American Pacific Borate & Lithium Ltd
Annual Report
30 June 2017
ABN 68 615 606 114
americanpacificborate.com
Berkut Minerals Limited
1
2016 Annual Report to Shareholders
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CONTENTS
Corporate Directory
Directors’ Report
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
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
ASX Additional Information
Schedule of Tenements
Important Information and Disclaimers
CORPORATE DIRECTORY
Directors
Mr. Harold (Roy) Shipes (Non-Executive Chairman)
Mr. Michael Schlumpberger (Managing Director)
Mr. Anthony Hall (Executive Director)
Mr. John McKinney (Non-Executive Director)
Mr. Stephen Hunt (Non-Executive Director)
Company Secretary
Mr. Aaron Bertolatti
Registered Office & Principal Place of Business
Level 24, Allendale Square,
77 St Georges Terrace,
PERTH WA 6000
Telephone: + 61 6141 3145
Website: americanpacificborate.com
Share Registry
Advanced Share Registry Pty Ltd
110 Stirling Highway
NEDLANDS WA 6009
Telephone: +61 8 9389 8033
Auditors
RSM Australia Partners
Level 32, Exchange Tower,
2 The Esplanade
PERTH WA 6000
Telephone: +61 8 9261 9160
Stock Exchange
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
ASX Code: ABR
Directors’ Report
The Directors present their report for American Pacific Borate & Lithium Limited (“American Pacific” or “the
Company”) and its subsidiaries (“the Group”) for the period of incorporation, 28 October 2016 to 30 June
2017.
DIRECTORS
The names of the Directors of American Pacific Borate & Lithium Ltd during the financial period and to the
date of this report are:
▪ Harold (Roy) Shipes (appointed 2 May 2017)
▪ Michael Schlumpberger (appointed 1 June 2017)
▪
▪
▪
▪
▪
Anthony Hall
Stephen Hunt (appointed 2 May 2017)
John McKinney (appointed 2 May 2017)
Robert Wrixon (resigned 2 May 2017)
Aaron Bertolatti (resigned 2 May 2017)
Directors have been in office since the start of the financial period to the date of this report unless
otherwise stated.
DIRECTORS’ INFORMATION
Mr. Harold (Roy) Shipes (appointed 2 May 2017)
Non-Executive Chairman, BSc
Harold (Roy) Shipes has over 50 years’ commercial experience in metals & mining – primarily engineering
and project development around the world including the USA, Canada, Peru, Australia, PNG, Venezuela
and Mexico. He served as CEO and General Manager of OK Tedi Mining Ltd, GM Operations for the
Southern Peru Copper Corporation and previously for Phelps Dodge Corp.
Mr Shipes is Founder and President of a number of North American focused mining companies, including
American Pacific Mining, Western States Engineering and Atlas Precious Metals Inc (the owner of the Fort
Cady assets). Prior to his mining career, Mr Shipes served as a captain in the US Air Force.
Mr. Michael Schlumpberger (appointed 1 June 2017)
Managing Director, BEng (Mining), MBA
Michael Schlumpberger is a qualified mining engineer with over 30 years’ experience in industrial minerals.
His background includes management, operations and maintenance in all aspects of mining, processing,
reclamation, and permitting.
Mr Schlumpberger has held senior roles with Potash Corporation of Saskatchewan, Passport Potash and
ASX listed Highfield Resources, and has worked in the United States, Canada, and Europe. Mr
Schlumpberger holds an MBA from East Carolina University.
Mr. Anthony Hall
Executive Director, BBus, LLB(Hons), AGIA
Anthony Hall is a qualified lawyer with 20 years´ commercial experience in venture capital, risk
management, strategy and business development. He was previously the Managing Director of ASX listed
Highfield Resources Ltd (ASX: HFR) from 2011 to 2016. During his tenure the company´s market cap grew
to over $500m and raised over $140m to progress potash projects in Spain. The Muga Mine will be the
first potash mine built in fifty years that is not owned by a major fertiliser company. Mr Hall holds a
Bachelor of Laws (Hons), Bachelor of Business and a Graduate Diploma of Applied Finance and Investment.
American Pacific Borate & Lithium Limited
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2017 Annual Report to Shareholders
Directors’ Report
Mr. Stephen Hunt (appointed 2 May 2017)
Non-Executive Director, BBus, MAICD
Stephen Hunt has 25 years’ experience in the marketing mineral products worldwide. His career includes
15 years at BHP Billiton where he spent 5 years in the London office marketing minerals to a global
customer base. Mr. Hunt has built his own minerals trading company, which has a strong Chinese focus.
He brings 15 years of cumulative board experience with four ASX listed companies. Two of those
companies were successful in transitioning from project development to production. Currently Mr. Hunt
is a Non-Executive Director of Volt Resources Ltd (ASX: VRC) and is a Member of the Australian Institute of
Company Directors.
Mr. John McKinney (appointed 2 May 2017)
Non-Executive Director, BScBA
John McKinney, has performed in senior management positions in the mining industry for approximately
25 years. He is experienced in Corporate Operations, Management and Business Development. Mr.
McKinney has co-founded a number of mining companies, including Western Gold Resources, American
International Trading Company and Western States Engineering, an engineering company specializing in
mining related engineering projects. His responsibilities have included overseeing operations in the U.S.,
Mexico and Bolivia, including Arisur, AITCO and Atlas Precious Metals in Bolivia. Mr. McKinney has been
Executive Vice President of Atlas Precious Metals, Inc. since May 1994.
Dr. Robert Wrixon (resigned 2 May 2017)
Executive Director
Robert Wrixon has 19 years’ commercial experience in corporate strategy, mining M&A and exploration
management. He was previously MD of two ASX listed mining companies: Haranga Resources (focusing on
iron ore in Mongolia) and Manhattan Corporation (uranium in Western Australia) and spent five years in
corporate strategy for Xstrata plc based in Sydney and London, prior to the Glencore merger. Dr Wrixon
holds an honours degree in chemical engineering and a Ph.D in mineral engineering from UC Berkeley.
COMPANY SECRETARY
Mr. Aaron Bertolatti (resigned as Executive Director on 2 May 2017)
B.Com, CA, AGIA
Mr. Bertolatti is a qualified Chartered Accountant and Company Secretary with over 10 years’ experience
in the mining industry and accounting profession. Mr. Bertolatti has both local and international
experience and provides assistance to a number of resource companies with financial accounting and
stock exchange compliance. Mr. Bertolatti has significant experience in the administration of ASX listed
companies, corporate governance and corporate finance.
INTERESTS IN THE SECURITIES OF THE COMPANY
As at the date of this report, the interests of the Directors in the securities of American Pacific Borate &
Lithium Limited are:
Director
Ordinary Shares
Options – exercisable at
$0.20 each on or before
30-Nov-2021
Options – exercisable at
$0.30 each on or before
31-May-2022
Harold (Roy) Shipes
Michael Schlumpberger
Anthony Hall
Stephen Hunt
John McKinney
49,220,0001
250,000
5,020,001
290,000
-
1,000,000
-
1,500,000
500,000
500,000
-
4,000,000
1,000,000
-
-
1 Mr. Shipes is a director and shareholder (52% interest) of Atlas Precious Metals Inc.
American Pacific Borate & Lithium Limited
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2017 Annual Report to Shareholders
Directors’ Report
RESULTS OF OPERATIONS
The Company’s net loss after taxation attributable to the members of American Pacific for the period to
30 June 2017 was $848,511.
DIVIDENDS
No dividends were paid or declared. The directors do not recommend the payment of a dividend.
CORPORATE STRUCTURE
American Pacific Borate & Lithium Limited is a company limited by shares, which is incorporated and
domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
During the reporting period the Group was focussed on activities in preparation for listing on the
Australian Securities Exchange.
REVIEW OF OPERATIONS
American Pacific Borate and Lithium Limited is an Australian incorporated Company focused on advancing
its 100% owned Fort Cady Boron and Lithium Project located in Southern California, USA. Fort Cady is a
highly rare and large colemanite deposit with substantial lithium potential and is the largest known
contained borate occurrence not owned by the two major borate producers Rio Tinto and Eti Maden.
The Company commenced trading on the Australian Securities Exchange on 28 July 2017, after successfully
raising $15 million at $0.20 per share for its initial public offering (IPO). The Company issued 75m shares
for its IPO (total shares on issue 169.6m), giving the company a fully diluted market capitalisation of $36.9
million.
The Company’s US Project has a historical non-JORC mineral estimate of 115Mt at 7.4% B2O3 or 13.2%
H3BO3 (boric acid) equivalent (5% B2O3 cut-off) including 69Mt at 9% B2O3 and 16% H3BO3 (7% B2O3 cut-
off)1,2,3. The aforementioned estimates are historical estimates and are not reported in accordance with
the JORC Code. A competent person has not done sufficient work to classify the historical estimates as
mineral resources or ore reserves in accordance with the JORC Code. It is uncertain that following
evaluation and/or further exploration work that the historical estimates will be able to be reported as
mineral resources or ore reserves in accordance with the JORC Code.
More than US$50m has been spent at Fort Cady to date, with substantial operations test works having
been completed:
▪ 33 diamond resource holes were drilled by Duval Corp (1979 - 1981) at 250m spacing
▪ 17 production wells completed
▪ Metallurgical testing, well field testing, pilot plant and borate acid test production completed
▪
Feasibility studies and permitting completed
▪ Three historic mineral estimates completed
Colemanite mineralisation occurs around 400m beneath surface and the deposit remains open to the
northwest and southeast, while the colemanite horizon ranges from 30m to 75m thick in most areas.
Lithium concentrations in excess of 300 ppm have also been defined within the colemanite ore body and
concentrations up to 90 ppm have been recorded in the ambient brines within the ore body.
1 Refer to Independent Geologists Report in APBL May 2017 prospectus (ASX release 27th July 2017)
2 H3BO3 equivalent grade = 1.78 x B2O3
3 The Company confirms that the supporting information provided in relation to the historical mineral estimates continues to apply and has
not materially changed.
American Pacific Borate & Lithium Limited
4
2017 Annual Report to Shareholders
Directors’ Report
The Project is close to existing infrastructure including an interstate highway and rail line (within 5km), gas
and grid electricity, port access and a pilot plant.
The Company is planning on conducting the following activities over the remainder of 2017. These activities
are focused on expediting development studies so the Fort Cady Project is construction ready in the
second half of 2018:
▪
▪
▪
A total of 23 drill holes, for 9,500m, using a combination of open hole percussion, reverse circulation
(RC) and diamond drilling (DD);
The key objectives of the drilling programme are to:
- Confirm the historical resource estimate and define a JORC Compliant Mineral Resource Estimate
- Test open areas of the sub basin to the north west of the known colemanite horizon
- Test for lithium-enriched brines in the Hector Lithium Exploration Project; and
Commence initial metallurgical test work studies for process design optimisation
UPDATE ON EVALUATION OF HISTORICAL RESOURCE ESTIMATES
Subsequent to the end of financial period of this report, the Company commenced drilling to evaluate the
historical resource estimates. At the time of writing this report, two drill holes have been spudded but
neither of these drill holes have been completed. The Company plans on continuing the current
confirmatory resource drilling program with the view of defining a maiden JORC Compliant Mineral
Resource Estimate in the 2018 financial year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
American Pacific was incorporated in Australia on 28 October 2016 for the purpose of acquiring and
developing borate and lithium projects. The Company lodged a Prospectus with ASIC in May 2017, offering
up to 75,000,000 Shares at an issue price of 20 cents each to raise $15,000,000. The Company successfully
listed on the Australian Securities Exchange on 28 July 2017.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
The Company commenced trading on the Australian Securities Exchange on 28 July 2017, after successfully
raising $15 million at $0.20 per share for its initial public offering (IPO). The Company issued 75m shares
for its IPO (total shares on issue 169.6m). There have been no other significant events subsequent to the
end of the financial period to the date of this report.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Directors have excluded from this report any further information on the likely developments in the
operations of the Company and the expected results of those operations in future financial years, as the
Directors believe that it would be speculative and prejudicial to the interests of the Company.
ENVIRONMENTAL REGULATIONS AND PERFORMANCE
The operations of the Group are presently subject to environmental regulation under the laws of the
United States. The Group is, to the best of its knowledge, at all times in full environmental compliance with
the conditions of its licences.
SHARE OPTIONS
As at the date of this report there were 14,000,000 unissued ordinary shares under options. The details of
the options are as follows:
Number
7,000,000
1,000,000
6,000,000
14,000,000
Exercise Price $
$0.20
$0.30
$0.30
Expiry Date
30-Nov-2021
30-Nov-2021
31-May-2022
American Pacific Borate & Lithium Limited
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2017 Annual Report to Shareholders
Directors’ Report
No option holder has any right under the options to participate in any other share issue of the Company
or any other entity. No options expired unexercised during the financial period. No options were exercised
during or since the period ended 30 June 2017.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has made an agreement indemnifying all the Directors and officers of the Company against
all losses or liabilities incurred by each Director or officer in their capacity as Directors or officers of the
Company to the extent permitted by the Corporations Act 2001. The indemnification specifically excludes
wilful acts of negligence.
INDEMNIFICATION OF THE AUDITOR
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify
the auditor of the Company or any related entity against a liability incurred by the auditor. During the
financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
DIRECTORS’ MEETINGS
During the financial period, in addition to regular Board discussions, the number of meetings of Directors
held during the period and the number of meetings attended by each Director were as follows:
Director
Harold (Roy) Shipes
Michael Schlumpberger
Anthony Hall
Stephen Hunt
John McKinney
Robert Wrixon
Aaron Bertolatti
Number of
Meetings Eligible
to Attend
Number of
Meetings
Attended
-
-
2
-
-
2
2
-
-
2
-
-
2
2
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of the Court to bring proceedings on behalf of the Company or intervene
in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of
the Company for all or any part of those proceedings. The Company was not a party to any such
proceedings during the period.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors
of American Pacific Borate & Lithium Limited support and adhere to the principles of sound corporate
governance. The Board recognises the recommendations of the Australian Securities Exchange Corporate
Governance Council, and considers that American Pacific is in compliance to the extent possible with those
guidelines, which are of importance and add value to the commercial operation of an ASX listed resources
company. The Company has established a set of corporate governance policies and procedures and these
can be found on the Company’s website: americanpacificborate.com.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
Section 307C of the Corporations Act 2001 requires the Company’s auditors to provide the Directors of
American Pacific with an Independence Declaration in relation to the audit of the financial report. A copy
of that declaration is included within the annual report.
American Pacific Borate & Lithium Limited
6
2017 Annual Report to Shareholders
Directors’ Report
Non-Audit Services
Details of amounts paid or payable to the auditor for non-audit services provided during the period by the
auditor are outlined in note 13 to the financial statements. The Directors are satisfied that the provision
of non-audit services is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
The Directors are of the opinion that the services do not compromise the auditor’s independence as all
non-audit services have been reviewed to ensure that they do not impact the integrity and objectivity of
the auditor and none of the services undermine the general principles relating to auditor independence
as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the
Accounting Professional & Ethical Standards Board.
AUDITED REMUNERATION REPORT
This report, which forms part of the Directors’ report, outlines the remuneration arrangements in place
for the key management personnel of American Pacific Borate & Lithium Limited for the financial period
ended 30 June 2017. The information provided in this remuneration report has been audited as required
by Section 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration
arrangements for KMP who are defined as those persons having authority and responsibility for planning,
directing and controlling the major activities of the Group, directly or indirectly, including any Director
(whether executive or otherwise) of the Group.
Details of Directors and Key Management Personnel
Directors
▪ Harold (Roy) Shipes (appointed 2 May 2017)
▪ Michael Schlumpberger (appointed 1 June 2017)
▪ Anthony Hall
▪ Stephen Hunt (appointed 2 May 2017)
▪
John McKinney (appointed 2 May 2017)
▪ Robert Wrixon (resigned 2 May 2017)
▪ Aaron Bertolatti (resigned 2 May 2017)
Remuneration Policy
The Board is responsible for determining and reviewing compensation arrangements for the Directors.
The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a
yearly basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high-quality board and executive team. The
expected outcome of this remuneration structure is to retain and motivate Directors.
As part of its Corporate Governance Policies and Procedures, the board has adopted a formal
Remuneration Committee Charter and Remuneration Policy. The Board has elected not to establish a
remuneration committee based on the size of the organisation and has instead agreed to meet as deemed
necessary and allocate the appropriate time at its board meetings. Fees and payments to non‑executive
directors reflect the demands which are made on, and the responsibilities of, the directors. Non‑executive
directors’ fees and payments are reviewed annually by the Board. The Chair’s fees are determined
independently to the fees of non‑executive directors based on comparative roles in the external market.
Non‑executive directors do not receive performance-based pay.
Level
Chairman
Managing Director
Non-Executive Director
Senior Executives
Cash Remuneration
A$60,000
US$189,000
A$36,000
Up to A$200,000
American Pacific Borate & Lithium Limited
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2017 Annual Report to Shareholders
Directors’ Report
Additional fees
A Director may also be paid fees or other amounts as the Directors determine if a Director performs special
duties or otherwise performs services outside the scope of the ordinary duties of a Director. A Director
may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special
duties.
Details of Remuneration
Details of the nature and amount of each element of the remuneration of each Director of the Group for
the period ended 30 June 2017 are as follows:
2017
Directors 1
Harold (Roy) Shipes2
Michael Schlumpberger3
Anthony Hall
Stephen Hunt2
John McKinney2
Robert Wrixon4
Aaron Bertolatti4
Base
Salary
$
Short term
Directors’
Fees
$
Consulting
Fees
$
Options
Share Based
Payments
$
-
-
-
-
-
-
-
-
9,678
-
-
5,806
5,806
-
-
21,290
-
29,810
40,000
-
-
48,000
40,000
157,810
10,366
20,808
85,980
5,183
5,183
65,554
40,612
233,686
Option
related
%
51.7
41.1
68.2
47.2
47.2
57.7
50.4
Total
$
20,044
50,618
125,980
10,989
10,989
113,554
80,612
412,786
1 American Pacific was incorporated on 28 October 2016.
2 Harold Shipes, Stephen Hunt and John McKinney were appointed on 2 May 2017.
3 Mike Schlumpberger was appointed on 1 June 2017.
4 Robert Wrixon and Aaron Bertolatti resigned on 2 May 2017.
There were no other executive officers of the Company during the financial period ended 30 June 2017.
Shareholdings of Directors
The number of shares in the Company held during the financial period by Directors of the Group, including
their personally related parties, is set out below. There were no shares granted during the reporting period
as compensation.
2017
Directors
Harold (Roy) Shipes2
Michael Schlumpberger3
Anthony Hall
Stephen Hunt2
John McKinney2
Robert Wrixon4
Aaron Bertolatti4
Balance at the
start of the
period1
Granted during
the period as
compensation
On exercise of
share options
Other changes
during the
period
Balance at the
end of the
period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49,220,000
250,000
5,020,001
100,000
-
-
-
49,220,000
250,000
5,020,001
100,000
-
-
-
1 American Pacific was incorporated on 28 October 2016.
2 Harold Shipes, Stephen Hunt and John McKinney were appointed on 2 May 2017.
3 Mike Schlumpberger was appointed on 1 June 2017.
4 Robert Wrixon and Aaron Bertolatti resigned on 2 May 2017.
American Pacific Borate & Lithium Limited
8
2017 Annual Report to Shareholders
Directors’ Report
All equity transactions with Directors other than those arising from the exercise of remuneration options
have been entered into under terms and conditions no more favourable than those the Company would
have adopted if dealing at arm’s length.
Option holdings of Directors
The numbers of options over ordinary shares in the Company held during the financial period by each
Director of American Pacific Borate & Lithium Limited, including their personally related parties, are set
out below:
2017
Directors
Harold (Roy) Shipes2
Michael Schlumpberger3
Anthony Hall
Stephen Hunt2
John McKinney2
Robert Wrixon4
Aaron Bertolatti4
Balance at
the start of
the
period1
Granted
during the
period as
compensation
Exercised
during the
period
Other
changes
during the
period
Balance
at the end
of the
period
Exercisable
Un-
exercisable
-
-
-
-
-
-
-
1,000,000
4,000,000
2,500,000
500,000
500,000
1,000,000
1,000,000
-
-
-
-
-
-
-
- 1,000,000
- 4,000,000
- 2,500,000
500,000
-
500,000
-
-
(1,000,000)
-
(1,000,000)
- 1,000,000
- 4,000,000
- 2,500,000
500,000
-
500,000
-
-
-
-
-
1 American Pacific was incorporated on 28 October 2016.
2 Harold Shipes, Stephen Hunt and John McKinney were appointed on 2 May 2017.
3 Mike Schlumpberger was appointed on 1 June 2017.
4 Robert Wrixon and Aaron Bertolatti resigned on 2 May 2017.
No option holder has any right under the options to participate in any other share issue of the Company
or any other entity. Options granted as part of remuneration have been valued using the Black Scholes
option pricing model that takes into account the exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected price volatility of the underlying share and the risk-
free interest rate for the term of the option. Options granted under the plan carry no dividend or voting
rights. For details on the valuation of options, including models and assumptions used, please refer to
note 18.
Options Affecting Remuneration
The terms and conditions of options affecting remuneration in the current or future reporting years are
as follows:
Grant
Date
Grant
Number
Expiry
date/last
exercise
date
Exercise
price
per
option
Value of
options at
grant
date1
Number
of
options
vested
Vested
%
Max value
yet to vest
Directors
Harold (Roy) Shipes
02/05/17
Michael Schlumpberger 01/06/17
Anthony Hall
01/12/16
21/04/17
26/05/17
02/05/17
02/05/17
01/12/16
21/04/17
01/12/16
26/05/17
Stephen Hunt
John McKinney
Robert Wrixon
Aaron Bertolatti
1,000,000 30/11/21
4,000,000 31/05/22
1,000,000 30/11/21
500,000 30/11/21
1,000,000 31/05/22
500,000 30/11/21
500,000 30/11/21
500,000 30/11/21
500,000 30/11/21
500,000 30/11/21
500,000 31/05/22
10,500,000
$0.20 $78,266
$0.30 $423,239
$0.20 $81,440
$0.20 $39,253
$0.30 $105,976
$0.20 $39,133
$0.20 $39,133
$0.20 $40,720
$0.20 $39,253
$0.20 $40,720
$0.30 $52,988
$980,121
-
-
-
-
-
-
-
-
-
-
$67,900
-
- $402,431
$29,678
-
$11,219
-
$99,792
-
$33,950
-
$33,950
-
$3,200
-
$11,219
$3,200
-
-
$49,896
$746,435
1 The value at grant date has been calculated in accordance with AASB 2 Share based payments.
American Pacific Borate & Lithium Limited
9
2017 Annual Report to Shareholders
Directors’ Report
Service Agreements
Executive Directors
The Managing Director, Mr. Michael Schlumpberger is employed under an Executive Employment
Agreement effective 1 June 2017. Under the agreement Mr. Schlumpberger is paid an annual fee of
US$189,000. Mr. Schlumpberger also has the opportunity to participate in short term and long-term
incentive schemes that the Company may put in place in the future. The Agreement may be terminated by
the Company without notice or without cause by giving six months’ notice in writing or payment in lieu of
notice. The Agreement may also be terminated by Mr. Schlumberger by providing six months’ notice in
writing.
Mr. Anthony Hall is employed under an Executive Employment Agreement effective 1 March 2017. Under
the agreement Mr. Hall is paid an annual fee of A$120,000. Mr. Hall also has the opportunity to participate
in short term and long-term incentive schemes that the Company may put in place in the future.
Non-Executive Directors
On appointment to the Board, all non-executive directors enter into a service agreement with the Group
in the form of a letter of appointment. The letter summarises the Board policies and terms, including
compensation, relevant to the Director. The aggregate remuneration for Non-Executive Directors has been
set at an amount not to exceed $500,000 per annum. This amount may only be increased with the
approval of Shareholders at a general meeting.
Loans to Directors and Executives
There were no loans to Directors and key management personnel during the financial period ended 30
June 2017.
END OF AUDITED REMUNERATION REPORT
Signed on behalf of the Board in accordance with a resolution of the Directors.
Michael Schlumpberger
Managing Director
California, USA
21 September 2017
American Pacific Borate & Lithium Limited
10
2017 Annual Report to Shareholders
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the period ended 30 June 2017
American Pacific Borate & Lithium Ltd
Continuing Operations
Interest received
Professional and consulting fees
Director and employee costs
Other expenses
Share based payments expense
Travel and accommodation
Loss before income tax
Income tax expense
Net loss for the period
Other comprehensive income
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations
Other comprehensive income for the period net of tax
Total comprehensive loss for the period
Loss per share
Loss per share (cents)
Note
28 October 2016
- 30 June 2017
$
18
3
1,521
(285,258)
(21,290)
(19,782)
(367,427)
(156,275)
(848,511)
-
(848,511)
(13,284)
(13,284)
(861,795)
16
(3.00)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
American Pacific Borate & Lithium Limited
11
2017 Annual Report to Shareholders
Consolidated Statement of Financial Position as at 30 June 2017
American Pacific Borate & Lithium Ltd
Note
30 June 2017
$
Current Assets
Cash and cash equivalents
Other assets
Trade and other receivables
Total Current Assets
Non-Current Assets
Property, plant and equipment
Deferred exploration and evaluation expenditure
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
4
5
6
7
8
9
10
11
12
4,883,114
46,070
20,171
4,949,355
646,672
10,386,377
11,033,049
15,982,404
5,356,297
5,356,297
5,356,297
10,626,107
11,120,475
354,143
(848,511)
10,626,107
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
American Pacific Borate & Lithium Limited
12
2017 Annual Report to Shareholders
Consolidated Statement of Changes in Equity for the period ended 30 June 2017
American Pacific Borate & Lithium Ltd
Issued
capital
$
Accumulated
losses
$
Foreign
exchange
translation
reserve
Share
option
reserve
$
Balance at 28 October 2016
Total comprehensive loss for the period
Loss for the period
Foreign currency translation
Total comprehensive loss for the period
Transactions with owners in their capacity as owners
Shares issued during the period
Cost of issue
Share based payment
Balance at 30 June 2017
-
-
-
-
11,432,002
(311,527)
-
11,120,475
-
-
(848,511)
-
(848,511)
-
-
-
(848,511)
-
(13,284)
(13,284)
-
-
-
(13,284)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Total
$
-
(848,511)
(13,284)
(861,795)
-
-
-
-
-
-
367,427
367,427
11,432,002
(311,527)
367,427
10,626,107
American Pacific Borate & Lithium Limited
13
2017 Annual Report to Shareholders
Consolidated Statement of Cash Flows for the period ended 30 June 2017
American Pacific Borate & Lithium Ltd
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payments for exploration expenditure
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from IPO shares to be issued
Payments for share issue costs
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of exchange rate fluctuations on cash
Cash and cash equivalents at the end of the period
28 October 2016
- 30 June 2017
$
Note
(247,196)
1,521
(245,675)
(1,274,620)
(1,274,620)
1,640,002
4,857,474
(94,067)
6,403,409
4,883,114
-
-
4,883,114
4
9
4
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
American Pacific Borate & Lithium Limited
14
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
1. Corporate Information
The financial report of American Pacific Borate & Lithium Limited (“American Pacific” or “the Company”) for
the period ended 30 June 2017 was authorised for issue in accordance with a resolution of the Directors on
21 September 2017. American Pacific is a company limited by shares incorporated in Australia whose shares
commenced public trading on the Australian Securities Exchange on 28 July 2017. The nature of the operations
and the principal activities of the Company are described in the Directors’ Report.
2. Summary of Significant Accounting Policies
(a) Basis of Preparation
The financial statements are general-purpose financial statements, which have been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board. The financial statements have also been
prepared on a historical cost basis. The presentation currency is Australian dollars.
Comparatives
The Company was incorporated on 28 October 2016 and listed on the ASX on 28 July 2017; therefore, there is
no comparative data for the period ended 30 June 2017.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the
consolidated entity only. Supplementary information about the parent entity is disclosed in note 21.
(b) Compliance Statement
The financial report complies with Australian Accounting Standards, which include Australian equivalents to
International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report,
comprising the financial statements and notes thereto, complies with International Financial Reporting
Standards (IFRS).
(c) Basis of Consolidation
The consolidated financial statements comprise the financial statements of American Pacific Borate & Lithium
Limited (‘the Company’) and its subsidiaries as at 30 June each year (‘the Group’). Subsidiaries are those
entities over which the Company has the power to govern the financial and operating policies so as to obtain
benefits from their activities. The existence and effect of potential voting rights that are currently exercisable
or convertible are considered when assessing whether a Company controls another entity.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and
expenses and profit and losses resulting from intra-company transactions have been eliminated in full.
Unrealised losses are also eliminated unless costs cannot be recovered. Non-controlling interests in the
results and equity of subsidiaries are shown separately in the Statement of Profit or Loss and Other
Comprehensive Income and Consolidated Statement of Financial Position respectively.
(d) Foreign Currency Translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company’s controlled entities are measured using
the currency of the primary economic environment in which the entity operates (‘the functional currency’).
The functional and presentation currency of American Pacific Borate & Lithium Limited is Australian dollars.
The functional currency of the US subsidiary is the US Dollar.
American Pacific Borate & Lithium Ltd
15
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement of profit or loss and other comprehensive
income.
(iii) Group entities
The results and financial position of all the Group entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
▪
▪
▪
assets and liabilities for each statement of financial position presented are translated at the closing rate
at the date of that statement of financial position;
income and expenses for each statement of profit or loss and other comprehensive income are
translated at average exchange rates (unless this is not a reasonable approximation of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the dates of the
transactions); and
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities
are taken to shareholders’ equity. When a foreign operation is sold or any borrowings forming part of the
net investment are repaid, a proportionate share of such exchange differences are recognised in the
statement of profit or loss and other comprehensive income, as part of the gain or loss on sale where
applicable.
(e) Segment Reporting
For management purposes, the Company is organised into one main operating segment, which involves
exploration for Borates and Lithium. All of the Company’s activities are interrelated, and discrete financial
information is reported to the Managing Director (Chief Operating Decision Maker) as a single segment.
Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The
financial results from this segment are equivalent to the financial statements of the Company as a whole.
(f) Changes in accounting policies and disclosures
The Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that
are relevant to the Company’s operations and effective for future reporting periods. It has been determined
by the Directors that there is no impact, material or otherwise, of the new and revised Standards and
Interpretations on the Company and therefore, no change will be necessary to Company accounting policies.
(g) Exploration and evaluation expenditure
Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an
exploration and evaluation asset in the year in which they are incurred where the following conditions are
satisfied:
the rights to tenure of the area of interest are current; and
(i)
(ii) at least one of the following conditions is also met:
(a) the exploration and evaluation expenditures are expected to be recouped through successful
development and exploration of the area of interest, or alternatively, by its sale; or
(b) exploration and evaluation activities in the area of interest have not at the balance date reached a
stage which permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or in relation to, the area of interest are
continuing.
American Pacific Borate & Lithium Ltd
16
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore,
studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation
and amortisation of assets used in exploration and evaluation activities.
General and administrative costs are only included in the measurement of exploration and evaluation costs
where they are related directly to operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that
the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The
recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has
been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the
impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset
is increased to the revised estimate of its recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset in previous years.
Where a decision has been made to proceed with development in respect of a particular area of interest, the
relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to
development. Where an area of interest is abandoned, any expenditure carried forward in respect of that
area is written off.
(h) Income Tax
The income tax expense or benefit for the year is the tax payable on the current year’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary difference and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting year. Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior years are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except when:
▪ the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
▪ the taxable temporary difference is associated with investments in subsidiaries, associates or interests in
joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused
tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences and the carry-forward of unused tax credits and unused tax
losses can be utilised, except when:
American Pacific Borate & Lithium Ltd
17
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
▪ the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; or
▪ the deductible temporary difference is associated with investments in subsidiaries, associates or interests
in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that
the temporary difference will reverse in the foreseeable future and taxable profit will be available against
which the temporary difference can be recognised.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be recognised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is recognised or the liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
(i) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Government. In these circumstances the GST is recognised as part of the
cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement
of financial position are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the Government is included as part of receivables or
payables in the statement of financial position. Cash flows are presented in the statement of cash flows on a
gross basis, except for the GST component of investing and financing activities, which is receivable from or
payable to the Government, are disclosed as operating cash flows.
(j) Impairment of non-financial assets other than goodwill
The Company assesses at each balance date whether there is an indication that an asset may be impaired.
If any such indication exists, or when annual impairment testing for an asset is required, the Company makes
an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is
determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or Company of assets and the asset’s value in use cannot be
estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-
generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds
its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its
recoverable amount.
American Pacific Borate & Lithium Ltd
18
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset. Impairment losses relating to continuing operations are recognised in those expense categories
consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which
case the impairment loss is treated as a revaluation decrease).
An assessment is also made at each balance date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the
recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been
a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss
was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount.
That increased amount cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years.
Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the
reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future
years to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its
remaining useful life.
(k) Cash and cash equivalents
Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
(l) Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and
services provided to the Company prior to the end of the financial year that are unpaid and arise when the
Company becomes obliged to make future payments in respect of the purchase of these goods and services.
(m) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not
recognised for future operating losses.
When the Company expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually
certain. The expense relating to any provision is presented in the statement of comprehensive income net of
any reimbursement.
Provisions are measured at the present value or management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting year.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the
passage of time is recognised as an interest expense.
American Pacific Borate & Lithium Ltd
19
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
(n) Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly
attributable to the issue of new shares or options for the acquisition of a new business are not included in the
cost of acquisition as part of the purchase consideration.
(o) Property, plant and equipment
Land and buildings are shown at fair value, based on periodic, at least every 3 years, valuations by external
independent valuers, less subsequent depreciation and impairment for buildings. The valuations are
undertaken more frequently if there is a material change in the fair value relative to the carrying amount. Any
accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the
asset and the net amount is restated to the revalued amount of the asset. Increases in the carrying amounts
arising on revaluation of land and buildings are credited in other comprehensive income through to the
revaluation surplus reserve in equity. Any revaluation decrements are initially taken in other comprehensive
income through to the revaluation surplus reserve to the extent of any previous revaluation surplus of the
same asset. Thereafter the decrements are taken to profit or loss.
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds
are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred
directly to retained profits.
(p) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the
arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement conveys a right to use the asset. A distinction is made
between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and
benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets,
or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal
component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the
remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter
of the asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will
obtain ownership at the end of the lease term. Operating lease payments, net of any incentives received from
the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.
(q) Current and Non-Current Classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification. An asset is classified as current when: it is either expected to be realised or intended to be sold
or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected
to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.
All other assets are classified as non-current.
American Pacific Borate & Lithium Ltd
20
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period;
or there is no unconditional right to defer the settlement of the liability for at least 12 months after the
reporting period. All other liabilities are classified as non-current.
(r) Revenue
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company
and the revenue can be reliably measured. The following specific recognition criteria must also be met before
revenue is recognised:
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial asset.
(s) Earnings per share
Basic earnings/loss per share is calculated as net profit/loss attributable to members, adjusted to exclude any
costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted
average number of ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit/loss attributable to members, adjusted for:
▪ costs of servicing equity (other than dividends) and preference share dividends;
▪ the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have
been recognised as expenses; and
▪ other non-discretionary changes in revenues or expenses during the year that would result from the
dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
(t) Share based payment transactions
(i) Equity settled transactions:
The Company provides benefits to individuals acting as, and providing services similar to employees (including
Directors) of the Company in the form of share based payment transactions, whereby individuals render
services in exchange for shares or rights over shares (‘equity settled transactions’). There is currently an
Employee Share Option Plan (ESOP) in place, which provides benefits to Directors and individuals providing
services similar to those provided by an employee.
The cost of these equity settled transactions with employees is measured by reference to the fair value at the
date at which they are granted. The fair value is determined by using the Black Scholes formula taking into
account the terms and conditions upon which the instruments were granted, as discussed in note 18. The
expected price volatility is based on the historic volatility of the Company’s share price on the ASX.
In valuing equity settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of American Pacific Borate & Lithium Limited (‘market conditions’).
The cost of the equity settled transactions is recognised, together with a corresponding increase in equity,
over the year in which the performance conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (‘vesting date’).
American Pacific Borate & Lithium Ltd
21
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
The cumulative expense recognised for equity settled transactions at each reporting date until vesting date
reflects (i) the extent to which the vesting year has expired and (ii) the number of awards that, in the opinion
of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available
information at balance date.
No adjustment is made for the likelihood of the market performance conditions being met as the effect of
these conditions is included in the determination of fair value at grant date. The statement of comprehensive
income charge or credit for a year represents the movement in cumulative expense recognised at the
beginning and end of the year.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional
upon a market condition. Where the terms of an equity settled award are modified, as a minimum an expense
is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in
the value of the transaction as a result of the modification, as measured at the date of the modification.
Where an equity settled award is cancelled, it is treated as if it had vested on the date of the cancellation, and
any expense not yet recognised for the award is recognised immediately. However if a new award is
substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the
cancelled and new award are treated as if they were a modification of the original award, as described in the
previous paragraph.
The cost of equity-settled transactions with non-employees is measured by reference to the fair value of goods
and services received unless this cannot be measured reliably, in which case the cost is measured by reference
to the fair value of the equity instruments granted. The dilutive effect, if any, of outstanding options is
reflected in the computation of loss per share (see note 16).
(ii) Cash settled transactions:
The Company may also provide benefits to employees in the form of cash-settled share-based payments,
whereby employees render services in exchange for cash, the amounts of which are determined by reference
to movements in the price of the shares of the Company.
The cost of cash-settled transactions is measured initially at fair value at the grant date using the Black-Scholes
formula taking into account the terms and conditions upon which the instruments were granted. This fair
value is expensed over the year until vesting with recognition of a corresponding liability. The liability is
remeasured to fair value at each balance date up to and including the settlement date with changes in fair
value recognised in profit or loss.
(u) Critical accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions about
carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the
year in which the estimate is revised if it affects only that year, or in the year of the revision and future years
if the revision affects both current and future years.
American Pacific Borate & Lithium Ltd
22
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
Share-based payment transactions:
The Company measures the cost of equity-settled transactions and cash-settled share-based payments with
employees and third parties by reference to the fair value of the equity instruments at the date at which they
are granted. The fair value at the grant date is determined using the Black and Scholes option pricing model
taking into account the terms and conditions upon which the instruments were granted and the assumptions
detailed in note 18.
Acquisition of Fort Cady California Corporation
Key estimates and judgments are applied in the acquisition accounting including determining the type of
acquisition, the fair value of the assets and liabilities acquired and the fair value of the consideration paid. The
acquisition was determined by the directors to be an asset acquisition as detailed in note 8.
Deferred Exploration and evaluation Expenditure
Deferred exploration and evaluation expenditure has been capitalised on the basis that the company will
commence commercial production in the future, from which time the costs will be amortised in proportion to
the depletion of the mineral resources. Key judgements are applied in considering costs to be capitalised
which includes determining expenditures directly related to these activities and allocating overheads between
those that are expensed and capitalised.
In addition, costs are only capitalised that are expected to be recovered either through successful
development or sale of the relevant mining interest. Factors that could impact the future commercial
production at the mine include the level of reserves and resources, future technology changes, which could
impact the cost of mining, future legal changes and changes in commodity prices. To the extent that
capitalised costs are determined not to be recoverable in the future, they will be written off in the period in
which this determination is made.
(v) New standards and interpretations not yet adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board that are mandatory for the current reporting period. Any new,
revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The Group's assessment of the impact of these new or amended Accounting Standards and Interpretations,
most relevant to the Group, are set out below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard
replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance
leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position,
measured at the present value of the unavoidable future lease payments to be made over the lease term. The
exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal
computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use'
asset is recognised or lease payments are expensed to profit or loss as incurred.
A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease
incentives received, initial direct costs incurred and an estimate of any future restoration, removal or
dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation
charge for the leased asset (included in operating costs) and an interest expense on the recognised lease
liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease
under AASB 16 will be higher when compared to lease expenses under AASB 117.
American Pacific Borate & Lithium Ltd
23
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as
the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For
classification within the statement of cash flows, the lease payments will be separated into both a principal
(financing activities) and interest (either operating or financing activities) component. For lessor accounting,
the standard does not substantially change how a lessor accounts for leases.
The impact of the new leases standard is that leased asset will be capitalised in the statement of financial
position, measured as the present value of the unavoidable future lease payments to be made over the lease
term and a liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration,
removal or dismantling costs. The Group will adopt this standard from 1 July 2019.
3.
Income Tax
(a) Income tax expense
Major component of tax expense for the period:
Current tax
Deferred tax
(b) Numerical reconciliation between aggregate tax expense recognised in the
statement of profit or loss and other comprehensive income and tax expense
calculated per the statutory income tax rate.
A reconciliation between tax expense and the product of accounting loss before income
tax multiplied by the Company’s applicable tax rate is as follows:
Loss from continuing operations before income tax expense
Tax at the Australian rate of 30%
Share based payments
Non-deductible legal expenses
Income tax benefit not brought to account
Income tax expense
(c) Deferred tax
The following deferred tax balances have not been bought to account:
Liabilities
Total exploration and evaluation expenditure
Offset by deferred tax assets
Deferred tax liability recognised
Assets
Losses available to offset against future taxable income
Accrued expenses
Deferred tax assets offset against deferred tax liabilities
Net deferred tax asset not recognised
(d) Unused tax losses
Unused tax losses
Potential tax benefit not recognised at 30%
2017
$
-
-
-
(848,511)
(254,553)
110,228
-
(144,325)
-
-
-
-
139,825
4,500
-
144,325
466,084
139,825
American Pacific Borate & Lithium Ltd
24
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
The benefit for tax losses will only be obtained if:
i. the Company derives future assessable income of a nature and of an amount sufficient to enable the
benefit from the deductions for the losses to be realised; and
ii. the Company continues to comply with the conditions for deductibility imposed by tax legislation; and
iii. no changes in tax legislation adversely affect the Company in realising the benefit from the deductions
for the losses.
4. Cash and cash equivalents
Reconciliation of cash
Cash comprises of:
Cash at bank
Restricted Cash – IPO funds received
Reconciliation of operating loss after tax to net cash flow from operations
Loss after tax
Non-cash and non-operating items
Share based payments
Change in assets and liabilities
Decrease / (increase) in trade and other receivables
Increase / (decrease) in trade and other payables
Net cash flow used in operating activities
2017
$
25,640
4,857,474
4,883,114
(848,511)
367,427
(66,240)
301,649
(245,675)
Non-cash investing and financing activities
During the period ended 30 June 2017, the Company issued 80,000,000 ordinary shares as consideration for
the acquisition of Fort Cady (California) Corporation. Refer to Note 8 for details of the identifiable assets
acquired.
5. Other assets
Prepayments
6. Trade and other receivables
GST receivable
46,070
46,070
20,171
20,171
Debtors, other debtors and GST receivable are non-interest bearing and generally receivable on 30-day terms.
They are neither past due nor impaired. The amount is fully collectible. Due to the short-term nature of these
receivables, their carrying value is assumed to approximate their fair value.
7. Property, plant and equipment
Land at cost
Movements in property, plant and equipment:
Opening balance
Additions through acquisition – Land held by Fort Cady (California) Corporation
Net exchange differences on translation
Closing balance
646,672
-
659,957
(13,285)
646,672
American Pacific Borate & Lithium Ltd
25
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
The land was acquired on acquisition from Fort Cady (California) Corporation on 2 May 2017. The land was
valued at US$497,000 as at 31 December 2016 and this valuation is the deemed cost on acquisition. The fair
value of the land was determined based on current prices in an active market for similar properties of the
same location and condition. Refer to Note 8.
8. Deferred Exploration and Evaluation Expenditure
Exploration and Evaluation phase - at cost
Opening balance
Acquisition of exploration tenements
Exploration and evaluation expenditure incurred during the period
Closing balance
2017
$
-
8,940,0431
1,446,334
10,386,377
1 At 30 June 2017 the deferred exploration and evaluation balance included an amount of $8,940,043 being
the identifiable exploration assets acquired upon the issue of 80,000,000 shares issued to the vendors of
Fort Cady (California) Corporation for the acquisition of the Company’s USA projects at $0.12 per share.
Purchase consideration:
80,000,000 Ordinary shares
Identifiable assets acquired:
Exploration tenements
Land
9,600,000
8,940,043
659,957
9,600,000
During the period, the Group acquired a number of tenements in the USA. These acquisitions did not
constitute a business combination and the cost of the acquisitions have been allocated to the individual
identifiable assets and liabilities on the basis of their respective fair values. The ultimate recoupment of costs
carried forward for exploration expenditure is dependent on the successful development and commercial
exploitation or sale of the respective mining areas.
9. Trade and Other Payables
Trade payables
Other payables1
Accruals
462,533
4,857,474
36,290
5,356,297
1The Company lodged an IPO Prospectus with ASIC in May 2017. The offer opened in June 2017 and the
Company received funds totalling $4,857,474 for shares to be issued to IPO applicants. The offer closed on 3
July 2017 and shares were allotted on 25 July 2017.
Trade creditors and other creditors are non-interest bearing and generally payable on 30-day terms. Due to
the short-term nature of these payables, their carrying value is assumed to approximate their fair value.
10. Issued Capital
(a) Issued and paid up capital
Issued and fully paid
11,120,475
American Pacific Borate & Lithium Ltd
26
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
(b) Movements in ordinary shares on issue
Opening Balance
Shares issued and fully paid
Shares issued as consideration for acquisition1
Transaction costs on share issue
Number of
shares
$
-
14,600,002
80,000,000
-
94,600,002
-
1,832,002
9,600,000
(311,527)
11,120,475
1 80,000,000 fully paid ordinary shares were issued to the vendors of the Fort Cady (California) Corporation
for the acquisition of the Company’s USA projects at a deemed issue price of $0.12 per share. Refer to Note
8.
(c) Ordinary shares
The Company does not have authorised capital nor par value in respect of its issued capital. Ordinary shares
have the right to receive dividends as declared and, in the event of a winding up of the Company, to participate
in the proceeds from sale of all surplus assets in proportion to the number of and amounts paid up on shares
held. Ordinary shares entitle their holder to one vote, either in person or proxy, at a meeting of the Company.
(d) Capital risk management
The Company’s capital comprises share capital, reserves less accumulated losses amounting to a net equity
of $10,626,107 at 30 June 2017. The Company manages its capital to ensure its ability to continue as a going
concern and to optimise returns to its shareholders. The Company was ungeared at period end and not
subject to any externally imposed capital requirements. Refer to note 17 for further information on the
Company’s financial risk management policies.
(e) Share Options
As at the date of this report there were 14,000,000 unissued ordinary shares under options. The details of the
options are as follows:
Number
7,000,000
1,000,000
6,000,000
14,000,000
Exercise Price
$
$0.20
$0.30
$0.30
Expiry Date
30-Nov-2021
30-Nov-2021
31-May-2022
No option holder has any right under the options to participate in any other share issue of the Company or
any other entity. No options expired unexercised during the financial period. No options were exercised
during or since the period ended 30 June 2017.
11. Reserves
Foreign exchange translation reserve
Share option reserve
2017
$
(13,284)
367,427
354,143
American Pacific Borate & Lithium Ltd
27
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
Movements in Reserves
Foreign exchange translation reserve
Opening balance
Foreign exchange translation difference
Closing balance
2017
$
-
(13,284)
(13,284)
The foreign exchange differences arising on translation of foreign controlled entities are taken to the foreign
currency translation reserve.
Share option reserve
Opening balance
Share based payments expense
Closing balance
-
367,427
367,427
The share option reserve is used to record the value of equity benefits provided to Directors and executives
as part of their remuneration and non-employees for their goods and services. Refer to note 18 for further
details of the securities issued during the financial period ended 30 June 2017.
12. Accumulated Losses
Movements in accumulated losses were as follows:
Opening balance
Loss for the period
Closing balance
13. Auditor’s Remuneration
The auditor of American Pacific Borate & Lithium Limited is RSM Australia Partners
Amounts received or due and receivable by the parent auditor for:
- an audit or review of the financial report
Other services:
- Preparation of Independent Accountant’s Report
-
(848,511)
(848,511)
27,000
12,000
39,000
14. Directors and Key Management Personnel Disclosures
(a) Remuneration of Directors and Key Management Personnel
Details of the nature and amount of each element of the emolument of each Director and key management
personnel of the Company for the financial period are as follows:
Short term employee benefits
Share based payments
Total remuneration
179,100
233,686
412,786
(b) Other transactions with key management personnel
Atlas Precious Metals Inc., a company controlled by Mr. Harold (Roy) Shipes received 49,220,000 ordinary
shares in the Company as consideration for being a vendor of Fort Cady (California) Corporation as part of
the acquisition.
American Pacific Borate & Lithium Ltd
28
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
JAWAF Enterprises Pty Ltd company in which Mr. Anthony Hall is a director, charged the Company consulting
fees of $40,000. The consulting fee is included in Note 14(a) “Compensation of key management personnel”.
$40,000 was outstanding at period end. JAWAF Enterprises Pty Ltd also received 4,720,000 ordinary shares in
the Company as consideration for being a vendor of Fort Cady (California) Corporation as part of the
acquisition.
Schlumpberger Inc. a company in which Mr. Michael Schlumpberger is a director, charged the Company
consulting fees of $29,810. The consulting fee is included in Note 14(a) “Compensation of key management
personnel”. $19,684 was outstanding at period end.
Good Spirit International Limited a company in which Dr. Robert Wrixon is a director, charged the Company
consulting fees of $48,000. The consulting fee is included in Note 14(a) “Compensation of key management
personnel”. Nil was outstanding at period end. Good Spirit International Limited also received 4,000,000
ordinary shares in the Company as consideration for being a vendor of Fort Cady (California) Corporation as
part of the acquisition.
Mr. Aaron Bertolatti charged the Company consulting fees of $25,000. 1918 Consulting Pty Ltd a company in
which Mr. Bertolatti is a director, charged the Company consulting fees of $15,000. The consulting fee is
included in Note 14(a) “Compensation of key management personnel”. $15,000 was outstanding at period
end.
Transactions with key management personnel were made at arm’s length at normal market prices and normal
commercial terms. There were no other transactions with key management personnel for the period ended
30 June 2017.
15. Related Party Disclosures
(a) Key management personnel
For Director related party transactions please refer to Note 14 “Key Management Personnel Disclosures”.
(b) Subsidiaries
The consolidated financial statements include the financial statements of American Pacific Borate & Lithium
Limited and the subsidiaries listed in the following table:
Name of Entity
Fort Cady Holdings Pty Ltd
Fort Cady (California) Corporation
Country of
Incorporation
Australia
USA
Equity Holding
100%
100%
16. Loss per Share
Loss used in calculating basic and dilutive EPS
Weighted average number of ordinary shares used in calculating basic loss per share:
Effect of dilution:
Share options
Adjusted weighted average number of ordinary shares used in calculating diluted loss
per share:
2017
$
(848,511)
Number
of Shares
28,254,474
-
28,254,474
American Pacific Borate & Lithium Ltd
29
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
There is no impact from 14,000,000 options outstanding at 30 June 2017 on the earnings per share calculation
because they are anti-dilutive. These options could potentially dilute basic EPS in the future.
There have been no transactions involving ordinary shares or potential ordinary shares that would
significantly change the number of ordinary shares or potential ordinary shares outstanding between the
reporting date and the date of completion of these financial statements.
17. Financial Risk Management
Exposure to foreign currency risk, credit risk, liquidity risk and interest rate risk arises in the normal course of
the Company’s business. The Company uses different methods as discussed below to manage risks that arise
from these financial instruments. The objective is to support the delivery of the financial targets while
protecting future financial security.
(a) Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with
financial liabilities. The Company manages liquidity risk by maintaining sufficient cash facilities to meet the
operating requirements of the business and investing excess funds in highly liquid short-term investments.
The responsibility for liquidity risk management rests with the Board of Directors.
Alternatives for sourcing our future capital needs include our cash position and the issue of equity
instruments. These alternatives are evaluated to determine the optimal mix of capital resources for our
capital needs. The Directors expect that present levels of liquidity along with future capital raising will be
adequate to meet expected capital needs.
(b) Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the
fair value of financial instruments. The Company’s exposure to market risk for changes to interest rate risk
relates primarily to its earnings on cash and term deposits. The Company manages the risk by investing in
short term deposits.
Cash and cash equivalents
2017
$
4,883,114
Interest rate sensitivity
The following table demonstrates the sensitivity of the Company’s statement of profit or loss and other
comprehensive income to a reasonably possible change in interest rates, with all other variables constant.
Change in Basis Points
Increase 75 basis points
Decrease 75 basis points
Effect on Post
Tax Loss ($)
2017
36,623
(36,623)
Effect on equity including
retained earnings ($)
Increase/(Decrease)
2017
36,623
(36,623)
A sensitivity of 75 basis points has been used as this is considered reasonable given the current level of both
short term and long term Australian Dollar interest rates. The change in basis points is derived from a review
of historical movements and management’s judgement of future trends.
American Pacific Borate & Lithium Ltd
30
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
(c) Credit Risk Exposures
Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an
obligation and cause the Company to incur a financial loss. The Company’s maximum credit exposure is the
carrying amounts on the statement of financial position. The Company holds financial instruments with credit
worthy third parties. At 30 June 2017, the Company held cash at bank. 100% of the Company’s cash was held
in financial institutions with a rating from Standard & Poors of AA or above (long term). The Company has no
past due or impaired debtors as at 30 June 2017.
(d) Foreign currency risk
The Company undertakes certain transactions denominated in foreign currencies, hence exposures to
exchange rate fluctuations arise. The carrying amounts of the Group’s foreign currency denominated
monetary assets and monetary liabilities at the balance date expressed in Australian dollars are as follows:
2017
US Dollar
Liabilities
$
130
Assets
$
646,802
18. Share Based Payments
(a) Recognised share based payment transactions
Share based payment transactions recognised either as operational expenses in the statement of profit or
loss and other comprehensive income or as capital raising costs in the equity during the period were as
follows:
Employee and Director share based payments
Share based payments to suppliers
2017
$
233,686
133,741
367,427
(b) Employee and Director share based payments
The Company has established an employee share option plan (ESOP). The objective of the ESOP was to assist
in the recruitment, reward, retention and motivation of employees and contractors of American Pacific Borate
& Lithium Limited. An individual may receive the options or nominate a relative or associate to receive the
options. The plan is open to executive officers, employees and eligible contractors of American Pacific Borate
& Lithium Limited.
The fair value at grant date of options granted during the reporting period was determined using the Black
Scholes option pricing model that takes into account the exercise price, the term of the option, the share price
at grant date, the expected price volatility of the underlying share and the risk-free interest rate for the term
of the option. The table below summarises options granted during the year period 30 June 2017:
Grant Date Expiry date
Exercise
price
per
option
Balance
at start of
the
period
Granted
during the
period
Exercised
during the
period
Expired
during the
period
Balance at
end of the
period
01/12/2016 30/11/2021 $0.20
21/04/2017 30/11/2021 $0.20
02/05/2017 30/11/2021 $0.20
26/05/2017 31/05/2022
$0.30
01/06/2017 31/05/2022 $0.30
1
Number Number
-
-
-
-
-
2,000,000
1,000,000
2,000,000
1,500,000
4,000,000
10,500,000
Number
-
-
-
-
-
-
Number
Number
2,000,000
-
1,000,000
-
2,000,000
-
1,500,000
-
4,000,000
-
- 10,500,000
Exercisable
at
end of the
period
Number
-
-
-
-
-
American Pacific Borate & Lithium Ltd
31
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
The expense recognised in respect of the above options granted during year was $233,686. The model inputs,
not included in the table above, for options granted during the period ended 30 June 2017 included:
a) options were granted for no consideration;
b) expected lives of the options range from 4.6 to 5.0 years;
c) share price at grant date ranged from $0.12 to $0.16;
d) expected volatility of 100%;
e) expected dividend yield of nil; and
f) a risk-free interest rate of 1.90%
(c) Share-based payment to suppliers
During the financial period ended 30 June 2017 the Company issued unlisted options to consultants for
services rendered during the financial period. These options have been valued using the Black-Scholes option
pricing model.
Grant Date Expiry date
Exercise
price
per
option
Balance
at start of
the
period
Granted
during the
period
Exercised
during the
period
Expired
during the
period
Balance at
end of the
period
01/12/2016 30/11/2021 $0.20
21/04/2017 30/11/2021 $0.20
21/04/2017 30/11/2021 $0.30
$0.30
26/05/2017 31/05/2022
1
Number Number
-
-
-
-
500,000
1,500,000
1,000,000
500,000
3,500,000
Number
-
-
-
-
-
Number
-
-
-
-
-
Number
500,000
1,500,000
1,000,000
500,000
3,500,000
Exercisable
at
end of the
period
Number
-
-
-
-
The expense recognised in respect of the above options granted during the year was $133,741. The model
inputs, not included in the table above, for options granted during the period ended 30 June 2017 included:
a) options were granted for no consideration;
b) expected lives of the options range from 4.6 to 5.0 years;
c)
share price at grant date ranged from $0.12 to $0.16;
d) expected volatility of 100%;
e) expected dividend yield of nil; and
f)
a risk-free interest rate of 1.90%
19. Segment Information
The Group has identified its operating segments based on the internal reports that are reported to the
Managing Director (the chief operating decision maker) in assessing performance and in determining the
allocation of resources. The Board as a whole will regularly review the identified segments in order to allocate
resources to the segment and to assess its performance.
The Group operates predominately in one industry, being the exploration for Borate and Lithium.
The main geographic areas that the entity operates in are Australia and the United States of America (“USA”).
The parent entity is registered in Australia. The Group’s exploration assets are located in the US.
The following table present revenue, expenditure and certain asset and liability information regarding
geographical segments for the period ended 30 June 2017:
American Pacific Borate & Lithium Ltd
32
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
Period ended 30 June 2017
Revenue
Interest income
Segment revenue
Result
Loss before tax
Income tax expense
Loss for the period
Asset and liabilities
Segment assets
Segment liabilities
20. Commitments
Australia
$
US
$
Total
1,521
1,521
(848,511)
-
(848,511)
-
-
-
-
-
1,521
1,521
(848,511)
-
(848,511)
4,949,224
(5,356,167)
11,033,180
(130)
15,982,404
(5,356,297)
The Group has a mineral lease agreement for the purposes of obtaining exclusive rights to exploration at the
Fort Cady Project. The mineral lease agreement requires the Group to make a minimum royalty payment of
US$75,000 per annum until expiry on 1 October 2021. The minimum lease commitments as at 30 June 2017
are as follows:
Within one year
Later than one year but not later than five years
21. Parent Entity Information
2017
$
99,088
322,037
421,135
The following details information related to the parent entity, American Pacific Borate & Lithium Limited, at
30 June 2017. The information presented here has been prepared using consistent accounting policies with
those presented in Note 2.
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Loss of the parent entity
Other comprehensive income for the period
Total comprehensive loss of the parent entity
Other Commitments
The Company had no commitments as at 30 June 2017.
Contingent Liabilities
The Company had no contingent liabilities as at 30 June 2017.
4,949,124
15,895,558
(5,356,167)
(5,356,167)
10,539,391
11,120,475
367,427
(948,511)
10,539,391
(948,511)
-
(948,511)
American Pacific Borate & Lithium Ltd
33
2017 Annual Report to Shareholders
American Pacific Borate & Lithium Ltd
Notes to the Consolidated Financial Statements for the period ended 30 June 2017
22. Significant Events after the Reporting Date
The Company commenced trading on the Australian Securities Exchange on 28 July 2017, after successfully
raising $15 million at $0.20 per share for its initial public offering (IPO). The Company issued 75m shares for
its IPO (total shares on issue 169.6m).
There have been no other significant events subsequent to the end of the financial period to the date of this
report.
23. Contingent Assets and Liabilities
There are no known contingent assets or liabilities as at 30 June 2017.
24. Dividends
No dividend was paid or declared by the Company in the period ended 30 June 2017 or the period since the
end of the financial period and up to the date of this report. The Directors do not recommend that any amount
be paid by way of dividend for the financial period ended 30 June 2017.
American Pacific Borate & Lithium Ltd
34
2017 Annual Report to Shareholders
Directors’ Declaration
In accordance with a resolution of the Directors of American Pacific Borate & Lithium Limited, I state that:
1. In the opinion of the Directors:
a)
the financial statements and notes of American Pacific Borate & Lithium Limited for the period ended
30 June 2017 are in accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the consolidated financial position as at 30 June 2017 and of its
performance for the period ended on that date; and
complying with Accounting Standards (including the Australian Accounting Interpretations), the
Corporations Regulations 2001 and other mandatory professional reporting requirements; and
b)
the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in note 2(b).
2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
3. This declaration has been made after receiving the declarations required to be made by the Directors in
accordance with sections of 295A of the Corporations Act 2001 for the financial period ended 30 June
2017.
On behalf of the Board
Michael Schlumpberger
Managing Director
California, USA
21 September 2017
American Pacific Borate & Lithium Ltd
35
2017 Annual Report to Shareholders
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of American Pacific Borate & Lithium Ltd for the period 28
October 2016 to 30 June 2017, I declare that, to the best of my knowledge and belief, there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 21 September 2017
ALASDAIR WHYTE
Partner
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
AMERICAN PACIFIC BORATE & LITHIUM LTD
Opinion
We have audited the financial report of American Pacific Borate & Lithium Ltd (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and
the consolidated statement of cash flows for the period 28 October 2016 to 30 June 2017, and notes to the
financial statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the Group's financial position as at 30 June 2017 and of its financial
performance for the period 28 October 2016 to 30 June 2017; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed this matter
Acquisition of Fort Cady California Corporation
Refer to Note 8 in the financial statements
On 2 May 2017, the group acquired 100% of the
issued capital in Fort Cady California Corporation
(FCCC) for consideration of $9,600,000 through
the issue of ordinary shares. The acquisition was
considered by management
to be an asset
acquisition and resulted in the recognition of
deferred exploration and evaluation expenditure of
$8,940,043 being the rights to the Fort Cady Boron
and Lithium Project.
The acquisition of FCCC is considered to be a key
audit matter because it is material to the Group and
the acquisition accounting involves the exercise of
significant management judgement to determine
the accounting treatment of the acquisition, the fair
value of the consideration paid and the fair value of
assets and liabilities acquired.
Our audit procedures in relation to the acquisition of FCCC
included:
Reviewing the sale and purchase agreement to
related
transaction and
the
understand
accounting considerations;
the
Evaluating management’s determination that the
acquisition did not meet the definition of a business
within AASB 3 Business Combinations and
therefore was an asset acquisition as opposed to a
business combination;
Evaluating management’s determination that FCCC
was not the acquiring entity, and that therefore the
transaction should not be accounted for using the
principles of reverse acquisition accounting;
Assessing management’s determination of the fair
value of the consideration paid; and
Assessing the appropriateness of the disclosures in
the financial report in respect of the acquisition.
Carrying value of Deferred Exploration and Evaluation Expenditure
Refer to Note 8 in the financial statements
The Group has capitalised a significant amount of
exploration and evaluation expenditure, with a
carrying value of $10,386,377 as at 30 June 2017.
Under AASB 6 Exploration for and Evaluation of
Mineral Resources, the Company is required to test
the deferred exploration and evaluation expenditure
asset for impairment when facts and circumstances
suggest that the carrying amount may exceed the
recoverable amount. This assessment was
significant to our audit as a result of the judgement
and complexity involved.
Our audit procedures in relation to the carrying value of the
deferred exploration and evaluation asset included:
Reviewing the valuation of acquired exploration
rights;
Obtaining evidence that the Group has valid rights
to explore in the specific area;
Enquiring with and assessing management’s basis
on which they have determined that the exploration
and evaluation of mineral resources has not yet
reached the stage where it can be concluded that no
commercially viable quantities of mineral resources
exists;
Enquiring with management and reviewing budgets
incur
that
and plans
substantive expenditure on further exploration for
and evaluation of mineral resources in the specific
area; and
the Group will
test
to
Reviewing minutes of director meetings to ensure
there have been no adverse impact on the specific
area.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the period 28 October 2016 to 30 June 2017, but does not include the financial
report and the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description
forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the period 28 October 2016 to
30 June 2017.
In our opinion, the Remuneration Report of American Pacific Borate & Lithium Ltd, for the period 28 October 2016
to 30 June 2017, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 21 September 2017
ALASDAIR WHYTE
Partner
ASX Additional Information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report
is as follows. The information is current at 15 September 2017.
Distribution of Share Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
TOTAL
Ordinary Shares
Number of Holders
Number of Shares
5
48
34
300
186
573
504
147,124
283,022
16,208,961
152,960,391
169,600,002
There were 10 holders of ordinary shares holding less than a marketable parcel.
Top Twenty Share Holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
Atlas Precious Metals Inc
ISLV Partners Llc
J P Morgan Nominees Australia Limited
JAWAF Enterprises Pty Ltd
Bring on Retirement Ltd
Mr Daniel Eddington + Mrs Julie Eddington
Good Spirit International Limited
Scor Go Luath Limited
WWB Investments Pty Ltd
HSBC Custody Nominees (Australia) Limited
Bring on Retirement Ltd
E & E Hall Pty Ltd
UBS Nominees Pty Ltd
Wealth Defender Limited
Dundee Corporation Limited
BNP Paribas Nominees Pty Ltd
Jason Ryan
HGT Investments Pty Ltd
Kanbah Pty Ltd
Bring on Retirement Ltd
Substantial Shareholders
Name
Atlas Precious Metals Inc
On-Market Buy Back
There is no current on-market buy back.
Shares
49,220,000
6,780,000
6,580,851
4,840,000
4,720,000
4,700,000
4,000,000
3,920,000
3,750,000
3,469,150
2,075,435
2,020,000
1,978,252
1,920,000
1,600,000
1,225,000
1,000,000
1,000,000
949,801
850,000
106,598,489
%
29.02
4.00
3.88
2.85
2.78
2.77
2.36
2.31
2.21
2.05
1.22
1.19
1.17
1.13
0.94
0.72
0.59
0.59
0.56
0.50
62.85
Shares
49,220,000
29.02
Voting Rights
All ordinary shares carry one vote per share without restriction. Options have no voting rights.
American Pacific Borate & Lithium Ltd
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2017 Annual Report to Shareholders
ASX Additional Information
Use of Proceeds
In accordance with listing rule 4.10.19, the Company confirms that it has used cash and assets in a form
readily convertible to cash in a way consistent with its business objectives during the financial period ended
30 June 2017.
Unlisted Options
Class
Number Holders with more than 20
Options over ordinary shares exercisable
at $0.20 on or before 30 November 2021.
7,000,000
- JAWAF Enterprises Pty Ltd
1,500,000 Options
Options over ordinary shares exercisable
at $0.30 on or before 30 November 2021.
Options over ordinary shares exercisable
at $0.30 on or before 31 May 2022.
1,000,000
- Arkley Ventures Limited 1,000,000 options
6,000,000
- Michael X. Schlumpberger 4,000,000 options
American Pacific Borate & Lithium Ltd
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2017 Annual Report to Shareholders
Schedule of Tenements
American Pacific’s USA Projects
Project Tenement Name
Country
Status Grant Date Expiry Area
Ownership Rights
Date
km2
Surface Mineral
Lessee
USA
Granted
8/05/2010
N/A
0.65
0.32
FCCC
FCCC
N/A
USA
Granted
8/05/2010
N/A
1.09
FCCC
State of
California
N/A
USA
Granted
Various
12/09/1991
Various
Various
29/07/1937
29/07/1937
29/07/1937
29/07/1937
18/11/1934
15/12/1931
N/A
0.65
0.65
0.65
0.65
0.65
0.65
0.65
0.65
0.28
0.65
Elementis Elementis
FCCC
USA
Granted
Various
N/A
1.21
Elementis Elementis
FCCC
USA
Granted
Various
N/A
9.63
FCCC
FCCC
N/A
Fort
Cady
Borate
and
Lithium
Project
Parcel 0529-251-01
Parcel 0529-251-03
Parcel 0529-251-04
Company 1 Group
Litigation 1 Group
Litigation 4 Group
Litigation 5 Group
Litigation 2
Litigation 3
Litigation 6
Litigation 11
Geyser View 1
Company 4
HEC #124 - #127, HEC #129, HEC
#131, HEC #343, HEC #344, HEC
#365, HEC #369, HEC #371, HEC
#372, HEC #374 - #376
HEC #19; HEC #21; HEC# 23; HEC#25;
HEC #34 - #41; HEC #43 - #67; HEC
#70 - #82; HEC #85 - #93; HEC #182;
HEC #184; HEC #288; HEC #290; HEC
#292; HEC #294; HEC #296 - #297;
HEC #299 - #350
FCCC - Fort Cady (California) Corporation
Elementis - Elementis Specialties, Inc.
USA Project Locations
Figure 1: Location of the Fort Cady Borate and Lithium Project, California USA
American Pacific Borate & Lithium Limited
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2017 Annual Report to Shareholders
Important Information and Disclaimers
Disclaimer about Historical Estimates
The aforementioned estimates are historical estimates and are not reported in accordance with the JORC Code.
A competent person has not done sufficient work to classify the historical estimates as mineral resources or
ore reserves in accordance with the JORC Code. It is uncertain that following evaluation and/or further
exploration work that the historical estimates will be able to be reported as mineral resources or ore reserves
in accordance with the JORC Code.
Competent Person
The information in this report which relates to exploration targets, exploration results and historical mineral
estimates is based on, and fairly represents, information and supporting documentation compiled by Lachlan
Rutherford (PhD, MBA) the Company’s Head of Strategy & Corporate Development. Dr Rutherford is a
competent person who is a member of the Australian Institute of Mining & Metallurgy, and a full-time employee
of the Company. Dr Rutherford has sufficient experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which he is undertaking to qualify as a competent person
as defined in the 2012 edition of the JORC Code. Dr Rutherford consents to the inclusion of the matters based
in this Prospectus on his information noted in the form and context in which it appears.
American Pacific Borate & Lithium Limited
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2017 Annual Report to Shareholders