American Pacific Borates Ltd
Annual Report
30 June 2020
ABN 68 615 606 114
americanpacificborate.com
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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
David Salisbury (Non-Executive Chairman)
Michael Schlumpberger (Managing Director)
Anthony Hall (Executive Director)
John McKinney (Non-Executive Director)
Stephen Hunt (Non-Executive Director)
Company Secretary
Aaron Bertolatti
Registered Office & Principal Place of Business
Level 12, 197 St Georges Terrace,
PERTH WA 6000
Telephone: + 61 6141 3145
Website: americanpacificborate.com
Share Registry
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
Perth WA 6000
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 Borates Limited (“American Pacific” or “the
Company”) and its subsidiaries (“the Group”) for the year ended 30 June 2020.
DIRECTORS
The names of the Directors of American Pacific during the financial year and to the date of this report are:
▪ David Salisbury – appointed 12 August 2020
▪ Harold (Roy) Shipes – resigned 31 July 2020
▪ Michael Schlumpberger
▪
▪
▪
Anthony Hall
Stephen Hunt
John McKinney
Directors have been in office since the start of the financial year to the date of this report unless otherwise
stated.
DIRECTORS’ INFORMATION
David Salisbury - appointed 1 August 2020
Non-Executive Chairman, BSc (Electrical Engineering), MBA
David Salisbury is a qualified electrical engineer with over 40 years’ experience in the global mining
industry. David resides in the USA and is a former Rio Tinto executive who was President and CEO of
Resolution Copper Company, Kennecott Minerals Company and Rössing Uranium Limited. David has been
directly responsible for the development, construction and production of four mines.
Michael Schlumpberger
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.
Anthony Hall
Executive Director, BBus, LLB(Hons), ACG
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. Mr Hall holds a Bachelor of
Laws (Hons), Bachelor of Business and a Graduate Diploma of Applied Finance and Investment.
Stephen Hunt
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.
American Pacific Borates Limited
2
2020 Annual Report to Shareholders
Directors’ Report
John McKinney
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.
Harold (Roy) Shipes - resigned 31 July 2020
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.
DIRECTORSHIPS OF OTHER LISTED COMPANIES
Directorships of other listed companies held by current directors in the 3 years immediately before the
end of the financial year are as follows:
Director
Company
Period of Directorship
Anthony Hall
Stephen Hunt
High Grade Metals Ltd
Volt Resources Ltd
Director since February 2019
Director from December 2015 to May 2020
COMPANY SECRETARY
Aaron Bertolatti
B.Com, CA, ACG
Aaron Bertolatti is a qualified Chartered Accountant and Company Secretary with over 15 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 are:
Director
David Salisbury
Michael Schlumpberger
Anthony Hall
Stephen Hunt
John McKinney
Ordinary
Shares
-
675,000
5,728,335
623,335
-
Options –
$0.20 each on
or before
30-Nov-2021
-
-
1,500,000
500,000
500,000
Options –
$0.30 each on
or before
31-May-2022
-
4,000,000
1,000,000
-
-
Options -
$0.50 each on
or before
5-Nov-2022
Options -
$0.50 each on
or before
30-Jul-2024
-
4,000,000
2,000,000
250,000
250,000
-
3,500,000
2,500,000
-
-
American Pacific Borates Limited
3
2020 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 year to 30
June 2020 was $5,191,489 (2019: $3,020,343).
DIVIDENDS
No dividends were paid or declared. The directors do not recommend the payment of a dividend.
CORPORATE STRUCTURE
American Pacific is a company limited by shares, which is incorporated and domiciled in Australia.
NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES
American Pacific Borates Limited is focused on advancing its 100% owned Fort Cady Borate Mine Project
located in Southern California, USA. Fort Cady is a highly rare and large colemanite deposit and is the
largest known contained borate occurrence in the world not owned by the two major borate producers
Rio Tinto and Eti Maden. The JORC compliant Mineral Resource Estimate and Reserve is presented below.
Importantly, it comprises 13.93Mt of contained boric acid.
In excess of US$60m has been spent at Fort Cady, including resource drilling, metallurgical test works, well
injection tests, permitting activities and substantial small-scale commercial operations and test works.
A Definitive Feasibility Study (“DFS”) was completed in December 2018 (ASX release dated 17 December
2018). An enhanced DFS was completed in April 2020 (ASX release dated 16 April 20201). The enhanced
DFS increased production of SOP to 363ktpa in full production. This complemented boric acid production
of 409ktpa.
The enhanced DFS delivered exceptional financial metrics, including an unlevered post tax NPV8 of
US$1.97bn, an unlevered post tax IRR of 39% and an EBITDA in the first full year of production of US$438m.
Table 1 | JORC compliant Mineral Resource Estimate and Reserve
(ASX release dated 3 December 20182)
JORC compliant Mineral Resource Estimate and Reserve
Reserves
B2O3 %
6.70
H3BO3 %
11.91
Li ppm
379
B2O3 MT
1.82
H3BO3 MT
3.24
- Proven
- Probable
Total Reserves
Resources
- Measured
-
-
Indicated
Total M&I
Inferred
MMT
27.21
13.80
41.01
38.87
19.72
58.59
61.85
Total M,I&I
120.44
6.40
6.60
6.70
6.40
6.60
6.43
6.51
11.36
11.72
11.91
11.36
11.72
11.42
11.57
343
367
379
343
367
322
344
0.88
2.71
2.61
1.26
3.87
3.98
7.84
1.57
4.81
4.63
2.24
6.87
7.07
13.93
1 ABR confirms all material assumptions underpinning the production target and corresponding financial
information continue to apply and have not materially changed as per Listing Rule 5.19.2.
2 ABR confirms all material assumptions and technical parameters underpinning the Resource Estimate and
Reserve continue to apply and have not materially changed as per Listing Rule 5.23.2
American Pacific Borates Limited
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2020 Annual Report to Shareholders
Directors’ Report
In 1994 the Plan of Operations (mining permit) was authorised along with the Mining and Land
Reclamation Plan. These permits are in good standing and contain a full Environmental Impact Report and
water rights for initial operations of 82ktpa of boric acid. The Company obtained the final substantive
operational permit in August 2020 and is currently in construction of Phase 1A of the mine.
In addition to the flagship Fort Cady Project, the Company also has an earn-in agreement to acquire a
100% interest in the Salt Wells North and Salt Wells South Projects in Nevada, USA on the incurrence of
US$3m of Project expenditures. The Projects cover an area of 36km2 and are considered prospective for
borates and lithium in the sediments and lithium in the brines within the project area. Surface salt samples
from the Salt Wells North project area were assayed in April 2018 and showed elevated levels of both
lithium and boron with several results of over 500ppm lithium and over 1% boron.
Rapid Progress by American Pacific Borates
The following are key accomplishments reflecting the rapid progress made since 1 July 2019.
July 2019
Provided an update on various initiatives relating to the Fort Cady Borate Project
August 2019
Executed a term sheet for the Fort Cady Borate Project finance and the
confirmation that all conditions precedent had been satisfied
Provided notice that discussions continued with Chinese State Owned Enterprise’s
(“SOE’s”)
September 2019
Completed four major milestones for the Fort Cady Project
October 2019
Name changed to American Pacific Borates Limited
November 2019
Development of a Boron SOP fertiliser as part of the main product portfolio
December 2019
Released plan to double SOP production at the Fort Cady Mine which entailed a
revision to the mine DFS
February 2020
Completed a A$7m placement to assist with the development of Fort Cady Mine
March 2020
Provided an update on the Enhanced DFS at the Fort Cady Mine
April 2020
Completed the Enhanced DFS at the Fort Cady Mine
Released additional information with respect to the tripling of SOP Production
May 2020
Announced that the Company remains on track for first production in 2H CY2021
June 2020
Executed a binding term sheet for a US$30M convertible note
Accelerated construction activities at Fort Cady Borate Project
Completed a A$31.8m placement to fast track construction
July 2020
Deferred spending commitments at Salt Wells Borate Project
August 2020
Appointed David Salisbury, a US based former Rio Tinto executive as Chairman
Progressed construction activities at Fort Cady Mine
Confirmed all substantive operational permits are in place at Fort Cady Mine
American Pacific Borates Limited
5
2020 Annual Report to Shareholders
Directors’ Report
REVIEW OF OPERATIONS
On 4 July 2019 the Company provided an update to the market on various initiatives relating to the Fort
Cady Borate Project. These included basic engineering and financing discussions.
On 27 August 2019 the Company announced it had agreed to issue US$2m of convertible notes to Amvest
Capital Mining Opportunities LLC. The issue of the convertible notes was subject to a number of conditions
precedent.
On 30 August 2019 the Company announced it had received confirmation from both Sinochem Group and
Sinomach (two Chinese SOE’s) that samples provided from the Fort Cady Borate Project were in line with
expectations for high grade boric acid. Parties continued to move forward on off take discussions.
On 16 September 2019 the Company announced an update to the Fort Cady Project. Steady progress
continued to be made and that four major milestones had been achieved:
1. The completion of basic engineering;
2. The connection of grid electricity to site;
3. The commencement of a process to connect the gas pipeline to site that is expected to ensure network
gas is ready for first production; and
4. The receipt of all air quality permits.
On 17 October 2019 the Company announced the formal change of the Company’s name to American
Pacific Borates Limited. This followed approval by shareholders of the name change at the Company’s
Annual General Meeting held on 16 October 2019.
On 19 November 2019 the Company announced it had commenced a process to engage both a west coast
and east coast US university to conduct crop trials and studies on a combined boron, potassium and
sulphur speciality fertiliser that can be produced directly from the main products produced at the Fort
Cady Borate Mine from the Company’s main products – boric acid and SOP.
On 11 December 2019 the Company announced it had completed a placement of A$2.75m at A$0.25 per
share to three global institutional investors. The Placement included five unlisted options for every six
ordinary shares with a strike price of A$0.30.
On 19 February 2020 the Company announced it had completed a placement of A$7.1m (before costs) at
$0.40 per share to institutional, professional and sophisticated investors. At the same time the Company
advised that on 14 February 2020 it had paid Amvest Capital Mining Opportunities, LLC, US$1.4m, which
represented the outstanding balance of the US$2.0m Amvest convertible note issued on 5 September
2019.
On 24 March 2020 the Company announced it had completed all relevant engineering studies required for
the enhanced DFS. The Company had previously announced on 17 December 2019 that it had been
working on optimising the flow sheet for the Mine with a view to maximising by-product SOP production
On 16 April 2020 the Company announced it had enhanced the Fort Cady Borate Mine DFS originally
released on 17 December 2018 to incorporate process improvements. The enhanced DFS substantially
increased the production of SOP. Key changes from January 2019 to the April 2020 enhanced DFS are
detailed in the Table 2 below:
American Pacific Borates Limited
6
2020 Annual Report to Shareholders
Directors’ Report
Table 2 | Key changes from the 2019 Modified DFS
BA Production
(in full production)
SOP Production
(in full production)
BA Price
SOP Price
Capex
NPV8
IRR
EBITDA in first year
full production
Enhanced DFS
(April 2020)
Modified DFS
(January 2019)
408,233
tonnes/year
362,874
tonnes/year
408,233
tonnes/year
108,862
tonnes/year
Change
No change ➔
254,012
tonnes/year
US$750/tonne
US$800/tonne
US$50/tonne
US$675/tonne
US$725/tonne
US$50/tonne
US$737.9 million
US$526.2 million
US$211.7m
US$1.965 billion
US$1.428 billion
US$537m
39.4%
40.5%
1.1%
US$438.4 million
US$345.4 million
US$98.0m
Table 3 | Key Financial Metrics for the Fort Cady Borate Mine on a Phase by Phase Basis
(refer ASX release dated 16 April 20203)
Fort Cady Project (Boric Acid and SOP Production)
Phase 1A Only
Capex
NPV8
IRR
US$50.3 million
US$224.3 million
35.9%
EBITDA in first full year of production
US$19.6 million
Phase 1A & 1B Only
Capex (Phase 1B only)
NPV8
IRR
US$156.0 million
US$773.8 million
32.4%
EBITDA in first full year of production
US$73.2 million
Phase 1 & 2 Only
Capex (Phase 2 only)
NPV8
IRR
EBITDA in first full year of production
US$268.3 million
US$1.709 billion
37.8%
US$242.2 million
Full Project (Phases 1, 2, & 3)
Capex (Phase 3 only)
NPV8
IRR
EBITDA in first full year of production
US$263.2 million
US$1.965 billion
39.4%
US$438.4 million
3 ABR confirms all material assumptions underpinning the production target and corresponding financial information
continue to apply and have not materially changed as per Listing Rule 5.19.2.
American Pacific Borates Limited
7
2020 Annual Report to Shareholders
Directors’ Report
The Project is forecast to directly employ around 250 people in full production. The Company announced
it was in the process of contracting economists to determine a reasonable number of indirect employment
that the 250 direct employees will create. Both the direct employment and indirect employment is
expected to be meaningful to the local area.
On 24 April 2020 that DFS included a significantly increased of SOP production to 363k tonnes pa from
109k tonnes per annum in full production.
On 11 May 2020 the Company provided an update on its progress with respect to its target of first
production in 2H, CY2021 and that the Company remained on track for first production consistent with the
timeline in the Company’s release to the ASX of 24 April 2020.
On 1 June 2020 the Company announced that total financing was secured of A$77 million (US$51m) (before
costs). This was achieved via a two tranche Placement to raise A$31.2m at A$0.60 per share plus a binding
term sheet for a US$30m convertible note that can convert to ordinary shares at headline share price of
A$1.00 per share subject to receipt of the final main operational permit.
On 18 June 2020 the Company advised that it had accelerated construction activities at the Fort Cady
Borate Mine and that discussions were progressing with respect to a potential dual listing on the NYSE.
Planned Activities
The Company is planning on conducting the following major activities over the remainder of the second
half of 2020:
1. Continue to progress construction activities with more equipment to arrive on site. These activities
should place the Company in a strong position to deliver on its target of first production in Q3, CY2021.
2. Progress has been made on brand creation for early work in establishing a US presence for the
Company’s products. The Company expects to develop this brand strategy further and provide an
update once brands have been agreed by the Company and its creative agencies.
3. The Company will continue discussions with respect to a potential dual listing on the NYSE.
ANNUAL REVIEW OF ORE RESERVES AND MINERAL RESOURCES
In accordance with ASX Listing Rule 5, the Company has performed an annual review of all JORC-compliant
ore reserves and mineral resources as at 30 June 2020.
Fort Cady Borate Project
American Pacific Borates has not released an updated Mineral Resource Estimate during the year ending
30 June 2020.
Table 4 | Fort Cady Mineral Resources Summary
30 June 2020
30 June 2019
Tonnes B2O3 H3BO3
(wt
%)
(million)
(wt %) ppm
Measured
38.9 6.7% 11.9%
19.7 6.4% 11.4%
379
343
Indicated
Total Measured
and Indicated
Inferred
Total
58.6 6.6% 11.7%
367
61.9 6.4% 11.4%
322
120.5 6.5% 11.6%
344
Li
B2O3 H3BO3
Tonnes B2O3 H3BO3
Li
B2O3 H3BO3
(Mt)
(Mt)
(million)
(wt
%)
(wt %) ppm
(Mt)
(Mt)
2.6
1.3
3.9
4.0
7.8
8
4.6
2.2
6.9
7.1
38.9 6.7% 11.9%
19.7 6.4% 11.4%
379
343
58.6 6.6% 11.7%
367
61.9 6.4% 11.4%
322
13.9
120.5 6.5% 11.6%
344
2.6
1.3
3.9
4.0
7.8
4.6
2.2
6.9
7.1
13.9
2020 Annual Report to Shareholders
American Pacific Borates Limited
Directors’ Report
The Company released a maiden JORC compliant Ore Reserve on 17 December 2018. This Ore Reserve
was converted from the existing MRE as part of the Company’s initial DFS, which was also released on 17
December 2018.
Table 5 |Fort Cady Ore Reserves Summary
30 June 2020
30 June 2019
Tonnes B2O3 H3BO3
(wt
%)
(million)
(wt %) ppm
Li
B2O3 H3BO3
Tonnes B2O3 H3BO3
Li
B2O3 H3BO3
(Mt)
(Mt)
(million)
(wt
%)
(wt %) ppm
(Mt)
(Mt)
Proven
Probable
27.2 6.7% 11.9%
13.8 6.4% 11.4%
379
343
Total Reserves
41.0 6.6% 11.7%
367
1.8
0.9
2.7
3.2
1.6
4.8
27.2 6.7% 11.9%
13.8 6.4% 11.4%
379
343
41.0 6.6% 11.7%
367
1.8
0.9
2.7
3.2
1.6
4.8
Salt Wells Project
The Salt Wells Project has not reported either an MRE or Ore Reserves.
Summary
A summary of American Pacific Borates total Mineral Resources is shown below.
Table 6 | American Pacific Borates Total Mineral Resources Summary (all projects)
30 June 2020
30 June 2019
Tonnes B2O3 H3BO3
(wt
%)
(million)
(wt %) ppm
Measured
38.9 6.7% 11.9%
19.7 6.4% 11.4%
379
343
Indicated
Total Measured
and Indicated
Inferred
Total
58.6 6.6% 11.7%
367
61.9 6.4% 11.4%
322
120.5 6.5% 11.6%
344
Li
B2O3 H3BO3
Tonnes B2O3 H3BO3
Li
B2O3 H3BO3
(Mt)
(Mt)
(million)
(wt
%)
(wt %) ppm
(Mt)
(Mt)
2.6
1.3
3.9
4.0
7.8
4.6
2.2
6.9
7.1
38.9 6.7% 11.9%
19.7 6.4% 11.4%
379
343
58.6 6.6% 11.7%
367
61.9 6.4% 11.4%
322
13.9
120.5 6.5% 11.6%
344
2.6
1.3
3.9
4.0
7.8
4.6
2.2
6.9
7.1
13.9
Table 7 | American Pacific Borates Total Ore Reserves Summary (all projects)
30 June 2020
30 June 2019
Tonnes B2O3 H3BO3
(wt
%)
(million)
(wt %) ppm
Li
B2O3 H3BO3
Tonnes B2O3 H3BO3
Li
B2O3 H3BO3
(Mt)
(Mt)
(million)
(wt
%)
(wt %) ppm
(Mt)
(Mt)
Proven
Probable
27.2 6.7% 11.9%
13.8 6.4% 11.4%
379
343
Total Reserves
41.0 6.6% 11.7%
367
1.8
0.9
2.7
3.2
1.6
4.8
27.2 6.7% 11.9%
13.8 6.4% 11.4%
379
343
41.0 6.6% 11.7%
367
1.8
0.9
2.7
3.2
1.6
4.8
Corporate Governance – Resources and Reserve Calculations
Due to the nature, stage and size of the Company’s existing operations, the Company believes there would
be no efficiencies or additional governance benefits gained by establishing a separate mineral resources
and reserves committee responsible for reviewing and monitoring the Company’s processes for calculating
mineral resources and reserves and for ensuring that the appropriate internal controls are applied to such
calculations. However, the Company ensures that all Mineral Resource calculations are prepared by a
competent, senior geologist and are reviewed and verified independently by a qualified person.
American Pacific Borates Limited
9
2020 Annual Report to Shareholders
Directors’ Report
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Group during the financial year, other
than as set out in this report.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE
On 6 July 2020, the Company issued 2,100,000 unlisted options to Executives as part of their FY2021 Long
Term Incentive award pursuant to the Company’s Employee Share Option Scheme. The unlisted options
are exercisable at $0.90 each on or before 6 July 2024.
With ABR’s focus being on construction of the Fort Cady Borate Mine, the Company announced on 30 July
that it had renegotiated the earn-in agreement expenditure requirements for the Salt Wells Borate Project
located in Nevada, USA. Year 3 (FY21) will now become Year 1 in the revised agreement and see an
expenditure commitment of US$100k (inclusive of annual lease payments). The existing Year 4 (FY22) will
now become Year 2 with a revised expenditure commitment of US$300k and so on.
Mr. Harold (Roy) Shipes retired from the Board effective 31 July 2020.
The Company’s Registered Office and Principal Place of Business changed to, Level 12, 197 St Georges
Terrace Perth 6000, Western Australia on 1 August 2020.
On 3 August 2020, the Company announced the appointment of Mr. David J Salisbury as the Company’s
new Chairman effective 1 August 2020. Mr. Salisbury has over 40 years’ experience in the mining industry,
including seventeen years with Rio Tinto. Over his 40 years he has been directly responsible for the
development, construction and operations of four mines.
The Company was awarded the Underground Injection Control permit by the US EPA on 14 August 2020.
With the award of this permit the Company now has all substantive operational permits for production of
borates and SOP at the Fort Cady Borate Mine.
The following options were converted into ordinary fully paid shares after the reporting date;
Date shares
issued
2-Jul-20
24-Jul-20
31-Jul-20
5-Aug-20
11-Aug-20
25-Aug-20
26-Aug-20
8-Sep-20
TOTAL
$0.30 each on or before
30-Nov-2021
$0.40 each on or before
30-Apr-2021
$0.25 each on or before
10-Aug-2020
-
-
-
250,000
-
-
-
500,000
750,000
-
-
-
-
-
500,000
750,000
-
1,250,000
475,467
5,641,958
3,078,723
-
3,580,701
-
-
-
12,776,849
The impact of the Coronavirus (COVID-19) pandemic is ongoing and it is not practicable to estimate the
potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is
dependent on measures imposed by the Australian Government and other countries, such as maintaining
social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be
provided.
There have been no other significant events subsequent to the end of the financial year to the date of this
report.
American Pacific Borates Limited
10
2020 Annual Report to Shareholders
Directors’ 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.
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.
SHARE OPTIONS
As at the date of this report there were 55,250,000 unissued ordinary shares under options. The details of
the options are as follows:
Number
7,000,000
250,000
6,500,000
500,000
1,100,000
10,000,000
8,500,000
2,050,000
1,550,000
15,000,000
2,100,000
700,000
55,250,000
Exercise Price $
$0.20
$0.30
$0.30
$0.40
$0.60
$0.50
$0.50
$0.60
$0.80
$0.75
$0.90
$1.10
Expiry Date
30-Nov-2021
30-Nov-2021
31-May-2022
30-April-2021
30-June-2022
5-Nov-2022
30-Jul-2024
1-Feb-2023
1-Feb-2023
1-Jul-2021
6-Jul-2024
31-Dec-2023
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 year. 12,303,984 options were
exercised during the year ended 30 June 2020.
American Pacific Borates Limited
11
2020 Annual Report to Shareholders
Directors’ Report
DIRECTORS’ MEETINGS
During the financial year, in addition to regular Board discussions, the number of meetings of Directors
held during the year and the number of meetings attended by each Director were as follows:
Director
Harold (Roy) Shipes
Michael Schlumpberger
Anthony Hall
Stephen Hunt
John McKinney
Number of Meetings
Eligible to Attend
11
11
11
11
11
Number of
Meetings Attended
10
11
11
11
11
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 year.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors
of American Pacific 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 complies 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. There were no non-audit services provided by the
Company’s auditor.
Officers of the company who are former partners of RSM Australia Partners
There are no officers of the company who are former partners of RSM Australia Partners.
Auditor
RSM Australia Partners continue in office in accordance with section 327 of the Corporations Act 2001.
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 for the financial year ended 30 June 2020. 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.
American Pacific Borates Limited
12
2020 Annual Report to Shareholders
Directors’ Report
Details of Directors and Key Management Personnel
Directors
▪ David Salisbury – appointed 1 August 2020
▪ Harold (Roy) Shipes – resigned 31 July 2020
▪ Michael Schlumpberger
▪ Anthony Hall
▪ Stephen Hunt
▪
John McKinney
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.
FY2020
Level
Chairman
Managing Director
Executive Director
Non-Executive Director A$39,000
Short Term Incentive
Cash
Remuneration
Nil
US$50,000
US$250,000
Up to 60% of cash remuneration 3.5m share options
Up to A$256,000 Up to 60% of cash remuneration 2.5m share options
Long Term Incentive
Nil
Nil
Nil
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 year ended 30 June 2020 are as follows:
American Pacific Borates Limited
13
2020 Annual Report to Shareholders
Directors’ Report
2020
Short term
Base
Salary
$
Directors’
Fees
$
Consulting
Fees
$
Incentive
Award
Options
Share-Based
Payments
$
Other
benefits
Total
$
Option
related
%
Harold (Roy) Shipes
Michael
Schlumpberger
Anthony Hall
Stephen Hunt
John McKinney
-
74,484
366,320
-
-
-
-
-
39,000
39,000
-
-
256,000
-
-
-
-
-
74,484
-
55,5351
16,0001
498,227
339,278
-
-
-
-
31,2082
-
-
-
951,290
611,278
52.4
55.5
39,000
39,000
-
-
366,320 152,484
256,000
71,535
837,505
31,208
1,715,052
48.8
1 The STI award relates to the achievement of 2019 KPIs that were approved by the Board and paid during
the year ended 30 June 2020.
2 Mr. Schlumpberger received paid private accommodation for the entire year.
There were no other executive officers of the Company during the financial year ended 30 June 2020.
Details of the nature and amount of each element of the remuneration of each Director of the Group for
the year ended 30 June 2019 are as follows:
2019
Harold (Roy) Shipes
Michael
Schlumpberger
Anthony Hall
Stephen Hunt
John McKinney
Short term
Base
Salary
$
Directors’
Fees
$
Consulting
Fees
$
Incentive
Award
Options
Share-Based
Payments
$
Other
benefits
Total
$
Option
related
%
-
70,401
-
-
22,916
-
93,317
24.6
231,694
-
-
-
-
-
115,600
160,000
174,8491
81,0001
39,000
39,000
-
-
-
-
258,241
28,8642
100,529
11,458
11,458
-
-
-
809,248
341,529
50,458
50,458
231,694 148,401
275,600
255,849
404,602
28,864
1,345,010
31.9
29.4
22.7
22.7
29.8
1 The STI award relates to the achievement of 2018 KPIs that were approved by the Board and paid during
the year ended 30 June 2019.
2 Mr. Schlumpberger received paid private accommodation for the entire year.
Shareholdings of Directors
The number of shares in the Company held during the financial year by Directors of the Group, including
their personally related parties, is set out below. There were no shares granted during the reporting year
as compensation.
Harold (Roy) Shipes
Michael Schlumpberger
Anthony Hall
Stephen Hunt
John McKinney
Balance at the
start of the
year
49,220,000
675,000
5,575,557
553,890
-
Granted during
the year as
compensation
-
-
-
-
-
On exercise of
share options
Other changes
during the year
Balance at the
end of the year
-
-
-
-
-
-
-
-
-
-
49,220,000
675,000
5,575,557
553,890
-
American Pacific Borates Limited
14
2020 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 year by each
Director of American Pacific, including their personally related parties, are set out below:
Balance at
the start of
the year
1,500,000
Granted
during the
year as
compensation
-
8,000,000
4,652,778
819,445
750,000
3,500,000
2,500,000
-
-
Exercised
during the
year
-
-
-
-
-
Other
changes
during the
year
-
Balance
at the end
of the year Exercisable
1,500,000
1,500,000
Un-
exercisable
-
- 11,500,000 11,500,000
7,152,778
-
819,445
-
750,000
-
7,152,778
819,445
750,000
-
-
-
-
Harold (Roy) Shipes
Michael
Schlumpberger
Anthony Hall
Stephen Hunt
John McKinney
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 21.
Options Affecting Remuneration
The terms and conditions of options affecting remuneration in the current or future reporting years are
as follows:
Michael
Schlumpberger
Anthony Hall
Grant
Date
Grant
Number
Expiry
date/last
exercise
date
01/06/17
17/10/19
26/05/17
17/10/19
4,000,000 31/05/22
3,500,000 30/07/24
1,000,000 31/05/22
2,500,000 30/07/24
11,000,000
Exercise
price
per
option
$0.30
$0.50
$0.50
$0.50
Value of
options at
grant date1
Number of
options
vested
Vested
Max
value yet
to vest
$423,239
$462,571
$105,976
$330,408
$1,322,194
4,000,000
3,500,000
1,000,000
2,500,000
11,000,000
100%
100%
100%
100%
-
-
-
-
-
1 The value at grant date has been calculated in accordance with AASB 2 Share-based payments.
Service Agreements
Anthony Hall is employed under the terms of an Executive Employment Agreement executed on 1 March
2017. Since this time the Board has unanimously resolved to increase Mr. Halls remuneration on an
annual basis. On 29 June 2020 the Board approved an annual consulting fee of US$224,00, effective 1 July
2020.
American Pacific Borates Limited
15
2020 Annual Report to Shareholders
Directors’ Report
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 year ended 30 June
2020.
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2020 are summarised below:
Other income*
EBITDA
EBIT
Profit after income tax
2020
$
196,851
(5,163,416)
(5,191,489)
(5,191,489)
2019
$
112,161
(3,006,224)
(3,020,343)
(3,020,343)
2018
$
-
(2,795,016)
(2,800,802)
(2,800,802)
20171
$
-
(848,511)
(848,511)
(848,511)
* Other income was derived from the sale of water to an unrelated privately held construction company
during the financial years ended 30 June 2019 and 30 June 2020.
The factors that are considered to affect total shareholders return (“TSR”) are summarised below:
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic earnings per share (cents per share)
0.50
-
(2.92)
0.20
-
(1.58)
0.29
-
(1.70)
-
-
(3.00)
2020
2019
2018
20171
1 American Pacific was incorporated in Australia on 28 October 2016 and commenced trading on the
Australian Securities Exchange on 28 July 2017.
Voting and comments made at the company's 2019 Annual General Meeting
American Pacific received 100% of "yes" votes on its remuneration report for the 2019 financial year. The
Group did not receive specific feedback on its remuneration report at the AGM.
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
14 September 2020
American Pacific Borates Limited
16
2020 Annual Report to Shareholders
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2020
American Pacific Borates Ltd
Continuing Operations
Interest income
Other income
Gain on foreign exchange
Expenses
Professional and consulting fees
Director and employee costs
Other expenses
Interest expense
Borrowing costs
Marketing and promotional expenses
Share-based payments expense
Travel and accommodation
Loss before income tax
Income tax expense
Net loss for the year
Note
30-Jun-20
30-Jun-19
$
$
11,470
196,851
(145,991)
10,284
112,161
19,143
(918,505)
(272,293)
(354,624)
(349,390)
(337,051)
(145,602)
21
(2,596,450)
(279,904)
(984,537)
(544,764)
(302,781)
-
-
(260,444)
(762,587)
(306,818)
(5,191,489)
(3,020,343)
3
-
-
(5,191,489)
(3,020,343)
Other comprehensive income
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
206,668
206,668
681,657
681,657
(4,984,821)
(2,338,686)
Loss per share
Loss per share (cents)
19
(2.34)
(1.58)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes.
American Pacific Borates Limited
17
2020 Annual Report to Shareholders
Consolidated Statement of Financial Position as at 30 June 2020
American Pacific Borates Ltd
Current Assets
Cash and cash equivalents
Other assets
Receivables
Total Current Assets
Non-Current Assets
Receivables
Long Term Prepayment for Property, Plant and Equipment
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
30-Jun-20
30-Jun-19
Note
$
$
4
5
6
7
8
9
10
11
13
14
15
38,742,907
2,893,663
1,694
131,785
201,542
62,086
38,876,386
3,157,291
536,247
3,116,246
1,388,857
517,025
-
768,177
29,483,185
24,692,541
34,524,535
25,977,743
73,400,921
29,135,034
3,815,995
3,815,995
3,815,995
346,372
346,372
346,372
69,584,926
28,788,662
73,862,440
31,961,550
7,583,631
3,496,768
(11,861,145)
(6,669,656)
69,584,926
28,788,662
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
American Pacific Borates Limited
18
2020 Annual Report to Shareholders
Consolidated Statement of Changes in Equity for the year ended 30 June 2020
American Pacific Borates Ltd
Balance at 1 July 2018
Total comprehensive loss for the year
Loss for the year
Foreign currency translation
Total comprehensive loss for the year
Transactions with owners in their capacity as owners
Shares issued by placement
Cost of issue
Share-based payments (note 21)
Balance at 30 June 2019
Issued
capital
$
Accumulated
losses
$
25,398,240
(3,649,313)
-
-
-
(3,020,343)
-
(3,020,343)
7,300,000
(821,440)
84,750
31,961,550
-
-
-
(6,669,656)
Foreign
exchange
translation
reserve
$
447,549
-
681,657
681,657
-
-
-
1,129,206
Share
option
reserve
$
Total
$
1,255,506
23,451,982
-
-
-
(3,020,343)
681,657
(2,338,686)
-
-
1,112,056
2,367,562
7,300,000
(821,440)
1,196,806
28,788,662
Balance at 1 July 2019
31,961,550
(6,669,656)
1,129,206
2,367,562
28,788,662
Total comprehensive loss for the year
Loss for the year
Foreign currency translation
Total comprehensive loss for the year
Transactions with owners in their capacity as owners
Shares issued by placement
Shares issued on conversion of unlisted options
Shares issued on conversion of convertible note
Cost of issue
Share-based payments (note 21)
Balance at 30 June 2020
-
-
-
(5,191,489)
-
(5,191,489)
41,650,000
3,559,329
499,523
(3,807,962)
-
73,862,440
-
-
-
-
-
(11,861,145)
-
206,668
206,668
-
-
-
-
-
1,335,874
-
-
-
(6,475,234)
206,668
(4,984,821)
-
-
-
-
3,880,195
6,247,757
41,650,000
3,559,329
499,523
(3,807,962)
3,880,195
69,584,926
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
American Pacific Borates Limited
19
2020 Annual Report to Shareholders
Consolidated Statement of Cash Flows for the year ended 30 June 2020
American Pacific Borates Ltd
Cash flows from operating activities
Payments to suppliers and employees
Other receipts
Interest received
Interest paid
Note
30-Jun-20
30-Jun-19
$
$
(2,006,204)
(2,377,900)
196,851
11,470
(349,390)
111,862
10,284
-
Net cash used in operating activities 4
(2,147,273)
(2,255,754)
Cash flows from investing activities
Purchase of property, plant and equipment
Payments for exploration expenditure
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from issue of Convertible Note
Proceeds from the conversion of unlisted options
Borrowing costs
Repayment of convertible note
Payments for share issue costs
(1,558,585)
-
(4,522,142)
(4,572,766)
(6,080,727)
(4,572,766)
41,650,000
7,283,952
2,934,655
3,678,196
(192,834)
(2,471,413)
(1,410,508)
-
-
-
-
(462,776)
Net cash provided by financing activities
44,188,096
6,821,176
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash
35,960,096
2,893,663
(110,852)
(7,344)
2,881,565
19,442
Cash and cash equivalents at the end of the year
4
38,742,907
2,893,663
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
American Pacific Borates Limited
20
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
1. Corporate Information
The financial report of American Pacific Borates Limited (“American Pacific” or “the Company”) for the year
ended 30 June 2020 was authorised for issue in accordance with a resolution of the Directors on 14 September
2020. 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.
Going concern
The financial statements have been approved by the Directors on a going concern basis. In determining the
appropriateness of the basis of preparation, the Directors have considered the impact of the COVID19
pandemic on the position of the Group at 30 June 2020 and its operations in future periods.
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 27.
(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 Borates 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 Borates Limited is Australian dollars. The
functional currency of the US subsidiary is the US Dollar.
American Pacific Borates Ltd
21
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
(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 Borates Ltd
22
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
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 Borates Ltd
23
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
▪ 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 Borates Ltd
24
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
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) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as
part of the cost of acquisition of an asset or as part of an item of expense; or
for receivables and payables which are recognised inclusive of GST.
ii.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables. Cash flows are included in the cash flow statement on a gross basis. The GST
component of cash flows arising from investing and financing activities which is recoverable from, or payable
to, the taxation authority is classified as operating cash flows.
(l) 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.
(m) Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave
expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected
to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the
reporting date are measured at the present value of expected future payments to be made in respect of
services provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using market yields at the reporting date on
corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future
cash outflows.
American Pacific Borates Ltd
25
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are
incurred.
(n) 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.
(o) 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.
(p) 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.
(q) 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.
American Pacific Borates Ltd
26
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
(r) Right of use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at
cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments
made at or before the commencement date net of any lease incentives received, any initial direct costs
incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred
for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain
ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life.
Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The Company has elected not to recognise a right of use asset and corresponding lease liability for short term
leases with terms of twelve months or less and leases of low value assets. Lease payments on these assets are
expensed to the profit or loss as incurred.
(s) Lease Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at
the present value of the lease payments to be made over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental
borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable
lease payments that depend on an index or a rate, amounts expected to be paid under residual value
guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur,
and any anticipated termination penalties. The variable lease payments that do not depend on an index or a
rate are expensed in the period in which they are incurred
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a
lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss
if the carrying amount of the right-of-use asset is fully written down.
(t) 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.
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.
(u) 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:
American Pacific Borates Ltd
27
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial asset.
(v) 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.
(w) 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 21. 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 Borates 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’).
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.
American Pacific Borates Ltd
28
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
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 19).
(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.
(x) 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.
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 21.
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 year in which this
determination is made.
American Pacific Borates Ltd
29
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had,
or may have, on the consolidated entity based on known information. Other than as addressed in specific
notes, there does not currently appear to be either any significant impact upon the financial statements or
any significant uncertainties with respect to events or conditions which may impact the consolidated entity
unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
(y) 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 Company adopted AASB 16 Leases as of 1 July 2019. The adoption of this standard did not have significant
impact on the financial results or disclosures of the Company.
Conceptual Framework for Financial Reporting (Conceptual Framework)
The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January
2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition
criteria as well as new guidance on measurement that affects several Accounting Standards. Where the
consolidated entity has relied on the existing framework in determining its accounting policies for
transactions, events or conditions that are not otherwise dealt with under the Australian Accounting
Standards, the consolidated entity may need to review such policies under the revised framework. At this time,
the application of the Conceptual Framework is not expected to have a material impact on the consolidated
entity's financial statements.
3.
Income Tax
(a) Income tax expense
Major component of tax expense for the year:
Current tax
Deferred tax
2020
$
2019
$
-
-
-
-
-
-
(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
(5,191,489)
(1,557,447)
778,935
288,899
489,613
-
(3,020,343)
(906,103)
228,776
197,096
480,231
-
American Pacific Borates Ltd
30
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
(c) Deferred tax
The following deferred tax balances have not been bought to account:
Liabilities
Unrealised foreign exchange
Offset by deferred tax assets
Deferred tax liability recognised
Assets
Losses available to offset against future taxable income
Accrued expenses
Section 40-880 costs
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%
2020
$
2019
$
(455,844)
455,844
-
(405,986)
405,986
-
1,921,104
5,475
443,773
(455,844)
1,914,508
1,286,332
6,000
111,803
(405,986)
998,149
6,403,679
1,921,104
4,287,773
1,286,332
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
Cash comprises of:
Cash at bank
Reconciliation of operating loss after tax to net cash flow from
operations
Loss after tax
Non-cash and non-operating items
Share-based payments
Borrowing costs
Foreign exchange (gain)/loss
Depreciation
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
5. Other assets
Prepayments
Other
38,742,907
2,893,663
(5,191,489)
(3,020,343)
2,596,450
337,051
36,281
28,073
762,587
-
-
14,119
(14,068)
60,429
(2,147,273)
(37,622)
25,505
(2,255,754)
1,694
-
1,694
57,325
144,2171
201,542
1 The Company agreed to pay a pre-funded lender work fee of A$144,217 (US$100,000) pursuant to the terms
of a Private Placement Term Sheet entered into with Amvest Capital Mining Opportunities LLC. This was
recognised as an expense in the current year as the term sheet expired.
American Pacific Borates Ltd
31
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
6. Receivables - Current
Other receivables
GST receivable
2020
$
2019
$
-
131,785
131,785
16,048
46,038
62,086
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. Receivables – Non-Current
Bonds and Guarantees
536,247
536,247
517,025
517,025
The Bonds are pledged to the Bureau of Land Management (San Bernardino County) and relate to the Fort
Cady Project’s water permits.
8. Long Term Prepayment for Property, Plant and Equipment
Long Term Prepayment for Property, Plant and Equipment
3,116,246
3,116,246
-
-
Long term prepayment for property, plant and equipment represented the prepayments made to suppliers
for purchases of equipment and construction services in relation to the development of the Fort Cady Borate
Project. The prepayments are expected to form part of Property, Plant and Equipment and were therefore
classified as non-current assets.
9. Property, plant and equipment
Land and Buildings, net
Plant and Equipment, net
Motor Vehicles, net
Movements in property, plant and equipment:
Land and Buildings
Opening balance
Additions
Net exchange differences on translation
Closing balance
Plant and Equipment
Opening balance
Additions
Net exchange differences on translation
Depreciation for the year
Closing balance
937,572
419,343
31,942
1,388,857
708,454
21,071
38,652
768,177
708,454
214,780
14,338
937,572
21,071
418,479
426
(20,633)
419,343
671,349
-
37,105
708,454
26,795
-
1,462
(7,186)
21,071
American Pacific Borates Ltd
32
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
Motor Vehicles
Opening balance
Net exchange differences on translation
Depreciation for the year
Closing balance
10. Deferred Exploration and Evaluation Expenditure
Exploration and Evaluation phase - at cost
Opening balance
Foreign exchange translation difference
Exploration and evaluation expenditure incurred during the year1
Closing balance
2020
$
2019
$
38,652
730
(7,440)
31,942
43,207
2,378
(6,933)
38,652
24,692,541
272,726
4,517,918
29,483,185
20,111,727
497,762
4,083,052
24,692,541
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.
11. Trade and Other Payables
Trade payables
Other payables
Accruals
3,550,491
133,2541
132,250
3,815,995
126,849
14,720
204,803
346,372
1 During the financial year the Company received funds totalling $118,867 for the conversion of 475,467
unlisted options into ordinary fully paid shares. Shares however were not allotted until 2 July 2020.
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.
12. Borrowings
Convertible note
Issued during the year
Foreign exchange loss
Repaid during the year
Closing balance
2,934,655
36,281
(2,970,936)
-
-
-
-
On 27 August 2019, the Company announced that it had agreed to issue a US$2m convertible note to Amvest
Capital Mining Opportunities, LLC (“Amvest”).
The interest rate associated with these borrowings was 12%. Interest totalling $349,390 was prepaid by the
company at the issue date. The borrowings were unsecured and were scheduled to mature in September
2021.
On 14 February 2020 the Company paid Amvest US$1.4m, which represented the return of the outstanding
balance of the US$2.0m convertible note. Refer to Note 13(b) for details of shares issued upon conversion of
convertible notes prior to repayment.
13. Issued Capital
(a) Issued and paid up capital
Issued and fully paid
73,862,440
31,961,550
American Pacific Borates Ltd
33
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
(b) Movements in ordinary shares on issue
Opening Balance
Shares issued to consultant1
Shares issued to consultant2
Shares issued via $0.20 placement
Shares issued via $0.18 placement
Shares issued via $0.25 placement
Shares issued via $0.40 placement
Shares issued via $0.60 placement
Conversion of Convertible Notes
Conversion of Unlisted Options - $0.25
Conversion of Unlisted Options - $0.30
Transaction costs on share issue
2020
Number of
shares
2019
Number of
shares
$
$
208,442,224
-
-
-
-
11,000,000
17,750,000
53,000,000
2,064,462
2,637,317
9,666,667
-
304,560,670
31,961,550
-
-
-
-
2,750,000
7,100,000
31,800,000
499,523
659,329
2,900,000
(3,807,962)
73,862,440
169,820,002
250,000
150,000
21,000,000
17,222,222
-
-
25,398,240
60,000
24,750
4,200,000
3,100,000
-
-
-
-
-
-
208,442,224
-
-
-
(821,440)
31,961,550
1 On 12 July 2018, 250,000 shares were issued for nil consideration to pay a referral fee to a consultant
following the acquisition of the Salt Wells North and Salt Wells South Borate and Lithium exploration projects
in Nevada, USA. The fair value was determined by the share price of $0.24 on the grant date.
2 On 12 March 2019, 150,000 shares were issued for nil consideration pursuant to an Independent Contractor
Agreement to provide analytical and report writing services, marketing services, corporate advice and
associated services to the Company. The fair value was determined by the share price of $0.165 on the
grant date.
(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 $69,584,926 at 30 June 2020. 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 year end and not subject to any externally imposed capital requirements.
Refer to note 20 for further information on the Company’s financial risk management policies.
(e) Share Options
As at 30 June 2020 there were 67,423,794 unissued ordinary shares under options. The details of the options
were as follows:
American Pacific Borates Ltd
34
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
Number
Exercise Price $
$0.20
$0.30
$0.30
$0.40
$0.60
$0.25
$0.50
$0.50
$0.60
$0.80
$0.70
7,000,000
1,000,000
6,500,000
1,750,000
1,100,000
12,973,794
10,000,000
8,500,000
2,050,000
1,550,000
15,000,000
67,423,794
Expiry Date
30-Nov-2021
30-Nov-2021
31-May-2022
30-April-2021
30-June-2022
10-Aug-2020
5-Nov-2022
30-Jul-2024
1-Feb-2023
1-Feb-2023
1-Jul-2021
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 year. 12,303,984 options were
exercised during the year ended 30 June 2020.
14. Reserves
Foreign exchange translation reserve
Share option reserve
Movements in Reserves
Foreign exchange translation reserve
Opening balance
Foreign exchange translation difference
Closing balance
2020
$
2019
$
1,335,874
6,247,757
7,583,631
1,129,206
2,367,562
3,496,768
1,129,206
206,668
1,335,874
447,549
681,657
1,129,206
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
Closing balance
2,367,562
3,880,195
6,247,757
1,255,506
1,112,056
2,367,562
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 21 for further
details of the securities issued during the financial year ended 30 June 2020.
15. Accumulated Losses
Movements in accumulated losses were as follows:
Opening balance
Loss for the year
Closing balance
(6,669,656)
(5,191,489)
(11,861,145)
(3,649,313)
(3,020,343)
(6,669,656)
American Pacific Borates Ltd
35
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
16. Auditor’s Remuneration
The auditor of American Pacific Borates Limited is RSM Australia Partners
Amounts received or due and receivable by the parent auditor for:
- an audit or review of the financial report
2020
$
2019
$
32,050
32,050
28,850
28,850
17. 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 year are as follows:
Short term employee benefits
Share-based payments
Other benefits
Total remuneration
846,339
837,505
31,208
1,715,052
911,544
404,602
28,864
1,345,010
(b) Other transactions with key management personnel
JAWAF Enterprises Pty Ltd company in which Mr. Anthony Hall is a director, earned consulting fees totalling
$256,000 during the year ended 30 June 2020. This consulting fee is included in note 17(a) “Remuneration of
Directors and Key Management Personnel”. $96,000 was outstanding at year end.
Minerals and Metals Marketing Pty. Ltd a company in which Mr Stephen Hunt is a Director, earned fees
totalling $39,000 for non-executive director services provided. This fee is included in note 17(a)
“Remuneration of Directors and Key Management Personnel”. $3,250 was outstanding at year 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 year ended 30
June 2020.
18. Related Party Disclosures
(a) Key management personnel
For Director related party transactions please refer to Note 17 “Director and Key Management Personnel
Disclosures”.
(b) Subsidiaries
The consolidated financial statements include the financial statements of American Pacific Borates 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%
19. Loss per Share
Loss used in calculating basic and dilutive EPS
(5,191,489)
(3,020,343)
2020
$
2019
$
American Pacific Borates Ltd
36
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
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:
Number
of Shares
Number
of Shares
222,099,290
190,783,661
-
-
222,099,290
190,783,661
There is no impact from 67,423,794 options outstanding at 30 June 2020 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.
20. 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
2020
$
38,742,907
2019
$
2,893,663
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.
American Pacific Borates Ltd
37
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
Change in Basis Points
Effect on equity
including retained
earnings ($)
Increase/(Decrease)
Effect on Post
Tax Loss ($)
Effect on equity
including retained
earnings ($)
Increase/(Decrease)
Effect on Post
Tax Loss ($)
2020
2019
Increase 75 basis points
Decrease 75 basis points
290,572
(290,572)
290,572
(290,572)
21,702
(21,702)
21,702
(21,702)
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.
(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 2020, 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 2020.
(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:
2020
US Dollar
2019
US Dollar
21. Share-Based Payments
(a) Recognised share-based payment transactions
Share-based payment transactions during the year were as follows:
Options issued to employees and Directors (note 21 (b))
Options issued to suppliers (note 21 (c))
Movement in share option reserve
Shares issued to consultants
Share-based payments recognised
1 Refer to note 11(b) for further details of the shares issued to consultants.
Liabilities
$
Assets
$
2,416,083
1,251,525
226,765
798,711
2020
$
1,300,803
2,579,392
3,880,195
-
3,880,195
2019
$
733,217
378,839
1,112,056
84,7501
1,196,806
American Pacific Borates Ltd
38
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
Share-based payment transactions have been recognised within the consolidated statement of profit or loss
and other comprehensive income and consolidated statement of financial positions as follows:
Share-based payment expense
Deferred exploration & evaluation expenditure
Issued capital – transaction costs on share issue
2020
$
2,596,450
-
1,283,745
3,880,195
2019
$
762,587
84,750
349,469
1,196,806
(b) Options issued to employees and Directors
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
Borates 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 Borates
Limited.
The fair value at grant date of options granted during the reporting year 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 to employees and Directors during the year
ended 30 June 2020:
Grant Date Expiry date
Exercise
price
per
option
30/07/2019 30/07/2024 $0.50
17/10/2019 30/07/2024 $0.50
18/02/2020 01/02/2023 $0.60
18/02/2020 01/02/2023 $0.80
Balance
at start of
the year
Granted
during the
year
Exercise
d during
the year
Expired
during
the year
Balance at end
of the year
Exercisable at
end of the
year
Number
-
-
-
-
Number
2,500,000
6,000,000
1,050,000
550,000
10,100,000
Number
-
-
-
-
-
Number
-
-
-
-
-
Number
2,500,000
6,000,000
1,050,000
550,000
10,100,000
Number
2,500,000
6,000,000
1,050,000
550,000
10,100,000
The expense recognised in respect of the above options granted during the year was $1,154,385. The expense
recognised during the year on options granted in prior periods was $146,418.
The model inputs, not included in the table above, for options granted during the year ended 30 June 2020
included:
a) options were granted for no consideration;
b) expected lives of the options range from 3 to 4 years;
c) share price at grant date ranged from $0.135 to $0.43;
d) expected volatility ranged from 74% to 101%;
e) expected dividend yield of nil; and
f) a risk-free interest rate ranged from 1.25% to 2.23%
American Pacific Borates Ltd
39
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
The table below summarises options granted to employees and Directors during the year ended 30 June 2019:
Grant Date
Expiry
date
Exercise
price per
option
Balance
at start of
the year
Granted
during
the year
Exercised
during the
year
Expired
during
the year
Balance at
end of the
year
Exercisable
at end of the
year
05/11/2018 05/11/2022 $0.50
27/03/2019 05/11/2022 $0.50
Number Number Number Number Number
Number
- 9,000,000
- 1,000,000
- 10,000,00
0
-
-
-
9,000,000
- 9,000,000
-1
- 1,000,000
- 10,000,000 9,000,000
1 The options will vest at the Board’s discretion subject to satisfactory performance against KPI’s following 6
months of service.
The model inputs, not included in the table above, for options granted during the year ended 30 June 2019
included:
a) options were granted for no consideration;
b) expected lives of the options ranged from 3.6 to 4.0 years;
c)
share price at grant date ranged from $0.135 to $0.185;
d) expected volatility ranged from 66% to 74%;
e) expected dividend yield of nil; and
f)
a risk-free interest rate ranged from 1.50% to 2.23%
(c) Options issued to suppliers
During the financial year ended 30 June 2020, the Company issued options to brokers and corporate advisors
for services rendered during the year. 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 year
Granted
during the
year
Exercis
ed
during
the
year
Expired
during the
year
Balance at end
of the year
Exercisable
at end of the
year
18/02/2020 01/02/2023 $0.60
18/02/2020 01/02/2023 $0.80
29/06/2020 01/07/2021 $0.75
Number
-
-
-
Number
1,000,000
1,000,000
15,000,000
17,000,000
Number
-
-
-
-
Number
-
-
-
-
Number
1,000,000
1,000,000
Number
1,000,000
1,000,000
15,000,000 15,000,000
17,000,000 17,000,000
The expense recognised in respect of the above options granted during the year was $2,574,957. The expense
recognised during the year on options granted in prior periods was $4,435.
The model inputs, not included in the table above, for options granted during the year ended 30 June 2020
included:
a) options were granted for no consideration;
b) expected lives of the options range from 1 to 3 years;
c)
share price at grant date ranged from $0.43 to $0.51;
d) expected volatility of 101%;
e) expected dividend yield of nil; and
f)
a risk-free interest rate of 1.25%
American Pacific Borates Ltd
40
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
The table below summarises options granted to suppliers during the year ended 30 June 2019:
Grant Date Expiry date
Exercise
price
per
option
Balance
at start of
the year
Granted
during the
year
Exercised
during the
year
Expired
during
the year
Balance at
end of the
year
Exercisable
at end of the
year
10/08/2018 10/08/2020 $0.25
08/05/2019 10/08/2020 $0.25
Number
-
-
Number
4,000,000
3,000,000
7,000,000
Number
Number
-
-
-
-
-
-
Number
4,000,000
3,000,000
7,000,000
Number
4,000,000
3,000,000
7,000,000
The model inputs, not included in the table above, for options granted during the year ended 30 June 2019
included:
share price at grant date ranging from $0.180 to $0.195;
a) options were granted for no consideration;
b) expected life of the options ranging from 1.3 to 2.0 years;
c)
d) expected volatility ranging from 66% to 74%;
e) expected dividend yield of nil; and
f)
a risk-free interest rate ranging from 1.50% to 1.98%
22. Commitments
a) Preliminary closure and Post-Closure Maintenance Plan
The Group is required to submit to the California Regional Water Quality Control Board a financial assurance
mechanism for the Fort Cady Project for clean closure of the surface impoundments and decommissioning
of associated infrastructure. The amount of this financial assurance mechanism is approximately A$469,067
(US$322,718).
b) Mineral Lease Agreement
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
approximately A$109,011 (US$75,000) per annum until expiry on 1 October 2021.
The minimum lease commitments as at 30 June 2020 are as follows:
Within one year
Later than one year but not later than five years
2020
$
109,011
-
109,011
2019
$
106,909
133,637
240,546
23. Contingent Assets and Liabilities
There are no known contingent assets or liabilities as at 30 June 2020
24. Dividends
No dividend was paid or declared by the Company in the year ended 30 June 2020 or the period since the end
of the financial year 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 year ended 30 June 2020.
American Pacific Borates Ltd
41
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
25. 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 Borates 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 year ended 30 June 2020:
Year ended 30 June 2020
Other income
Interest income
Segment revenue
Result
Loss before tax
Income tax expense
Loss for the year
Asset and liabilities
Segment assets
Segment liabilities
Year ended 30 June 2019
Other income
Interest income
Segment revenue
Result
Loss before tax
Income tax expense
Loss for the year
Asset and liabilities
Segment assets
Segment liabilities
Australia $
US $
Total
-
2,133
2,133
(5,151,707)
-
(5,151,707)
196,851
9,338
206,189
(39,782)
-
(39,782)
196,851
11,471
208,322
(5,191,489)
-
(5,191,489)
38,161,108
1,399,912
35,239,813
2,416,083
73,400,921
3,815,995
-
8,430
8,430
(2,944,310)
-
(2,944,310)
112,161
1,854
114,015
(76,033)
-
(76,033)
112,161
10,284
122,445
(3,020,343)
-
(3,020,343)
2,880,235
119,607
25,881,890
226,765
29,135,034
346,372
26. Significant Events after the Reporting Date
On 6 July 2020, the Company issued 2,100,000 unlisted options to Executives as part of their FY2021 Long
Term Incentive award pursuant to the Company’s Employee Share Option Scheme. The unlisted options are
exercisable at $0.90 each on or before 6 July 2024.
With ABR’s focus being on construction of the Fort Cady Borate Mine, the Company announced on 30 July
that it had renegotiated the earn-in agreement expenditure requirements for the Salt Wells Borate Project
located in Nevada, USA. Year 3 (FY21) will now become Year 1 in the revised agreement and see an
expenditure commitment of US$100k (inclusive of annual lease payments). The existing Year 4 (FY22) will
now become Year 2 with a revised expenditure commitment of US$300k and so on.
Mr. Harold (Roy) Shipes retired from the Board effective 31 July 2020.
American Pacific Borates Ltd
42
2020 Annual Report to Shareholders
American Pacific Borates Ltd
Notes to the Consolidated Financial Statements for the year ended 30 June 2020
On 3 August 2020, the Company announced the appointment of Mr. David J Salisbury as the Company’s new
Chairman effective 1 August 2020. Mr. Salisbury has over 40 years’ experience in the mining industry,
including seventeen years with Rio Tinto. Over his 40 years he has been directly responsible for the
development, construction and operations of four mines.
The Company was awarded the Underground Injection Control permit by the US EPA on 14 August 2020.
With the award of this permit the Company now has all substantive operational permits for production of
borates and SOP at the Fort Cady Borate Mine.
The following options were converted into ordinary fully paid shares after the reporting date;
Date shares
issued
2-Jul-20
24-Jul-20
31-Jul-20
5-Aug-20
11-Aug-20
25-Aug-20
26-Aug-20
8-Sep-20
TOTAL
$0.30 each on or before
30-Nov-2021
$0.40 each on or before
30-Apr-2021
$0.25 each on or before
10-Aug-2020
-
-
-
250,000
-
-
-
500,000
750,000
-
-
-
-
-
500,000
750,000
-
1,250,000
475,467
5,641,958
3,078,723
-
3,580,701
-
-
-
12,776,849
There have been no other significant events subsequent to the end of the financial year to the date of this
report.
27. Parent Entity Information
The following details information related to the parent entity, American Pacific Borates Limited, at 30 June
2020. 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
Total comprehensive loss of the parent entity
2020
$
2019
$
38,161,008
70,901,331
2,880,235
28,891,010
(1,399,911)
(1,399,911)
69,501,420
(119,607)
(119,607)
28,771,403
73,862,440
6,247,758
(10,608,779)
69,501,419
31,961,550
2,367,563
(5,557,710)
28,771,403
(5,051,069)
(5,051,069)
(2,288,511)
(2,288,511)
Other Commitments and Contingent Liabilities
The Company had no commitments and no contingent liabilities as at 30 June 2020.
American Pacific Borates Ltd
43
2020 Annual Report to Shareholders
Directors’ Declaration
In accordance with a resolution of the Directors of American Pacific Borates Limited, I state that:
1. In the opinion of the Directors:
a)
the financial statements and notes of American Pacific Borates Limited for the year ended 30 June
2020 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 2020 and of its
performance for the year 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 year ended 30 June 2020.
On behalf of the Board
Michael Schlumpberger
Managing Director
California, USA
14 September 2020
American Pacific Borates Ltd
44
2020 Annual Report to Shareholders
Level 32 Exchange Tower, 2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
RSM Australia Partners
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of American Pacific Borates Limited for the year ending 30
June 2020, 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: 14 September 2020
ALASDAIR WHYTE
Partner
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
Level 32 Exchange Tower, 2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
RSM Australia Partners
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 BORATES LIMITED
Opinion
We have audited the financial report of American Pacific Borates Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2020, 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 year then ended, 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 2020 and of its financial
performance for the year then ended; 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
Capitalised exploration and evaluation expenditure
Refer to Note 10 in the financial statements
The Group has capitalised a significant amount of
exploration and evaluation expenditure, with a
carrying value of $29,483,185 as at 30 June 2020.
We considered this to be a key audit matter due to
the significant management judgments involved in
assessing the carrying value of the assets including:
Determination of whether the exploration
can be
and evaluation expenditure
associated with finding specific mineral
resources and the basis on which that
expenditure is allocated to an area of
interest; and
Assessing whether any
impairment are present.
indicators of
Share-based payments
Refer to Note 21 in the financial statements
During the year, options were issued to key
management personnel and consultants of the
Group.
Management
these
arrangements in accordance with AASB 2 Share-
Based Payments.
accounted
have
for
We consider this to be a key audit matter because
of:
the complexity of the accounting required to
value the instruments;
the judgmental nature of inputs into the
valuation models, including the likelihood of
vesting conditions being met, and
the
appropriate valuation methodology to apply;
the conditions associated with each
instrument; and
the non-routine nature of the transactions.
Our audit procedures in relation to the carrying value of the
deferred exploration and evaluation asset included:
Obtaining evidence that that the right to tenure of the
area of interest is current;
Agreeing a sample of additions to supporting
documentation and ensuring the amounts are
capital in nature and relate to the area of interest;
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;
Assessing
evaluating management’s
assessment that no indicators of impairment existed
at the reporting date.
and
Enquiring with management and reviewing budgets
and plans
incur
that
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 and ASX
announcements to ensure that the Group had not
resolved to discontinue activities in the specific area.
Our audit procedures in relation to the issue of these
options included:
Making enquiries of management about the nature of
and the rationale behind the instruments issued;
Reviewing the terms and conditions of the instruments
issued;
Obtaining
the valuation models prepared by
management and assessing whether the models were
appropriate for valuing the instruments issued during
the year;
Challenging the reasonableness of key assumptions
used by management relative to the valuation at the
grant date;
Checking
the mathematical accuracy of
the
computation;
Reviewing of minutes of director meetings and ASX
announcements for the approval in relation to the
granting of the options; and
Reviewing the adequacy and accuracy of the relevant
disclosures in the financial statements.
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 year ended 30 June 2020, 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: https://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 year ended 30 June 2020.
In our opinion, the Remuneration Report of American Pacific Borates Limited, for the year ended 30 June 2020,
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: 14 September 2020
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 7 September 2020.
Distribution of Share Holders
Ordinary Shares
Number of Holders
Number of Shares
%
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
TOTAL
139
433
267
760
347
1,946
77,682
1,237,772
2,112,147
28,249,309
287,240,609
318,917,519
0.02
0.39
0.66
8.86
90.07
100
There were 54 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
MAYFAIR VENTURES PTE LTD
CS THIRD NOMINEES PTY LIMITED
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