More annual reports from Australian Potash Limited:
2023 ReportANNUAL
REPORT
JUNE 2018
FOR THE YEAR ENDED
Table of Contents
Chairman’s Letter
Operations Report
Directors’ Report
Auditors Independence Declaration
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 Financial Statements
Directors’ Declaration
Audit Report
ASX Additional Information
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1
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018
This page was intentially left blank
Corporate Information
Directors
Share Register
James Walker (Non-Executive Chairman)
Security Transfer Australia
Matt Shackleton (Managing Director
& Chief Executive Officer)
Brett Lambert (Non-Executive Director)
Rhett Brans (Non-Executive Director)
Company Secretary
Sophie Raven
770 Canning Highway
APPLECROSS WA 6153
Auditors
Bentleys Audit & Corporate (WA) Pty Ltd
Level 3, 216 St Georges Terrace
PERTH WA 6000
Registered Office & Principal Place of Business
Website
31 Ord Street
WEST PERTH WA 6005
Telephone: +61 8 9322 1003
Solicitors
Steinepreis Paganin
Level 4, The Read Building
16 Milligan Street
PERTH WA 6000
www.australianpotash.com.au
Stock Exchange Listing
Australian Potash Limited shares (ASX code APC)
are listed on the Australian Securities Exchange.
Chairman’s Letter
Dear Shareholders,
It is my great pleasure to present the 2018 Annual Report to you on behalf of the Directors of Australian Potash
Limited, my first as the Company’s new Chairman.
I am delighted to have joined the Board in August 2018 at such an important stage of development of the Company’s
Lake Wells Sulphate of Potash (SOP) Project, and I would like to take this opportunity to thank my fellow Directors,
Matt Shackleton (who is now the Company’s Managing Director and CEO), Brett Lambert and Rhett Brans, both
Non-Executive Directors, for welcoming me onto the Board.
I look forward to working with them and the Company’s management as we progress both the SOP Project and the
Company’s Lake Wells Gold Project, for which the Company recently announced a $7 million joint venture with St
Barbara Limited. This was the culmination of management’s hard work to ensure maximum value for the Company
and its shareholders in respect of its gold assets.
I am particularly pleased that my appointment coincided with a key milestone for the Company – the grant of mining
leases which cover the Company’s development area for Stages 1 and 2 of the Lake Wells SOP Project. The grant of
these mining leases means that the forthcoming quarters are shaping up to deliver some of the most significant
de-risking events for the Lake Wells SOP Project development cycle.
We are now gearing up for a concerted push towards finalising the field programs (such as completion of the
current brine bore installation program, fresh water development program and various geotechnical, logistical and
marketing analyses) leading into finishing the Definitive Feasibility Study, the results of which we expect to report in
the first half of 2019.
We look forward to updating our valued shareholders on the Company’s progress as it achieves further milestones,
and as your new Chairman I am excited to be a part of the Company’s future.
Yours sincerely,
Jim Walker
2
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Operations Report
Australian Potash Limited (ASX: APC) is an ASX-listed Sulphate of Potash (‘SOP’) explorer and developer. APC holds
a 100% interest in the Lake Wells Potash Project located approximately 500km northeast of Kalgoorlie, in Western
Australia’s Eastern Goldfields. On development of Stage 1, Lake Wells will comprise a 150,000 tonne per annum (tpa)
SOP processing operation, supported by an estimated 35-bore brine abstraction network.
During the year, APC continued progressing the feasibility study into the development of the Lake Wells Sulphate of
Potash Project. This was achieved through a number of specific programs of work as detailed below.
4 Pond Pilot Evaporation Program
On 3 October 2017, APC commissioned a 4 pond pilot evaporation program1.
The design, construction and commissioning of the pilot solar evaporation pond network is an extension of the Class
A evaporation pan trial underway since October 2016. The evaporation pan trial will continue to collect data that
contributes to the evaporation model under which the commercial ponds will operate and when combined with the
outcomes of the pilot solar evaporation pond network, will lead to refining the design of the commercial scale pond
network.
The pilot ponds have been constructed off the playa in a similar manner to one of the options proposed for the
harvest ponds in the full-scale commercial project. At full-scale, the initial concentration and halite crystallisation
ponds will be developed on the surface of the playa lakes, taking advantage of the existing near-surface low-
permeability clay layer to minimise brine leakage, and save considerable pond construction expenditure associated
with lining the bottom of the ponds.
Subsequent to year end, on 22 August 2018, APC announced the successful transfer of brine from the
pre-concentration pond into the first harvest pond at the Lake Wells Sulphate of Potash project pilot evaporation
pond network.
Figure 1: Pre-concentration pond at the Lake Wells SOP project prior to initial brine transfer
1 Refer to ASX announcement 3 October 2017 ‘Pilot Solar Evaporation Ponds Commissioned’.
3
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 The pilot pond network at Lake Wells comprises 1 large pre-concentration pond and 3 smaller, harvest ponds.
The raw, hypersaline brine was pumped into the pre-concentration pond using one of the five (5) already installed
production bores at the project.
As the brine evaporates further through the harvest ponds, various sodium and magnesium salts are crystallised out
of it until it becomes highly concentrated with potassium bearing salts. It is anticipated that the final transfer of brine
into the final harvest pond will occur towards the end of 2018, resulting in the crystallisation of ‘feeder’ or harvest
salts in the harvest ponds. It is from these blended harvest salts that SOP is processed and refined.
Figure 2: Pre-concentrated brine after transfer into harvest pond 1
The pilot evaporation pond program is anticipated to produce approximately 22 tonnes of harvest salts, from which
an estimated 2 tonnes of SOP can eventually be refined. In the initial production run, approximately 250 kilograms
of trade samples of SOP will be produced. The Company’s processing consultants, Novopro will manage the
production of SOP over the final stages of the process, with that company’s lead expert being present in Perth
for the duration.
4
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Long Term Test Pumping
On 27 October 2017, the Company advised that the recently completed geotechnical survey program at Lake Wells
confirmed a continuous layer of low-permeability clay across the lake (or playa) which supports the proposed
development of un-lined, on-lake evaporation ponds.
The development of economic un-lined pre-concentration and crystalliser ponds (evaporation ponds) on a lake
surface requires a low-permeability layer of clay near surface to control leakage from the pond network back into
the aquifer. Lower leakage rates lead to higher potassium recoveries, with a positive flow through to a smaller pond
footprint and improved overall project recoveries and economics.
In November, APC received significant new information from its long-term test-pumping program at Lake Wells, with
the program confirming key resource estimation and extraction parameters.
Key outcomes and project implications included:
• First results of the long-term test pumping program used to confirm the downward drainage of brine
assumption in the JORC Mineral Resource Estimate (MRE), with strongly positive implications for long-term
yield and extractable SOP volumes;
• The confirmation of bores as the optimal method of extraction as envisaged in the Scoping Study following an
external review by leading hydrogeological consultancy firm AQ2.
A long-term pumping test was commissioned to demonstrate that the Lake Wells SOP project palaeochannel
performs in a similar manner to the palaeochannel bore fields near Kalgoorlie, in that abstraction from the basal sand
aquifer induces downward drainage of the intermediate clay. A successful test outcome is a significant response in
the intermediate clay, which indicates brine is recoverable from all sections of the stratigraphic sequence.
Abstraction commenced from the basal sand aquifer (TPB003) on 20 October 2017 at a constant rate of 15 L/s.
Contrary to the conservative analytical calculations of overlying aquifer response times, measurable responses in the
clay monitoring bore (LWDRM006) occurred in the first day of testing.
After 25 days of testing, 31 metres of drawdown was recorded in the intermediate clay monitoring bore, and 0.35
metres of drawdown in the upper sand aquifer monitoring bore. Groundwater analysis was conducted using a
logarithmic time scale, with a 25 day-test therefore representing a confident forecast of life-of-mine sustainability.
The magnitude of response indicates the intermediate clay overlying the basal sand aquifer is relatively hydraulically
conductive and brine hosted within the strata overlying the basal sand is accessible and recoverable by abstraction
from the basal aquifer alone.
Environmental Protection Authority (EPA): Level of Assessment –
Environmental Review (No Public Comment)
In December 2017, the Company referred its proposed project development to the EPA. The purpose of the referral
was to understand at what level of assessment the EPA would consider the development proposal. The assessment
options range from the lowest ‘No Assessment’ to the most stringent ‘Environmental Review with Public Comment’.
On 6 February 2018, the EPA advised that it will assess the project development based upon the submission of an
Environmental Review Document (No Public Comment), which is the second lowest level of assessment. That is, the
EPA requires APC to submit sufficient information in order for it to understand how the project will be developed, and
what impacts the development will have on the surrounding environment.
The level of assessment required will not require formal public environmental review, therefore reducing the
timeframes required for completion of assessment.
Grant of Mining Leases
Subsequent to year end on 12 September 2018, APC announced that the Mining Leases have been granted at the
Lake Wells Sulphate of Potash project (Figure 1). The Mining Leases cover an area in excess of 30,000 hectares of
the Lake Wells playa and underlying palaeochannel system. Mining Leases granted are M38/1274, M38/1275
and M38/1276.
5
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Figure 3: Mining Leases have been granted at Australian Potash’s Lake Wells Sulphate of Potash project
Logistics
On 3 September 2018, the Company advised that the Shire of Laverton has received committed funding to bitumen-
seal an additional 100kms of the Great Central Road to the east of Laverton, commencing in January 2019. This
road-surfacing project will replace 70kms of un-sealed road with high-grade sealed road in APC’s logistics solution
(Figure 3). APC and the Shire of Laverton have entered into an Agreement to off-set rates due on the recently
granted Mining Leases at Lake Wells to the upgrade and maintenance of the Lake Wells access road. The two
entities have also agreed to scope the feasibility of sealing the Lake Wells access road which would make the Lake
Wells SOP Project’s logistics solution a 300km all-weather bitumen sealed road to the Leonora rail-head.
6
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 LAKE WELLS (previously YAMARNA) GOLD PROJECT
The Lake Wells Gold project is situated 130km north-east of Laverton in Western Australia’s Eastern Goldfields.
APC’s tenements cover an estimated 65km of strike, 60km north-west of the 6-million ounce Gruyere mine
development.
During 2017, the Company commissioned CSA Global to conduct a structural & lithological-geochemical review,
interpretation and targeting exercise at the project. The Lake Wells area considered in the reviews comprises
over 1,400km2 of granted and pending tenure, encompassing the majority of the northern third of the Yamarna
Greenstone Belt.
During the June 2018 quarter, the Company commenced a 3-stage, 23,000m Air-Core (AC) drill program to test a
highly prospective zone identified in the CSA Global review process. The program commenced on five targets at
Target area 1 (see Figure 4), and 12 targets have been defined with more pending as the detailed targeting process
continues.
The first phase (6,000m) of the planned 23,000m AC drilling campaign into targets at the Lake Wells Gold Project
finished in early May, with some 1,400 samples submitted for assay.
In June, the Company released assay results from the first set of samples submitted, which returned bedrock
gold anomalism and confirmed a substantial and widespread gold mineralised system extending north from the
Company’s southern tenement boundary. A significant anomaly within target T15a stretches over 2,500 metres of
strike and is open to the north-west and is up to 200 metres wide. The T15a anomaly is approaching the scale of the
early stage AC anomaly at the Ibanez Prospect of southern neighbour Gold Road Resources Ltd2.
Additionally, the northern most line of the 6 lines of new AC drilling returned anomalous results stretching over a
500-metre width. This anomaly is open along strike, where historical drilling was only selectively sampled.
Results received extend the mineralised system that has been identified in southern neighbouring tenements, into
APC’s Lake Wells Gold Project. Gold anomaly levels are consistent with those reported from early AC drilling at the
Ibanez and Stratocaster targets3 where subsequent AC, Reverse Circulation (RC), and Diamond Drilling (DD) has
revealed high grade gold mineralisation4.
Air-Core Drill Program
Through April and early May, a total of 139 vertical AC drill holes between depths of 27 metres and 72 metres were
completed over selected targets within the Yamarna Shear Zone for a total of 7,027 metres. Drill holes were generally
spaced at 80 metre intervals with provision to infill to 40 metres where field observation warranted it. The rock types
logged, and assay results received are all consistent with results reported by other companies working along this
frontier greenstone belt.
Litho-geochemical and spectral analysis are being conducted on samples from this program by industry leading
consultants CSA Global to assist in evaluating targets for more extensive drill testing. The combination of analysis
techniques provides a robust basis for understanding the anomalism encountered and provides a sound platform for
additional drilling.
2Gold Road Resources Limited (ASX: GOR) ASX announcement 2 November 2015 ‘High Grade Gold Intersected at Corkwood’.
3Gold Road Resources Limited (ASX: GOR) ASX announcement 2 November 2015 ‘High Grade Gold Intersected at Corkwood’.
4 Gold Road Resources Limited (ASX: GOR) ASX announcement 1 August 2017 ‘High Grade Mineralisation Confirmed at Ibanez: 8.20 metres at
11.63 g/t Au’.
7
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Figure 4: The 23,000m Air-Core drill program is testing and will continue to test structural and geochemical/lithological targets along strike
and between 1km and 10km north of GOR’s Ibanez/Corkwood prospect
Subsequent to year end, on 26 September 2018, the Company announced that it had entered into an Earn-In & Joint
Venture Agreement with Australian mid-tier gold producer, St Barbara Limited (SBM) at the Lake Wells Gold Project.
Under the terms agreed, covering the tenements identified in Figure 4, SBM will pay APC A$1.25M cash
consideration for entering the Agreement, and a minimum exploration spend of $1.75M during the initial 12 month
Earn-In period.
After the first year Earn-In period, SBM can elect to earn a 70% interest in the tenements by spending a further $3.5M
over a 24-month Joint Venture period on exploration, and reimburse APC up to $0.5M in costs previously spent on
exploration at Lake Wells.
APC will retain 100% of all potash mineral rights.
APC’s 30% interest will be free-carried to the completion of a Bankable Feasibility Study (BFS), following which
industry standard contribution and dilution clauses apply.
8
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Corporate
Appointments
On 15 August 2018, APC appointed Mr James (Jim) Walker to the role of Non-Executive Chairman of the Company.
Mr Matt Shackleton, formerly Executive Chairman, was appointed managing Director and Chief Executive Officer.
On 31 January 2018, the Company appointed Ms Sophie Raven as Company Secretary, following the resignation of
Leigh-Ayn Absolom who continues in her role as Financial Controller. Ms Raven is a lawyer and company secretary
with 20 years’ experience in corporate law and company secretarial roles within the resources industry.
In May 2018, the Company was pleased to announce the appointment of Mr Jay Hussey as Chief Commercial
Officer. Mr Hussey is a highly experienced fertiliser industry executive, with an extensive background in Sulphate of
Potash (SOP) marketing, Potash (MOP) supply contracting, and off-take & joint venture negotiations throughout Asia,
Europe, North America and South America. Mr Hussey served for 10 years as Vice-President of China-based Migao
Corporation in both Toronto and Beijing. During his time with Migao, Mr Hussey was responsible for in excess of
US$160m in equity and debt financings, which allowed that company to grow into China’s largest non-State owned
SOP producer.
Placements, SPP and Options Issue
On 14 August 2017, the Company completed a bookbuild for a placement to institutional, sophisticated and
professional investors to raise up to $3 million through an oversubscribed placement of 30,000,000 fully paid
ordinary shares at an issue price of $0.10 per share.
The funds were used to continue the advancement of the Feasibility Study at Lake Wells and to commence
exploration at the Lake Wells Gold project.
In addition, APC issued 5,420,000 new shares under a Share Purchase Plan (“SPP”) on 19 September 2017, following
receipt of valid applications totalling $542,000. The SPP provided eligible shareholders the opportunity to subscribe
for up to $15,000 worth of shares at an offer price of $0.10 per share without having to pay brokerage or other
transaction costs.
APC announced on 28 September 2017 a non-renounceable entitlement issue of one (1) Option for every three (3)
Shares held by Shareholders at an issue price $0.01 per Option to raise up to $854,910 before expenses (“Loyalty
Option Issue”).
The Loyalty Option Issue closed on 18 October 2017, with valid applications for entitlements received totalling
$358,268 for the application of 35,826,763 options with an exercise price of 20c expiring 25 October 2019. The
Company also received oversubscriptions totalling $17,681 for 1,768,143 Options from unrelated parties.
In May 2018, the Company completed a placement to sophisticated and professional investors to raise $3.02 million
through an oversubscribed placement of approximately 43,200,000 fully paid ordinary shares (New Shares) at an
issue price of 7.0 cents each (Placement). As part of the Placement, the Company agreed to issue one free attaching
option with every two Placement shares (Options). The Options will be exercisable at $0.12 with an expiry date of
three years from issue and will be listed on ASX if there are more than 50 holders and all ASX requirements are met.
The allotment of Options was subject to shareholder approval at a general meeting of the Company, which was held
post year-end on 12 July 2018.
At the general meeting of shareholders, approval was obtained for the issue of the Options as well as the issue of
715,000 New Shares (equivalent to $50,000) and corresponding Options to the Company’s directors.
9
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Competent Persons Statement
The information presented here that relates to the gold portion only of this ‘Exploration Program on Yamarna Gold
Project’ release is based on information compiled by Mr Marcus Willson of CSA Global Pty Ltd. Mr Willson takes
overall responsibility for information relating to the gold related strategic review. Data was provided for the review
by Australian Potash Limited. Mr Willson is a Member and Registered Professional Geoscientist (Exploration) with
the Australian Institute of Geoscientists and has sufficient experience which is relevant to this style of mineralisation
under consideration and to the activity that has been undertaken to qualify as a Competent Person as defined in the
2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
(JORC Code 2012)’. The Competent Person consents to the inclusion in this release of the matters based on the
information in the form and context in which it appears.
About Australian Potash Limited
Australian Potash Limited (ASX: APC) is an ASX-listed Sulphate of Potash (SOP) developer. The Company holds a
100% interest in the Lake Wells Potash Project located approximately 500kms northeast of Kalgoorlie, in Western
Australia’s Eastern Goldfields.
The Lake Wells Potash Project is a palaeochannel brine hosted sulphate of potash project. Palaeochannel bore fields
supply large volumes of brine to many existing mining operations throughout Western Australia, and this technique is
a well understood and proven method for extracting brine. APC will use this technically low-risk and commonly used
brine extraction model to further develop a bore-field into the palaeochannel hosting the Lake Wells SOP resource.
A Scoping Study on the Lake Wells Potash Project was completed and released on 23 March 20175. The Scoping
Study exceeded expectations and confirmed that the Project’s economic and technical aspects are all exceptionally
strong, and highlights APC’s potential to become a significant long-life, low capital and high margin sulphate of
potash (SOP) producer.
Key outcomes from the Scoping Study are as follows:
• Stage 1 production rate of 150,000tpa of premium-priced sulphate of potash (years 1 – 5)
• Stage 2 production rate of 300,000tpa of premium-priced sulphate of potash (years 6 – 20)
• Upgraded JORC 2012 Mineral Resource Estimate comprising 14.7m tonnes of SOP, including 12.7mt in the
Indicated category6
• Operating expenditure of A$368/US$283 tonne SOP in the first 5 years and A$343 tonne SOP over the life of
mine
• At a SOP price of A$795 per tonne SOP, the Project generates LOM annual operating pre-tax cashflow7 of
A$118m/US$81m
• Pre-production capital expenditure (Stage 1) of A$175m/US$135m and Stage 2 of A$163m/US$125m
• Life of Mine (LOM) is 20 years (inc. Stage 1 & Stage 2) –upside to LOM through continued exploration
5Refer to ASX announcement 23 March 2017 ‘Scoping Study Confirms Exceptional Economics of APC’s 100% Owned Lake Wells Potash
Project In WA’. That announcement contains the relevant statements, data and consents referred to in this announcement. Apart from that
which is disclosed in this document, Australian Potash Limited, its directors, officers and agents: 1. Are not aware of any new information that
materially affects the information contained in the 23 March 2017 announcement, and 2. State that the material assumptions and technical
parameters underpinning the estimates in the 23 March 2017 announcement continue to apply and have not materially changed.
6Refer to ASX announcement 23 March 2017 ‘Scoping Study Confirms Exceptional Economics of APC’s 100% Owned Lake Wells Potash
Project In WA’. That announcement contains the relevant statements, data and consents referred to in this announcement. Apart from that
which is disclosed in this document, Australian Potash Limited, its directors, officers and agents: 1. Are not aware of any new information that
materially affects the information contained in the 23 March 2017 announcement, and 2. State that the material assumptions and technical
parameters underpinning the estimates in the 23 March 2017 announcement continue to apply and have not materially changed.
7Operating cashflows include all revenue and operating expenditure, but exclude capital expenditure.
10
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018
Mineral Resource Statement
As at 30 June 2018
This statement details the Mineral Resource
Estimate of Australian Potash Limited as
at 30 June 2018. The Mineral Resource
estimates are grouped by deposit which form
part of the Lake Wells Sulphate of Potash
Project in Western Australia. No Ore Reserves
have been reported for these deposits.
Lake Wells Sulphate of Potash
Project - Mineral Resource Estimate
In compliance with internationally recognised
reporting standards, APC has reported its
Resource estimate using specific yield1, or
drainable porosity. The Company believes
this is an accurate estimate of the amount
of brine that can be abstracted from the
aquifers.
On 29 June 2016, APC announced a Maiden
Sulphate of Potash (SOP) JORC compliant Mineral Resource Estimate2, using specific yield (drainable porosity). The
maiden resource estimate sat in the Inferred Mineral Resource category and contained 18.4 million tonnes of SOP at
8.05 kg/m3 including a high-grade zone: 10.5 Mt of SOP at 9.03 kg/m3.
With additional information and increased confidence in the mineral resource, on 23 March 2017 APC announced
an updated Sulphate of Potash (SOP) JORC compliant Mineral Resource Estimate3, with the majority being in the
Indicated Category. Using specific yield (drainable porosity), the JORC 2012 compliant Mineral Resource Estimate
currently comprises 14.7m tonnes of SOP, including 12.7mt in the Indicated category. Refer to table 1 below.
The Mineral Resource, which has taken into account potential future economic abstraction, has been classified as
Indicated, with the Southern Zone remaining Inferred (Table 1). The Indicated Resource is estimated at 12.7 Mt at
8,267 mg/L (8.267 kg/m3) SOP. The Southern Zone of the Lake Wells Sulphate of Potash Project (LWPP), has an
Inferred estimate of 2.1 Mt at 5,963 mg/L (5.963 kg/m3) SOP.
The Indicated Mineral Resource is a static estimate. It represents the volume of potentially recoverable brine that is
contained within the defined aquifer. It does not take into account modifying factors such as the design of bore fields
(or other pumping scheme), which will affect both the proportion of the Indicated Mineral Resource that is ultimately
recovered and changes in grade associated with mixing between each aquifer unit. The Southern Zone remains a
data constrained Inferred Resource, with planned future drilling aiming to bring it into the Indicated category.
1Specific yield reflects the amount of recoverable Sulphate of Potash, in compliance with NI43-101, the only CRIRSCO reporting code to
include a brine standard.
2 Refer to ASX announcement 29 June 2016 ‘Maiden SOP Resource Estimate’. That announcement contains the relevant statements, data
and consents referred to in this announcement. Apart from that which is disclosed in this document, Goldphyre Resources Limited, its
directors, officers and agents: 1. Are not aware of any new information that materially affects the information contained in the 29 June 2016
announcement, and 2. State that the material assumptions and technical parameters underpinning the estimates in the 29 June 2016
announcement continue to apply and have not materially changed.
3 Refer to ASX announcement 23 March 2017 ‘Scoping Study Confirms Exceptional Economics of APC’s 100% Owned Lake Wells Potash
Project In WA’. That announcement contains the relevant statements, data and consents referred to in this announcement. Apart from that
which is disclosed in this document, Australian Potash Limited, its directors, officers and agents: 1. Are not aware of any new information
that materially affects the information contained in the 23 March 2017 announcement, and 2. State that all the material assumptions and
technical parameters underpinning the production target and the forecast financial information derived from a production target in the 23
March 2017 announcement continue to apply and have not materially changed.
11
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 JORC 2012 Mineral Resource Estimate Summary
Hydrogeological Unit
Volume of
Aquifer
Specific
Yield
Drainable
Brine
Volume
K
Concentration
(mg/L)
SOP Grade
(mg/L)
SOP
Resource
MCM
Mean
MCM
Weighted
Mean Value
Weighted
Mean Value
Indicated Resources
Western High Grade Zone
Surficial Aquifer
Upper Sand
Clay Aquitard
Basal Sand Aquifer
Sub Total (MCM / MT)
Eastern Zone
Surficial Aquifer
Upper Sand
Clay Aquitard
Basal Sand Aquifer
Sub Total (MCM / MT)
Total Indicated
Surficial Aquifer
Upper Sand
Clay Aquitard
Basal Sand Aquifer
Indicated Resource (MCM / MT)
Southern Zone
5,496
37
4,758
214
10,505
3,596
22
2,689
237
6,545
9,092
59
7,447
452
17,050
10%
25%
6%
29%
10%
25%
6%
29%
10%
25%
6%
29%
549
9
308
63
919
359
5
174
69
602
907
15
482
132
1,521
Inferred Resources
3,738
4,017
4,068
4,520
3,904
3,416
3,345
3,362
3,352
3,391
3,610
3,769
3,813
3,906
3,707
8,336
8,958
9,071
10,080
8,706
7,617
7,459
7,497
7,475
7,563
8,051
8,404
8,503
8,711
8,267
Surficial Aquifer
Clay Aquitard
Basal Sand Aquifer
Inferred Resources (MCM / MT)
Indicated Resource based modelled aquifer volume, mean specific yield and weighted mean K concentrations (derived from modelling)
1,296
1,901
82
3,279
2,742
2,620
2,871
2,674
6,115
5,842
6,401
5,963
207
114
19
340
16%
6%
23%
Indicated Resources
Inferred Resources
Total Resources
17,050
3,279
20,329
1,521
340
1,861
3,707
2,674
3,541
8,267
5,963
7,896
Resources do not include exploration target at Lake Wells South (tenement areas south of Southern Zone)
Table 1: Indicated and Inferred Mineral Resource estimate measured using Specific Yield (drainable porosity)4
Summary
MT
4.6
0.1
2.8
0.6
8.1
2.7
0.04
1.3
0.5
4.6
7.3
0.1
4.1
1.1
12.7
1.3
0.7
0.1
2.1
12.7
2.1
14.7
Annual Statement of Mineral Resources
The Annual Statement of Mineral Resources as at the 30 June 2018 presented in this Report has been prepared in
accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves
2012 Edition (the JORC Code 2012) and ASX listing Rules.
APC is not aware of any new information or data that materially affects the information included in this Annual
Statement and confirms that the all the material assumptions and technical parameters underpinning the estimates
in the relevant market announcements continue to apply and have not materially changed.
Mineral Resources Corporate Governance
Due to the nature, stage and size of APC’s existing operations, the Board believes there would be no efficiencies
gained by establishing a separate mineral reserves and resources committee responsible for reviewing and
monitoring APC’s processes for estimating mineral resource and ore reserves and for ensuring that the appropriate
internal controls are applied to such estimates. However, APC ensures that any mineral reserve and ore resource
estimations are prepared by competent geologists and hydrogeologists and are reviewed independently and
verified including estimation methodology, sampling, analytical and test data. APC reports mineral resources
estimates in accordance with the 2012 JORC Code.
1. Rounding may affect sub-totals and totals in all tables.
12
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Competent Persons Statement
The information in the announcement that relates to Exploration Targets and Mineral Resources is based on
information that was compiled by Mr Duncan Gareth Storey. Mr Storey is a Director and Consulting Hydrogeologist
with AQ2, a firm that provides consulting services to the Company. Neither Mr Storey nor AQ2 own either directly
or indirectly any securities in the issued capital of the Company. Mr Storey has 30 years of international experience.
He is a Chartered Geologist with, and Fellow of, the Geological Society of London (a Recognised Professional
Organisation under the JORC Code 2012). My Storey has experience in the assessment and development of
paleochannel aquifers, including the development of hypersaline brines in Western Australia. His experience and
expertise are such that he qualifies as a Competent Person as defined in the 2012 edition of the “Australian Code for
Reporting of Exploration Results, Mineral Resources and Ore reserves”. Mr Storey consents to the inclusion in this
report of the matters based on this information in the form and context as it appears.
The Hydrogeological information in this announcement has been prepared by Carsten Kraut, who is a member of
the Australasian Institute of Geoscientists (AIG), and International Association of Hydrogeologists (IAH). Mr Kraut
is contracted to the Company through Flux Groundwater Pty Ltd. Mr Kraut has experience in the assessment and
development of palaeochannel groundwater resources, including the development of water supplies in hypersaline
palaeochannels in Western Australia. His experience and expertise is such that he qualifies as a Competent Person
as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves’. Mr Kraut consents to the inclusion in this report of the matters based on his information in the form
and context in which it appears.
Forward Looking Statements Disclaimer
This announcement contains forward-looking statements that involve a number of risks and uncertainties. These
forward-looking statements are expressed in good faith and believed to have a reasonable basis. These
statements reflect current expectations, intentions or strategies regarding the future and assumptions based on
currently available information. Should one or more of the risks or uncertainties materialise, or should underlying
assumptions prove incorrect, actual results may vary from the expectations, intentions and strategies described in
this announcement. No obligation is assumed to update forward looking statements if these beliefs, opinions and
estimates should change or to reflect other future developments.
13
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Directors’ Report
Your directors submit their report on the consolidated entity (referred to hereafter as the Group) consisting of
Australian Potash Limited and the entities it controlled at the end of, or during, the year ended 30 June 2018.
Directors
The names and details of the Company’s directors in office during the year and until the date of this report are as
follows. Directors were in office for this entire period unless otherwise stated.
James (Jim) Walker (Non-Executive Chairman)
Appointed 15 August 2018
Mr Walker has 45 years’ experience in the resources industry, at both senior management and board level. Prior to
retiring from the position in 2013, Mr Walker was the Managing Director and Chief Executive Officer of WesTrac Pty
Ltd, during which time that company enjoyed significant expansion across Australia and into north-east China. From
January 2015 through to July 2015, Mr Walker performed the Executive Chairman’s role at Macmahon Holdings Ltd
as that company sought a replacement CEO. Mr Walker has been a member of the Macmahon board since 2013, and
now serves in a non-executive capacity as Chair.
Other current directorships:
Mr Walker is currently Chairman of Austin Engineering Limited (appointed November 2016), Deputy Chairman of
Seeing Machines Limited (appointed May 2017), Chairman of Macmahon Holdings Ltd (appointed 14 July 2015) and
Deputy Chair of RACWA Holdings (appointed April 2018). He also chairs the State Training Board WA and Wesley
College WA, and is a trustee of the WA Motor Museum.
Former directorships (last 3 years):
Non-executive Director of Programmed Group Limited.
Mr Walker was a director of Seven Group Holdings Ltd, National Hire Group Limited, Skilled Group Limited, Coates
Group Holdings Pty Ltd and Programmed Group Limited.
Matt Shackleton (Managing Director & Chief Executive Officer, member of the Audit Committee)
Appointed 15 August 2018 (prior to this Mr Shackleton was the Executive Chairman)
Mr Shackleton is a Chartered Accountant with over 20 years’ experience in senior management and board roles.
Previously the Managing Director of ASX listed Western Australian gold developer Mount Magnet South NL, Mr
Shackleton was a founding director of ASX listed and West African gold and bauxite explorer Canyon Resources
Limited. He has also held senior roles with Bannerman Resources Limited, a uranium developer, Skywest Airlines,
iiNet Limited and DRCM Global Investors in London. Mr Shackleton holds an MBA from The University of Western
Australia, and is a Fellow of The Institute of Chartered Accountants, Australia and New Zealand and a Member of the
Australian Institute of Company Directors.
Former directorships (last 3 years):
Mr Shackleton has also served as a director of Canyon Resources Limited.
Brett Lambert (Non-Executive Director, member of the Audit and Remuneration committees)
Mr Lambert is a mining engineer and experienced company director in the Australian and international mineral
resources industry. Over a career spanning 35 years, Mr Lambert has held senior management roles with Western
Mining Corporation, Herald Resources, Western Metals, Padaeng Industry, Intrepid Mines, Thundelarra Exploration
and Bullabulling Gold. He has successfully managed a number of green-fields resource projects through feasibility
study and development and has been involved in numerous facets of financing resource project development.
Mr Lambert has experience as a director of companies listed on the Australian Securities Exchange, AIM and the
Toronto Stock Exchange and holds a B.App.Sc. (Mining Engineering) degree from Curtin University in Western
Australia and is a Member of the Australian Institute of Directors.
Other current directorships:
Mr Lambert is currently Chairman of Mincor Resources NL (appointed January 2017) and Non-executive Director of
De Grey Mining Limited (appointed October 2017).
Former directorships (last 3 years):
Managing Director of ABM Resources NL.
14
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Rhett Brans (Non-Executive Director, member of the Audit and Remuneration committees)
Mr Brans is an experienced director and civil engineer with over 45 years experience in project developments. He
is currently a Non-executive Director of Syrah Resources and Carnavale Resources Ltd. Previously, Mr Brans was a
founding director of Perseus Mining Limited and served on the boards of Tiger Resources Limited and Monument
Mining Limited. Throughout his career, Mr Brans has been involved in the management of feasibility studies and
the design and construction of mineral treatment plants across a range of commodities and geographies. Mr Brans
holds a Dip.Engineering (Civil), and is a member of the Institution of Engineers, Australia and the Australian Institute of
Company Directors.
Other current directorships:
Mr Brans is currently non-executive director of AVZ Minerals Limited (appointed February 2018) and Carnavale
Resources Limited (appointed September 2013).
Former directorships (last 3 years):
Mr Brans was a director of Syrah Resources Limited, Monument Mining Limited and RMG Limited.
Company Secretary
Sophie Raven
Appointed 31 January 2018
Ms Raven is a corporate lawyer and company secretary, with extensive experience both in Australia and
internationally, including as a corporate lawyer in Santiago, Chile advising Australian and Canadian resources and
drilling companies. Ms Raven has held positions as Company Secretary with Golden West Resources Limited,
Sunbird Energy Limited, Citation Resources Ltd, Whitebark Energy Ltd, Salt Lake Potash Limited, and Cradle
Resources Limited.
Ms Raven holds a Bachelor of Laws from the University of Western Australia, and is a member of the Australian
Institute of Company Directors. Ms Raven is a board member of Parkerville Children and Youth Care (Inc), a not-for-
profit organisation. Ms Raven has not held any former directorships in the last 3 years.
Leigh-Ayn Absolom
Resigned 31 January 2018
Ms Absolom is a Chartered Accountant and Chartered Secretary with 18 years experience in auditing, accounting
and company secretarial roles within public practice and the resources industry. She commenced her career with
Deloitte, originally in South Africa and then Australia, before moving into the mining sector with Murchison Metals Ltd.
Ms Absolom has held positions as Group Financial Controller and Company Secretary with uranium development
company Bannerman Resources Limited, and Manager - Corporate with nickel explorer Resource Mining Corporation
Limited. Ms Absolom is an Associate Member of the Governance Institute of Australia and the South African Institute of
Chartered Accountants. Ms Absolom has not held any former directorships in the last 3 years.
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of Australian Potash Limited were:
James Walker
Matt Shackleton
Brett Lambert
Rhett Brans
Ordinary
Shares
Options over
Ordinary
Shares
-
-
6,182,499
8,905,370
378,750
178,750
839,375
839,375
15
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Principal Activities
During the year the Group carried out exploration on its tenements and applied for or acquired additional tenements
with the objective of identifying potash and other economic mineral deposits.
Dividends
No dividends were paid or declared during the year. No recommendation for payment of dividends has
been made.
Finance Review
The Group began the year with available cash assets of $1,960,557. The Group raised funds during the year via the
issue of shares and options. Total gross funds raised during the year amounted to $6,891,785.
During the year total exploration expenditure incurred by the Group amounted to $5,270,983 (2017: $5,747,151). In
line with the Group’s accounting policies, all exploration expenditure is written off as incurred. The Group received
a research and development tax incentive amounting to $1,821,743 (2017: $421,715). Net administration expenditure
incurred amounted to $271,062 (2017: $1,063,175). This has resulted in an operating loss after income tax for the year
ended 30 June 2018 of $4,999,921 (2017: $6,810,326).
At 30 June 2018 cash assets available totalled $2,201,681.
Operating Results for the Year
Summarised operating results are as follows:
Revenues and loss from ordinary activities before income
tax expense
Shareholder Returns
Basic loss per share (cents)
Risk Management
2018
Revenues
$
Results
$
1,874,097
(4,999,921)
2018
(1.9)
2017
(3.4)
The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that
activities are aligned with the risks and opportunities identified by the board.
The Company believes that it is crucial for all board members to be a part of this process, and as such the board has
not established a separate risk management committee.
The board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned
with the risks identified by the board. These include the following:
• Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders’
needs and manage business risk.
•
Implementation of board approved operating plans and budgets and board monitoring of progress against
these budgets.
Significant Changes In The State Of Affairs
Other than as disclosed in this Report, no significant changes in the state of affairs of the Group occurred during the
financial year.
Significant Events After The Balance Date
Subsequent to year end on 12 September 2018, the Company announced that Mining Leases have been granted
at the Lake Wells Sulphate of Potash project. The Mining Leases cover an area in excess of 30,000 hectares
of the Lake Wells playa and underlying palaeochannel system. The area of the granted Mining Leases covers
the proposed brine bore-field, evaporation ponds, processing plant, and associated infrastructure including
accommodation village, airstrip and power station.
16
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 On 14 September 2018, the Company and Salt Lake Potash Limited (ASX/AIM: SO4) announced that the Companies
have entered into a Memorandum of Understanding and Co-operation Agreement to undertake a joint study of
the potential benefits of development cost sharing for each Company’s project developments at Lake Wells. The
Companies’ substantial project holdings at Lake Wells are contiguous with many common infrastructure elements,
including access roads, proximity to the Leonora rail terminals, and potential power and fresh water solutions. Both
Companies anticipate substantial potential Capex and Opex benefits from some level of infrastructure sharing, with
further potential benefits arising from shared or common evaporation and salt processing facilities.
Significant Events After The Balance Date (continued)
No matters or circumstances, besides those disclosed at note 17, have arisen since the end of the year which
significantly affected or may significantly affect the operations of the Group, the results of those operations, or the
state of affairs of the Group in future financial periods.
Likely Developments And Expected Results
The Group expects to maintain the present status and level of operations and will report any further developments in
accordance with ASX continuous disclosure requirements.
Environmental Regulation And Performance
The Group is subject to significant environmental regulation in respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is
aware of and is in compliance with all environmental legislation. The directors of the Company are not aware of any
breach of environmental legislation for the year under review.
The directors have considered the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) which
introduces a single national reporting framework for the reporting and dissemination of information about
greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations. At the current
stage of development, the directors have determined that the NGER Act will have no effect on the Group for the
current, nor subsequent, financial year. The directors will reassess this position as and when the need arises.
Remuneration Report
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
Principles used to determine the nature and amount of remuneration
Remuneration Policy
The remuneration policy of Australian Potash Limited has been designed to align key management personnel
objectives with shareholder and business objectives by providing a fixed remuneration component and offering
specific longterm incentives based on key performance areas affecting the Group’s financial results. The board of
Australian Potash Limited believes the remuneration policy to be appropriate and effective in its ability to attract and
retain the best key management personnel to run and manage the Group.
The board’s policy for determining the nature and amount of remuneration for board members and senior executives
(if any) of the Group is as follows:
The remuneration policy, setting the terms and conditions for the executive directors, was developed by the board.
All executives receive a base salary or fee (which is based on factors such as length of service, performance and
experience) and the equivalent statutory superannuation. The board reviews executive packages annually by
reference to the Group’s performance, executive performance and comparable information from industry sectors
and other listed companies in similar industries.
The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to
attract and retain the highest calibre of executives and reward them for performance that results in longterm growth
in shareholder wealth.
Executives are also entitled to participate in the employee share and option arrangements.
The directors and executives (if any) receive a superannuation guarantee contribution required by the government,
which was 9.5% for the 2018 financial year. Some individuals may choose to sacrifice part of their salary or fees to
increase payments towards superannuation.
17
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 All remuneration paid to key management personnel is valued at the cost to the company and expensed. Shares
issued to key management personnel are valued as the difference between the market price of those shares and the
amount paid by the key management personnel. Options are valued using the BlackScholes methodology.
The board policy is to remunerate nonexecutive directors at market rates for comparable companies for time,
commitment and responsibilities. The board determines payments to the nonexecutive directors and reviews their
remuneration annually, based on market practice, duties and accountability. Independent external advice is sought
when required. The maximum aggregate amount of fees that can be paid to nonexecutive directors is subject to
approval by shareholders at the Annual General Meeting (currently $300,000). Fees for nonexecutive directors are
not linked to the performance of the Group. However, to align directors’ interests with shareholder interests, the
directors are encouraged to hold shares in the company and are able to participate in the employee option plan.
Performance based remuneration
Short Term Incentive
The Group currently has no short term performance based remuneration components built into key management
personnel remuneration packages.
Long Term Incentive (LTI)
The LTI awards are aimed specifically at creating long term shareholder value and the retention of executives. The
Group has implemented an Incentive Option Plan (Plan) which enables the provision of options to executives and
employees.
During the 2018 financial year, options which will vest subject to pre-defined performance hurdles were allocated to
all executives. The grant of options aims to reward executives in a manner that aligns remuneration with the creation
of shareholder wealth. Refer to page 20 for the number and value of options issued to executives during the year.
Performance measures to determine vesting
The vesting of the options is subject to the attainment of defined individual and group performance criteria, chosen
to align the interests of employees with shareholders, representing key drivers for delivering long term value. The
performance measures for the 2018 performance rights related to:
• Completion of the Lake Wells Potash Project feasibility study (Class 3)
• Finalisation of a board approved finance package to commence the development of the Lake Wells Potash
Project.
• Delineation of JORC compliant resource of > 250,000 gold equivalent ounces of bas, PG or precious metals.
Termination and change of control provisions
Where an executive ceases employment prior to the vesting of an award, the incentives are forfeited unless the
Board applies its discretion to allow vesting at or post cessation of employment in appropriate circumstances.
In the event of a change of control of the Group, the performance period end date will generally be brought forward
to the date of the change of control and the options and rights will vest in full, subject to ultimate Board discretion.
No hedging of LTIs
As part of the Company’s Securities Trading Policy, the Company prohibits executives from entering into
arrangements to protect the value of unvested LTI awards. This includes entering into contracts to hedge exposure
to options, performance rights or shares granted as part of their remuneration package.
Use of remuneration consultants
The Group did not employ the services of any remuneration consultants during the financial year ended 30 June
2018 (2017: Nil).
Voting and comments made at the Company’s 2017 Annual General Meeting
The Company received 100% of “yes” votes on its remuneration report for the 2017 financial year. The Company
did not receive any specific feedback at the Annual General Meeting or throughout the year on its remuneration
practices.
Details of remuneration
Details of the remuneration of the key management personnel of the Group are set out in the following table.
The key management personnel of the Group include the directors as per pages 14 and 15 above.
18
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Key management personnel of the Group
Short-Term
Post-Employment
Share-based
Payments
Total
Performance
Related
Salary
& Fees
Non-
Monetary
Superann
uation
Retirement
benefits
Shares
Options
$
$
$
$
$
$
$
%
Directors
Matt Shackleton
2018
2017
250,000
229,167
Brett Lambert
2018
2017
Rhett Brans
2018
2017
Brenton Siggs(1)
2018
2017
Dean Goodwin
2018
2017
41,096
6,111
41,096
6,111
-
153,614
-
32,038
-
-
-
-
-
-
-
-
-
-
23,750
21,771
3,904
581
3,904
581
-
2,214
-
-
Total key management personnel compensation
2018
2017
332,192
427,041
-
-
31,558
25,147
-
-
-
-
-
-
-
-
-
-
-
-
28.2%
12.3%
-
-
-
-
-
-
-
-
- 121,128 394,878
-
-
-
-
-
-
-
-
-
83,086 334,024
42,750 87,750
-
6,692
42,750 87,750
-
-
6,692
-
21,082 176,910
-
-
21,082 53,120
- 206,628 570,378
-
125,250 577,438
1.
In addition to the remuneration included here, Reefus Geology Services (a business controlled by Brenton Siggs) was paid $8,251 (2017)
for the provision of other exploration services to the Group.
Service Agreements
Matt Shackleton (formerly Executive Chairman, currently Managing Director and Chief Executive Officer), first
appointed 23 July 2014:
• Paid annual salary of $250,000 (plus statutory superannuation).
• The Company may terminate, without cause, the Executive’s employment at any time by giving three calendar
months’ written notice to the Executive.
• The Executive shall be entitled to a payment equal to three calendar months at the base salary in the event of
demotion from his position as Executive Chairman or if he is requested to assume responsibilities or perform
tasks not reasonably consistent with his position as Executive Chairman.
•
In the event the Executive Chairman is terminated as a result of one of the following circumstances the
Company will make a three calendar months Redundancy Payment to the Executive at the base salary:
⁰
⁰
⁰
the Executive’s position is made redundant by the Board;
there is a material diminution in the responsibilities or powers assigned to the Executive by the Board; or
there is a material reduction in the remuneration payable to the Executive as determined by the Board.
19
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Share-based compensation
Options
The following options over ordinary shares of the Company were granted to or vesting with key management
personnel during the year:
Grant Date
Granted
Number
Vesting Date
Expiry Date
Exercise
Price
(cents)
Value per
option at
grant date
(cents)
Exercised
Number
Directors
Matt Shackleton
30/11/2017 1,250,000
Matt Shackleton
30/11/2017 1,250,000
(1)
(1)
30/11/2020
30/11/2020
Brett Lambert
23/10/2017
750,000
09/05/2018 09/05/2020
Rhett Brans
23/10/2017
750,000
09/05/2018 09/05/2020
16.0
20.0
22.5
22.5
7.1
6.6
5.7
5.7
-
-
-
-
1. Vesting of the options granted is dependent on the following performance criteria being met:
•
•
50% will vest upon a resolution of the Board to proceed to the development of the Lake Wells SOP Project.
50% will vest on delineation of JORC compliant resource of > 250,000 gold equivalent ounces (as measured at the spot price) of
base, PG or precious metals.
Equity instruments held by key management personnel
Share holdings
The numbers of shares in the company held during the financial year by each director of Australian Potash Limited
and other key management personnel of the Group, including their personally related parties, are set out below.
There were no shares granted during the reporting period as compensation.
2018
Directors of Australian Potash Limited
Ordinary shares
Matt Shackleton
Brett Lambert
Rhett Brans
Option holdings
Received
during the
year on the
exercise of
options
Balance at
start of the
year
Number
acquired
during the
year
Balance at
end of the
year
5,624,999
-
-
-
-
-
200,000
5,824,999
200,000
200,000
-
-
The numbers of options over ordinary shares in the Company held during the financial year by each director of
Australian Potash Limited and other key management personnel of the Group, including their personally related
parties, are set out below:
2018
Balance at
start of the
year
Granted as
compensation
Exercised
Other
changes
Balance at
end of the
year
Vested and
exercisable
Unvested
Directors of Australian Potash Limited
Matt Shackleton
6,226,620
2,500,000
Brett Lambert
Rhett Brans
-
-
750,000
750,000
Loans to key management personnel
-
-
-
-
-
-
8,726,620
4,000,000
4,726,620
750,000
750,000
750,000
750,000
-
-
There were no loans to key management personnel during the year.
20
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Other Transactions with Key Management Personnel
There were no other transactions with key management personnel during the year.
End of audited Remuneration Report
Directors’ Meetings
During the year the Company held five meetings of directors. The attendance of directors at meetings of the board
and committees were:
Directors Meetings
Audit Committee Meetings
A
5
5
5
B
5
5
5
A
2
2
2
B
2
2
2
Matt Shackleton
Brett Lambert
Rhett Brans
Notes
A – Number of meetings held during the time the director held office during the year.
B – Number of meetings attended.
Shares Under Option
Unissued ordinary shares of Australian Potash Limited under option at the date of this report are as follows:
Date options issued
Expiry date
Exercise price (cents)
Number of options
25 October 2017
25 October 2019
30 November 2015
30 November 2018
30 November 2015
30 November 2018
2 May 2016
22 April 2016
22 April 2016
2 May 2019
21 April 2021
21 April 2021
28 November 2016
28 November 2019
28 November 2016
28 November 2019
22 December 2016
14 December 2019
22 December 2016
14 December 2019
23 October 2017
9 May 2020
30 November 2017
30 November 2020
30 November 2017
30 November 2020
8 August 2018
8 August 2021
20.0 Listed
12.5 Unlisted
17.5 Unlisted
12.5 Unlisted
10.0 Unlisted
15.0 Unlisted
17.5 Unlisted
22.5 Unlisted
17.5 Unlisted
22.5 Unlisted
22.5 Unlisted
16.0 Unlisted
20.0 Unlisted
12.0 Unlisted
Total number of options outstanding at the date of this report
37,594,906
4,500,000
4,500,000
5,000,000
3,430,000
3,430,000
1,861,702
2,034,883
2,559,526
2,756,412
1,500,000
1,250,000
1,250,000
21,600,000
93,267,429
No option holder has any right under the options to participate in any other share issue of the Company or
any other entity.
Insurance Of Directors And Officers
During the financial year, Australian Potash Limited paid a premium of $8,441 to insure the directors and secretary of
the Company.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may
be brought against the officers in their capacity as officers of the Company, and any other payments arising from
liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise
from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or
of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not
possible to apportion the premium between amounts relating to the insurance against legal costs and those relating
to other liabilities.
21
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Non-Audit Services
There were no nonaudit services provided by the entity’s auditor, Bentleys, or associated entities.
Proceedings On Behalf Of The Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to 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.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section
237 of the Corporations Act 2001.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set
out on page 23.
Signed in accordance with a resolution of the directors.
Matt Shackleton
Managing Director & Chief Executive Officer
Perth, 19 September 2018
22
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Auditor’s Independence Declaration
23
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018To The Board of DirectorsAuditor’s Independence Declaration under Section 307C of the Corporations Act 2001As lead audit partnerfor the audit of the financial statements of Australian PotashLimitedfor the financial year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of:the auditor independence requirements of the Corporations Act 2001in relation to the audit;andanyapplicable code of professional conduct in relation to the audit.Yours faithfullyBENTLEYSMARK DELAURENTIS CAChartered AccountantsPartnerDated at Perth this 19thday of September 2018
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Year Ended 30 June 2018
REVENUE
Finance revenue
Research and development tax incentive
Other Income
EXPENDITURE
Administration expenses
Depreciation and amortisation expenses
Employee benefits expenses
Exploration expenses
Share-based payments expense
LOSS BEFORE INCOME TAX
Income tax benefit/(expense)
Note
20(e)
5
2018
$
1,854
1,821,743
50,500
(744,608)
(20,189)
(641,226)
(5,270,983)
(197,012)
(4,999,921)
-
2017
$
16,281
421,715
21,135
(786,376)
(7,374)
(483,875)
(5,747,151)
(244,681)
(6,810,326)
-
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO
OWNERS OF AUSTRALIAN POTASH LIMITED
(4,999,921)
(6,810,326)
Basic and diluted loss per share for loss attributable to
the ordinary equity holders of the Company (cents per
share)
19
(1.9)
(3.4)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the
Consolidated Financial Statements.
24
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018
Consolidated Statement of
Financial Position
As at 30 June 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Plant and equipment
Intangibles
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
6
7
8
9
10
2018
$
2,201,681
143,246
2,344,927
119,993
13,557
133,550
2017
$
1,960,557
231,049
2,191,606
76,129
17,333
93,462
2,478,477
2,285,068
575,518
63,824
639,342
639,342
1,839,135
19,963,387
1,399,098
(19,523,350)
1,839,135
2,554,736
25,844
2,580,580
2,580,580
(295,512)
13,025,831
1,202,086
(14,523,429)
(295,512)
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial
Statements.
25
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Consolidated Statement of
Changes in Equity
For the Year Ended 30 June 2018
BALANCE AT 1 JULY 2016
Loss for the period
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the period
Share issue transaction costs
Issue of employee options
BALANCE AT 30 JUNE 2017
BALANCE AT 1 JULY 2017
Loss for the period
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares and options issued during the period
Share issue transaction costs
Issue of employee options
BALANCE AT 30 JUNE 2018
Issued Capital
Share-based
Payments
Reserve
Accumulated
Losses
$
$
$
7,446,664
957,405
-
-
5,909,678
(330,511)
-
-
-
-
-
244,681
(7,713,103)
(6,810,326)
(6,810,326)
-
-
-
13,025,831
1,202,086
(14,523,429)
13,025,831
1,202,086
(14,523,429)
-
-
7,391,785
(454,229)
-
-
-
-
-
197,012
(4,999,921)
(4,999,921)
-
-
-
19,963,387
1,399,098
(19,523,350)
Total
$
690,966
(6,810,326)
(6,810,326)
5,909,678
(330,511)
244,681
(295,512)
(295,512)
(4,999,921)
(4,999,921)
7,391,785
(454,229)
197,012
1,839,135
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial
Statements.
26
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Consolidated Statement
of Cash Flows
For the Year Ended 30 June 2018
Notes
CASH FLOWS FROM OPERATING ACTIVITIES
Expenditure on exploration
Payments to suppliers and employees
Interest received
Research and development refund received
Payment for tenements
Proceeds on sale of tenements
Net cash outflow from operating activities
18
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
Payments for intangibles
Net cash outflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options
Payments of share issue transaction costs
Net cash inflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes on cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
6
2018
$
(6,476,059)
(1,397,579)
4,356
1,821,743
(150,000)
50,000
(6,147,539)
(60,276)
-
(60,276)
6,891,785
(454,229)
6,437,556
229,741
1,960,557
11,383
2,201,681
2017
$
(3,147,988)
(1,300,542)
15,509
421,715
-
-
(4,011,306)
(81,952)
(18,884)
(100,836)
5,909,678
(330,511)
5,579,167
1,467,025
495,173
(1,641)
1,960,557
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements.
27
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018
Notes to the Consolidated
Financial Statements
For The Year Ended 30 June 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. The
financial statements are for Australian Potash Limited. The financial statements are presented in the Australian
currency. Australian Potash Limited is a company limited by shares, domiciled and incorporated in Australia. The
financial statements were authorised for issue by the directors on 19 September 2018. The directors have the power
to amend and reissue the financial statements.
a. Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001.
Australian Potash Limited is a for-profit entity for the purpose of preparing the financial statements. All amounts are
presented in Australian dollars unless otherwise stated.
(i)
Compliance with IFRS
The financial statements of Australian Potash Limited also comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the Group
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting period. The adoption of
these Accounting Standards and Interpretations did not have any significant impact on the financial performance or
position of the Group during the financial year.
(iii) Early adoption of standards
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation
of available-for-sale financial assets, which have been measured at fair value.
(v) Going concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business.
The Group incurred a loss for the period of $4,999,921 (2017: $6,810,326) and net cash inflows of $229,741 (2017:
$1,467,025). The ability of the Group to continue as a going concern is principally dependent upon the ability of the
Group to secure funds by raising capital from equity markets and managing cashflow in line with available funds.
These conditions indicate a material uncertainty that may cast significant doubt about the ability of the Group to
continue as a going concern.
The directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows
to meet all commitments and working capital requirements for the 12-month period from the date of signing this
financial report.
Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going
concern basis of preparation is appropriate. In particular, given the Group’s history of raising capital to date, the
directors are confident of the Group’s ability to raise additional funds as and when they are required.
28
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Should the Group be unable to continue as a going concern it may be required to realise its assets and extinguish
its liabilities other than in the normal course of business and at amounts different to those stated in the financial
statements. The financial statements do not include any adjustments relating to the recoverability and classification
of asset carrying amounts or to the amount and classification of liabilities that might result should the Group be
unable to continue as a going concern and meet its debts as and when they fall due.
b. Principles of consolidation
(i)
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They are de-consolidated from the date that control
ceases. The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement
of profit or loss and other comprehensive income, statement of changes in equity and statement of financial position
respectively.
(ii) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with
equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts
of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference
between the amount of the adjustment to non-controlling interests and any consideration paid or received is
recognised in a separate reserve within equity attributable to owners of Australian Potash Limited.
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value with the
change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes
of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In
addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted
for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously
recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a jointly controlled entity or associate is reduced but joint control or significant influence
is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are
reclassified to profit or loss where appropriate.
c. Segment reporting
An operating segment is defined as a component of an entity that engages in business activities from which it may
earn revenues and incur expenses, whose operating results are regularly reviewed by the entity’s chief operating
decision maker to make decisions about resources to be allocated to the segment and assess its performance, and
for which discrete financial information is available.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the full Board of Directors.
d. Revenue recognition
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial assets.
e.
Income tax
The income tax expense or revenue 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 differences and to unused tax losses.
29
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Group’s subsidiaries and associated operate and generate
taxable income. 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.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the
deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by
the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
f.
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets
(cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
g. Cash and cash equivalents
For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other shortterm highly liquid investments with original maturities of three months
or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes
in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of
financial position.
h. Trade and other receivables
Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An
estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-
off as incurred.
i. Exploration and evaluation costs
Exploration and evaluation costs for each area of interest in the early stages of project life are expensed as they are
incurred.
30
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
j.
Investments and financial instruments
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date being the date on which the Group
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Group has transferred substantially all the risks
and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in
equity are included in the profit or loss as gains and losses from investment securities.
Classification and subsequent measurement
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market and are subsequently measured at amortised cost using the effective interest rate method.
(i)
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost
using the effective interest rate method.
Impairment
At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been
impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is
considered to determine whether impairment has arisen. Impairment losses are recognised in the Profit or loss.
k. Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial
year which are unpaid. The amounts are unsecured, non-interest bearing and are paid on normal commercial terms.
l. Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within 12
months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting
date and are measured at the amounts expected to be paid when the liabilities are settled.
m. Share-based payments
The Group provides benefits to employees (including directors) of the Group in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares
(equity-settled transactions), refer to note 20.
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 an internal valuation using a Black-Scholes option pricing
model. A Monte Carlo simulation is applied to fair value the market related options.
The cost of equity-settled transactions is recognised, together with a corresponding increase
in equity, over the period 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 period has expired and (ii) the number of options 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 market performance conditions being met as the effect of these
conditions is included in the determination of fair value at grant date.
31
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon
a market condition.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of 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.
Options over ordinary shares have also been issued as consideration for the acquisition of interests in tenements and
other services. These options have been treated in the same manner as employee options described above, with the
expense being included as part of exploration expenditure.
n.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the
acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.
o. Earnings per share
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the company, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares
p. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement
of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
q. New accounting standards and interpretations not yet adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2018. The
Group’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most
relevant to the Group, are set out below.
AASB 9 : Financial Instruments and associated Amending Standards
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The Standard will
be applicable retrospectively and includes revised requirements for the classification and measurement of
financial instruments, revised recognition and derecognition requirements for financial instruments and simplified
requirements for hedge accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification of
financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit
loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not
held for trading in other comprehensive income.
32
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
AASB 15 : Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. When effective, this
Standard will replace the current accounting requirements applicable to revenue with a single, principles-based
model. Apart from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply
to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to
facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for the goods or services.
To achieve this objective, AASB 15 provides the following five-step process:
•
•
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
• determine the transaction price;
• allocate the transaction price to the performance obligations in the contract(s); and
•
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each
prior period presented per AASB 108 : Accounting Policies, Changes in Accounting Estimates and Errors (subject
to certain practical expedients in AASB 15 ); or recognise the cumulative effect of retrospective application to
incomplete contracts on the date of initial application. There are also enhanced disclosure requirements regarding
revenue.
The Company has performed a preliminary review of the adoption of AASB 15. As a result of this review the
Company has determined that there is unlikely to be a material impact, of AASB16 on its business and, therefore, no
change is necessary to Company accounting policies at this time.
AASB 16 : Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. When effective, this
Standard will replace the current accounting requirements applicable to leases in AASB 117 : Leases and related
Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to
be classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
•
recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12
months of tenure and leases relating to low-value assets);
• depreciation of right-of-use assets in line with AASB 116 : Property, Plant and Equipment in profit or loss and
unwinding of the liability in principal and interest components;
•
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease
liability using the index or rate at the commencement date;
• application of a practical expedient to permit a lessee to elect not to separate non-lease components and
instead account for all components as a lease; and
•
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives
in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening
equity on the date of initial application.
The Company has performed a preliminary review of the adoption of AASB 16. As a result of this review the
Company has determined that there is unlikely to be a material impact, of AASB16 on its business and, therefore, no
change is necessary to Company accounting policies at this time.
33
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
r. Critical accounting judgements, estimates and assumptions
The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial statements are:
Environmental Issues
Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted
environmental legislation, and the directors understanding thereof. At the current stage of the Group’s development
and its current environmental impact the directors believe such treatment is reasonable and appropriate.
Taxation
Balances disclosed in the financial statements and the notes thereto related to taxation are based on the best
estimates of the directors. These estimates take into account both the financial performance and position of the
Group as they pertain to current income taxation legislation, and the directors understanding thereof. No adjustment
has been made for pending or future taxation legislation. The current income tax position represents that directors’
best estimate, pending an assessment by the Australian Taxation Office. With regards to the research and
development incentive, AusIndustry reserves the right to review claims made under the R&D legislation.
Share-based payments
Share-based payment transactions, in the form of options to acquire ordinary shares, are valued using the Black-
Scholes option pricing model. A Monte Carlo simulation is applied to fair value the market related element of the
shares or rights. Both models use assumptions and estimates as inputs.
2. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for all board
members to be involved in this process. The Executive Chairman, with the assistance of senior management as
required, has responsibility for identifying, assessing, treating and monitoring risks and reporting to the board on risk
management.
a. Market Risk
(i)
Foreign exchange risk
As all operations are currently within Australia, the Group is not exposed to any material foreign exchange risk.
(ii) Commodity price risk
Given the current level of operations the Group is not exposed to commodity price risk.
(iii)
Interest rate risk
The Group is exposed to movements in market interest rates on cash and cash equivalents. The Group policy is to
monitor the interest rate yield curve out to six months to ensure a balance is maintained between the liquidity of cash
assets and the interest rate return. The entire balance of cash and cash equivalents for the Group $2,201,681 (2017:
$1,960,557) is subject to interest rate risk. The weighted average interest rate received on cash and cash equivalents
by the Group was 2.6% (2017: 2.5%).
Sensitivity analysis
At 30 June 2018, if interest rates had changed by -/+ 100 basis points from the weighted average rate for the year
with all other variables held constant, post-tax loss for the Group would have been $14,198 lower/higher (2017:
$20,420 lower/higher) as a result of lower/higher interest income from cash and cash equivalents.
34
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 2. FINANCIAL RISK MANAGEMENT (continued)
b. Credit Risk
The Group has no significant concentrations of credit risk. The maximum exposure to credit risk at balance date is the
carrying amount (net of provision for impairment) of those assets as disclosed in the statement of financial position
and notes to the financial statements.
As the Group does not presently have any debtors, lending, significant stock levels or any other credit risk, a formal
credit risk management policy is not maintained.
c. Liquidity Risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient
cash and marketable securities are available to meet the current and future commitments of the Group. Due to the
nature of the Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities,
with the primary source of funding being equity raisings. The Board of Directors constantly monitor the state of
equity markets in conjunction with the Group’s current and future funding requirements, with a view to initiating
appropriate capital raisings as required.
The financial liabilities of the Group are confined to trade and other payables as disclosed in the statement of
financial position. All trade and other payables are non-interest bearing and due within 12 months of the reporting
date. Financial assets mature within 3 months of balance date.
d. Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes. The carrying amount of all financial assets and financial liabilities of the Group at the balance
date approximate their fair value due to their short term nature.
3. SEGMENT INFORMATION
For management purposes, the Group has identified only one reportable segment being exploration activities
undertaken in Australia. This segment includes activities associated with the determination and assessment of the
existence of commercial economic reserves, from the Group’s mineral assets in this geographic location.
Segment performance is evaluated based on the operating profit and loss and cash flows and is measured in
accordance with the Group’s accounting policies.
4. EXPENSES
Loss before income tax includes the following specific expenses::
Minimum lease payments relating to operating leases
Defined contribution superannuation expense
Depreciation of plant and equipment
Amortisation of intangibles
5. INCOME TAX
Income tax expense
a.
Current tax
Deferred tax
2018
$
50,004
69,190
16,412
3,777
-
-
-
2017
$
45,669
38,839
5,823
1,551
-
-
-
35
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 5. INCOME TAX (continued)
b. Numerical reconciliation of income tax expense to
prima facie tax payable
2018
$
2017
$
Loss from continuing operations before income tax expense
Prima facie tax benefit at the Australian tax rate of 27.5%
Tax effect of entertainment not deductible in calculating taxable income
Movements in unrecognised temporary differences
Tax effect of current period tax losses for which no deferred tax asset has
been recognised
(4,999,921)
(1,374,978)
561
(96,393)
1,470,810
(6,810,326)
(1,872,840)
700
34,835
1,837,305
Income tax expense
-
-
c. Unrecognised temporary differences
Deferred Tax Assets (at 27.5%)
On Income Tax Account
Accruals
Depreciation variances
Capital raising costs
Carry forward tax losses
Set off of deferred tax liabilities
Net deferred tax assets
Less deferred tax assets not recognised
Deferred Tax Liabilities (at 27.5%)
Tenement acquisition costs
Set off against deferred tax assets
7,894
1,128
167,730
3,396,594
3,573,346
(900,848)
2,672,498
(2,672,498)
-
900,848
900,848
(900,848)
-
52,147
239
96,084
2,289,740
2,438,210
(900,848)
1,537,362
(1,537,362)
-
900,848
900,848
(900,848)
-
Net deferred tax assets have not been brought to account as it is not probable within the immediate future that tax
profits will be available against which deductible temporary differences and tax losses can be utilised.
The Group’s ability to use losses in the future is subject to the Group satisfying the relevant tax authority’s criteria for
using these losses.
6. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
2,176,681
25,000
2,201,681
1,426,298
534,259
1,960,557
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
36
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 7. TRADE AND OTHER RECEIVABLES
GST receivable
Other receivables
8. PLANT AND EQUIPMENT
2018
$
75,297
67,949
143,246
Computer
Equipment
Plant and
Equipment
Motor Vehicles
Cost
Balance at 1 July 2016
Additions
Disposals
Balance at 30 June 2017
Additions
Balance at 30 June 2018
Accumulated Depreciation
Balance at 1 July 2016
Additions
Disposals
Balance at 30 June 2017
Additions
Balance at 30 June 2018
Net Book Value
Balance at 30 June 2017
Balance at 30 June 2018
$
4,000
3,823
(4,000)
3,823
6,418
10,241
4,000
787
(4,000)
787
2,403
3,190
3,036
7,051
$
-
78,129
-
78,129
11,765
89,894
-
5,036
-
5,036
12,256
17,292
73,093
72,601
9. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
$
-
-
-
-
42,093
42,093
-
-
-
-
1,753
1,753
-
40,340
2018
$
2017
$
195,279
35,770
231,049
Total
$
4,000
81,952
(4,000)
81,952
60,276
142,228
4,000
5,823
(4,000)
5,823
16,412
22,235
76,129
119,993
2017
$
412,678
162,840
575,518
2,236,163
318,573
2,554,736
10. ISSUED CAPITAL
2018
2017
a. Share capital
Ordinary shares fully paid
b. Other equity securities
Options
Notes
Number of
securities
$
Number of
securities
$
10(c), 10(f) 304,358,073
19,610,092
221,454,213
13,008,920
10(d)
54,505,576
353,295
16,910,670
16,911
Total issued capital
19,963,387
13,025,831
37
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018
10.
ISSUED CAPITAL (continued)
c. Movements in ordinary share capital
2018
2017
Number of
securities
$
Number of
securities
$
Beginning of the financial year
221,454,213
13,008,920
147,583,276
7,429,753
Issued during the year:
Issued for cash at 10 cents per share
35,418,860
3,541,886
Issued for services rendered at 10 cents per share
5,000,000
500,000
Issued for cash at 7 cents per share
42,485,000
2,973,950
-
-
-
-
-
-
Issued for cash at 8 cents per share upon exercise of
listed options
Share issue transaction costs
End of the financial year
-
-
-
73,870,937
5,909,678
(414,664)
-
(330,511)
304,358,073
19,610,092
221,454,213
13,008,920
d. Movements in other equity securities
Beginning of the financial year
16,910,670
16,911
16,910,670
16,911
- Issued during the year:
- Issued for cash at 1 cent per option
Share option transaction costs
End of the financial year
e. Movements in options on issue
37,594,906
-
54,505,576
375,949
(39,565)
353,295
-
-
-
-
16,910,670
16,911
Beginning of the financial year
Movements of options during the year
Unlisted options issued, exercisable at 22.5 cents, expiring 9 May 2020
Unlisted options issued, exercisable at 16.0 cents, expiring 30 November 2020
Unlisted options issued, exercisable at 20.0 cents, expiring 30 November 2020
Listed options issued, exercisable at 20.0 cents, expriring 25 October 2019
Unlisted options issued, exercisable at 17.5 cents, expiring 28 November 2019
Unlisted options issued, exercisable at 22.5 cents, expiring 28 November 2019
Unlisted options issued, exercisable at 17.5 cents, expiring 14 December 2019
Unlisted options issued, exercisable at 22.5 cents, expiring 14 December 2018
Exercised at 8 cents, expiry 30 September 2016 (Listed)
Number of options
2018
2017
30,072,523
94,730,937
1,500,000
1,250,000
1,250,000
37,594,906
-
-
-
-
-
-
-
-
-
1,861,702
2,034,883
2,559,526
2,756,412
(73,870,937)
End of the financial year
71,667,429
30,072,523
f. Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
38
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 10.
ISSUED CAPITAL (continued)
g. Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it
may continue to provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the Group’s activities, being mineral exploration, the Group does not have ready access to
credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Group’s capital
risk management is the current working capital position against the requirements of the Group to meet exploration
programmes and corporate overheads.
The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with
a view to initiating appropriate capital raisings as required. The working capital position of the Group at 30 June 2018
and 30 June 2017 are as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Provisions
Working capital position
2018
$
2,201,681
143,246
(639,342)
(63,824)
1,641,761
2017
$
1,960,557
231,049
(2,554,736)
(25,844)
(388,974)
11. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
12. RELATED PARTY TRANSACTIONS
a. Parent entity
The ultimate parent entity within the Group is Australian Potash Limited.
b. Subsidiaries
Interests in subsidiaries are set out in note 13.
c. Key management personnel compensation
Short-term benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
2018
$
332,192
31,558
-
-
206,628
570,378
2017
$
427,041
25,147
-
-
125,250
577,438
Detailed remuneration disclosures are provided in the remuneration report on pages 19 to 21.
39
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 12. RELATED PARTY TRANSACTIONS (continued)
d. Transactions and balances with other related parties
Services
Reefus Geology Services, a business controlled by Mr Brenton Siggs, was engaged via a letter agreement to provide
technical geological management services to the Group during the prior year. The amounts paid were at arms’
length and were included as part of Mr Siggs’ compensation. In addition to the remuneration for Mr Siggs’ services,
Reefus Geology Services was paid $8,251 in the prior year for the provision of other exploration services to the
Group. Mr Siggs was a director of Australian Potash in the prior year and resigned on 9 May 2017.
Acquisitions
Mr Brenton Siggs is a director of Goldphyre WA Pty Ltd and ultimately controls a 60% interest in Goldphyre WA Pty
Ltd.
Goldphyre WA Pty Ltd and the Company are parties to a sale of Mining Tenements Agreement dated on or about 11
April 2011 under which the Company acquired a 100% interest in 9 Tenements. In consideration, the Company issued
the Vendor 7,250,000 ordinary shares and 3,625,000 options (with an exercise price of 20 cents that expired on 30
June 2015) during the 2011 financial period. The Company will potentially issue further ordinary shares to the Vendor,
refer to note 16.
Mr Siggs was a director of Australian Potash in the prior year and resigned on 9 May 2017.
e. Loans to related parties
There were no loans to related parties, including key management personnel, during the year.
13. SUBSDIARIES
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1(b):
Name
Country of Incorporation
Class of Shares
Lake Wells Potash Pty Ltd
Australia
Ordinary
1. The proportion of ownership interest is equal to the proportion of voting power held.
14. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services
provided by the auditor of the Group, its related practices and non-
related audit firms:
Audit services
Bentleys Audit & Corporate (WA) Pty Ltd – audit and review of financial
reports
Total remuneration for audit services
Equity
Holding(1)
2018
%
100
2018
$
2017
%
100
2017
$
27,042
27,042
26,903
26,903
40
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 15. CONTINGENCIES
Tenement Acquisition Agreements
Goldphyre WA Pty Ltd
Goldphyre WA Pty Ltd and the Company are parties to a sale of Mining Tenements Agreement dated on or about 11
April 2011 under which the Company acquired a 100% interest in 9 Tenements. In consideration, the Company issued
the Vendor 7,250,000 ordinary shares and 3,625,000 options (with an exercise price of 20 cents that expired on 30
June 2015) during the 2011 financial period. The Company will also issue the Vendor with further ordinary shares in
the following circumstances, subject to any necessary regulatory or shareholder approvals:
2,000,000 ordinary shares upon the Company delineating 250,000 ounces of JORC measured gold or equivalent
(as a single commodity) that can be verified as an economic deposit by an independent expert, on a tenement
acquired from the Vendor;
2,000,000 ordinary shares upon the Company delineating a further 250,000 ounces of JORC measured gold or
equivalent (as a single commodity) that can be verified as an economic deposit by an independent expert, on a
tenement acquired from the Vendor; and
3,000,000 ordinary shares upon the Company completing a bankable feasibility study in any of the tenements
acquired from the Vendor.
Subject to the grant of a waiver in writing from ASX from Condition 10 of Chapter 1 of the Listing Rules the Company
agrees to pay the Vendor a 2% net smelter royalty on any mineral won from the tenements acquired from the Vendor.
AusIndustry Business Services
On 13 March 2018, the Company received a notice from AusIndustry Business Services with respect to the
Company’s Research & Development (“R&D”) application for an advance/overseas finding which has brought into
question the ability of the Company to claim aspects of the R&D Incentive. On advice, the Board are of the opinion
that based on the facts to hand, the costs incurred meet the definition of a core R&D Activity and has exercised its
rights to appeal the notice. No specific timeframe has been provided to the Company with regards to the review.
The expenditure relating to the overseas finding is $649k (this relates to a tax offset of $282k). Accordingly, no
adjustment has been made to the financial report with respect to this matter.
16. COMMITMENTS
a. Exploration commitments
The Group has certain commitments to meet minimum
expenditure requirements on the mining exploration assets it
has an interest in.
Outstanding exploration commitments are as follows:
within one year
later than one year but not later than five years
b. Lease commitments: Group as lessee
Operating leases (non-cancellable):
Minimum lease payments
within one year
2018
$
2018
$
1,117,021
2,418,058
3,535,079
1,057,907
1,059,814
2,117,721
-
-
37,503
37,503
41
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018
17. EVENTS OCCURRING AFTER THE REPORTING DATE
No matters or circumstances have arisen since the end of the financial year which significantly affected or may
significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in
future financial periods.
18. CASH FLOW INFORMATION
a.
Reconciliation of net loss after income tax to net
cash outflow from operating activities
Net loss for the year
Non Cash Items
Depreciation and amortisation of non-current assets
Shares issued as consideration for services rendered
Share-based payments expense
Other
Change in operating assets and liabilities
Decrease in trade and other receivables
Increase in trade and other payables
Increase in provisions
Net cash outflow from operating activities
2018
$
2017
$
(4,999,921)
(6,810,326)
20,189
500,000
197,012
(11,384)
87,803
(1,979,218)
37,980
(6,147,539)
7,374
-
244,681
1,641
120,932
2,398,548
25,844
(4,011,306)
b. Non-cash investing and financing activities
On 24 November 2017 the Company issued 5,000,000 ordinary shares at a deemed cost of $500,000 to Ausdrill
International Pty Ltd for services rendered. This amount was included in ‘Exploration expenses’ on the statement of
profit or loss and other comprehensive income of the Group. No non-cash investing or financing activities occurred
in 2017.
19. LOSS PER SHARE
a.
Reconciliation of earnings used in calculating loss
per share
Loss attributable to the owners of the Company used in calculating basic
and diluted loss per share
b.
Weighted average number of ordinary shares used in
calculating loss per share
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share
2018
$
2017
$
(4,999,921)
(6,810,326)
Number of shares
2018
2017
258,663,458
203,097,066
c.
Information on the classification of options
As the Group has made a loss for the year ended 30 June 2018, all options on issue are considered antidilutive and
have not been included in the calculation of diluted earnings per share. These options could potentially dilute basic
earnings per share in the future.
42
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 20. SHARE-BASED PAYMENTS
a. Director Options
The Group has provided benefits to directors of the Company in the form of options constituting share-based
payment transactions. The exercise prices of the options granted ranges from 16.0 to 22.5 cents per option (2017: 17.5
to 22.5 cents). The contractual term for the options is three years (2017: three years.)
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary
share of the Company with full dividend and voting rights.
Vesting of the options granted is dependent on specific performance criteria being met. These include:
• upon a resolution of the Board to proceed to the development of the Lake Wells SOP Project.
• on delineation of JORC compliant resource of > 250,000 gold equivalent ounces (as measured at the spot
price) of base, PG or precious metals.
Fair value of options granted
The weighted average fair value of the options granted during the period was 6.42 cents (2017: 4.49 cents). The
price was calculated by using the Black-Scholes European Option Pricing Model taking into account the terms and
conditions upon which the options were granted. A Monte Carlo simulation is applied to fair value the TSR element, if
applicable.
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free interest rate
2018
19.7
2.8
11.5
111.80%
2.06%
2017
20.1
3.0
8.6
111.04%
2.75%
Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this
is indicative of future trends, which may not eventuate.
b.
Incentive Option Plan
The Group has provided benefits to employees and contractors of the Company in the form of options under the
Company’s Incentive Option Plan as approved at the Annual General Meeting on 28 November 2016, constituting
a share-based payment transaction. No options were issued in the current year. The exercise prices of the options
granted for the year ended 2017 range from 17.5 to 22.5 cents per option and all options granted have an expiry date
of 14 December 2019.
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary
share of the Company with full dividend and voting rights.
Fair value of options granted
No options were issued during the year. The weighted average fair value of the options granted during the prior year
4.04 cents. The price for the prior year was calculated by using the Black-Scholes European Option Pricing Model
taking into account the terms and conditions upon which the options were granted.
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free interest rate
2018
-
-
-
-
-
2017
20.1
3.0
7.9
111.04%
2.75%
Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this
is indicative of future trends, which may not eventuate.
43
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 20. SHARE-BASED PAYMENTS (continued)
c. Summary of Share-Based Payment
Set out below are summaries of the share-based payment options granted per (a) and (b):
2018
2017
Weighted
average
exercise price
(Cents)
15.6
19.7
-
-
16.1
14.6
Number of
options
20,860,000
9,212,523
-
-
30,072,523
19,298,647
Weighted
average
exercise price
(Cents)
13.6
20.1
-
-
15.6
13.9
Number of
options
30,072,523
4,000,000
-
-
34,072,523
24,131,981
Outstanding as at 1 July
Granted
Forfeited
Exercised
Outstanding as at 30 June
Exercisable as at 30 June
The weighted average remaining contractual life of share options outstanding at the end of the year was 1.6 years
(2017: 2.4 years), and the exercise prices range from 10 to 22.5 cents (2017: 10.0 to 22.5 cents).
The following share-based payment arrangements were in existence during the current and prior years:
Number of
options
4,500,000
4,500,000
5,000,000
3,430,000
3,430,000
1,861,702
2,034,883
2,559,526
2,756,412
1,500,000
1,250,000
1,250,000
Date options issued
Expiry date
30 November 2015
30 November 2018
30 November 2015
30 November 2018
2 May 2016
22 April 2016
22 April 2016
2 May 2019
21 April 2021
21 April 2021
28 November 2016
28 November 2019
28 November 2016
28 November 2019
22 December 2016
14 December 2019
22 December 2016
14 December 2019
23 October 2017
9 May 2020
30 November 2017
30 November 2020
30 November 2017
30 November 2020
Exercise price
(cents)
Fair value at grant
date (cents)
12.5
17.5
12.5
10.0
15.0
17.5
22.5
17.5
22.5
22.5
16.0
20.0
3.6
3.3
5.7
7.1
6.8
4.7
4.3
4.2
3.9
5.7
7.1
6.6
d. Shares issued to suppliers
On 24 November 2017 the Company issued 5,000,000 ordinary shares at a deemed cost of $500,000 to Ausdrill
International Pty Ltd for services rendered. No shares or options were issued to suppliers in the prior year.
e. Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the year were as follows:
Shares and options included in share-based payments expense
197,012
244,681
2018
$
2017
$
44
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 21. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Australian Potash Limited, at 30 June 2018. The information
presented here has been prepared using accounting policies consistent with those presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Reserves
Accumulated losses
Total equity
Loss for the year
Total comprehensive loss for the year
2018
$
2,344,927
133,650
2,478,577
639,342
639,342
19,963,387
1,399,098
2017
$
2,191,606
93,562
2,285,168
2,580,580
2,580,580
13,025,831
1,202,086
(19,523,249)
(14,523,329)
1,839,235
(295,412)
(4,999,921)
(4,999,921)
(6,810,326)
(6,810,326)
45
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Directors’ Declaration
In the directors’ opinion:the financial statements comprising the statement of profit or loss and other comprehensive
income, statement of financial position, statement of changes in equity, statement of cash flows and accompanying
notes set out on pages 24 to 45 are in accordance with the Corporations Act 2001, including:
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2018 and of its performance for
the financial period ended on that date;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and
a statement that the attached financial statements are in compliance with International Financial Reporting Standards
has been included in the notes to the financial statements.
The directors have been given the declarations required by section 295A of the Corporation Act 2001.
This declaration is made in accordance with a resolution of the directors.
Matt Shackleton
Managing Director & Chief Executive Officer
Perth, 19 September 2018
46
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018 Audit Report
47
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018Independent Auditor's ReportTo the Members of Australian Potash LimitedReport on the Audit of the Financial ReportOpinionWe have audited the financial report of Australian Potash Limited(“the Company”)and its subsidiaries (“the Group”), which comprises the consolidated statement of financial position as at 30June 2018, 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:a.the accompanying financial report of the Groupis 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 2018and of its financial performance for the year then ended; and(ii)complying with Australian Accounting Standards and the Corporations Regulations 2001.b.the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.Basis for OpinionWe conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Reportsection of our report. We are independent of the Groupin accordance with the auditor independence requirements of the Corporations Act 2001and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethicsfor 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Audit Report
48
Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018Independent Auditor’s ReportTo the Members of Australian Potash Limited(Continued)Material Uncertainty Related to Going ConcernWithout qualifying our opinion, we draw attention to Note 1(a)(v) in the financial report which indicates that the Group incurred a net loss of $4,999,921 during the year ended 30 June 2018. As stated in Note 1(a)(v), these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.Key Audit MattersKey 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 matterHow our audit addressed the key audit matterExploration Expenditure During the year the Group incurred exploration expenses of $5,270,983. Exploration expenditure is a key audit matter due to:The significance to the Group’s statement of profit or loss and other comprehensive income; andThe level of judgement required in evaluating management’s application of the requirements of AASB 6 Exploration for and Evaluation of Mineral Resources. AASB 6 is an industry specific accounting standard requiring the application of significant judgements, estimates and industry knowledge. Our procedures included, amongst others:Assessing management’s determination of its areas of interest for consistency with the definition in AASB6. This involved analysing the tenements in which the Groupholds an interest and the exploration programs planned for those tenements. For a sample of tenements, we assessed the Group’s rights to tenure by corroborating to government registries; andWe tested exploration expenditure for the year by evaluating a sample of recorded expenditure for consistency to underlying records, the requirements of the Group’s accounting policy and the requirements of AASB 6.Research and Development As disclosed in the Consolidated Statement of Profit or Loss and Other Comprehensive Income the entity received R&D Income. Under the Research and Development (“R&D”) tax incentive scheme, the Group receives a 43.5% refundable tax offset of eligible expenditure. An R&D submission was filed with AusIndustry, and the Group received $1,821,743 during the year. Our procedures included, amongst others in assessing the R&D Claim include:obtaining an understanding of the objectives and activities in the R&D program;reviewing the lodgement documents andrelated working papers utilised by the expert engaged by the Group; Audit Report
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Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018Independent Auditor’s ReportTo the Members of Australian Potash Limited(Continued)Key audit matterHow our audit addressed the key audit matterOn 13 March 2018, the Company received a notice from AusIndustry Business Services with respect to the Company’s Research & Development (“R&D”) application for an advance/overseas finding which has brought into question the ability of the Company to claim aspects of the R&D Incentive. The total amount in question was $648,761 of the R&D expenditure which could result in the repaymentof $282,211 of funds previously received.At the date of this report, this matter has yetto be resolved and the company has exercised its right to appeal the notice. This area is a key audit matter due to the inherent subjectivity that is involved in the Group making judgements in relation to estimation and recognition of the R&D tax incentive income and due to the ongoing matter with AusIndustry.assessing the scope of services and capabilities of the expert engaged by the Group;comparing the eligible expenditure used in the receivable calculation to the expenditure recorded in the general ledger; andassessing the adequacy of the disclosures in the financial report.In relation to the review with AusIndustry: We have assessed the correspondence with AusIndustry, and the R&D tax advisorHeld discussions with the Directors andR&D tax advisorsReviewed disclosure included on the matter in note 15 of the financial reportOther 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 2018, but does not include the financial report and our 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 ReportThe 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 Note 1, the directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report complies with International Financial Reporting Standards. Audit Report
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Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018Independent Auditor’s ReportTo the Members of Australian Potash Limited(Continued)In preparing the financial report, the directors are responsible for assessing the Group’sabilityto 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 Groupor to cease operations, or has no realistic alternative but to do so.Auditor’s Responsibilities for the Audit of the Financial ReportOur responsibility is to express an opinion on the financial report based on our audit.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.As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:Identify and assess the risks ofmaterial misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report tothe related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may causethe Groupto cease to continue as a going concern.Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Groupto express an opinion on the financial report. We are responsible for the direction,supervision and performance of the Groupaudit. We remain solely responsible for our audit opinion. Audit Report
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Australian Potash LimitedANNUAL REPORT FOR THE YEAR ENDED JUNE 2018Independent Auditor’s ReportTo the Members of Australian Potash Limited(Continued)We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.Report on the Remuneration ReportWe have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2018.The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with s 300A of the CorporationsAct 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.Auditor’s OpinionIn our opinion, the Remuneration Report of the Company, for the year ended 30 June 2018, complies with section300A of the Corporations Act 2001. BENTLEYSMARK DELAURENTIS CAChartered AccountantsPartnerDated at Perth this 19thday of September 2018 ASX ADDITIONAL INFORMATION
Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as
follows. The information is current as at 16 October 2018.
a. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Ordinary Shares
Number of holders
Number of shares
1
- 1,000
1,001
- 5,000
5,001
- 10,000
10,00
- 100,000
100,001 - and over
The number of equity security holders holding
less than a marketable parcel of securities are:
b. Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
26
28
157
385
319
915
66
3,241
116,358
1,481,963
18,453,729
285,017,782
305,073,073
192,726
Listed ordinary shares
Number of shares
Percentage of
ordinary shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
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