Australian Potash Limited
Annual Report 2022

Plain-text annual report

Table of Contents Corporate Information ......................................................................................................................... 3 Chair’s Letter ......................................................................................................................................... 4 Review of Operational Activities ........................................................................................................ 5 Review of Corporate Activities............................................................................................................ 9 Mineral Resource Statement ............................................................................................................ 11 Additional ASX Information ............................................................................................................... 76 Financial Report for the year ended 30 June 2022 .................................... 13 Directors’ Report Auditor’s 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 14 32 33 34 35 36 37 70 71 2 | P a g e Annual Report 2022 Corporate Information Directors Natalia Streltsova (Non-Executive Chair) Matt Shackleton (Managing Director & Chief Executive Officer) Brett Lambert (Non-Executive Director) Cathy Moises (Non-Executive Director) Rhett Brans (Non-Executive Director) Company Secretary Michelle Blandford Registered Office & Principal Place of Business Suite 31, 22 Railway Road SUBIACO WA 6008 Telephone: +61 8 9322 1003 Solicitors Steinepreis Paganin Level 4, The Read Building, 16 Milligan Street PERTH WA 6000 Share Registry Automic Registry Services Level 2, 267 St George’s Terrace PERTH WA 6000 Auditors KPMG 235 St George’s Terrace PERTH WA 6000 Website www.australianpotash.com.au Stock Exchange Listing At the date of this report the following are listed on the Australian Securities Exchange: Australian Potash Limited fully paid ordinary shares (ASX code APC) 3 | P a g e Annual Report 2022 Chair’s Letter Dear Shareholders Welcome to the 2021/22 Annual Report for Australian Potash Limited. I had the pleasure of becoming your Chair during the year and working closely with your first class management team in moving the Lake Wells Sulphate of Potash Project (LSOP) to its current pre-construction stage. This advanced stage has been achieved in spite of the ongoing COVID impact and the issues facing all resource companies in supply chain disruptions and volatile equity markets. I have no doubt there has also been a cloud over the listed potash sector with one high profile failure and some expectations not being met leading to equity market concerns. However, this is balanced by very strong potash demand for fertilisers and high pricing for our planned products. I note that Australian demand is almost entirely imported yet the resources in the various advanced potash projects here are sufficiently large enough to eliminate that offshore dependence and provide growth for all stakeholders. With this in mind, APC has substantially de-risked the technical aspects of LSOP through first stage development of the borefield, pump testing and positive reconciliation of the hydrogeological model. This work resulted in the Project being expanded during the latest studies from 120,000 tonnes per annum (tpa) to 135,000 tpa SOP from brine, with total forecast SOP production of 205,000 tpa1. Unlike some other projects, LSOP is entirely a borefield. There will be no surface disturbance through trenching. APC is well placed to start construction once funding is finalised, with all approvals having been granted and all design aspects finalised. To strengthen our commitment to Environment, Social and Governance (ESG), your Board has created the Risk and Sustainability Committee that will oversee the implementation of our comprehensive risk and ESG strategy that underscores your company’s green credentials. As part of our social contribution to the region, we have already established a training centre at Laverton. We have also signed an agreement to install a power supply for the LSOP using a majority of renewable energy (65% solar and wind) and achieved organic certification for our SOP product. I do want to express my and the Board’s appreciation for the ongoing shareholder support through the exercise of options and the share purchase plan as well as the rights issue subsequent to the end of the year. I look forward to working on your behalf throughout the 2022/23 year to take the LSOP into construction. Dr Natalia Streltsova Non-Executive Chair 1 Refer ASX announcement 21 September 2022 4 | P a g e Annual Report 2022 Review of Operational Activities Lake Wells Sulphate of Potash Project (LSOP) The LSOP is 100% owned by APC and located approximately 500km northeast of Kalgoorlie, in Western Australia’s eastern Goldfields. The Company is finalising pre-development plans for commencement of construction with first production from the LSOP scheduled for 31 months from a Final Investment Decision. During 2021/22, an early works program was completed at the LSOP comprising development of the western and southern borefields, including developing and pump testing of bores, progressing statutory approvals, and developing non-process infrastructure. Borefield Development & SOP Production Potential The LSOP is a 100% borefield sulphate of potash (SOP) project with zero kilometres of trench abstraction. It is being developed without any recourse to a trenching system to abstract, or mine the potassium rich brines. During the reporting period, 16 bores were drilled in the western and southern borefields, representing over 20% of those scheduled to be developed at operational start-up. A program of step rate testing, followed by a mixture of constant rate tests of varying duration, commenced in mid-October 2021. Information obtained from the pumping tests has been used to calculate the efficiency and yield of the tested production bores, and provide aquifer details that feed into the hydrogeological flow model. Evaporation Network The LSOP evaporation network comprises on-lake pre-concentration ponds and off-lake, HDPE lined harvest ponds. 460 geotechnical test-sites sampled across the surface of the lake system have identified a consistent layer of clay retarding the vertical seepage of brine. The pre-concentration pond construction methods have been trialled and have successfully demonstrated the veracity of the LSOP pond construction design. The LSOP evaporation pond development does not rely on long transfer pipelines or trenches of pre- concentrated brine. The operating model includes a ‘buffer’ pond at the start of the network, which will be fed year round from the borefield. The purpose of the buffer pond is to enable the storage of brine supply during the low evaporation periods (winter), that can then be discharged at a greater rate than is possible from the borefield directly in the peak evaporation periods (summer). The addition of buffer ponds enables better management of the pre-concentration ponds, to ensure they do not dry out and that the correct chemistry is maintained. The buffer pond fluctuates between 0.5m and 3.5m of brine depth and will hold, at peak capacity, up to 25% of the total annual LSOP brine demand. Production Potential On 20 April 2021 the Company announced to ASX the results of its Front End Engineering Design (FEED) study. Analysis of results from brine supply bores completed during 2021/22 and following the FEED program provides evidence of an increased brine grade and higher sustainable pumping rates within the borefield that was the subject of the FEED study. 5 | P a g e Annual Report 2022 Furthermore, updating the hydrogeological flow model with the newly collected data indicates the potential to increase the annual production of SOP from the LSOP brine from 120,000 tpa shown in the FEED study to 135,000tpa (an increase of 15,000tpa or 12.5%). An additional 70,000tpa is forecast to be produced through the addition and conversion of Muriate of Potash to SOP2. Additional improvements realised in the recent modelling also indicate a 48% reduction in installed bores. 89 supply bores will be suitable for life-of-mine (LOM) operation, whereas the original FEED development model had 172 bores over the LOM. Figure 1: Comparison of the FEED modelled results to updated flow model results for the early works’ bores. The yellow circle represents an individual bore’s performance for grade and flow, relative to the previous model. The financial outcomes to the increased average annual production from the LSOP of 205,000 tpa were announced subsequent to year end2. Technical De-risking & Project Development During the period, Tony Dominkovich was appointed as Project Manager to oversee the development of the LSOP. Tony brings to the APC team over 40 years of project management experience, with recent and relevant expertise in the Western Australian SOP sector. APC have engaged Corey Milne as a specialist consultant, specifically in the field of SOP production from brine. Corey has over 30 years’ experience in the operation of brine solar concentration ponds and SOP processing and production and will provide input into both the LSOP’s development pathway and risk minimising strategies for operations. 2 Refer ASX announcement 21 September 2022 6 | P a g e Annual Report 2022 Renewable Microgrid In early September 2021, the Company advised that PWR Hybrid had been awarded Preferred Proponent status to build, own and operate the circa 35MW high renewable energy fraction microgrid at the LSOP. The microgrid will integrate an innovative gas-fuelled power station with solar PV, wind and battery energy storage technology. It will be developed in a staged approach, with the thermal component to be completed within circa 15 months of the Company making a Final Investment Decision. This timeline ensures power supply preparedness for steady state operations. Further information regarding the microgrid is available in the Company’s 2022 Sustainability Report. Processing Plant The LSOP processing design is based on the reliable and proven ‘North American’ flow sheet with direct schoenite flotation and belt filters. It has been used at the largest ex-China solar SOP producer for over 50 years and several contemporary developments using similar flow sheet design have commissioned successfully and transitioned to profitable operations. The LSOP processing plant will be contracted on an Engineering-Procurement-Construction (EPC) basis providing process, time and cost guarantees from a successful Western Australian engineering head contractor, GR Engineering Services Limited (ASX: GNG), which is a specialist EPC contracting firm with exposure to and experience in the SOP sector. Organic Certification During 2021/22, LSOP premium product K-BriteTM potassium sulphate SOP was allowed by the United States’ premier organic certification body, Organic Materials Review Institute, for use in the production and processing of organic foods, in compliance with the US Department of Agriculture National Organic Program. It was also certified as compliant with the requirements set out in the Australian Certified Organic Standard 2021 (Version 1) by ACO Certification Ltd, Australia’s largest certifier for organic and biodynamic produce. The US and Australian organic certifications join the previously secured ECOCERT classification certifying K-BriteTM as suitable for use in organic farming in Europe. Approvals All approvals required for the LSOP to commence operations are now in place. The Company’s Cultural Heritage Management Plan provides a framework for understanding the cultural context within which the LSOP will be developed and was approved by the Environmental Protection Authority during July 2021. Mining Leases (M38/1287, M38/1288, M38/1289) were granted in early October 2021. The grant of these tenements secures mining lease tenure across the LSOP development area. Approval was received from the Environmental Protection Authority for changes to the LSOP (Ministerial Statement 1162) in January 2022. The changes reflect the updated operational scope since the original environmental application was submitted in December 2017. The Department of Mines, 7 | P a g e Annual Report 2022 Industry Regulation and Safety also approved the LSOP Mining Proposal and Mine Closure Plan, which permits the commencement of mining operations. Funding Approved credit facilities with Northern Australia Infrastructure Fund (NAIF) and Export Finance Australia were announced during 2020/21. Commercial banks continue with their credit processes for the final tranche of the debt facility. Discussions and documentation were ongoing during the year with the syndicated debt facility lenders. Additional technical due diligence requirements requested by funders in light of the development challenges of the Company’s Australian peers were completed. Lake Wells Gold Project The Lake Wells Gold Project operated as a joint venture with St Barbara Limited (SBM) during 2021/22 for the exploration, development and mining of non-potash minerals. SBM withdrew from the joint venture subsequent to year end. A program of 16 diamond drill holes, with reverse circulation pre-collars, for 4,407m commenced in September 2021. Results confirmed that the joint venture area has been subject to gold mineralising events. Significant intercepts over 0.5g/t Au included3:  1.11m @ 1.1g/t Au from 191.39m in 2021LWDD0009;  1m @ 2.1g/t Au from 51m in 2021LWDD0010;  1.2m @ 0.6g/t Au from 51.8m in 2021LWDD0013; and  1m @ 1.8g/t Au from 236m including 0.55m @ 2.7g/t and 1.16m @ 2.2g/t in 2021LWDD0019. While the results of the drilling program do not present targets for immediate follow-up drilling, there is significant data to work through to form the basis of future programs. Laverton Downs Project (LDP) The Laverton Downs Project is 100% owned by APC and located approximately 20km north of Laverton. Regional geology highlights the potential for gold and nickel sulphide mineralisation. Project evaluation undertaken to date by APC has incorporated regional datasets, detailed magnetic data and high precision geochemical assay results derived from historical bottom of hole drill samples. In early June 2021, a diamond drill rig was mobilised to the LDP. Two holes were drilled to depths of 213.3m and 300.5m. Results were received during the reporting period and in keeping with the gold mineralisation model for the project, several intervals returned elevated gold and arsenic results, with a peak interval of 8m @ 147ppb Au and 782ppm As from 274m in hole 21LDDD0024. Along with the ongoing collection and assay of legacy drill spoils, these results build on strong gold focussed targets for future drilling campaigns. 3 Refer ASX Announcement 29 April 2022 4 Refer ASX Announcement 29 October 2021 8 | P a g e Annual Report 2022 Darlot Project (DP) The Darlot Project comprises three exploration licences across Lake Darlot, 50 kilometres ENE of Leinster in the northern Goldfields. No work has been conducted at the DP, other than a data review of historical publicly available data. Review of Corporate Activities Board of Directors Dr Natalia Streltsova was appointed as Non-Executive Chair of the Company on 15 December 2021 following the resignation of Jim Walker due to other corporate commitments. During the year the Board reviewed membership of its Committees and established a Risk & Sustainability Committee in late 2021 to co-ordinate the Company’s ESG activities. Auditor Appointment KPMG were appointed the Company’s auditors following the 2021 annual general meeting. The change of auditor was made to align with the expectations of project financiers and followed the resignation of Hall Chadwick. Capital Raising On 9 July 2021 the Company held a general meeting of shareholders to consider various resolutions in relation to capital raisings conducted in November 2020 and May 2021. A total of 9,207,144 shares representing the second tranche of shares associated with the May 2021 placement to sophisticated and professional investors was issued on 16 July 2021 following the meeting. On 2 November 2021, the Company announced a $12 million capital raising comprising a two tranche placement to sophisticated and professional investors and a share purchase plan at an issue price of $0.08. The first tranche of the placement was completed on 9 November 2021 and the issue of the shares, the subject of both the share purchase plan and the second tranche of the placement, took place in mid-December 2021. Other equity movements during the period comprised the exercise and expiry of listed options (ASX: APCOB) and the issue and lapsing of unlisted performance rights to employees. Subsequent to year end, the Company announced a non-renounceable pro-rata entitlement offer to raised up to approximately $7.7 million. Community Engagement Heritage Survey Heritage surveys were conducted in September 2021 and March 2022 with heritage consultants and Traditional Custodians. Building on the previous ethnographic surveys, these surveys were conducted to assist with preparing site avoidance and management strategies, if and where applicable, at the LSOP. No sites of cultural significance were identified across the proposed development areas surveyed. 9 | P a g e Annual Report 2022 Sandalwood Harvesting APC has engaged for some time with the Forest Products Commission on a program to salvage a large quantity of sandalwood where the harvest ponds will be constructed at Lake Wells. During the period, sandalwood salvaging works were completed by the team from Yonga Djena, a local indigenous company. Laverton Training Centre The Laverton Training Centre (LTC) is an initiative of APC which provides access to nationally accredited vocational training for long-term unemployed Aboriginal people living in this remote part of Western Australia. The LTC is a registered charity (Public Benevolent Institution) with the Australian Charities and Not-for-profits Commission and a registered deductible gift recipient with the Australian Taxation Office. The LTC was announced as the recipient of a $250,000 WA Government Regional Economic Development grant in early 2022. The LTC training ethos is modelled on the highly successful Martu-ku Yiwarra Training Centre in Wiluna, a unique four-year pilot remote Aboriginal vocational training program, with delivery by Central Regional TAFE Kalgoorlie as the registered training organisation. Refurbishment of the dedicated LTC facility at 2 Crawford Street, Laverton began in August 2021 and training commenced in late February 2022. The first students received their certificates for completed units in early August 2022. Further information regarding the LTC is available in the Company’s 2022 Sustainability Report. Corporate Governance The Board of Directors of APC is responsible for corporate governance of the Company and the Company is committed to implementing a governance framework of the highest standard. The 2022 Corporate Governance at the Statement www.australianpotash.com.au/site/About-Us/corporate-governance. Company’s website available on is Forward Looking Statements Disclaimer This Report 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. 10 | P a g e Annual Report 2022 Mineral Resource Statement Australian Potash Limited presents its Mineral Resource Statement as at 30 June 2022 for the Lake Wells Sulphate of Potash Project (MR Statement). There has been no change to the Mineral Resource and Ore Reserve previously disclosed. A Probable Ore Reserve for the LSOP was announced in conjunction with the Definitive Feasibility Study (DFS) on 28 August 2019 of 3.6Mt SOP. Supporting the Probable Ore Reserve is a Measured Mineral Resource Estimate (MRE) that was reported on 5 August 2019. In accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition (the JORC Code 2012), the results of the MRE are reported in terms of potassium (K) and SOP. Lake Wells Sulphate of Potash Project – Measured Mineral Resource In compliance with Australian and internationally recognised reporting standards, APC has reported a MRE using specific yield, or drainable porosity that contains 8.1Mt of K. The Company believes this is an accurate estimate of the amount of potassium that can be abstracted from the measured aquifers and used in the production of SOP. An MRE has been calculated on the LSOP’s potassium deposit under both JORC Code 2012 and the Guidelines for Resource and Reserve Estimation for Brines 2019. Under these internationally recognised guidelines the Mineral Resource is reported in terms of gravity recoverable brine as measured by the Specific Yield (Sy) of the host lithology. Table 1: Measured MRE using Sy (drainable porosity) Measured Resource for APC Lake Wells Sulphate of Potash Project Volume of Aquifer Specific Yield Drainable Brine Volume K Conc (mg/L) Hydrogeological unit Loam Upper Aquitard Crete Upper Sand Lower Aquitard Mixed Aquifer Basal Sand Total MCM 5,180 10,772 479 801 9,502 440 503 27,677 Mean 10% 7% 5% 17% 8% 17% 23% 9% MCM Wgt Mean Ave 518 754 24 136 760 75 116 2,383 4,009 3,020 2,386 3,435 3,367 3,645 3,415 3,402 Lake Wells Sulphate of Potash Project – Probable Ore Reserve K Mt 2.08 2.28 0.06 0.47 2.56 0.27 0.40 8.11 SOP5 Mt 4.6 5.1 0.1 1.0 5.7 0.6 0.9 18.1 Where the Measured Resource is a static estimate of the volume of potentially recoverable brine, an Ore Reserve is the portion of the Mineral Resource that can be economically recovered and is calculated from a combination of groundwater flow modelling to simulate brine abstraction and the evaluation of associated engineering design, capital and operating costs and likely revenue. 5 The measured potassium content in brine can be expressed in units of sulphate of potash (SOP or K2SO4) by multiplying K by 2.229 and assuming complete conversion and no limiting reagent 11 | P a g e Annual Report 2022 The Ore Reserve is derived from the MRE, and is therefore a subset of the MRE, not an addition to it. Table 2: Probable Ore Reserve Estimate Probable Ore Reserve for APC Lake Wells Sulphate of Potash Project Brine Volume Recovered Average Produced K Concentration K Mass SOP Mass Proportion of Measured Resource Mm3 490 mg/L 3,325 Mt 1.6 Mt 3.6 SOP 20% Annual Statement of Mineral Resources The MR Statement has been prepared in accordance with the JORC Code 2012 and the ASX Listing Rules. On 5 August 2019, APC announced an upgrade to the MRE (originally announced 29 June 2016). Ore Reserves were declared as part of the DFS released on 28 August 2019. Those announcements contain the relevant statements, data and consents referred to this in this MR Statement. APC is not aware of any other new information or data that materially affects the information included in this MR Statement and confirms that 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 Resources and Ore Reserves and for ensuring that the appropriate internal controls are applied to such estimates. However, APC ensures that any Mineral Resource and Ore Reserve estimations are prepared by competent geologists and hydrogeologists and are reviewed independently and verified including estimation methodology, sampling, analytical and test data. APC reports an MRE in accordance with the JORC Code 2012. Competent Persons’ Statements The information in the MR Statement that relates to Mineral Resources and Ore Reserves 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). Mr Storey has experience in the assessment and development of palaeochannel 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 JORC Code 2012. The MR Statement has been approved by Christopher Shaw who is a member of the Australian Institute of Geoscientists. Mr Shaw is an employee of Australian Potash Ltd. Mr Shaw has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity currently being undertaken to qualify as a Competent Person as defined in the JORC Code 2012. Mr Shaw consents to the inclusion in this report of the MR Statement in the form and context in which it appears. 12 | P a g e Annual Report 2022  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 2022. 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. Natalia Streltsova (Non-Executive Chair) Appointed 15 December 2021 Dr Streltsova is a PhD qualified chemical engineer with over 25 years’ minerals industry experience, including more than 10 years in senior technical and corporate roles with mining majors Western Mining Corporation Ltd, BHP Group Ltd and Vale S.A. She has a strong background in mineral processing and project development across multiple commodities, including potash and phosphate fertilisers. Dr Streltsova has considerable international experience covering project development and acquisitions in several jurisdictions including North and South America, Africa and Central Asia. Other current and former ASX-listed directorships (last 3 years): Name of Company Position Held Date commenced Date resigned Centaurus Metals Ltd Non-Executive Director 15 August 2022 Neometals Ltd Non-Executive Director 14 April 2016 Ramelius Resources Ltd Non-Executive Director 1 October 2019 n/a n/a n/a Western Areas Ltd Non-Executive Director 1 January 2017 20 June 2022 Jim Walker (Non-Executive Chair) Resigned 15 December 2021 Mr Walker has over 45 years of experience in the resources sector, including as Managing Director of WesTrac Pty Ltd where he led the company’s rapid development in industrial and mining services locally and in China. Mr Walker is a Member of the Australian Institute of Company Directors and the Australian Institute of Management (WA). He is Chairman of Western Australia’s State Training Board, Chairman of RAC Holdings (WA) and Chairman of the Diggers & Dealers Mining Forum and serves on the Board of several ASX-listed companies. Other current and former ASX-listed directorships (last 3 years): Name of Company Position Held Date commenced Date resigned Austin Engineering Ltd Non-Executive Chair 8 July 2016 n/a Macmahon Holdings Ltd Non-Executive Chair 14 July 2015 27 June 2019 Mader Group Ltd Non-Executive Chair 1 January 2019 MLG OZ Ltd Non-Executive Chair 20 January 2021 n/a n/a 14 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Matt Shackleton (Managing Director & Chief Executive Officer) Mr Shackleton is an experienced director with over 25 years in senior corporate positions both in Australia and the UK. Previously the Managing Director of ASX-listed Western Australian gold developer Mount Magnet South NL, Mr Shackleton was the founding director of ASX-listed and West African gold and bauxite explorer Canyon Resources Ltd. He has also held senior roles with Bannerman Resources Ltd, a uranium developer, Skywest Airlines Ltd, iiNet Ltd and DRCM Global Investors in London. Mr Shackleton holds a BComm (Economics & Accounting) from Murdoch University in Western Australia, an MBA from The University of Western Australia, and is a Fellow of the Institute of Chartered Accountants, Australia & New Zealand, and a Member of the Australian Institute of Company Directors. Other current and former ASX-listed directorships (last 3 years): None Brett Lambert (Non-Executive Director) Mr Lambert is a mining engineer and experienced company director in the Australian and international mineral resources industries. Over a career spanning 35 years, Mr Lambert has held senior management roles with Western Mining Corporation Ltd, Herald Resources Ltd, Western Metals Ltd, Intrepid Mines Ltd, Thundelarra Exploration Ltd and Bullabulling Gold Ltd. He has successfully managed several greenfields 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 ASX, AIM and the Toronto Stock Exchange and holds a BAppSc (Mining Engineering) degree from Curtin University in Western Australia and is a Member of the Australian Institute of Company Directors. Other current and former ASX-listed directorships (last 3 years): Name of Company Position Held Date commenced Date resigned De Grey Mining Ltd Non-Executive Director 26 October 2017 22 July 2019 Metal Hawk Ltd Non-Executive Chair 3 July 2019 n/a Metals X Ltd Non-Executive Director 24 October 2019 10 July 2020 Mincor Resources NL Non-Executive Chair 1 January 2017 Musgrave Minerals Ltd Non-Executive Director 4 February 2021 Saturn Metals Ltd Non-Executive Chair 9 April 2020 n/a n/a n/a Cathy Moises (Non-Executive Director) Ms Moises holds a Bachelor of Science with Honours in Geology from the University of Melbourne and a Diploma of Finance and Investment from the Securities Institute of Australia. She has extensive experience in the resources sector having worked as a senior resources analyst for several major stockbroking firms including McIntosh (now Merrill Lynch), County Securities (now Citigroup) and Evans and Partners where she was a partner of that firm. More recently in 2017-2019, Ms Moises was Head of Research at Patersons Securities Ltd. Ms Moises brings substantial experience to APC in company management, capital markets and institutional investor engagement in the gold, base metals, mineral sands and rare earths sectors. 15 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Other current and former ASX-listed directorships (last 3 years): Name of Company Position Held Date commenced Date resigned Arafura Resources Ltd Non-Executive Director 1 December 2019 Eastern Metals Ltd Non-Executive Director 26 July 2021 PacGold Ltd Non-Executive Chair 11 February 2021 n/a n/a n/a Pearl Gull Iron Ltd Non-Executive Director 1 February 2021 5 April 2022 Podium Minerals Ltd Non-Executive Director 11 January 2021 WA Kaolin Ltd Non-Executive Chair 22 May 2020 n/a n/a Rhett Brans (Non-Executive Director) Transitioned from Non-Executive Director to Executive Director 9 June 2020 & resumed Non-Executive role 20 May 2022 Mr Brans is an experienced director and civil engineer with over 45 years’ experience in project development. He was a founding director of Perseus Mining Ltd and served on the boards of Tiger Resources Ltd, Monument Mining Ltd and Syrah Resources Ltd. 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 Institute of Engineers, Australia. Other current and former ASX-listed directorships (last 3 years): Name of Company Position Held Date commenced Date resigned AVZ Minerals Ltd Non-Executive Director 5 February 2018 Carnavale Resources Ltd Non-Executive Director 17 September 2013 n/a n/a Company Secretary Michelle Blandford Mrs Blandford (née Simson) has 25 years’ administration experience, including the last 20 years in the resources industry working in both exploration and mining companies in the commodities of gold and uranium. Mrs Blandford has previously held positions with Agincourt Resources Ltd, Nova Energy Ltd, Navigator Resources Ltd and Breaker Resources NL and has completed an Executive Master of Business Administration with Distinction at The University of Western Australia and a Graduate Diploma in Applied Corporate Governance. Mrs Blandford is a Chartered Secretary and Member of the Governance Institute of Australia. 16 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Interests in the shares and options/performance rights of the Company and related bodies corporate as at the date of this report Ordinary Shares Options over Ordinary Shares Performance Rights over Ordinary Shares - 9,422,372 794,099 - 791,861 - 328,947 829,410 750,000 1,316 - 2,379,107 - - 939,082 Natalia Streltsova Matt Shackleton Brett Lambert Cathy Moises Rhett Brans Principal Activities During the year the Group focused on progressing the development of the 100% owned Lake Wells Sulphate of Potash Project located approximately 500km northeast of Kalgoorlie, in Western Australia’s eastern Goldfields. 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 $7,796,799. The Group raised funds during the year via the issue of shares and exercise of options. Total gross funds raised during the year amounted to $15,474,159. During the year, the Group capitalised exploration costs amounting to $14,940,384 (2021: $11,387,177). Exploration expenditure not at the definitive feasibility stage of $1,569,176 (2021: $518,170) was expensed as incurred. The Group reported an operating loss after income tax for the year ended 30 June 2022 of $5,579,288 (2021: $3,734,289). At 30 June 2022 cash assets available totalled $878,791. Operating Results for the Year A summary of consolidated revenues and results for the year is set out below: 2022 2021 Income $ Results $ Income $ Results $ Australian Potash Limited 70,357 (5,579,288) 380,501 (3,734,289) Shareholder Returns Basic loss per share (cents) 2022 (0.75) 2021 (0.70) 17 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) 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. Audit Appointment At the annual general meeting, shareholders considered the appointment of a new auditor to the Company. The change of auditor was made to align with the expectations of project financiers and KPMG’s appointment followed the Australian Securities and Investment Commission’s approval for the resignation of Hall Chadwick. Significant Events after the Balance Date On 27 July 2022, the Company announced a non-renounceable pro-rata entitlement offer (Offer) to raise up to $7,679,637. The Offer was on the basis of one fully paid ordinary share in the Company for every four shares held by eligible shareholders at an issue price of $0.038 per share plus one free attaching option for every two new shares subscribed for. The Offer closed on 19 August 2022 with acceptances from eligible shareholders totaling $4,365,686 before costs, representing 114,886,355 shares and 57,443,347 options. The shortfall is available to be placed within three months of the closing date. No other matters or circumstances, besides those disclosed at Note 25, 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. Business Risks The material business risks faced by the Group that are likely to have an effect on its financial prospects, and how the Group manages these risks, are: Additional requirements for capital Additional funding will be required to develop the LSOP and also in the event if the future costs exceed estimates to effectively implement business and operations plans, to take advantage of opportunities for acquisitions, joint ventures or other business opportunities, and to meet any unanticipated liabilities or expenses which the Group may incur. The Group may seek to raise further funds through equity or debt financing, joint ventures or other means. Failure to obtain sufficient financing for the Group’s activities and future projects may result in delay and indefinite postponement of its development program. There can be no assurance that additional finance will be available when needed or, if available, the terms of the financing might not be favourable. 18 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Business Risks (continued) LSOP development There is remaining uncertainty around whether the development of the LSOP will proceed as previously announced, will proceed in the intended timeframe, or will proceed at all. Development of the LSOP will depend upon the review of the costs of that development, the market for end products after development and the ability of the Group to obtain financing to develop the Project. Exploration costs and success In addition to the LSOP, the Group holds interests in several other projects in the northeastern Goldfields of Western Australia. Any exploration costs associated with these projects are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, as a result, the actual costs may materially differ from these estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and the underlying assumptions will be realised in practice. The tenements at these other projects are at various stages of exploration, and mineral exploration and development are high-risk undertakings. There can be no assurance that further exploration will result in the discovery of an economic ore deposit at these projects. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. Coronavirus (COVID-19) risk The outbreak of COVID-19 continues to impact global financial markets. The ongoing nature and extent of the effect of the outbreak on the performance of the Group remains unknown. The Company’s share price may be adversely affected in the short to medium term by any economic uncertainty caused by COVID-19. Further, any new government or industry measures taken in response to COVID-19 may adversely impact operations and are likely to be beyond the control of the Group. The Group is operationally based in Western Australia and may continue to be impacted in various ways including supply chain and operational challenges, possible disruptions in access, limited specialised workers’ availability, and cross border movement restrictions. The Group will however continue to operate with the best intentions of fulfilling its commitments. The directors continue to monitor the situation and consider the impact of COVID-19 on business and financial performance however the consequences are inevitably uncertain. In compliance with its continuous disclosure obligations, the Group will update the market in regard to the impact of COVID- 19 on its projects and any other adverse impact on the Group. Climate change regulation Certain aspects of the Group’s operations now and planned are dependent on the consumption of fossil fuels. Increased regulation and government policy designed to mitigate climate change may adversely affect the Group's cost of operations and adversely impact the financial performance of the Group. Commodity price and exchange rate risks As it is focused on the development of the LSOP, the Group is exposed to movements in commodity prices, which are quoted in foreign currency. The Group monitors historical and forecast pricing for these commodities from a range of sources in order to inform its planning and decision making. 19 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) 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 outlines 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. Mining operations have inherent risks and liabilities associated with safety and damage to the environment and the disposal of waste products occurring as a result of mineral exploration and production. Whilst unlikely due to the proposed nature of activities at the LSOP, the occurrence of any such safety or environmental incident could delay development or increase costs. Events, such as unpredictable rainfall or bushfires may impact on the Group’s ongoing compliance with environmental legislation, regulations and licences. Significant liabilities could be imposed for damages, clean-up costs or penalties in the event of certain discharges into the environment, environmental damage caused by previous operations or non-compliance with environmental laws or regulations. The disposal of mining and process waste and mine water discharge are under constant legislative scrutiny and regulation. There is a risk that environmental laws and regulations become more onerous making the Group’s operations more expensive. Approvals are required for land clearing and for ground disturbing activities. Delays in obtaining such approvals can result in the delay to anticipated exploration programs or mining activities. Further information regarding the Group’s environmental activities is available in the 2022 Sustainability Report. 20 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Audited Remuneration Report The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001 (Cth). The Report details the remuneration arrangements for the Group’s key management personnel (KMP): • Non-executive directors (NEDs); and • Executive directors and senior executives (collectively the executives). KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the major activities of the Group. The KMP during the year were: Natalia Streltsova Non-Executive Chair Jim Walker Non-Executive Chair Appointed 15 December 2021 Resigned 15 December 2021 Matt Shackleton Managing Director & Chief Executive Officer Brett Lambert Non-Executive Director Cathy Moises Non-Executive Director Rhett Brans Project Director Non-Executive Director Resigned 20 May 2022 Appointed 20 May 2022 Michelle Blandford Company Secretary & Chief Administration Officer Scott Nicholas Chief Financial Officer Resigned 9 September 2022 Principles of Compensation Remuneration Policy The Remuneration & Nomination Committee of the Board of Directors (RNC) is responsible for determining and reviewing remuneration arrangements for the directors and executives. The RNC assesses the appropriateness of the nature and amount of remuneration of executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality, high performing director and executive team. The RNC will recommend remuneration for the directors and executives to the Board of Directors for approval. Non-executive directors The Company’s policy is to remunerate NEDs at market rates for comparable companies for time, commitment and responsibilities. The maximum aggregate amount of fees that can be paid to NEDs is subject to approval by shareholders at the annual general meeting (currently $500,000). Fees for NEDs 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 Company’s Incentive Performance Rights Plan. The base fee for the Chair was increased from $70,000 to $90,000 per annum effective 1 December 2021. Similarly, the base fees for other directors increased from $45,000 to $60,000 per annum. Non-executive directors do not receive performance-related compensation and are not provided with retirement benefits apart from statutory superannuation (which is included in the base fee). 21 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Audited Remuneration Report (continued) Executives Australian Potash’s remuneration policy has been designed to align KMP objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the Group’s financial and operating results. The Board of Directors believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best KMP to run and manage the Group. The Board’s policy for determining the nature and amount of remuneration for directors and senior executives of the Group is as follows: The remuneration policy, setting the terms and conditions for the executives, was developed by the RNC. 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 RNC 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 awards of equity. The policy is designed to attract and retain the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. Executives are also entitled to participate in employee share, option and performance right arrangements. The executives receive a superannuation guarantee contribution required by the government, which was 10% for the 2022 financial year. Some individuals may choose to sacrifice part of their salary or fees to increase payments towards superannuation. All remuneration paid to KMP is valued at the cost to the Company and expensed. Shares issued are valued as the difference between the market price of those shares and the amount paid by the KMP. Options are valued using the Black-Scholes methodology. Performance rights are valued using the share price on grant date. Consequences of performance on shareholder wealth In establishing performance measures and benchmarks to ensure incentive plans are appropriately structured to align corporate behaviour with the long-term creation of shareholder wealth, the Board has regard for the stage of development of the Group’s business, share price, operational and business development achievements (including results of exploration activities) that are of future benefit to the Group. In considering the Group’s performance and benefits for shareholder wealth, the Board have regarded the following indices in respect to the current and previous four financial years: (Loss)/profit per share (cents) 2022 (0.75) 2021 (0.70) 2020 (0.20) 2019 0.04 2018 (1.93) Net (loss)/profit ($) (5,5579,288) (3,734,289) (775,551) 142,446 (4,999,921) Share price at 30 June 0.045 0.140 0.055 0.095 0.058 22 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Audited Remuneration Report (continued) Performance Based Remuneration Short Term Incentive (STI) Executives were granted STIs during the year in the form of cash bonuses based on 12.5% of total remuneration. The STI was split into three tranches with the following vesting conditions: • 25% of the bonus vests when the Company makes a Final Investment Decision (FID) or 11 June 2022 (whichever comes first); • 50% of the bonus vests 3 months after the Company makes an FID; and • 25% of the bonus vests 12 months after the Company makes an FID. No other STIs were granted during the financial year (2021: nil STIs). Long Term Incentive (LTI) The LTI awards are aimed specifically at creating long term shareholder value and the retention of executives. Incentive Option Plan The Group has an Incentive Option Plan which enables the provision of options to executives and employees. In 2019/20 the Incentive Option Plan was replaced with the Incentive Performance Rights Plan. During the 2022 and 2021 financial years, no options were issued to executives under the Incentive Option Plan. Incentive Performance Rights Plan The Group implemented the Company’s Incentive Performance Rights Plan during the 2020 financial year which enables the provision of performance rights to employees and contractors of the Company. During the 2022 and 2021 financial years, performance rights which will vest subject to pre-defined performance hurdles were allocated to executives. The grant of performance rights aims to reward executives in a manner that aligns remuneration with the creation of shareholder wealth. Refer to page 27 for the number and value of performance rights issued to executives during the year. Performance Measures to Determine Vesting of Performance Rights The vesting of performance rights 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 2022 performance rights related to: • FID to develop the Lake Wells Sulphate of Potash Project (Project); and • commencement of commercial production at the Project. The performance measures for the 2021 performance rights related to: completion of the Front End Engineering Design Study for the Project; • • FID to develop the Project; and • commencement of commercial production at the Project. 23 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Audited Remuneration Report (continued) 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 rights will vest in full, subject to ultimate Board discretion. No hedging of LTIs As part of the Company’s Securities Trading Policy, executives are prohibited 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 2022 (2021: nil). Voting and Comments made at the Company’s 2021 Annual General Meeting The Company received 91.58% of “yes” votes on its remuneration report for the 2021 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 KMP of the Group (who are disclosed above) are set out in the table overleaf. 24 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Audited Remuneration Report (continued) Key Management Personnel of the Group Short-Term STI Cash Bonus(i) Salary & Fees $ $ Post-Employment Share-based Payments Other $ Super- annuation Retirement benefits Options/ Rights $ $ $ Total $ Performance Related % Directors Natalia Streltsova 2022 44,428 Jim Walker 2022 2021 32,466 70,000 Matt Shackleton 2022 2021 362,566 284,795 Brett Lambert 2022 2021 Cathy Moises 2022 2021 Rhett Brans 48,864 41,096 48,864 38,145 2022 2021 274,299 240,000 - - - 20,629(ii) - - - - - - - Total directors’ compensation 2022 2021 811,487 674,036 20,629 - 15,000 15,000 Other executives Michelle Blandford 2022 2021 226,263 13,851 13,558 - Scott Nicholas 2022 2021 284,978 267,992 9,625 - Total other executives’ compensation 2022 2021 511,241 281,550 23,476 - Total KMP compensation - - - - - - - - - 4,443 3,246 6,650 15,000 15,000 22,434 21,805 - - - - - - 4,886 3,904 4,886 3,624 21,451 22,800 61,346 58,783 23,434 1,288 23,984 22,008 47,418 23,296 - - - - - - - - - - - - - - - - - - - - - - - - 48,871 35,712 76,650 - - - (48,491) 372,138 (7.5%) 104,138 425,738 24.5% - 39,750 53,750 84,750 - 39,750 53,750 81,519 - - - - (9,322) 286,428 (3.3%) 120,812 383,612 31.5% (57,813) 850,649 304,450 1,052,269 - - 15,792 279,340 10.6% - 14,846 - (66,491) 252,096 (22.6%) 71,712 361,712 19.8% (50,699) 531,436 71,712 376,558 (108,512) 1,382,085 376,162 1,428,827 - - - - 2022 2021 1,322,728 44,105 955,586 - 15,000 15,000 108,764 82,079 (i) Included in STI Cash Bonus is tranche 1 (paid or payable) and recognition of the accrued portion of tranche 2 and 3. (ii) Mr Shackleton has deferred payment of tranche 1 of the STI. This amount is included in accounts payable as at 30 June 2022. 25 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Audited Remuneration Report (continued) Analysis of Bonuses included in Remuneration Details of the vesting profile of the short-term cash bonuses awarded as remuneration to key management personnel are detailed below. Included in Remuneration STI Incentive Bonus Vested in year(ii) Tranche 1 Tranche 2 Tranche 3 Directors $ $ % $ Matt Shackleton Other executives 20,629 12,031 100%(i) 6,666 Michelle Blandford 13,851 8,078 100% 4,476 Scott Nicholas 9,625 9,625 100% - % - - - $ 1,932 1,297 - % - - - Forfeited in year % - - - (i) Mr Shackleton has deferred payment of the STI. This amount is included in accounts payable as at 30 June 2022. (ii) Refer to elements of executive STI set out on page 23. Service Agreements Managing Director & Chief Executive Officer Matt Shackleton (appointed Managing Director & CEO 14 August 2018): • As from 1 July 2021 paid annual salary of $350,000 (2021: $280,000) (plus statutory superannuation). • The Company may terminate, without cause, the executive’s employment at any time by giving six calendar months’ written notice to the executive. • The Company pays $15,000 per annum towards the cost of a novated lease for a motor vehicle. Project Director Rhett Brans (appointed Project Director 1 July 2020, resumed as Non-Executive Director 20 May 2022): • As from 1 July 2021 paid annual salary of $295,000 (2021: $240,000) (plus statutory superannuation). • During the term of the agreement the Company could have terminated, without cause, the executive’s employment at any time by giving three calendar months’ written notice. Company Secretary & Chief Administration Officer Michelle Blandford (appointed 23 April 2021): • Paid annual salary of $235,000 (plus statutory superannuation). • The Company may terminate, without cause, the executive’s employment at any time by giving four weeks’ written notice to the executive. Chief Financial Officer Scott Nicholas (appointed 18 May 2019): • As from 1 July 2021, paid annual salary of $280,000 (2021: $264,840) (plus statutory superannuation). • The Company may terminate, without cause, the executive’s employment at any time by giving three calendar months’ written notice to the executive. 26 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Audited Remuneration Report (continued) Share-based Compensation Terms and conditions of share-based payment arrangements affecting remuneration of KMP in the current financial and future financial years: Instrument Grant Date Number Directors Value per right at grant date (cents) Exercise Price (cents) Expiry Date Vesting Date Matt Shackleton Rights 18-Nov-19 2,379,087 Rhett Brans Rights 28-Nov-20 939,082 Other executives Michelle Blandford Rights 7-Dec-21 832,402 Scott Nicholas Rights 4-Mar-20 1,110,026 9.9 13.5 7.2 9.9 - 4-Mar-24 - 4-Mar-24 - 4-Mar-24 - 4-Mar-24 (i) (i) (i) (i) (i) Vesting of the rights granted is dependent on the following performance criteria being met: • half will vest upon an FID to develop the Project; and • half will vest upon the commencement of commercial production at the Project. The following options/rights over ordinary shares of the Company were granted, vested or lapsed with KMP during the year: No. options /rights awarded during year Grant Date Value per option /right at grant date (cents) Other executives Michelle Blandford Vesting Date Exercise Price (cents) Expiry Date No. vested during year No. lapsed during year Value of options/rights granted during year exercised during year ($) ($) 2022 832,402 7-Dec-21 7.2 (i) - 4-Mar-24 - - 59,933 - (i) Vesting of the rights granted is dependent on the following performance criteria being met: • half will vest upon an FID to develop the Project; and • half will vest upon the commencement of commercial production at the Project. 27 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Audited Remuneration Report (continued) 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 KMP of the Group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation. 2022 ordinary shares Balance at start of the year Received during the year on the exercise of options Received during the year on the vesting of performance rights Number acquired during the year Other Balance at end of the year Directors Natalia Streltsova - Jim Walker 1,255,142 - - Matt Shackleton 8,523,228 241,250 Brett Lambert Cathy Moises Rhett Brans Other executives Michelle Blandford Scott Nicholas 525,613 109,666 - - 689,541 99,688 - 941,544 - - Option and Rights Holdings - - - - - - - - - - - - - - - - - - - - - - - - - 1,255,142 8,764,478 635,279 - 789,229 - 941,544 The numbers of options and rights over ordinary shares in the Company held during the financial year by each director of Australian Potash Limited and other KMP of the Group, including their personally related parties, are set out overleaf. 28 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Audited Remuneration Report (continued) Option and Rights Holdings (continued) 2022 Balance at start of the year Granted as compensa- tion Exercised Expired Balance at end of the year Vested and exercisable Unvested Directors Natalia Streltsova Options Jim Walker - Options 1,277,496 Matt Shackleton Options Rights 241,250 2,379,107 Brett Lambert Options 859,666 Cathy Moises Options 750,000 Rhett Brans Options Rights Other executives Michelle Blandford 99,688 939,082 - - - - - - - - Rights - 832,402 Scott Nicholas Rights 1,110,026 - - - - (1,277,496) (241,250) - (109,666) - (99,688) - - - - - - - - - - - - - - 2,379,107 - - - - 750,000 750,000 750,000 750,000 - 939,082 832,402 1,110,026 - - - - - - - 2,379,107 - - - 939,082 832,402 1,110,026 Loans to Key Management Personnel There were no loans to KMP during the year. Other Transactions with Key Management Personnel There were no other transactions with KMP during the year. End of Audited Remuneration Report 29 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Directors' Meetings During the year the Company held 13 meetings of directors. The attendance of directors at meetings of the Board and committees were: Board Meetings Audit Committee Meetings Remuneration & Nomination Committee Meetings Risk & Sustainability Committee Meetings Directors Natalia Streltsova Jim Walker Matt Shackleton Brett Lambert Cathy Moises Rhett Brans A 9 4 13 13 13 13 B 9 3 13 13 10 13 A 1 1 1 2 2 1 B 1 1 1 2 2 1 A 2 2 2 4 4 2 B 2 2 2 4 4 2 Notes A – Number of meetings held during the time the director held office during the year B – Number of meetings attended The composition of the Committees changed during the year. A 2 - 2 2 2 2 B 2 - 2 2 2 2 Shares Under Option/Right Unissued ordinary shares of Australian Potash Limited under option/right at the date of this report are as follows: Date issued Expiry date Exercise price (cents) Number Options 28-Nov-20 26-Aug-22 Rights 29-Jul-23 26-Aug-23 17.5 Unlisted 6.0 Unlisted 4-Mar-20(i) 4-Mar-24 NIL Unlisted Total number outstanding at the date of this report (i) This is the first date of issue for performance rights of the same class. 1,500,000 57,443,347 6,547,884 65,491,231 No option/right holder has any right under the options/rights to participate in any other share issue of the Company or any other entity. Insurance of Directors and Officers During the financial year, a premium was paid to insure the directors and officers of the Company. Details of the premium are subject to a confidentiality clause under the contract of insurance. 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. 30 | P a g e Financial Report 30 June 2022 Directors’ Report (continued) Non-Audit Services There were no non-audit services provided by the entity's auditor, KPMG, or associated entities. Proceedings on Behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 (Cth) 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 (Cth). Auditor’s Independence Declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 (Cth) is set out on page 32. Signed in accordance with a resolution of the directors. Matt Shackleton Managing Director & Chief Executive Officer Perth, 29 September 2022 31 | P a g e Financial Report 30 June 2022 Auditor’s Independence Declaration 32 | P a g e Financial Report 30 June 2022 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2022 REVENUE Revenue from contracts with customers Cost of sales Gross Profit Other income Administration expenses Exploration expenses OPERATING LOSS FINANCE COSTS Finance income Finance costs NET FINANCE COSTS LOSS BEFORE INCOME TAX Income tax benefit/(expense) LOSS FOR THE YEAR Other comprehensive income Note 2022 $ 2021 $ 5 6 7 8 - - - 159,360 (151,464) 7,896 70,357 221,141 (4,068,242) (3,424,380) (1,569,176) (518,170) (5,567,061) (3,713,513) 199 471 (12,426) (21,247) (12,227) (20,776) (5,579,288) (3,734,289) 9 - - (5,579,288) (3,734,289) - - TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF AUSTRALIAN POTASH LIMITED (5,579,288) (3,734,289) Loss per share (cents per share) Basic loss attributable to the ordinary equity holders of the Company Diluted loss attributable to the ordinary equity holders of the Company 27 27 (0.75) (0.75) (0.70) (0.70) 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. 33 | P a g e Financial Report 30 June 2022 Consolidated Statement of Financial Position as at 30 June 2022 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventory TOTAL CURRENT ASSETS NON CURRENT ASSETS Plant and equipment Right-of-use assets Intangibles Exploration and evaluation TOTAL NON CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Lease liabilities - current Provisions - current TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES Lease liabilities - non current Provisions - non current TOTAL NON CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY Note 10 11 2022 $ 2021 $ 878,791 7,796,799 472,142 227,206 735,600 52,760 1,578,139 8,585,159 12 13 196,733 108,143 4,353 173,957 110,255 6,812 14 35,763,106 20,822,722 36,072,335 21,113,746 37,650,474 29,698,905 15 13 16 13 16 2,206,021 5,311,008 44,116 82,192 1,855,167 309,426 4,105,304 5,702,626 - 35,307 514,350 514,350 - 35,307 4,619,654 5,737,933 33,030,820 23,960,972 17 18 60,491,225 45,704,920 2,009,627 2,146,796 (29,470,032) (23,890,744) 33,030,820 23,960,972 The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial Statements. 34 | P a g e Financial Report 30 June 2022 Consolidated Statement of Changes in Equity for the year ended 30 June 2022 Issued Capital Reserve Accumulated Losses $ $ $ Total $ BALANCE AT 1 JULY 2020 29,628,277 1,646,066 (20,156,455) 11,117,888 Loss for the year Other comprehensive income for the year TOTAL COMPREHENSIVE LOSS TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS - - - Shares and options issued during the year 17,063,826 Share issue transaction costs (987,183) - - - - - Issue of supplier options Share-based payments - - 3,586 497,144 (3,734,289) (3,734,289) - - (3,734,289) (3,734,289) - - - - 17,063,826 (987,183) 3,586 497,144 BALANCE AT 30 JUNE 2021 45,704,920 2,146,796 (23,890,744) 23,960,972 BALANCE AT 1 JULY 2021 45,704,920 2,146,796 (23,890,744) 23,960,972 Loss for the period Other comprehensive income for the year TOTAL COMPREHENSIVE LOSS TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS - - - Shares and options issued during the year 15,684,159 Share issue transaction costs (897,854) - - - - - Share-based payments - (137,169) (5,579,288) (5,579,288) - - (5,579,288) (5,579,288) - - - 15,684,159 (897,854) (137,169) BALANCE AT 30 JUNE 2022 60,491,225 2,009,627 (29,470,032) 33,030,820 The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements. 35 | P a g e Financial Report 30 June 2022 Consolidated Statement of Cash Flows for the year ended 30 June 2022 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payment of exploration expense Payments to suppliers and employees Interest received Research and development refund received Government grants Note 2022 $ 2021 $ - 159,360 (321,302) (370,318) (3,568,848) (3,022,349) 300 - - 686 134,304 67,500 Net cash outflow from operating activities 26 (3,889,850) (3,030,817) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds on sale of plant and equipment Payments for plant and equipment Payments for evaluation and exploration Net cash outflow from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares and options Payments of share issue transaction costs Repayments of lease liabilities Interest expense of lease liabilities Net cash inflow from financing activities 600 - (172,463) (119,609) (17,260,286) (8,342,474) (17,432,149) (8,462,083) 15,474,159 17,063,826 (902,293) (1,056,089) (171,452) (11,694) (77,396) (17,817) 14,388,720 15,912,524 Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year (6,933,279) 4,419,624 7,796,799 3,379,177 Effect of exchange rate changes on cash and cash equivalents 15,271 (2,002) CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 10 878,791 7,796,799 The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements. 36 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 1. REPORTING ENTITY Australian Potash Limited (the Company) is a company limited by shares, domiciled and incorporated in Australia. The Company’s registered office is at Suite 31, 22 Railway Road, Subiaco WA 6008. These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the ‘Group’). The Group is a for-profit entity and is primarily involved in the development of the Lake Wells Sulphate of Potash Project. The presentation currency of the group is Australian Dollars ($). 2. BASIS OF PRESENTATION The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards and Interpretations (Standards and Interpretations) adopted by the Australian Accounting Standards Board (the AASB) and the Corporations Act 2001 (Cth). The consolidated financial statements comply with International Financial Reporting Standards adopted by the International Accounting Standards Board. They were authorised for issue by the Board of Directors on 29 September 2022. Historical cost convention These financial statements have been prepared under the historical cost convention. 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 of $5,579,288 (2021: $3,734,289), operating cash outflows of $3,889,850 (2021: $3,030,817), net cash outflows of $6,933,279 (2021: Inflows $4,419,624) and working capital deficit of $2,495,951 (2021: Surplus $2,882,533). The ability of the Group to continue as a going concern is reliant on the Group securing funds by raising capital from equity financing, debt financing or other means and managing cashflow in line with available funds. These conditions, and the Group’s ability to raise additional capital indicate a material uncertainty that may cast significant doubt about the ability of the Group to continue as a going concern. The directors are satisfied there are reasonable grounds to believe that the Group will be able to continue as a going concern, after consideration of the following factors: • • • • • The Group has a history of successfully raising equity with $15.5 million (2021: $17.1 million) raised during the year including placements to professional and sophisticated investors; Subsequent to year end, the Group raised $4.4 million through a non-renounceable pro-rata entitlement offer with the shortfall of $3.3 million available to be placed until November 2022; The Group has a Controlled Placement Agreement (CPA) that provides APC with standby equity capital of 18.5 million shares to January 2024; The Group has no loans or borrowings; and The Group has the ability to adjust its expenditure commitments subject to operational plans and its funding position. 37 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 2. BASIS OF PREPARATION (continued) Going concern (continued) 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. Should the Group be unable to secure additional funding or curtail expenditure, or both, and 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. Adoption of new and revised Accounting Standards The Group has adopted all new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for an accounting period that begins on or after 1 July 2021. Standards and Interpretations in issue not yet adopted The Group has reviewed the new and revised Standards and Interpretations on issue not yet adopted for the year ended 30 June 2022. As a result of this review the Group has determined that there is no material impact of the Standards and Interpretations on issue not yet adopted on the Company and, therefore, no change is necessary to Group accounting policies. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) (i) Principles of consolidation Subsidiaries Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it 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 over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. (ii) Non-controlling interests Non-controlling interests (NCI) are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. (iii) Loss of control When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. 38 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 2. BASIS OF PREPARATION (continued) Significant accounting policies (continued) (iv) Investments in associates Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. Investments in associates are accounted for using the equity method and are recognised initially at cost. The cost of the investments includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of the investment, including any long-term interest that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. (v) Joint arrangements The Group classifies its interests in joint arrangements as either joint operations or joint ventures depending on the Group’s rights to the assets and obligations for the liabilities of the arrangements. When making this assessment, the Group considers the structure of the arrangements, the legal form of any separate vehicles, the contractual terms of the arrangements and other facts and circumstances. (vi) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment (b) Finance income and finance costs The Group’s finance income and finance costs include: • • interest income; and interest expense. Interest income or expense is recognised using the effective interest method. Dividend income is recognised in profit or loss on the date on which the Group’s right to receive payment is established. The “effective interest rate” is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to: • • the gross carrying amount of the financial asset; or the amortised cost of the financial liability. 39 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 2. BASIS OF PREPARATION (continued) Significant accounting policies (continued) In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis. (c) Inventories Materials and supplies are valued at the lower of cost or net realisable value. Any provision for obsolescence is determined by reference to specific items of stock. A regular review is undertaken to determine the extent of any provision for obsolescence. (d) 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. (e) (i) Financial Instruments Recognition and derecognition of financial instruments A financial asset or financial liability is recognised in the balance sheet when the Group becomes a party to the contractual provisions of the instrument, which is generally on trade date. Loans and receivables are recognised when cash is advanced (or settled) to the borrowers. Financial assets at fair value through profit or loss are recognised initially at fair value. All other financial assets are recognised initially at fair value plus directly attributable transaction costs. The Group derecognises a financial asset when the contractual cash flows from the asset expire or it transfers its rights to receive contractual cash flows from the financial asset in a transaction in which substantially all the risks and rewards of ownership are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. A financial liability is derecognised from the balance sheet when the Group has discharged its obligation or the contract is cancelled or expires. (ii) Classification of financial instruments The Group classifies its financial assets into the following measurement categories: • • those to be measured at fair value (either through other comprehensive income, or through profit or loss); and those to be measured at amortised cost. 40 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 2. BASIS OF PREPARATION (continued) Significant accounting policies (continued) The classification depends on the Group’s business model for managing financial assets and the contractual terms of the financial assets' cash flows. The Group classifies its financial liabilities at amortised cost unless it has designated liabilities at fair value through profit or loss or is required to measure liabilities at fair value through profit or loss such as derivative liabilities. (iii) Items at fair value through profit or loss Items at fair value through profit or loss comprise: • • items held for trading; items specifically designated as fair value through profit or loss on initial recognition; and • debt instruments with contractual terms that do not represent solely payments of principal and interest. Financial instruments held at fair value through profit or loss are initially recognised at fair value, with transaction costs recognised in the income statement as incurred. Subsequently, they are measured at fair value and any gains or losses are recognised in the income statement as they arise. Where a financial asset is measured at fair value, a credit valuation adjustment is included to reflect the credit worthiness of the counterparty, representing the movement in fair value attributable to changes in credit risk. Financial instruments held for trading A financial instrument is classified as held for trading if it is acquired or incurred principally for the purpose of selling or repurchasing in the near term, or forms part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking, or it is a derivative not in a qualifying hedge relationship. Financial instruments designated as measured at fair value through profit or loss Upon initial recognition, financial instruments may be designated as measured at fair value through profit or loss. A financial asset may only be designated at fair value through profit or loss if doing so eliminates or significantly reduces measurement or recognition inconsistencies (ie. eliminates an accounting mismatch) that would otherwise arise from measuring financial assets or liabilities on a different basis. A financial liability may be designated at fair value through profit or loss if it eliminates or significantly reduces an accounting mismatch or: • • if a host contract contains one or more embedded derivatives; or if financial assets and liabilities are both managed and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy. Where a financial liability is designated at fair value through profit or loss, the movement in fair value attributable to changes in the Group’s own credit quality is calculated by determining the changes in credit spreads above observable market interest rates and is presented separately in other comprehensive income. 41 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 2. BASIS OF PREPARATION (continued) Significant accounting policies (continued) (iv) Impairment of financial assets The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group’s assessment at the end of each reporting period as to whether the financial instrument’s credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. The Group assesses whether the credit risk on an exposure has increased significantly on an individual or collective basis. For the purposes of a collective evaluation of impairment, financial instruments are Grouped on the basis of shared credit risk characteristics, taking into account instrument type, credit risk ratings, date of initial recognition, remaining term to maturity, industry, geographical location of the borrower and other relevant factors. (v) Offsetting Financial assets and liabilities are offset and the net amount is presented in the balance sheet when the Group has a legal right to offset the amounts and intends to settle on a net basis or to realise the asset and settle the liability simultaneously. (f) Foreign currency Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Profit and Loss and Other Comprehensive Income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined. (g) 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: (i) Exploration and evaluation phase and the transition to development Management assesses the phase of its projects with respect to consideration of the transition from evaluation activities to the reclassification to development. Exploration and evaluation projects for which technical and commercial feasibility have been determined are transferred to development and tested for impairment at date of transition. Whilst technical feasibility of the Lake Wells SOP Project has been obtained, commercial feasibility is subject to the Company raising sufficient equity funding, which as at the date of this report has not been achieved. 42 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 2. BASIS OF PREPARATION (continued) Significant accounting policies (continued) (ii) Rehabilitation provision The Group assesses site rehabilitation liabilities on an annual basis. The provision recognised is based on an assessment of the estimated cost of closure and reclamation of the areas discounted to present value. Significant estimation is required in determining the provision for site rehabilitation. Factors such as future development/exploration activity, changes in the costs of goods and services required to complete restoration activity and changes to the legal and regulatory framework can all affect the timing and ultimate cost to rehabilitate sites where mining and/or exploration activities have previously taken place. (iii) 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. Performance rights are valued using the share price on grant date. 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. 3. FINANCIAL RISK MANAGEMENT The Group has exposure to the following risks arising from financial instruments: • market risk; • • credit risk; and liquidity risk. (a) Risk Management Framework The Company’s Board of Directors (Board) has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board has established the Audit Committee and the Risk & Sustainability Committee. The primary purpose of the Audit Committee is to assist the Board in monitoring and reviewing any matters of significance affecting the Company’s financial reporting and compliance; this includes all financial risks. The primary purpose of the Risk & Sustainability Committee is to assist the Board in discharging its responsibilities overseeing the Company’s risk management systems, governance and sustainability programs, environmental and community obligations, ethical standards, codes of conduct and compliance procedures. The Committees report regularly to the Board on their activities. Prior to December 2021, the Audit Committee was responsible for all risk management matters. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. 43 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 3. FINANCIAL RISK MANAGEMENT (continued) The Risk & Sustainability Committee oversees how management monitors compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. Management undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Risk & Sustainability Committee. (b) Market Risk Market risk is the risk that changes in market prices – eg. foreign exchange rates, interest rates and equity prices – will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. (i) Foreign exchange risk The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currency of Group companies. The functional currency of the Group is Australian Dollar. 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 of $878,791 (2021: $7,796,799) is subject to interest rate risk. The weighted average interest rate received on cash and cash equivalents by the Group was 0.2% (2021: 0.1%). Sensitivity analysis At 30 June 2022, 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 $18,687 lower/higher (2021: $10,198 lower/higher) as a result of lower/higher interest income from cash and cash equivalents. (c) 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 Consolidated Statement of Financial Position and Notes to the Consolidated Financial Statements. 44 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 3. FINANCIAL RISK MANAGEMENT (continued) The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the reporting date was: Cash and cash equivalents Trade and other receivables (d) Liquidity Risk Note 10 11 Carrying Value 2022 $ 2021 $ 878,791 472,142 7,796,799 735,600 1,350,933 8,532,399 Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows. Typically, the Group ensures it has sufficient cash on demand to meet expected operational expenses for a period of 90 days, this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The expected settlement of the Group’s financial liabilities is as follows: Contractual Cashflows Carrying Amount $ Total $ < 6 months 6-12 months $ $ 1-2 years(i) $ 2-5 years $ 30 June 2022 Trade and other payables 2,206,021 2,206,021 2,206,021 Lease liabilities – current 44,116 44,116 44,116 - - - - Provisions – current 1,855,167 1,855,167 220,637 251,851 1,382,679 4,105,304 4,105,304 2,470,774 251,851 1,382,679 - - - - (i) Whilst the Company does not have the right to defer the liability, it is progressing though an arbitration process so payment is expected to occur at that point, which is anticipated to be over 12 months from balance date. Refer to Note 16 for further information. (e) 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. 4. 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. 45 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 5. REVENUE FROM CONTRACTS WITH CUSTOMERS Sale of goods Accounting Policy: Revenue from contracts with customers 2022 $ 2021 $ - 159,360 Revenue from contracts with customers is recognised when control of the goods is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods. The Group has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods or services before transferring them to the customer. Sale of Sulphate of Potash (SOP) Revenue from sale of SOP is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the goods at the customer’s location. The normal credit term is 50% deposit before goods are received and payment on delivery. The Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price for the SOP, the Group considers the effects of variable consideration, existence of a significant financing component, non-cash consideration, and consideration payable to the customer (if any). 6. OTHER INCOME Research and development tax incentive Government grants Other Accounting Policy: Government grants 2022 $ - - 70,357 70,357 2021 $ 134,304 67,500 19,337 221,141 Government grants are recognised when there is reasonable assurance that: • • the Group will comply with the conditions attaching to them; and the grants will be received; they are then recognised in profit or loss as other income or as a deduction against the carrying value of an underlying asset. The Group recognises the refundable research and development tax incentive (received under the tax legislation passed in 2011) as a government grant. This incentive is refundable to the Group regardless of whether the Group is in a tax payable position and is presented by deducting the grant from the carrying amount of the related exploration asset. 46 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 7. ADMINISTRATION EXPENSES BY NATURE Accounting and compliance Consultants Depreciation and amortisation expense Employee benefits expense Insurance Legal fees Office costs Telecommunications Travel Stakeholder engagement Other 8. EXPLORATION EXPENSE Research & development incentive reversal Exploration expenditure expenses 9. INCOME TAX Income tax expense Current tax Deferred tax 2022 $ 225,403 546,964 170,072 2021 $ 173,054 530,347 127,110 1,929,000 1,825,422 106,759 262,055 176,685 145,523 81,077 226,703 198,001 79,447 148,772 149,248 - 15,680 240,619 134,681 4,068,242 3,424,380 Note 6, 16 14 2022 $ 1,382,679 186,497 1,569,176 2021 $ - 518,170 518,170 2022 $ 2021 $ - - - - - - Numerical reconciliation of income tax expense to prima facie tax payable Loss from continuing operations before income tax expense (5,579,288) (3,734,289) Prima facie tax benefit at the Australian tax rate of 25% (2021: 26%) (1,394,822) (970,915) Tax effect of: Non-deductible expenses Movement in deferred tax assets not brought into account Income tax expense 380,736 1,014,086 - 77,922 892,994 - 47 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 9. INCOME TAX (continued) Unrecognised temporary differences Deferred Tax Assets (at 25% (2021: 26%)) Accruals and other provisions 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 25% (2021: 26%)) Exploration Prepayments Other Set off against deferred tax assets 2022 $ 2021 $ 353,160 405,366 646,324 346,034 13,592,455 8,661,421 14,350,981 9,653,779 (8,958,824) (962,261) 5,392,157 8,691,518 (5,392,157) (8,691,518) - - 8,885,976 52,992 19,856 917,231 45,029 8,958,824 962,261 (8,958,824) (962,261) - - 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. Accounting Policy: 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. 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 associates 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. 48 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 9. INCOME TAX (continued) 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. 10. CASH AND CASH EQUIVALENTS Cash at bank and in hand Short-term deposits 2022 $ 2021 $ 853,791 7,771,799 25,000 25,000 878,791 7,796,799 Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates. Accounting Policy: For Consolidated Statement of Cash Flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term 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 Consolidated Statement of Financial Position. 49 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 11. TRADE AND OTHER RECEIVABLES GST receivable Other receivables Accounting Policy: Trade and other receivables 2022 $ 35,843 436,299 472,142 2021 $ 519,220 216,380 735,600 The Group makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward- looking information to calculate the expected credit losses (ECL) using a provision matrix. The Group assesses impairment of trade receivables on a collective basis; as they possess shared credit risk characteristics they have been grouped based on the days past due. Allowance for ECL The Group has not recognised any loss (2021: nil) in respect of ECL for the year ended 30 June 2022. 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 Consolidated 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. 50 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 12. PLANT AND EQUIPMENT Computer Equipment Plant & Equipment Leasehold Improvements Motor Vehicles Furniture & Fittings $ $ $ $ $ Total $ Cost Balance at 1 July 2020 Additions Disposals 35,852 16,077 125,017 10,395 (1,145) (3,382) Balance at 30 June 2021 Additions Government grant received(i) Disposals 50,784 16,485 - - 132,030 - - - - 42,093 85,164 (26,364) 17,245 220,207 1,818 113,454 - (30,891) 100,893 19,063 302,770 - - 152,265 82,312 (60,831) (99,169) (4,545) - - - - - 251,062 (160,000) (4,545) Balance at 30 June 2022 67,269 127,485 91,434 84,036 19,063 389,287 Accumulated Depreciation Balance at 1 July 2020 Depreciation for the year Disposals Balance at 30 June 2021 Depreciation for the year Disposals 14,681 9,303 50,243 19,293 (1,145) (1,286) 22,839 15,981 68,250 17,684 - (3,691) - - - - 7,639 - 18,591 12,363 (2,398) 28,556 20,179 - 3,506 5,662 87,021 46,621 - (4,829) 9,168 5,949 - 128,813 67,432 (3,691) Balance at 30 June 2022 38,820 82,243 7,639 48,735 15,117 192,554 Net Book Value Balance at 30 June 2021 Balance at 30 June 2022 27,945 28,449 63,780 45,242 - 83,795 72,337 35,301 9,895 3,946 173,957 196,733 (i) The Group was awarded a grant from the Government of Western Australia’s Regional Economic Development Grants program. The grant has been recognised as a deduction against the carrying value of the underlying assets (refer Note 6 for the accounting policy). Accounting Policy: Plant and equipment Plant, machinery, fixtures and fittings are stated at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method, on the following bases: • Computer equipment 20% - 33% per annum • Motor vehicles 20% per annum • Plant and equipment 10% - 20% per annum • Furniture and fittings 16% - 33% per annum • Leasehold improvements 10% - 20% per annum 51 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 12. PLANT AND EQUIPMENT (continued) The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in profit or loss. Impairment of non-financial assets The carrying amounts of the Company’s non-financial assets, other than deferred tax assets (see Note 9) are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash- generating unit”). An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 52 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 13. LEASES (GROUP AS LESSEE) RIGHT-OF-USE ASSETS Cost Beginning of the period Additions End of the period Accumulated Depreciation Beginning of the period Charge for the period End of the period Carrying Amount 2022 $ 2021 $ 238,053 98,068 336,121 127,798 100,180 227,978 108,143 238,053 - 238,053 49,307 78,491 127,798 110,255 The Group entered into leases for office space and a motor vehicle. The average lease term is 0.5 years (30 June 2021: 2 years). Amounts recognised in profit and loss: Depreciation expense on right-of-use assets Interest expense on lease liabilities Expense relating to short-term leases 2022 $ 2021 $ 100,180 11,694 - 78,491 17,817 - Expense relating to leases of low value assets 20,165 16,204 At 30 June 2022, the Group is committed to $nil short-term leases (2021: $nil). LEASE LIABILITIES Maturity analysis: Year 1 Year 2 Year 3 Less unearned interest Analysed as: Current Non current 2022 $ 2021 $ 44,712 - - 44,712 (596) 44,116 44,116 - 88,747 35,897 - 124,644 (7,145) 117,499 82,192 35,307 44,116 117,499 The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the Group’s treasury function. 53 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 13. LEASES (GROUP AS LESSEE) (continued) Accounting Policy: The Group as lessee The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise: • Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable; • Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; • The amount expected to be payable by the lessee under residual value guarantees; and • The exercise price of purchase options, if the lessee is reasonably certain to exercise the options. The lease liability is presented as a separate line in the Consolidated Statement of Financial Position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The Group remeasures the lease liability (and makes a corresponding adjustment to the related right- of-use asset) whenever: • The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate; • The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments' change is due to a change in a floating interest rate, in which case a revised discount rate is used); and • A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification. The Group did not make any such adjustments during the periods presented. 54 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 13. LEASES (GROUP AS LESSEE) (continued) The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under AASB 137. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The right-of-use assets are presented as a separate line in the Consolidated Statement of Financial Position. The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the “Plant and Equipment” policy outlined in Note 12. Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in the line “administration expenses” in profit or loss. As a practical expedient, AASB 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient. For contracts that contain a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. 14. EXPLORATION AND EVALUATION Beginning of the financial year Additions End of the financial year 2022 $ 2021 $ 20,822,722 9,435,545 14,940,384 11,387,177 35,763,106 20,822,722 The value of the Company’s interest in exploration expenditure is dependent upon: • The continuance of the Company’s rights to tenure of the areas of interest; • The results of future exploration; and • The recoupment of costs through successful development and exploitation of the areas of interest or, alternatively, by their sale. 55 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 14. EXPLORATION AND EVALUATION (continued) Accounting Policy: Exploration and evaluation expenditure Exploration and evaluation costs for each area of interest in the early stages of project life are expensed as they are incurred. For each area of interest, the expenditure is recognised as an exploration and evaluation asset where the following conditions are satisfied: • The area of interest has progressed to the definitive feasibility study stage; • The rights to tenure of the area of interest are current; and • At least one of the following conditions is also met: o The expenditure is expected to be recouped through successful development and commercial exploitation of an area of interest, or alternatively by its sale; and o Exploration and evaluation activities in the area of interest have not, at reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise “economically recoverable reserves” and active and significant operations in, or in relation to, the area of interest are continuing. Economically recoverable reserves are the estimated quantity of product in an area of interest that can be expected to be profitably extracted, processed and sold under current and foreseeable conditions. Exploration and evaluation assets include: • Acquisition of rights to explore; • Topographical, geological, geochemical and geophysical studies; • Exploratory drilling, trenching, and sampling; and • Activities in relation to evaluating the technical feasibility and commercial viability of extracting the mineral resource. General and administrative costs are allocated to, and included in, the cost of exploration and evaluation assets only to the extent that those costs can be related directly to the operational activities in the area of interest to which the exploration and evaluation assets relate. In all other instances, these costs are expensed as incurred. Exploration and evaluation assets are transferred to development assets once technical feasibility and commercial viability of an area of interest is demonstrable. Exploration and evaluation assets are assessed for impairment, and any impairment loss is recognised prior to being reclassified. The carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective area of interest. Impairment testing of exploration and evaluation assets Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability or facts and circumstances suggest that the carrying amount exceeds the recoverable amount. 56 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 14. EXPLORATION AND EVALUATION (continued) Exploration and evaluation assets are tested for impairment when any of the following facts and circumstances exist: • The term of exploration licence in the specific area of interest has expired during the reporting period or will expire in the near future, and is not expected to be renewed; • Substantive expenditure on further exploitation for and evaluation of mineral resources in the specific area are not budgeted or planned; • Exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the decision was made to discontinue such activities in the specified area; or • Sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. Where a potential impairment is indicated, an assessment is performed for each cash generating unit which is no larger than the area of interest. The Group performs impairment testing in accordance with accounting policy detailed in Note 12. 15. TRADE AND OTHER PAYABLES Trade payables Other payables and accruals Accounting Policy: Trade and other payables 2022 $ 2021 $ 1,295,760 3,099,899 910,261 2,211,109 2,206,021 5,311,008 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. 16. PROVISIONS Current Employee entitlements Research & development incentive provision(i) Note 2022 $ 2021 $ 472,488 309,426 6, 8 1,382,679 - 1,855,167 309,426 (i) The Company has received a notice from the Department of Industry, Science, Energy and Resources (Department) with respect to the Company’s Research & Development (R&D) application for the 2018/2019 financial year which has brought into question the ability of the Company to claim aspects of the R&D incentive. The Company requested, and received, an independent internal review by the Department which concluded a portion of the 2018/2019 R&D application was ineligible. The Company has obtained advice and has filed an application in the Administrative Appeals Tribunal (Tribunal) to appeal the Department’s decision. Pending the outcome of this action before the Tribunal, the Company has recognised a $1.4 million provision based on the Department’s independent internal review. This matter was previously disclosed as a contingent liability in the 30 June 2021 annual financial report. 57 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 16. PROVISIONS (continued) Non current Employee entitlements Rehabilitation provision(ii) 2022 $ 99,535 414,815 514,350 2021 $ - - - (ii) Provision has been made for the anticipated costs for future rehabilitation of land disturbed or mined. Accounting Policy: Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Rehabilitation Provision The Group records the present value of the estimated cost of legal and constructive obligations to restore operating locations in the period in which the obligation arises. The nature of restoration activities includes the removal of facilities, abandonment of wells and restoration of affected areas. A restoration provision is recognised and updated at different stages of the development and construction of a facility and then reviewed on an annual basis. When the liability is initially recorded, the present value of the estimated future cost is capitalised by increasing the carrying amount of the related property plant and equipment. Over time, the liability is increased for the change in the present value based on a pre-tax discount rate appropriate to the risks inherent in the liability. The unwinding of the discount is recorded as an accretion charge within finance costs. The carrying amount is capitalised unless the costs incurred relate to an operation that does not have a future economic benefit, in which case the costs are expensed. Short-term and other long-term employee benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, bonuses, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service. Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group in respect of services provided by employees up to the reporting date. 58 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 17. CONTRIBUTED EQUITY 2022 2021 No. of securities Note $ No. of securities $ (a) Share capital Ordinary shares fully paid 17(c) 808,382,808 59,950,430 626,478,509 45,164,125 (b) Other equity securities Options Total issued capital 17(d) - 540,795 51,222,420 540,795 60,491,225 45,704,920 (c) Movements in ordinary share capital Beginning of the financial year 626,478,509 45,164,125 486,560,550 29,087,482 Issued during the year: − Issued for cash at 14 cents per share 9,207,144 1,289,000 62,221,428 8,711,000 − Issued for cash at 8 cents per share 155,962,500 12,477,000 − Issued to supplier at 8.4 cents per share 17(i) 2,500,000 210,000 − Issued for cash at 11.1 cents per share − Issued on exercise of unlisted options at 15 cents per option − Issued on exercise of unlisted options at 10 cents per option − Issued on exercise of listed options at 12 cents per option − Issued on vesting of performance 14,234,655 1,708,159 4,127,715 495,326 rights (i) 3,645,753 - Share issue transaction costs End of the financial year - (897,854) - (987,183) 808,382,808 59,950,430 626,478,509 45,164,125 (d) Movements in other equity securities Beginning of the financial year 51,222,420 540,795 72,260,805 540,795 Issued during the year: − Exercise of listed options at 12 cents per option Expiry of listed options End of the financial year (14,234,655) (36,987,765) - - (4,127,715) (16,910,670) - - - 540,795 51,222,420 540,795 (i) Shares issued on vesting of performance rights were in escrow until 12 May 2022. 59 | P a g e Financial Report 30 June 2022 - - - - 63,063,063 7,000,000 3,430,000 514,500 3,430,000 343,000 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 17. CONTRIBUTED EQUITY (continued) (e) Movements in options on issue Beginning of the financial year Movements of options during the year 2022 2021 Number of options 55,787,785 67,775,500 Unlisted options issued, exercisable at 17.5 cents, expiring 29 July 2023 - 1,500,000 Exercise of listed options at 12 cents per option (14,234,655) (4,127,715) Exercise of unlisted options at 10 cents per option Exercise of unlisted options at 15 cents per option Expired during the year End of the financial year (f) Movements in performance rights on issue Beginning of the financial year Movements of performance rights during the year - - (3,430,000) (3,430,000) (40,053,130) (2,500,000) 1,500,000 55,787,785 2022 2021 Number of rights 7,327,025 9,850,347 Unlisted performance rights issued, expiring 4 March 2024 1,805,672 1,408,623 Unlisted performance rights vested during the year Unlisted performance rights forfeited during the year End of the financial year Note: Performance rights do not have an exercise price. (g) Ordinary shares - (3,645,753) (1,474,787) (286,192) 7,657,910 7,327,025 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. On 28 February 2020 (ratified by the shareholders on 9 April 2020), the Company entered into a Controlled Placement Agreement (CPA) and placed 18,500,000 shares on 3 March 2020 at nil consideration to Acuity Capital (Collateral Shares) but may at any time cancel the CPA and buy back the Collateral Shares for no consideration. The Collateral Shares are fully paid ordinary shares. (h) Shares issued to suppliers In April 2022, the Company issued 2,500,000 ordinary shares to Goldphyre WA Pty Ltd as settlement of the 2011 tenement sale agreement milestone consideration clause. The shares were valued at the closing price on the date of issue being 8.4 cents each for a total expense of $210,000. 60 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 17. (i) CONTRIBUTED EQUITY (continued) Capital risk management The Group’s objective 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 programs 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 positions of the Group at 30 June 2022 and 30 June 2021 are as follows: Cash and cash equivalents Trade and other receivables Inventory Trade and other payables Lease liabilities – current Provisions – current Working capital (deficit)/position Accounting Policy: Issued capital Ordinary shares are classified as equity. 2022 $ 2021 $ 878,791 7,796,799 472,142 227,206 735,600 52,760 (2,206,021) (5,311,008) (44,116) (82,192) (1,855,167) (309,426) (2,527,165) 2,882,533 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. 18. RESERVES Share-based payment reserve Beginning of the financial year Note 2022 $ 2021 $ 2,146,796 1,646,066 Movements in share-based payment reserve 28(f) (137,169) 500,730 End of the financial year 2,009,627 2,146,796 19. DIVIDENDS No dividends were paid during the financial year. No recommendation for payment of dividends has been made. 61 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 20. (a) RELATED PARTY TRANSACTIONS Parent entity The ultimate parent entity within the Group is Australian Potash Limited. (b) Subsidiaries Interests in subsidiaries are set out in Note 21. (c) Key management personnel compensation Short-term benefits Post-employment benefits Other long-term benefits Termination benefits Share-based payments 2022 $ 1,381,833 108,764 - - 2021 $ 970,586 82,079 - - (108,512) 376,162 1,382,085 1,428,827 Detailed remuneration disclosures are provided in the remuneration report on pages 21 to 29. (d) Transactions and balances with other related parties There were no transactions with other related parties, including key management personnel, during the year. (e) Loans to related parties There were no loans to related parties, including key management personnel, during the year. 21. SUBSIDIARIES The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 2: 2022 % 2021 % Name Country of Incorporation Class of Shares Equity Holding(i) Lake Wells Potash Pty Ltd Lake Wells Potash Holdings Pty Ltd Laverton Downs Project Pty Ltd Lake Wells East Pty Ltd Laverton TC Property Pty Ltd Laverton Training Centre Pty Ltd Australia Australia Australia Australia Australia Australia Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary (i) The proportion of ownership interest is equal to the proportion of voting power held. 100 100 100 100 100 100 100 100 100 - - - 62 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 22. 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: 2022 $ 2021 $ Audit services KPMG – audit and review of financial reports Hall Chadwick WA Audit Pty Ltd – audit and review of financial reports Total remuneration for audit services 55,000 18,333 73,333 - 36,654 36,654 23. CONTINGENCIES There has been no change in contingent liabilities or contingent assets since the last annual reporting date other than in relation to the R&D incentive provision described in Note 16 and the settlement of the tenement sale agreement milestone consideration clause described in Note 17(h). 24. COMMITMENTS 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 Later than five years(i) 2022 $ 2021 $ 4,110,068 3,222,892 13,571,255 12,241,622 37,983,984 37,441,339 55,665,307 52,905,853 (i) Relates to Mining Leases granted for a period of 20 years. 25. EVENTS OCCURRING AFTER THE REPORTING DATE On 27 July 2022, the Company announced a non-renounceable pro-rata entitlement offer (Offer) to raise up to $7,679,637. This Offer was on the basis of one fully paid ordinary share in the Company for every four shares held by eligible shareholders at an issue price of $0.038 per share plus on free attaching option for every two new shares subscribed for. The Offer closed on 19 August 2022 with acceptances from eligible shareholders totaling $4,365,686 before costs, representing 114,886,355 shares and 57,443,347 options. The shortfall is available to be placed within three months of the closing date. No other 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. 63 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 26. (a) CASH FLOW INFORMATION 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 Lease liability finance charges Share-based payments expense Loss on disposal of property, plant and equipment Other Change in operating assets and liabilities 2022 $ 2021 $ (5,579,288) (3,734,289) 170,072 11,694 127,110 17,817 (137,169) 500,730 254 (15,170) 26,061 2,003 Decrease/(increase) in trade and other receivables 459,567 (476,965) Increase in inventory (Decrease)/increase in trade and other payables Increase in provisions Net cash outflow from operating activities (b) Non-cash investing and financing activities (174,446) (251,322) 1,625,958 (52,760) 434,356 125,120 (3,889,850) (3,030,817) In April 2022, the Company issued 2,500,000 ordinary shares to Goldphyre WA Pty Ltd as settlement of the 2011 tenement sale agreement milestone consideration clause. The shares were valued at the closing price on the date of issue being 8.4 cents each for a total expense of $210,000. There were no other non-cash investing and financing activities during the year (2021: $nil). 27. LOSS PER SHARE 2022 $ 2021 $ (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 (5,579,288) (3,734,289) (b) Weighted average number of ordinary shares used in calculating loss per share Number of shares Weighted average number of ordinary shares used as the denominator in calculating basic loss per share 741,702,009 535,323,345 Effects of dilution from: Share options - - Weighted average number of ordinary shares adjusted for the effects of dilution 741,702,009 535,323,345 64 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 27. LOSS PER SHARE (continued) There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of authorisation of these financial statements. (c) Information on the classification of options As the Group has made a loss for the year, all options on issue are considered antidilutive and have not been included in the calculation of diluted earnings per share. Accounting Policy: 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. 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. 28. (a) SHARE-BASED PAYMENTS Director Options The Group has provided benefits to directors of the Company in the form of options constituting share- based payment transactions. No options were granted during the year ended 30 June 2022. In the prior year, 1,500,000 options were granted. Options granted had an exercise price of 17.5 cents per option and the contractual term for the options is 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. Fair value of options granted The weighted average fair value of the options granted during the prior year was 5.3 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 2022 - - - - - 2021 17.5 3 13.5 70.61% 0.18% Historical volatility has been used as the basis for determining expected share price volatility as it is assumed that this is indicative of future trends, which may not eventuate. 65 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 28. (b) SHARE-BASED PAYMENTS (continued) 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 or prior year. 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 current or prior year. (c) Incentive Performance Rights Plan The Group provides benefits to employees and contractors of the Company in the form of performance rights under the Company’s Incentive Performance Rights Plan as approved at the annual general meeting on 18 November 2019, constituting a share-based payment transaction. During the year, 1,805,672 performance rights (2021: 1,408,623) with a $nil exercise price (2021: $nil) and expiry of 2.2 years (2021: 3 years) were granted. The average fair value of the performance rights granted during the year is 7.2 cents (2021: 13.5 cents). Performance rights granted carry no dividend or voting rights. When vested, each performance right is convertible into one ordinary share of the Company with full dividend and voting rights. (d) Summary of Share-Based Payments Set out below are summaries of the share-based payment options granted per (a) and (b): 2022 2021 Number of options Weighted average exercise price (cents) Number of options Weighted average exercise price (cents) Outstanding as at 1 July 2,777,496 19.8 10,637,496 Granted Forfeited Exercised Expired Outstanding as at 30 June Exercisable as at 30 June - - - (1,277,496) 1,500,000 1,500,000 - - - 22.5 17.5 17.5 1,500,000 - (6,860,000) (2,500,000) 2,777,496 2,777,496 15.0 17.5 - 18.0 12.5 19.8 19.8 The weighted average remaining contractual life of share options outstanding at the end of the year was 1.1 years (2021: 1.3 years), and the exercise price is 17.5 cents (2021: 17.5 to 22.5 cents). Set out below are summaries of the share-based payment performance rights granted per (c): 66 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 28. SHARE-BASED PAYMENTS (continued) Outstanding as at 1 July Granted Forfeited Exercised Expired Outstanding as at 30 June Exercisable as at 30 June 2022 2021 Number of performance rights Number of performance rights 7,327,025 1,805,672 9,850,347 1,408,623 (1,474,787) (286,192) - - (3,645,753) - 7,657,910 7,327,025 - - The weighted average remaining contractual life of performance rights outstanding at the end of the year was 1.7 years (2021: 2.7 years). Performance rights have $nil exercise price. The following share-based payment arrangements were in existence during the current and prior years: Number Grant date Expiry date Options 3,430,000 3,430,000 1,250,000 1,250,000 1,277,496 1,500,000 Performance Rights 22 April 2016 22 April 2016 21 April 2021 21 April 2021 30 November 2017 30 November 2020 30 November 2017 30 November 2020 27 December 2018 27 December 2021 25 November 2020 29 July 2023 3,550,906 6,299,441 1,408,623 1,689,772 115,900 18 November 2019 4 March 2024 4 March 2020 4 March 2024 25 November 2020 4 March 2024 7 December 2021 17 January 2022 4 March 2024 4 March 2024 Exercise price (cents) Fair value at grant date (cents) 10.0 15.0 16.0 20.0 22.5 17.5 - - - - - 7.1 6.8 7.1 6.6 0.8 5.3 9.0 9.9 13.5 7.2 7.2 (e) Shares issued to suppliers In April 2022, the Company issued 2,500,000 ordinary shares to Goldphyre WA Pty Ltd as settlement of the 2011 tenement sale agreement milestone consideration clause. The shares were valued at the closing price on the date of issue being 8.4 cents each for a total expense of $210,000. No shares were issued to suppliers during the prior year. (f) Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognised during the year were as follows: 67 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 28. SHARE-BASED PAYMENTS (continued) Performance rights and options included in share-based payments expense (137,169) 497,144 2022 $ 2021 $ Accounting Policy: 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). 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: • • the extent to which the vesting period has expired; and 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. 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. 29. PARENT ENTITY INFORMATION The following information relates to the parent entity, Australian Potash Limited, at 30 June 2022. The information presented here has been prepared using accounting policies consistent with those presented throughout the financial statements. 68 | P a g e Financial Report 30 June 2022 Notes to the Consolidated Financial Statements for the year ended 30 June 2022 (continued) 29. PARENT ENTITY INFORMATION (continued) Current assets Non current assets Total assets Current liabilities Non current liabilities Total liabilities Issued capital Reserves Accumulated losses Total equity Loss for the year Total comprehensive loss for the year 2022 $ 2021 $ 1,567,802 8,585,159 35,845,897 21,113,946 37,413,699 29,699,105 (4,103,139) (5,702,626) (514,350) (35,307) (4,617,489) (5,737,933) 60,491,225 45,704,920 2,009,627 2,146,796 (29,704,642) (23,890,544) 32,796,210 23,961,172 (5,814,098) (3,734,189) (5,814,098) (3,734,189) 69 | P a g e Financial Report 30 June 2022 Directors’ Declaration In the directors’ opinion: (a) the financial statements comprising the 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 and accompanying notes set out on pages 33 to 69 are in accordance with the Corporations Act 2001 (Cth), including: (i) (ii) complying with Accounting Standards, the Corporations Regulations 2001 (Cth) and other mandatory professional reporting requirements; and giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance for the financial period ended on that date; (b) (c) 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 Consolidated Financial Statements. The directors have been given the declarations required by section 295A of the Corporation Act 2001 (Cth). This declaration is made in accordance with a resolution of the directors. Matt Shackleton Managing Director & Chief Executive Officer Perth, 29 September 2022 70 | P a g e Financial Report 30 June 2022 Audit Report 71 | P a g e Financial Report 30 June 2022 Audit Report (continued) 72 | P a g e Financial Report 30 June 2022 Audit Report (continued) 73 | P a g e Financial Report 30 June 2022 Audit Report (continued) 74 | P a g e Financial Report 30 June 2022 Audit Report (continued) 75 | P a g e Financial Report 30 June 2022 Additional ASX Information Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows. The information is current as at 31 August 2022. (a) Distribution of equity securities Analysis of numbers of equity security holders by size of holding: 1 1,001 5,001 - 1,000 - 5,000 - 10,000 10,001 - 100,000 100,001 and over Ordinary Shares # holders # shares % capital 68 144 452 1,849 1,185 3,698 6,220 575,242 3,678,976 77,641,127 841,367,598 932,269,163 0.00 0.06 0.40 8.41 91.13 100.00 There are 839 holders of unmarketable parcels of fully paid ordinary shares (ASX: APC), based on the closing market price of $0.038 on 31 August 2022, representing 6,333,233 shares and amounting to 0.69% of issued capital. (b) On-market buy-back There is no current on-market buy-back. (c) Restricted securities There are Nil restricted securities on issue. (d) Voting rights All fully paid ordinary shares carry one (1) vote per share. Unlisted options or performance rights carry no attaching voting rights. (e) Substantial shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001 (Cth), and the details of their holding at the time of notification, are: Yandal Investments Pty Ltd # shares 43,864,974 % shares 7.83 76 | P a g e Annual Report 2022 (f) Top 20 shareholders The names of the 20 largest holders of quoted fully paid ordinary shares (ASX: APC) are: 1 2 3 4 5 6 7 8 9 10 11 Yandal Investments Pty Ltd Perth Select Seafoods Pty Ltd Bluedale Pty Ltd Mr Geoffrey Donald Coultas Acuity Capital Investment Management Pty Ltd Kassett Pty Ltd Trade Holdings Pty Ltd Cuzinc 2 Pty Ltd Mr Michael Owen Meredith Navigator Australia Ltd Element Au SMSF Pty Ltd 12 Mr William Tannahill Fleming 13 14 15 Cen Pty Ltd Argento Fodera Pty Ltd BNP Paribas Noms Pty Ltd 16 Mr Rodney James Kevan 17 Citicorp Nominees Pty Ltd Mr Michael Owen Meredith & Mrs Tracy Lee Meredith Tangee Pty Ltd Fakuba Pty Ltd 18 19 20 Fully Paid Ordinary Shares # shares % shares 50,722,300 21,000,000 19,375,000 19,000,000 18,500,000 13,211,034 13,000,000 9,166,048 8,825,577 7,812,500 7,689,866 7,400,000 7,125,000 7,000,000 6,913,371 6,500,000 6,475,065 6,284,122 6,150,000 6,000,000 5.49 2.27 2.10 2.06 2.00 1.43 1.41 0.99 0.96 0.85 0.83 0.80 0.77 0.76 0.75 0.70 0.70 0.68 0.67 0.65 248,149,883 26.88 (g) Unquoted securities Holders of 20% or more of the class Class # securities # holders Holder name/s # securities Unlisted $0.175 options expiring 29/07/2023 Unlisted $0.06 options expiring 26/08/2023 1,500,000 2 EM Lambert / Tooradin Park Super Fund 750,000/ 750,000 57,443,347 1,024 Performance Rights – Tranche B Performance Rights – Tranche C 3,811,196 3,846,714 14 14 77 | P a g e Annual Report 2022 (h) Tenement Schedule APC’s tenement holdings as at 31 August 2022: Area Tenement Interest E38/1903 E38/2113 E38/2114 E38/2505 E38/2901 E38/2988 E38/3018 E38/3021 E38/3028 E38/3039 E38/3224 E38/3225 E38/3226 E38/3270 E38/2724 E38/3014 E38/3132 E37/1388 E37/1389 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Lake Wells Laverton Downs7 Darlot Tenement E38/3423 ELA38/36376 LA38/3507 L38/3517 L38/3567 LA38/3577 LA38/3597 LA38/3607 M38/1274 M38/1275 M38/1276 M38/1287 M38/1288 M38/1289 E38/3402 E38/3403 E38/3404 E37/1390 Interest 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 6 Tenements held by Lake Wells Potash Pty Ltd, a wholly owned subsidiary of APC 7 Tenements held by Laverton Downs Pty Ltd, a wholly owned subsidiary of APC 78 | P a g e Annual Report 2022 

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