that Globe will not be subject to any increases in applicable taxes during the Stability Period of 10 years or such other length of time as extended;

1. Globe to maintain a ratio of indebtedness to net worth equal to or lower than 3:1 at all times

1. Globe to expend its Investment Commitment of $200M substantially in the manner and on the terms set out in the Agreement;

1. Globe to conduct all operations within the laws of Malawi and in accordance with International Standards

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