Announcement PDF Annual Financial Report Year ended 30 June 2024 ABN 97 140 316 463 Suvo Strategic Minerals Limited Corporate Directory 30 June 2024 Corporate Directory Directors Aaron Banks Oliver Barnes Mark Pensabene Company secretary Chris Achurch Registered office Level 11 40 The Esplanade Perth WA 6000 Phone: (08) 9389 4495 Principal place of business 3610 Glenelg Hwy Pittong VIC 3360 Phone: (03) 5344 6688 Share registry Automic Registry Services Pty Ltd Level 5 191 St Georges Terrace Perth WA 6000 Phone: 1300 288 664 Auditors RSM Australia Partners Level 32 2 The Esplanade Perth WA 6000 Phone: (08) 9261 9100 Solicitors Hamilton Locke Level 48 152-158 St Georges Terrace Perth WA 6000 Phone: (08) 6311 9160 Stock exchange listing Suvo Strategic Minerals Limited’s shares are listed on the Australian Securities Exchange (ASX code: SUV) Website www.suvo.com.au Corporate Governance Statement www.suvo.com.au/investors/corporate-governance/ 2 Suvo Strategic Minerals Limited Directors’ Report 30 June 2024 Directors’ Report The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Suvo Strategic Minerals Limited (referred to hereafter as the 'Suvo' or the 'Company') and the entities it controlled at the end of, or during, the year ended 30 June 2024. Directors The following persons were Directors of Suvo during the whole of the financial year and up to the date of this report, unless otherwise stated: Mr Aaron Banks Mr Oliver Barnes Mr Mark Pensabene Dr Agu Kantsler Mr Hugh Thomas Executive Chairman (appointed 1 May 2024) Non-Executive Chairman (resigned 1 May 2024) Non-Executive Director Non-Executive Director (appointed 13 June 2024) Non-Executive Director (appointed 5 September 2023, resigned 13 June 2024) Managing Director (resigned 30 October 2023) Principal activities The principal activities of the Group during the year were refined kaolin production in Victoria and commercialisation of the ‘Murdoch Technology’, namely Intellectual Property for a geopolymer concrete batching plant and a low carbon geopolymer concrete formulation known as ‘Colliecrete’, licensed by the Company under a worldwide and exclusive Intellectual Property License Agreement. Review of operations Kaolin Operations The Company generated revenue of A$12.3 million in FY24 (A$11.3 million in FY23). Sales of hydrous kaolin products sold to the local and international markets totaled ~20,000 tonnes during the 2024 financial year. Over the past 12 months the Company has undertaken extensive engagements, both in Australia and Asia, with major industry players and market participants. As a result of this, it was determined that Suvo’s kaolin and applicable chemistry from its Pittong kaolin mines is best suited to the high-margin industries such as paints and coatings, rubber, inks and pharmaceuticals. This engagement, and related analysis, has prompted kaolin sales efforts and focus on purchasers operating in these industries and the Company believes the revised sales and marketing strategy will deliver improved long-term results. In the second half of FY24, the Company achieved an average selling price on new customers converted after successful plant trials of A$863/tonne, which is a 47% premium compared to the weighted average selling price achieved for other existing customers during the same period (ASX announcement 31 July 2024). Subsequent to the financial year end, the Company secured purchase orders from existing Chinese distributor Qingdao Minglang New Material Co., Ltd (Qingdao) totaling 1,568 tonnes of hydrous kaolin (attracting a 22% price premium compared to the weighted average selling price to existing customers) to be supplied between July 2024 and December 2025 (18 months) valued at ~A$1.15 million (based on an exchange rate of 0.65:1 AUD:USD). Qingdao purchased 596 tonnes of hydrous kaolin across the prior 18 months up to 30 June 2024, resulting in increased orders of almost 1,000 tonnes of hydrous kaolin (ASX announcement 31 July 2024). In parallel with the sales strategy of focusing on high margin industries, Suvo had implemented a number of initiatives to optimise operational costs at Pittong, including reduction of operational working hours and staffing levels which will allow the Company to meet current sales and production requirements. Additionally, the period of significant capital expenditure at Pittong has been completed and as a result capital outflows have significantly reduced. These initiatives were implemented in June 2024 and are expected to bear fruit in FY25. The Company continues product testing and trials with other potential end users operating in the end user markets or highmargin industries where the Pittong kaolin is being marketed due to its suitability. As sales orders are received from new customers production will start to ramp up at Pittong. Geopolymer Concrete As announced on 30 October 2023, Suvo licensed the ‘Murdoch Technology’ from Murdoch University under a worldwide and exclusive Intellectual Property License Agreement. The Murdoch Technology is namely Intellectual Property for a geopolymer concrete batching plant and a low carbon geopolymer concrete formulation known as ‘Colliecrete’. 3 Suvo Strategic Minerals Limited Directors' Report 30 June 2024 Directors’ Report Geopolymer concrete is a low carbon alternative to traditional concrete. It is produced by using a caustic activator to react with aluminate and silicate-bearing materials, such as metakaolin, fly ash, ground blast furnace slag, and other waste-derived materials. In this process, these materials act as the binder in place of Ordinary Portland Cement (OPC). The manufacture of OPC is an emission intensive process that currently accounts for 8% of global CO2 emissions, which is equivalent to the emissions produced by entire global car fleet. Utilising the licensed IP, in a laboratory setting, Suvo has successfully produced three new geopolymer concrete formulations using caustic activators, metakaolin and flyash. The laboratory trials ran tests comprising five samples in each test, returning an average compressive strength of 27 megapascal (MPa) up to 52MPa. The trials indicated the geopolymer concrete formulations using metakaolin and flyash showed a potential greenhouse gas emission reduction of up to ~70% compared to concrete made using OPC. Suvo subsequently entered into a binding Joint Development Agreement (JDA) with PERMAcast and is now in the process of incorporating a joint venture entity (SPV Entity) to develop and commercialise low-carbon geopolymer concrete (GPC) products and projects. Under the binding JDA, Suvo and PERMAcast will prepare and test various formulations, assess their suitability for different applications, and determine the best route for commercialisation through the jointly-owned special purpose vehicle. Subsequent to the financial year end, the Company with its partner PERMAcast, completed the production and delivery of its first low carbon geopolymer precast product, a series of 1000mm x 350mm x 350mm backing blocks, to be used for hardscaping and demonstration purposes for a major Government infrastructure project. The 28-day compressive strengths on the backing blocks ranged from 31 to 35 Megapascals (MPa). Corporate During the year, the Company completed a successful Placement and Share Purchase Plan (Capital Raise) which raised A$4.5 million (before costs). Funding from the Capital Raise is being used to support production at Pittong and accelerate the commercialisation of the Company’s low carbon geopolymer concrete licensed intellectual property. In October 2023, the Company’s CFO, Bojan Bogunovic, was appointed as Interim Chief Executive Officer of the Company, effective immediately following the resignation of Mr Hugh Thomas as Managing Director and Chief Executive Officer. In June 2024, Bojan Bogunovic, Suvo’s Interim Chief Executive Officer was appointed as Chief Executive Officer of the Company. In May 2024, Aaron Banks, Suvo’s Non-Executive Chairman was appointed as Executive Chairman of the Company. Additionally, in June 2024, Mark Pensabene was appointed as Non-Executive Director of the Company with Agu Kantsler resigning from the Board of Directors. Mark Pensabene holds a Bachelor of Engineering and Commerce degrees from the University of Western Australia and has over 20 years of operational and management experience in the engineering and construction sectors. Projects Suvo’s focus is on expanding high margin sales of hydrous kaolin produced at its 100% owned Pittong operations and progressing the commercialisation of the ‘Murdoch Technology’, namely the intellectual property for a geopolymer concrete batching plant and low carbon geopolymer concrete formulation known as ‘Colliecrete’, licensed by the Company under a worldwide and exclusive Intellectual Property License Agreement. Consequently, the Company opted to relinquish the majority of its silica sand tenements (E70/5322, E70/5323, E70/5324) on the Eneabba Project in Western Australia. The Company partly relinquished EL70/5001, keeping approximately 10 blocks of the tenement which are situated on privately owned cleared farmland (ASX announcement 13 June 2024). Relinquishing these tenements will reduce the Company’s overall administrative overhead on exploration, including the need to meet annual minimum expenditure commitments and costs associated with annual rents and rates. During the period, Suvo made the decision not to progress the remaining stages of the staged earn-in agreement in Dingo HPA Pty Ltd. The Board of Directors of Dingo HPA Pty Ltd resolved to de-register the Company as Dingo’s technology could not be commercialised. Subsequently, the remaining cash balance held by Dingo was distributed proportionally amongst the shareholders of the Company. Suvo, as a 26% shareholder received A$25,788 from the divestment process (ASX announcement 30 April 2024). 4 Suvo Strategic Minerals Limited Directors' Report 30 June 2024 Directors’ Report Significant changes in the state of affairs There were no significant changes in the state of affairs of the Group during the financial year. Matters subsequent to the end of the financial year On 9 July 2024, the Company announced that a tripartite binding Joint Development Agreement (JDA) was executed between Suvo, its wholly owned subsidiary Climate Tech Cement Pty Ltd (CTC) and Polevine Pty Ltd (PERMAcast). The purpose of the JDA is for CTC and PERMAcast to deliver low carbon geopolymer concrete products and projects and otherwise commercialise the intellectual property created through a joint venture entity. On 17 September 2024, the Company secured a 12-month extension on debt funding of A$1.0 million (before costs) advanced on 1 December 2023 and previously repayable on 30 November 2024. The loan term period has been extended for a period of six months commencing 1 December 2024 and expiring 31 May 2025. A further six months will be available, at the Company’s option, for the subsequent period from 1 June 2025 to 30 November 2025. Apart from matters discussed above, no other matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Likely developments and expected results of operations The Group intends to continue its exploration, development, commercialisation and production activities on its existing operations and projects and to acquire further suitable projects as opportunities arise. Environmental regulation The Group is subject to and is compliant with all aspects of environmental regulation of its exploration and mining activities. The Directors are not aware of any environmental law that is not being complied with. Material business risks Development and commercialisation of the Company’s licensed technology The success of the Company will depend upon the Company’s ability to further develop and commercialise its licensed technology and intellectual property. A failure to successfully develop and commercialise the technology could lead to a loss of opportunities and adversely impact the Company’s operating results and financial position. Intellectual Property The success of the Company, in part, depends on its continued ability to protect its intellectual property and use any trademarks to increase brand awareness. The Company will depend on its intellectual property to protect its brand and trade secrets, and any pending patents on its products and production processes. In the event the Company is unable to protect its intellectual property adequately, the value of the Company’s products and brands could be adversely affected. This may further impact the overall business, with respect to its financial position and overall profitability and operational output. Exploration and development The Company’s mining tenements are at various stages of exploration, and potential investors should understand that mineral exploration and development are high-risk undertakings. There can be no assurance that future exploration of these tenements, or any other mineral tenements that may be acquired in the future, will result in the discovery of an economic resource. Even where an apparently viable resource is identified, there is no guarantee that it can be economically exploited. Staffing and reliance on key management The Company relies on the experience and knowledge of key members of its staff. In the event that key personnel leave and the Company is unable to recruit suitable replacements, such loss could have a materially adverse effect on the Company. Capital and funding requirements Suvo is not yet at the stage where it is generating positive cash flows at the group level. Further, no assurance can be given that Suvo will become profitable in the future. Accordingly, the Company may require additional equity or debt funding in the short, medium or long term. The ability of Suvo to access funding is never certain and is dependent on a multitude of factors, including the macro-economic conditions in Australia and overseas. 5 Suvo Strategic Minerals Limited Directors' Report 30 June 2024 Directors’ Report Production, operations and supply chain Suvo aims to have reliable operational performance to allow it to deliver on its operational objectives and satisfy its obligations to customers, regulators and communities. Supply chains have an influence on the way Suvo operates and the results it generates. The Company relies on various key customers, supplier relationships and contractors to conduct various aspects of its operations. Demand, product pricing and offtake agreements Suvo continues to build relationships with its customers and has underpinned its production with geographically diverse offtake agreements with various pricing mechanisms. Environment, climate change and natural events Suvo’s hydrous kaolin operational activities have the potential to impact the environment and require proactive management to minimise any potential impact to water resources, air quality and biodiversity. Climate change has the potential to impact the frequency, intensity, and likelihood of extreme events that could impact people’s safety, wellbeing, security and key operating infrastructure. Future growth opportunities Suvo endeavors to improve its return on investments and create shareholder value by carefully evaluating organic and inorganic growth and investment opportunities. The Company expects this risk may increase with the increased likelihood of growth and investment opportunities. Information on directors Name: Title: Experience and expertise: Aaron Banks Executive Chairman (appointed 1 May 2024), Non-Executive Chairman (resigned 1 May 2024) Aaron Banks is a specialist business consultant with over 20 years’ experience in contract negotiations and business development including senior roles in sales, marketing and construction management. In 2015 as founder and Managing Director of Australian Silica Pty Ltd, Mr Banks discovered one of the largest high grade silica sand resources in the world. Whilst on the Board of Australian Silica he successfully negotiated the sale of the Muchea Silica Sand Project to Ventnor Resources Limited which pivoted the former base metals explorer to the emerging silica sand producer known today as VRX Silica Limited (ASX:VRX). In 2020 he vended his private companies into what is Suvo Strategic Minerals Limited today. Aaron has an extensive background in industrial minerals and has focused on developing emerging assets globally. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: None Interests in shares: 75,451,278 Interests in options: None Interests in performance rights: 15,000,000 Name: Title: Experience and expertise: Oliver Barnes Non-Executive Director Oliver Barnes has over 25 years’ experience in natural resources and asset development with expertise in carbon, rural development, ESG and clean technology commercialisation. Mr Barnes was previously the Managing Director of an ASX listed land and water developer and held a senior role with an ASX listed phosphate technology company. He holds a Bachelor of Science in Agriculture Business Management. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: None Interests in shares: None Interests in options: None Interests in performance rights: 5,895,000 6 Suvo Strategic Minerals Limited Directors' Report 30 June 2024 Directors’ Report Name: Title: Experience and expertise Mark Pensabene Non-Executive Director (appointed 13 June 2024) Mark Pensabene holds Bachelor of Engineering and Commerce degrees from the University of Western Australia and has over 20 years of operational and management experience in the engineering and construction sectors. Mark spent 18 years with ASX-200 Company, Monadelphous Group, where he held a number of general manager roles. Most recently, Mark was the Executive General Manager & Chief Operating Officer at Primero Group, subsidiary of ASX listed NRW Holdings, a company specializing in the provision of EPC services in the Western Australian and North American mining sectors. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: None Interests in shares: 1,300,000 Interests in options: None Interests in performance rights: None Name: Title: Experience and expertise: Agu Kantsler Non-Executive Director (appointed 5 September 2023, resigned 13 June 2024) Dr Agu Kantsler B.SC (hons), Ph.D., G.A.I.C.D., FTSE, has over 45 years of experience in the international and Australian upstream oil and gas industry and has spent over 20 years in senior leadership positions and 12 years serving on the boards of several listed and private companies. He is currently the Managing Director of Transform Exploration Pty Ltd and a Non-Executive Director of Central Petroleum Limited. Other current directorships: Not applicable as no longer a director Former directorships (last 3 years): Not applicable as no longer a director Special responsibilities: Not applicable as no longer a director Interests in shares: Not applicable as no longer a director Interests in options: Not applicable as no longer a director Interests in performance rights: Not applicable as no longer a director Name: Title: Experience and expertise: Hugh Thomas Managing Director (resigned 30 October 2023) Mr Thomas has over 35 years’ industry experience, with a strong mix of commercial and operational experience, having held several executive positions across the natural resources sector. Previous positions include Managing Director and Head of Asia Pacific Natural Resources for both JP Morgan and Morgan Stanley in Hong Kong, Head of Natural Resources Investment Banking at Investec Bank in Sydney and Partner at Deloitte Corporate Finance. Other current directorships: Not applicable as no longer a director Former directorships (last 3 years): Not applicable as no longer a director Special responsibilities: Not applicable as no longer a director Interests in shares: Not applicable as no longer a director Interests in options: Not applicable as no longer a director Interests in performance rights: Not applicable as no longer a director '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. Company secretary Chris Achurch holds the position of Company Secretary. Mr Achurch provides company secretarial, corporate advisory and general consulting services to a number of ASX listed companies. 7 Suvo Strategic Minerals Limited Directors' Report 30 June 2024 Directors’ Report Meetings of directors The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the year ended 30 June 2024, and the number of meetings attended by each director were: Nomination and Remuneration Committee1 Attended Held Full board Attended Held Aaron Banks Oliver Barnes Mark Pensabene Agu Kantsler Hugh Thomas 5 5 5 1 5 5 5 1 - - Audit and Risk Committee1 Attended Held - - 1 Refer to Company’s Corporate Governance statement. Held: represents the number of meetings held during the time the Director held office or was a member of the relevant committee. Remuneration report (audited) The remuneration report details the key management personnel remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all Directors. The remuneration report is set out under the following main headings: ● Principles used to determine the nature and amount of remuneration ● Details of remuneration ● Service agreements ● Share-based compensation ● Additional information ● Additional disclosures relating to key management personnel Principles used to determine the nature and amount of remuneration The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices: ● competitiveness and reasonableness ● acceptability to shareholders ● performance linkage / alignment of executive compensation ● transparency The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high-quality personnel. In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Non-executive directors’ remuneration Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the Board. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The most recent determination was at the 2016 Annual General Meeting where the shareholders approved a maximum annual aggregate remuneration of $350,000. 8 Suvo Strategic Minerals Limited Directors' Report 30 June 2024 Directors’ Report Executive remuneration The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. The executive remuneration has four components: ● base pay and non-monetary benefits ● short-term performance incentives ● share-based payments ● other remuneration such as superannuation and long service leave The combination of these comprises the executive's total remuneration. Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Board based on individual and business unit performance, the overall performance of the Group and comparable market remunerations. Executives may receive their fixed remuneration in the form of cash or other fringe benefits where it does not create any additional costs to the Group and provides additional value to the executive. The short-term incentives ('STI') program is designed to align the targets of the business units with the performance hurdles of executives. STI payments are granted to executives based on specific annual targets and key performance indicators ('KPI's') being achieved. The long-term incentives ('LTI') include share-based payments. Shares are awarded to executives over a period greater than one year based on long-term incentive measures. Use of remuneration consultants During the financial year ended 30 June 2024, the Group did not engage a remuneration consultant. Voting and comments made at the Company's 2023 Annual General Meeting ('AGM') At the 2023 AGM, 95.49% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2023. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. 9 Suvo Strategic Minerals Limited Directors' Report 30 June 2024 Directors’ Report Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the Group are set out in the following tables. The key management personnel of the Group consisted of the following persons: ● Aaron Banks - Executive Chairman (appointed 1 May 2024), Non-Executive Chairman (resigned 1 May 2024) ● Oliver Barnes - Non-Executive Director ● Mark Pensabene - Non-Executive Director (appointed 13 June 2024) ● Agu Kantsler - Non-Executive Director (appointed 5 September 2023, resigned 13 June 2024) ● Hugh Thomas - Managing Director (resigned 30 October 2023) ● Bojan Bogunovic - Chief Executive Officer (appointed 31 October 2023), previously Chief Financial Officer ● Hanno Van Der Merwe - Chief Operating Officer Postemployment Long-term benefits benefits Short-term benefits 2024 Cash salary and fees $ Cash bonus $ Superannuation $ Other $ Long service leave $ Share-based payments Equitysettled shares $ Equitysettled Other $ Total $ Executive Directors: Aaron Banks1 Hugh Thomas2 41,667 165,000 - - 4,583 - - - (177,186)8 (13,221)9 (130,936) 151,779 Non-Executive Directors: Aaron Banks1 Oliver Barnes Mark Pensabene3 Agu Kantsler4 54,299 48,000 2,400 33,574 - 61,6146 - 12,750 3,693 - - (49,155)8,10 - 128,663 (1,155) 2,400 37,267 291,667 - - 29,333 - - (34,101) 8 286,899 257,918 - 12,0007 27,399 - 60,000 (25,952) 8 331,365 894,525 - 73,614 77,758 - 60,000 (299,615) 806,282 Other KMP: Bojan Bogunovic5 Hanno Van Der Merwe 1 2 3 4 5 6 7 8 9 10 Aaron Banks was Non-Executive Chairman up until 1 May 2024, he then transitioned to Executive Chairman. Hugh Thomas resigned as Managing Director on 30 October 2023. Mark Pensabene was appointed Non-Executive Director on 13 June 2024. Agu Kantsler was appointed Non-Executive Director on 5 September 2023 and resigned on 13 June 2024. Bojan Bogunovic was Chief Financial Officer up until 31 October 2023, he then transitioned to Chief Executive Officer. This was for consulting services provided by Aaron Banks during his time as Non-Executive Chairman. This was for director fees for Dingo HPA Pty Ltd. Relates to reversal of performance rights as a result of changes in the likelihood of vesting. Relates to performance rights forfeited due to cessation of directorship. Includes a $17,886 reversal in performance rights issued to ESG-F Holdings Pty Ltd, a related party of Oliver Barnes. 10 Suvo Strategic Minerals Limited Directors' Report 30 June 2024 Directors’ Report 2023 Executive Directors: Aaron Banks1 Hugh Thomas2 Henk Ludik3 Non-Executive Directors: Aaron Banks1 Oliver Barnes Henk Ludik3 Ian Wilson5 Other KMP: Hugh Thomas2 Bojan Bogunovic Hanno Van Der Merwe6 1 2 3 4 5 6 7 8 9 Postemployment Long-term Short-term benefits benefits benefits Long Cash salary Cash NonSuperservice and fees bonus monetary annuation leave $ 16,500 261,639 $ - $ $ - 26,250 $ Share-based payments EquityEquitysettled settled shares Other9 $ - Total - $ 399,3757 225,000 $ 399,375 16,500 512,889 21,012 48,000 6,000 47,663 - - 2,206 - - - 87,7944 (34,641)8 23,218 135,794 6,000 13,022 82,500 197,083 - - 22,794 - 20,000 13,221 145,744 95,721 385,621 150,453 - - 15,797 - - 46,488 212,738 830,850 - - 67,047 - 20,000 882,981 1,800,878 Aaron Banks was Executive Director up until 7 March 2023, he transitioned to Interim Non-Executive Chairman. Hugh Thomas was appointed Chief Executive Officer on 1 April 2023 and as Managing Director on 15 June 2023. Henk Ludik was Non-Executive Chairman up until 22 August 2022, he then transitioned to Executive Chairman. He held this role until 7 March 2023, transitioning to Non-Executive Director. He resigned as Non-Executive Director on 15 June 2023. Includes $31,945 in performance rights issued to ESG-F Holdings Pty Ltd, a related party of Oliver Barnes. Salary represents