DANAKALI LTD
ABN 56 097 904 302
AUDITED FINANCIAL REPORT
FOR THE YEAR ENDED
31 DECEMBER 2023
Corporate Information
Directors
Seamus Cornelius
Paul Donaldson
Zhang Jing
Taiwo Adeniji
(Executive Chairman)
(Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
Executive Management
Joint Company Secretary
Greg MacPherson
Rod McEachern
(Chief Financial Officer)
(Chief Operating Officer)
Catherine Grant-Edwards
Melissa Chapman
Registered Office and Principal Place of Business
Level 1, 2A / 300 Fitzgerald Street
NORTH PERTH WA 6006
Telephone: +61 (0)8 6266 8368
Bank
Bendigo Bank
80 Grenfell Street
Adelaide SA 5000
Auditors
Hall Chadwick
283 Rokeby Road
SUBIACO WA 6000
Share Register (Australia)
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
PERTH WA 6000
Telephone: 1300 850 505 (Inside Australia)
Telephone: +61 (0)3 9415 4000 (Outside Australia)
Facsimile: +61 (0)3 9473 2500
www.computershare.com
Website
www.danakali.com
Stock Exchange Listing
Danakali Limited Shares were suspended from quotation on the Australian Stock Exchange at the close of trading 3
April 2023 (ASX:DNK).
American Depository Receipts
The Bank of New York Mellon sponsored DNK's Level 1 American Depository Receipts Program (ADR) in the United
States of America.
The Deposit Agreement was terminated on 12 July 2023.
Under the terms of the Deposit Agreement, owners and beneficial owners have until the 15 July 2024, to surrender
their Danakali ADRs for delivery of the underlying shares. Subsequent to 15 July 2024, under the terms of the Deposit
Agreement, the Depositary may attempt to sell the underlying shares. If the Depositary has sold such shares, you
must surrender your ADRs to obtain payment of the sale proceeds, net of the expenses of sale, any applicable U.S. or
local taxes or government charges and a cancellation fee.
ADR Holders seeking information on their shareholding should contact: tatyana.vesselovskaya@bnymellon.com OR
LONDON
Mark Lewis
mark.lewis@bnymellon.com
Telephone +44 207 163 7407
NEW YORK
Rick Maehr
richard.maehr@bnymellon.com
Telephone +1 212 815 2275
DANAKALI LIMITED ABN 56 097 904 302
1
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
Executive Chairman’s Letter
Directors' Report
Auditors’ Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor’s Report
ASX Additional Information
Page
3
4
21
22
23
24
25
26
46
47
51
DANAKALI LIMITED ABN 56 097 904 302
2
Executive Chairman’s Letter
Dear fellow shareholders
On behalf of your Board, it’s my pleasure to present the 2023 Annual Financial Statements of Danakali
Limited.
2023 was a transformative year for Danakali with the successful sale of our interest in the Colluli Potash
Project for approximately US$121 million net of taxes.
Shareholders will recall that we signed the definitive sale documents in January 2023 and received the first
tranche of the sale proceeds in early April 2023. The second and final tranche of the sale proceeds was
received, on time in September 2023. Shareholders approved a return of capital in November 2023 and in
early January 2024 we distributed approximately A$155m to shareholders (42 cents per share) by way of a
capital return and special dividend.
The result achieved for investors in 2023 would not have been possible without the excellent support we
received from shareholders and other key stakeholders including the Eritrean National Mining Corporation
(“ENAMCO”) and the Government of Eritrea, in particular the Ministry of Energy and Mines.
Your board is proud to have returned 42 cents per share to shareholders. Generating strong returns for
shareholders while maintaining the strongest governance principles is what every public company board
should be about. We’re determined to continue doing this and to delivering a fresh wave of value for our
investors.
We are well aware many other exploration and development companies listed on the ASX may have applied
the proceeds of the Colluli sale differently and retained most if not all of the funds. The Danakali Board
believed the vast majority of funds should be repatriated to shareholders. We have retained sufficient funds to
satisfy the residual obligations arising from the sale of the Colluli Potash Project and take Danakali in a fresh
direction with a new portfolio of exciting assets.
Danakali’s focus now is on satisfying the ASX requirements for relisting as soon as possible to restore
liquidity and to provide further opportunities to deliver value for our shareholders. We have been engaging
consistently with the ASX with support from our advisors while at the same time conducting due diligence on
a wide range of potentially suitable projects.
Shortly, we will formally submit our relisting proposal to the ASX which will see us return to the boards with a
select group of attractive mineral exploration and development projects. Be assured, we will update
shareholders on relisting progress and project details as soon as possible.
2023 was a great year for Danakali but not without its frustrations due to the ASX suspension, and I am
grateful for the continued strong support from our shareholders and the hard work of our small team of
employees and advisors.
We look forward to the future of Danakali with great optimism and thank you for coming with us on that
journey.
Yours sincerely
Seamus Cornelius
Executive Chairman
Danakali Limited
DANAKALI LIMITED ABN 56 097 904 302
3
Directors’ Report
The directors present their report together with the financial statements of the consolidated entity being, Danakali Limited
(Danakali or the Company) and its controlled entities (the Group) for the financial year ended 31 December 2023.
DIRECTORS
The names and details of the Company’s directors in office during the financial period and until the date of this report are
as follows. Where applicable, all current and former directorships held in listed public companies over the last three years
have been detailed below. Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities:
Seamus Ian Cornelius
Executive Chairman, LLB, LLM, initially appointed Non-Executive Chairman on 15 July 2013, transitioned to Executive
Chairman on 14 June 2018, resumed Non-Executive Chairman role on 25 June 2019, and transitioned to Executive
Chairman on 26 February 2021.
Mr Cornelius has extensive experience as a corporate lawyer and former partner of one of Australia’s leading international
law firms. He has a high degree of expertise in cross-border transactions, particularly in the resources and finance sectors.
Mr Cornelius was appointed as Non-Executive Chairman of the Company on 15 July 2013 and acted in the role of Executive
Chairman from 14 June 2018 to 25 June 2019. As announced on 26 February 2021, Mr Cornelius was re-appointed as
Executive Chairman.
Mr Cornelius is currently the Non-Executive Chairman of Buxton Resources Ltd (appointed 29 November 2010) and
Duketon Mining Ltd (appointed 8 February 2013). Mr Cornelius was previously Non-Executive Chairman of Element 25
Limited (appointed 30 June 2011 and resigned 28 November 2023) and was previously a Non-Executive Director of First
Tin PLC (appointed 8 April 2022 and resigned 6 September 2023) and South Harz Potash Limited (appointed 21 August
2023 and resigned 10 March 2024).
Special Responsibilities:
During the year Mr Cornelius was a member of the Audit and Risk Committee and a member of the Remuneration and
Nomination Committee.
Paul Michael Donaldson
Independent Non-Executive Director, Master’s Degree - Mining Engineering, Master’s Degree - Business and Technology,
BEng Chemical (Honours, University Medal), Assoc Dip. Applied Science (Metallurgy), appointed 11 October 2021
Over 30 years’ experience in senior management at BHP, Danakali and Pacific National. Mr Donaldson held a series of
senior management roles spanning over 20 years with BHP Billiton where he managed large scale open-cut mining
operations, headed the BHP Carbon Steel Materials Technical Marketing Team, managed the Port Hedland iron ore facility,
as well as key roles in product and infrastructure planning across large scale supply chains.
He also has extensive experience in high level business improvement and logistics from base metal operations and a high
degree of integrated supply chain management, technical operational management and frontline leadership experience in
the steel industry.
Mr. Donaldson, in his previous role as the Company’s CEO and Managing Director, redefined the product and development
path and process for the Project, overseeing the pre-feasibility, definitive feasibility and FEED study phases.
Special Responsibilities:
During the year Mr Donaldson was Chairman of the Audit and Risk Committee and on 15 June 2023 transitioned from his
role as a member to being Chairman of the Remuneration and Nomination Committee.
Zhang Jing
Non-Executive Director, M.Sc., appointed 17 June 2016
Ms Zhang has more than 15 years of international trading and business development experience in China and previously
held investment and project managerial roles in public listed companies.
Ms Zhang holds a Master’s degree in International Consultancy and Accounting from the university of Reading in the United
Kingdom.
Special Responsibilities:
None.
DANAKALI LIMITED ABN 56 097 904 302
4
Directors’ Report
Taiwo Adeniji
Non-Executive Director, HCIB, appointed 23 April 2020
Mr Adeniji is Senior Director for Investment Operations & Execution at AFC, where he has responsibility, amongst other
things, for the institution’s investments in oil & gas, and mining projects. Taiwo has had over 26 years of post-graduate and
extensive professional and managerial experience in several areas of banking and finance. He has deep knowledge and
extensive experience with infrastructure and mining policy issues, as well as the analysis, evaluation and financing of
infrastructure and mining projects. Mr Adeniji has supervised AFC’s investments in mining projects that spanned different
products, including gold, copper, bauxite, and iron ore, as well as in different geographies, including countries in West,
North and Central Africa. From 1994 to 2007, Mr Adeniji worked with the African Development Bank, focussing largely on
infrastructure investments and financial sector development.
Mr Adeniji’s academic background is in economics and finance. He is an Honorary Senior Member (HCIB) of the Chartered
Institute of Bankers of Nigeria.
Special Responsibilities:
None.
Samaila Zubairu
Non-Executive Director, FCA, appointed 23 April 2020, resigned 15 June 2023
Mr Zubairu is African Finance Corporation’s (AFC) President and Chief Executive Officer. Previously, he was the CEO of
Africapital Management Limited, where he established a joint venture with Old Mutual’s African Infrastructure Investment
Managers to develop a fund for infrastructure private equity across West Africa, and Chief Financial Officer for Dangote
Cement Plc. Prior to that, he was the Treasurer for the Dangote Group during its transformation from a trading company to
an industrial conglomerate. He has undertaken investments of over US$3 billion, financing green-field project finance,
acquisitions, corporate transformation, privatisation and equity capital market transactions.
Mr Zubairu is an Eisenhower Fellow and sits on the Eisenhower Fellowship’s Global Network Council and the President’s
Advisory Council. He holds several non-executive board positions including being the advisory board member for KSE
Africa, a leading operations and management provider of captive power plants in the mining sectors in Botswana and
Nigeria. He is also a Fellow of the Institute of Chartered Accountants of Nigeria (FCA) and holds a BSc in Accounting from
Ahmadu Bello University, Nigeria.
Special Responsibilities:
None.
Neil Gregson
Independent Non-Executive Director, Qualified Mining Engineer, appointed 3 August 2020, resigned 15 June 2023
Mr Gregson is an experienced resource sector investor having spent over 30 years managing investments predominantly
in mining and energy companies.
Mr Gregson’s previous roles included portfolio manager in J.P. Morgan Asset Management’s Global Equities Team based
in London and responsible for global natural resource mandates. Prior investment roles were with CQS Asset Management
as a Senior Portfolio Manager, with a focus on the natural resource sector and Credit Suisse Asset Management as Head
of Emerging Markets and related sector funds.
Mr Gregson began his career holding various positions at mining companies, including a role as a mining investment analyst
at South African company Gold Fields. He is a qualified mining engineer.
Mr Gregson is currently a Director of Uranium Royalty Corp. (appointed 14 October 2020), Atalaya Mining Plc (appointed
10 February 2021) and Meridian Mining Plc (appointed 10 October 2023).
Special Responsibilities:
During the period up until the date of his resignation, Mr Gregson was Chairman of the Remuneration and Nomination
Committee.
DANAKALI LIMITED ABN 56 097 904 302
5
Directors’ Report
COMPANY SECRETARY
Catherine Grant-Edwards and Melissa Chapman
Appointed Joint Company Secretary 7 July 2017
Ms Melissa Chapman (Certified Practicing Accountant (CPA), AGIA/ACIS, GAICD) and Ms Catherine Grant-Edwards
(Chartered Accountant (CA)) were appointed as Joint Company Secretary on 7 July 2017. Ms Chapman and Ms Grant-
Edwards are directors of Bellatrix Corporate Pty Ltd (Bellatrix), a company that provides company secretarial and
accounting services to a number of ASX listed companies. Between them, Ms Chapman and Ms Grant-Edwards have over
40 years’ experience in the provision of accounting, finance and company secretarial services to public listed resource and
private companies in Australia and the UK, and in the field of public practice external audit.
INTERESTS IN SHARES, OPTIONS AND PERFORMANCE RIGHTS OF THE COMPANY
As at the date of this report, the interests of the directors in the shares, options and performance rights on issue by Danakali
Limited were:
Director
S Cornelius
Paul Donaldson
Ordinary
Shares
14,741,126
1,145,693
Options over
Ordinary Shares
2,000,000
-
PRINCIPAL ACTIVITIES
The principal activity of the Group during the year ended 31 December 2023 was the disposal of its investment in CMSC
in Eritrea, East Africa.
The company is now seeking new opportunities in line with its vision to become a leading exploration and development
company in Australia and Africa, driving sustainable growth, technological innovation, and responsible resource
management.
CORPORATE STRUCTURE
Danakali Limited is a company limited by shares that is incorporated and domiciled in Australia.
REVIEW OF OPERATIONS
Disposal of Colluli Mining Share Company
On the 29 March 2023, the company disposed its interest in CMSC to Sichuan Road and Bridge Group Co., Ltd. (SRBG)
for US$166 million in upfront cash and deferred payments. The equity consideration amounted to US$135 million, and the
loan receivable amounted to US$31 million. Net of all government taxes, Danakali received US$105 million (AUD$156
million) on the 29 March 2023, with a second tranche payment of US$16 million received on 29 September 2023 (DNK
Announcement 29 September 2023).
Distribution to Shareholders
The Board announced a distribution of approximately 90% of the net proceeds from the sale of CMSC to the shareholders
(DNK Announcement 31 March 2023). At the shareholders general meeting held on 24 November 2023, the shareholders
approved a total return of capital of $100,466,735 and the Board approved a special dividend of $54,233,691 to
shareholders as at 5:00pm (AWST) on 2 January 2024 (Record Date). The total distribution amounted to $154,700,426
(DNK Announcement 24 November 2023).
The distribution was paid to shareholders on the 8 January 2024.
ASX Suspension
The Company’s securities were suspended from quotation on the Australian Stock Exchange (ASX) following the disposal
of CMSC. The ASX determined that Danakali’s operations were no longer adequate to warrant the continued quotation of
its securities. The suspension will continue until Danakali is able to demonstrate compliance with Listing Rule 12.1 of the
listing rules (DNK Announcement 3 April 2023).
The Company is engaging with the ASX with regards to its suspension and continues with its corporate development
activities to acquire and develop new business opportunities to meet the requirements of Listing Rule 12.1.
Corporate Development
Danakali continues with its corporate development activities to investigate suitable projects to grow the company in line
with its vision of being a leading exploration and development company in Australia and Africa’s critical resources sectors,
driving sustainable growth, technological innovation, and responsible resource management.
DANAKALI LIMITED ABN 56 097 904 302
6
Directors’ Report
The corporate development strategy is fully aligned with meeting the requirements of Listing Rule 12.1 to return to official
quotation upon application to ASX.
CORPORATE
Board and Management Changes
On 15 June 2023, Neil Gregson and Samaila Zubairu resigned as directors of the company following the successful sale
of CMSC (DNK Announcement 16 June 2023).
There were no other changes to the Board or management during the period. In the future, the composition and size of the
Board will be determined by the Company’s operations and the skills and experience needed to protect and enhance
shareholder value.
Shares
There were no new shares issued during the year.
At 31 December 2023, there were a total of 368,334,346 fully paid ordinary shares on issue.
Options
There were no unlisted options exercised during the period.
The following unlisted options expired during the period:
▪
▪
▪
500,000 unlisted options at $0.527 expired 29 January 2023
250,000 unlisted options at $0.780 expired 24 March 2023
200,000 unlisted options at $0.664 expired 8 July 2023
The shareholders approved the following classes of options to be cancelled (DNK Announcement 24 November 2023):
▪
▪
4,000,000 unlisted options at $0.450 were cancelled for consideration of $0.075 per option
250,000 unlisted options at $0.501 were cancelled for consideration of $0.010 per option
As at 31 December 2023, there was a total of 10,000,000 unlisted options on issue $0.640 which expire on 30 July 2025.
In accordance with Listing Rule 7.22.3, the exercise price of each option was reduced by the equivalent of the return of
capital per share made to shareholders on the 8 January 2024. The options strike price was reduced by $0.273 per option
to $0.367 (DNK Announcement 19 January 2024).
Performance Rights
There were no performance rights vested and converted into shares during the period.
The following performance rights lapsed during the period:
▪
▪
280,000 Class 1 performance rights
80,000 Class 5 performance rights
As at 31 December 2023, there was no performance rights outstanding.
Change of Auditors
Hall Chadwick were appointed as auditors’ effective 31 May 2023 (DNK Announcement 13 June 2023).
Annual General Meeting
The Company’s annual general meeting was held on 31 May 2023 (AGM). For more information, refer to the Notice of
AGM and Results available via the Company’s website.
General Meeting
The Company held a general meeting on 24 November 2023 (GM). For more information, refer to the Notice of GM and
Results available via the Company’s website.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Disposal of Colluli Mining Share Company
Refer to review of operations above for details (DNK Announcement 30 March 2023).
Suspension from ASX
Refer to review of operations above for details (DNK Announcement 3 April 2023).
Other
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.
DANAKALI LIMITED ABN 56 097 904 302
7
Directors’ Report
EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
At the shareholders meeting held on 24 November 2023, the shareholders approved a total return of capital of $100,466,735
and the Board approved a special dividend of $54,233,691 to shareholders as at 5:00pm (AWST) on 2 January 2024
(Record Date). The total distribution amounted to $154,700,426 and was paid on 8 January 2024.
As at 31 December 2023, there was a total of 10,000,000 unlisted options on issue $0.640 expiring 30 July 2025. In
accordance with Listing Rule 7.22.3, the exercise price of each option was reduced by the equivalent of the return of capital
per share made to shareholders on the 8 January 2024. The options strike price was reduced by $0.273 per option to
$0.367 (DNK Announcement 19 January 2024).
On 15 February 2024 the Australian Taxation Office (ATO) published a Class Ruling (CR 2024/8) in relation to Danakali’s
distribution to shareholders which confirmed the Capital Return of 27.3 cents per share and Special dividend of 14.7 cents
per share which was paid on 8 January 2024.
There are no other matters or circumstances that 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 years.
ACTIVITIES PLANNED FOR 2024
The following key activities are planned over the coming year:
• Corporate development activities to acquire and develop new business opportunities.
• Engagement with the ASX and development activities to comply with the requirements of Listing Rule 12.1 and
seek to be relisted.
• Ongoing compliance costs to maintain our license to operate.
FINANCE REVIEW
The Group recorded a net profit of $133,787,133 (discontinued operations - $132,271,689) for the financial year to
31 December 2023 compared to a loss of $3,502,021 (discontinued operations (profit) - $998,428) for the financial year to
31 December 2022. As the Group has no material revenue streams, the net profit after tax primarily reflect the profit made
on the disposal of the Colluli Project.
Total consolidated cash on hand at the end of the financial year was $193,109,430 (31 December 2022: $14,873,027).
Operating activities utilised $4,621,269 (31 December 2022: $4,905,062 utilised) of net cash flows. Net cash inflow from
investing activities of $183,187,321 (31 December 2022: $3,055,601 outflows) was predominantly made in relation to:
• Disposal of the Colluli Mining Share Company
•
• Capital restructure and proposed cash distribution to Shareholders.
Identification of new projects & growth opportunities.
Net cash outflow from financing activities amounted to $302,500 during the financial year ended 31 December 2023 (31
December 2022: Nil), for the cancellation of options for consideration.
DIVIDENDS & CAPITAL RETURN
No dividends were paid during the financial year to 31 December 2023.
At the shareholders meeting held on 24 November 2023, the shareholders approved a total return of capital of $100,466,735
and the Board approved a special dividend of $54,233,691 to shareholders as at 5:00pm (AWST) on 2 January 2024
(Record Date).
The total distribution amounted to $154,700,426 and was paid on 8 January 2024.
DANAKALI LIMITED ABN 56 097 904 302
8
Directors’ Report
DIRECTORS’ MEETINGS
The number of meetings of the Company’s Board of Directors and permanent Board sub-committees held during the
financial year ended 31 December 2023 and the number of meetings attended by each Director were:
Board of Directors
Audit and Risk Committee Remuneration and Nomination
Committee
Total meetings
held / eligible
to attend
Total
attended
Total meetings
held / eligible to
attend
Total
attended
Total meetings
held / eligible to
attend
Total
attended
12
12
12
12
7
7
10
12
5
5
4
-
5
5
-
-
-
-
5
5
-
-
-
-
1
1
-
-
-
-
1
1
-
-
-
-
Director
S Cornelius
P Donaldson
J Zhang
T Adeniji
N Gregson1
S Zubairu1
1Resigned 15 June 2023.
OPTIONS
At the date of this report, unissued ordinary shares in respect of which options are outstanding are as follows:
Balance at the beginning of the year
Movements of share options during the financial year ended 31 December 2023:
Expired, exercisable at $0.664 on or before 8 July 20231
Expired, exercisable at $0.527 on or before 29 January 2023
Expired, exercisable at $0.780 on or before 24 March 2023
Cancelled, exercisable at $0.501 on or before 3 December 2023
Cancelled, exercisable at $0.450 on or before 31 December 2024
Share options outstanding at 31 December 2023
Movements since the financial year ended 31 December 2023:
Total number of share options outstanding as at the date of this report
Expiry date
30 July 2025
30 July 2025
Exercise price
$0.3671
$0.3671
Total number of share options outstanding at the date of this report
Number of options
15,200,000
(200,000)
(500,000)
(250,000)
(250,000)
(4,000,000)
10,000,000
-
10,000,000
Number of options
2,000,000
8,000,000
10,000,000
1 In accordance with Listing Rule 7.22.3, the exercise price of each option was reduced by the equivalent of the return of
capital per share made to shareholders on the 8 January 2024. The options strike price was reduced by $0.273 per option
to $0.367 (DNK Announcement 19 January 2024).
There are no participating rights or entitlements inherent in these options and holders of the options will not be entitled to
participate in new issues of capital that may be offered to shareholders during the currency of the option. No option holder
has any right under the option to participate in any share issue of the Company.
No options were granted to KMP of the Company since the end of the financial year.
PERFORMANCE RIGHTS
Details of performance rights over unissued shares in Danakali Ltd as at the date of this report are set out below:
Balance at the beginning of the year
Movements of performance rights during the financial year ended 31 December 2023:
Lapsed (a)
Performance rights outstanding at 31 December 2023
Movements since the financial year ended 31 December 2023:
Total number of performance rights as at the date of this report
Number of rights
360,000
(360,000)
-
-
-
No performance rights holder has any right to participate in any other share issue of the Company or any other entity.
DANAKALI LIMITED ABN 56 097 904 302
9
Directors’ Report
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Indemnification
An indemnity agreement has been entered into with each of the directors, company secretary and Key Management
Personnel of the Company named earlier in this report. Under the agreements, the Company has agreed to indemnify those
officers against any claim or for any expense or cost which may arise as a result of work performed in their respective
capacities to the extent permitted by law. There is no monetary limit to the extent of this indemnity.
Insurance
During the period, the Company paid an insurance premium in respect of Directors’ and Officers’ insurance. The premiums
relate to costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and
whatever their outcome, and other liabilities that may arise from their position, with the exception of conduct involving a
wilful breach of duty or improper use of information or position to gain a personal advantage. Premiums totalling $305,515
(2022: $376,872) were paid in respect of directors’ and officers’ liability cover. The insurance policies outlined above do not
contain details of the premiums paid in respect of individual officers of the Company.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to indemnify its auditors, Hall Chadwick, as part of the terms of
its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No
payment has been made to indemnify Hall Chadwick during or since the financial year.
NON-AUDIT SERVICES
There were no non-audit services provided during the year.
All non-audit services provided would be subject to the corporate governance procedures adopted by the Company and
would be reviewed by the Board to ensure they do not impact the integrity and objectivity of the auditor; and the non-audit
services provided would not undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants (including Independence Standards), as they would not involve reviewing or
auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an
advocate for the Company or jointly sharing risks and rewards.
CORPORATE GOVERNANCE
The Company’s corporate governance statement can be found at the following URL: https://danakali.com.au/about-us/
RISK MANAGEMENT
The Company has established a Risk Management Policy which outlines the Board’s expectations in relation to risk
management, responsibilities, risk management objectives, and the principles of its risk management framework.
The Board, through the Audit and Risk Committee is responsible for overseeing the establishment and implementation of
effective risk management and internal control systems to manage the Company’s material business risks and for reviewing
and monitoring the Company’s application of those systems.
The Audit and Risk Committee continues to work closely with management to assess, monitor and review business risks
and to carry out assessments of internal controls and processes for improvement opportunities. In support of this, the
Committee receives reports from management on new and emerging risks and related controls and mitigation measures
that management have implemented.
A summary of the material business risks of the Company is set out in the below table.
RISK
MITIGATION / CONTROL
Financial Risks
Operational risk could lead to financial loss due to a
failure of internal controls within the company,
technological failures, mismanagement, human error, or
lack of employee training.
The Company has implemented appropriate capital,
financial and treasury management processes and
procedures to monitor and manage its cash resources.
DANAKALI LIMITED ABN 56 097 904 302
10
Directors’ Report
Compliance Risks
ASX continue to determine that Danakali’s operations are
no longer adequate to warrant the continued quotation of
its securities and therefore in breach of Listing Rule 12.1.
The allocation of distribution to shareholders between
capital and dividends is not in agreement with the ATO
class ruling.
The Company is actively engaging with the ASX with
regards to its suspension and continues to engage with it
on the company’s corporate development activities to
acquire and develop new business opportunities to meet
the requirements of Listing Rule 12.1.
On 15 February 2024 the Australian Taxation Office (ATO)
published a Class Ruling (CR 2024/8) in relation to
Danakali’s distribution to shareholders which confirmed
the Capital Return of 27.3 cents per share and Special
dividend of 14.7 cents per share which was paid on 8
January 2024.
Operation Risks
New business opportunity adversely affects the Groups
performance.
The Company has in place appropriate merger and
acquisition processes and procedures to engage and
assess new business opportunities.
The Group is reliant on several key personnel. The loss
of one or more of its key personnel could have an
adverse impact on the business of the Group
The Company has developed succession plans to reduce
the exposure to the loss of any key personnel. In
addition, incentive plans have been implemented.
Health & Safety
Health event that could impact the employee wellbeing or
disrupt business continuity.
The Company has developed a business continuity plan
in the event of a business interruption event and
developed various controls to limit the impact of a
Pandemic.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility
on behalf of the Company for all or any part of those proceedings.
No proceedings have been brought or intervened in or on behalf of the Company with leave of the Court under section 237
of the Corporations Act 2001.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
separately in this report.
REMUNERATION REPORT (AUDITED)
The Remuneration Report outlines the director and executive remuneration arrangements of the Group in accordance with
the requirements of the Corporations Act 2001 (Cth) and its Regulations. For the purposes of this report, Key Management
Personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and
controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of
the Company. For the purposes of this report, the term ‘Executive’ includes the Executive Chairman, Chief Operating Officer
and Chief Financial Officer of the Group.
The KMP of Danakali Ltd and the Group during the financial year to 31 December 2023 were:
Directors
S Cornelius
P Donaldson
J Zhang
T Adeniji
S Zubairu
N Gregson
Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (resigned 15 June 2023)
Non-Executive Director (resigned 15 June 2023)
Non-Director KMP
G MacPherson
R McEachern
Chief Financial Officer
Chief Operations Officer
All of the above persons were KMP during the financial year to 31 December 2023 unless otherwise stated. The information
provided in this remuneration report has been audited as required by section 308 (3C) of the Corporations Act 2001.
DANAKALI LIMITED ABN 56 097 904 302
11
Directors’ Report
Key Elements of KMP Remuneration Strategy
The remuneration strategy for Danakali Ltd is designed to provide rewards that achieve the following:
•
•
•
•
•
•
Attract, retain, motivate and reward KMP;
Reward KMP for Company and individual performance against targets set by reference to appropriate
benchmarks;
Link reward with the strategic goals and performance of the Company;
Provide remuneration that is competitive by market standards;
Align executive interests with those of the Company’s shareholders; and
Comply with applicable legal requirements and appropriate standards of governance.
The Company is satisfied that its remuneration framework reflects current business needs, shareholder views and
contemporary market practice and is appropriate to attract, motivate, retain and reward employees.
A summary of the key elements of the remuneration arrangements during the period is as follows:
Link to
Performance
Executive performance and
remuneration packages are
reviewed by the Board and
Remuneration and
Nomination Committee.
The review process
includes consideration of
the individual’s
performance in addition to
the overall performance of
the Group.
Award of STI linked directly
to achievement of company
and individual KPI’s and
performance targets.
Award of LTI linked directly
to achievement of strategic
Company objectives.
Remuneration
Component
Fixed Remuneration
Item
Purpose
• Base salary
• Superannuation
contributions
Provide competitive
remuneration with
reference to the role and
responsibilities, market and
experience, to attract high
calibre people.
Performance Based
Short Term Incentive (STI)
• Cash bonus
• Options / rights
Performance Based:
Long Term Incentive (LTI)
• Shares
• Options
• Performance Rights
Provide reward to KMP for
the achievement of
individual and Group
performance targets linked
to the Company’s short-
term goals and strategic
objectives.
Provide reward to KMP for
their continued service and
their contribution to
achieving corporate
objectives set by the Board
to ensure the long-term
growth of the Company.
The Remuneration Report has been set out under the following headings:
a) Decision Making Authority for Remuneration
b) Principles Used to Determine the Nature and Amount of Remuneration
c) Voting and Comments Made at the Last Annual General Meeting
d) Details of Remuneration
e) Service Agreements
f) Details of Share Based Compensation
g) Equity Instruments Held by KMP
h)
i) Other Transactions with KMP
j) Additional Information
Loans to KMP
a) Decision Making Authority for Remuneration
The Company’s remuneration policy and strategies are overseen by the Remuneration and Nomination Committee on
behalf of the Board. The Remuneration and Nomination Committee is responsible for making recommendations to the
Board on all aspects of remuneration arrangements for KMP including:
•
•
•
•
•
the Company’s remuneration policy and framework;
the remuneration arrangements for the Chief Executive Officer, Executive Chairman and other KMP;
the terms and conditions of long-term incentives and short-term incentives for the Chief Executive Officer,
Executive Chairman and other KMP;
the terms and conditions of employee incentive schemes; and
the appropriate remuneration to be paid to non-executive Directors.
DANAKALI LIMITED ABN 56 097 904 302
12
Directors’ Report
The Remuneration and Nomination Committee Charter is approved by the Board and is published on the Company’s
website. Remuneration levels of the Directors and KMP are set by reference to other similar sized mining and development
companies with similar risk profiles and are set to attract and retain KMP capable of managing the Group’s operations.
Remuneration levels for Executives are determined by the Board based upon recommendations from the Remuneration
and Nomination Committee. Remuneration of non-executive directors is determined by the Board within the maximum
levels approved by the shareholders from time to time.
b) Principles Used to Determine the Nature and Amount of Remuneration
The Company’s remuneration practices are designed to attract, retain, motivate and reward high calibre people capable of
delivering the strategic objectives of the Company. The Company’s KMP remuneration framework aligns their remuneration
with the achievement of strategic objectives and the creation of value for shareholders and conforms with market practice
for delivery of reward.
The Remuneration and Nomination Committee ensures that the remuneration of KMP is competitive and reasonable,
acceptable to shareholders and aligns remuneration with performance. The structure and level of remuneration for KMP is
conducted annually by the Remuneration and Nomination Committee relative to the Company’s circumstances, size, nature
of business and performance.
Remuneration of Non-Executive Directors
Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of the
directors. Non-executive directors’ fees and payments are reviewed annually by the Board. The Board at times receives
advice from independent remuneration consultants to ensure non-executive Directors fees and payments are appropriate
and in line with the market. No advice was received during the period.
The general principles of non-executive Directors’ compensation are:
•
•
Non-executive Directors are paid a base fee prior to any statutory superannuation payments;
Additional fees are paid to Directors who serve on the board sub-committees; and
Adjustments may be made in the event that a specific non-executive Director’s contribution warrants an
adjustment. Such adjustments are at the recommendation of the board.
Fees for the non-executive directors are determined within an aggregate directors’ fee pool limit of $500,000 as approved
by shareholders on 27 May 2019.
Remuneration of Executive Chairman
Executive Chairman’s fees are determined independently to the fees of non-executive directors based on comparative roles
in the external market and the specific requirements that the Company has of the Chairman.
The Executive Chairman is not present at any of the discussions relating to the determination of his own remuneration.
Remuneration of Executives
The Company’s remuneration and reward framework is designed to ensure reward structures are aligned with shareholders’
interest by:
•
•
•
•
Being market competitive to attract and retain high calibre individuals;
Rewarding high individual performance,
Recognising the contribution of each executive to the contributed growth and success of the Company, and
Ensuring that long term incentives are linked to shareholder value.
To achieve these objectives, the remuneration of executive may comprise a fixed salary component and an ‘at risk’ variable
component linked to performance of the individual and the Company as a whole. Fixed remuneration comprises base
salary, superannuation contributions and other defined benefits. ‘At risk’ variable remuneration comprises both short term
and long-term incentives.
The remuneration and reward framework for executive may consist of the following areas:
i)
ii)
iii)
Fixed Remuneration,
Variable Short-Term Incentives,
Variable Long-Term Incentives.
The combination of these would comprise the executive’s total remuneration.
i)
Fixed Remuneration
The fixed remuneration for each senior executive is influenced by the nature and responsibilities of each role and
knowledge, skills and experience required for each position. Fixed remuneration provides a base level of
remuneration which is market competitive and comprises a base salary and statutory superannuation. It is structured
as a total employment cost package, which may be delivered as a combination of cash and prescribed non-financial
benefits at the executives’ discretion.
Executives are offered a competitive base salary that comprises the fixed component of pay and rewards. External
remuneration consultants may provide analysis and advice to ensure base pay is set to reflect the market for a
comparable role. External advice was taken this period and the recommendations have been actioned. Base salary
DANAKALI LIMITED ABN 56 097 904 302
13
Directors’ Report
for executives is reviewed periodically to ensure the executives’ pay is competitive with the market. The pay of
executives is also reviewed on promotion. There is no guaranteed pay increase included in any executive’s contract.
ii)
Variable Remuneration – Short Term Incentives (STI)
The Danakali Ltd Short-Term Incentive Scheme applies to executives in the Company and is designed to link any
STI payment to shareholder value, with share price usually being used as the overarching performance metric. The
Board has the discretion to reduce or suspend any bonus payments where Company circumstances render it
appropriate.
iii)
Variable Remuneration – Long Term Incentives (LTI)
Details of options issued to executives in the previous years can be found in section f(i) below.
Voting and Comments Made at the Last Annual General Meeting
The Company received 71.27% of votes in favour of its Remuneration Report for the financial year ending 31 December
2022 and received no specific feedback on its Remuneration Report at the Annual General Meeting or throughout the
period.
c) Details of Remuneration
Details of the remuneration of the directors and other KMP of Danakali Ltd are set out in the following table. The disclosed
directors’ fees are inclusive of committee fees.
DANAKALI LIMITED ABN 56 097 904 302
14
Directors’ Report
KMP of the Company for the financial year to 31 December 2023:
Financial Year to
31 December 2023
Executive Directors
S Cornelius
Non-Executive Directors
P Donaldson
J Zhang
T Adeniji
N Gregson(b)
S Zubairu(b)
Other Non-Director KMP
R McEachern
G MacPherson
TOTAL
Note:
Short-Term Benefits
Post-Employment
Salary
and Fees
$
Performance
Bonus
$
Super-
annuation
$
Shares
$
Share Based Payments
STI
Performance
Rights
$
LTI
Options
$
225,000
90,000
34,088
56,000
40,000
40,000
22,917
18,333
-
6,020
-
-
-
-
291,587
290,000
983,837
214,519
230,338
534,857
57,184
58,067
155,359
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
Remuneration
Performance
related (a)
$
%
349,088
26%
62,020
40,000
40,000
22,917
18,333
0%
0%
0%
0%
0%
563,290
44%
578,405 42%
1,674,053
35%
-
-
-
-
-
-
-
-
-
(a) Performance related percentage calculated in reference to bonuses payments divided by total remuneration.
(b) Resigned 15 June 2023.
DANAKALI LIMITED ABN 56 097 904 302
15
Directors’ Report
KMP of the Company for the financial year to 31 December 2022:
Financial Year to
31 December 2022
Short-Term Benefits
Post-Employment
Salary
and Fees
$
Performance
Bonus
Super-
annuation
$
$
Shares
$
Share Based Payments
STI
Performance
Rights(a) (b)
$
LTI
Options(a)
Executive Directors
S Cornelius
Non-Executive Directors
P Donaldson
225,000
56,000
-
-
23,063
5,740
J Zhang
N Gregson
S Zubairu
T Adeniji
Other Non-Director KMP
R McEachern(d)
G MacPherson(d)
TOTAL
Note:
40,000
50,000
-
-
-
-
40,030
40,030
-
-
-
-
283,488
250,116
984,664
-
-
-
28,931
25,821
83,555
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
157,500
157,500
315,000
Total
Remuneration
Performance
related (b)
$
$
%
375,550(c)
623,613
60%
-
-
-
-
-
-
-
61,740
40,000
50,000
40,030
40,030
469,919
433,437
375,550
1,758,769
0%
0%
0%
0%
0%
33%
36%
39%
(a) The recorded values of options will only be realised by the KMP’s in the event the Company’s share price exceeds the option exercise price. The recorded values of performance rights will only be
realised by the KMP’s in the event the Company achieves its stated objectives, which is expected to create further value for shareholders.
(b) Performance related percentage calculated in reference to share based payments divided by total remuneration (excluding reversal amounts).
(c) 4,000,000 options issued at an exercisable price of $0.450, expiry date 31 December 2024.
(d) 500,000 performance rights each were issued to G MacPherson & R McEachern on 28 March 2022. The conditions were not met and expired on 31 December 2022.
DANAKALI LIMITED ABN 56 097 904 302
16
Directors’ Report
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Executive Directors
S Cornelius
Non-Executive Directors
J Zhang
P Donaldson
T Adeniji
N Gregson
S Zubairu
Other Non-Director KMP
R McEachern
G MacPherson
e) Service Agreements
Financial Year to 31 December 2023
Fixed Remuneration
At risk – STI
At risk - LTI
40%
100%
100%
100%
100%
100%
62%
60%
26%
-
-
-
-
-
38%
40%
-
-
-
-
-
-
-
-
Remuneration and other terms of employment for the executive managers are formalised in employment contracts. Other
major provisions of the agreements relating to remuneration are set out below.
S Cornelius, Executive Chairman:
• Appointed 26 February 2021.
• Engaged as a permanent part-time employee (0.6 FTE).
• Mr Cornelius’s remuneration is $225,000 per annum plus superannuation at the statutory rate. In addition, Mr
Cornelius is eligible to participate in the Company’s incentive plans, the terms and operation of which are at the
discretion of the Board and subject to shareholder approval in the case of securities.
• Notice period of three months, required to be given by either party for termination.
G MacPherson, Chief Financial Officer:
• Appointed 1 March 2022.
• Mr MacPherson’s remuneration is $290,000 per annum plus superannuation at the Australian statutory rate.
• Engaged as a permanent full-time employee.
• Notice period of three months, required to be given by either party for termination.
R McEachern, Chief Operations Officer
• Appointed 3 December 2020.
• Engaged as a permanent full-time employee.
• Mr McEachern’s salary is CAD 255,000 per annum plus superannuation at the Australian statutory rate and health
insurance for Mr McEachern and his dependents.
• Notice period of three months, required to be given by either party for termination.
f) Details of Share Based Compensation
(i) Options
No new options were issued to KMP’s during the period.
The terms and conditions of each grant of options constituting KMP remuneration that remain on issue to KMP at
31 December 2023 are set out in the following table:
Grant date
Vesting and first
exercise date
30 July 2021
30 July 2021
Expiry date
30 July 2025
9 September 2021
9 September 2021
30 July 2025
Total Options
Number of
Options
2,000,000
4,000,000
6,000,000
Exercise
price
$0.640(i)
$0.640(i)
Value per
option at
grant date
Vested and
exercisable
%
$0.171
$0.140
100%
100%
(i)
In accordance with Listing Rule 7.22.3, the exercise price of each option was reduced by the equivalent of the return of capital per
share made to shareholders on the 8 January 2024. The options strike price was reduced by $0.273 per option to $0.367 (DNK
Announcement 19 January 2024).
DANAKALI LIMITED ABN 56 097 904 302
17
Directors’ Report
Details of options over ordinary shares in the Company, provided as remuneration to KMP are set out in the following table.
Year
of
grant
2021
2021
2021
Year in
which
options
vest
2021
2021
2021
Number of
options
granted
2,000,000
2,000,000
2,000,000
6,000,000
Value of
options at
grant date
$248,992
$280,806
$280,806
Unamortised
value of
options at 31
Dec 2023
-
-
-
Number of
options
vested
2,000,000
2,000,000
2,000,000
6,000,000
Vested
and
exercisable
100%
100%
100%
Name
S Cornelius
R McEachern
G MacPherson
Total Options
Options will automatically expire on the earlier of the expiry date or the date the holder ceases to be an employee of the
Company, unless the Board otherwise may determine.
When exercisable, each option is convertible into one ordinary share. Further information on the options is set out in note
22.
(ii) Performance Rights
There remain no performance rights held by KMP at 31 December 2023.
g) Equity Instruments Held by KMP
(i) Shares
No shares were granted as remuneration during the year ended 31 December 2023.
The number of shares in the Company held during the financial period by each director of Danakali Ltd and other KMP of
the Group, including their personally related parties, are set out in the following tables.
Financial Year to
31 December
2023
Balance at
1 January 2023
Granted as
compensation
Received
on exercise of
remuneration
options
On market
purchases/
(sales)
Other
Balance at
31 December
2023
Shares
Directors
S Cornelius
P Donaldson
J Zhang
T Adeniji
N Gregson(a)
S Zubairu
Other KMP
G MacPherson
R McEachern
TOTAL
Note:
14,741,126
1,145,693
-
-
80,000
-
-
100,000
16,066,819
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,741,126
1,145,693
-
-
80,000
-
-
100,000
16,066,819
(a) Mr Neil Gregson held 80,000 shares on the date of his resignation on 15 June 2023.
(ii) Options
The numbers of options over ordinary shares in the Company held during the financial period by each director of Danakali
Ltd and other KMP of the Group, including their personally related parties, are set out in the following tables.
Financial Year to
31 December
2023
Balance at
1 January
2023
Granted
Exercised
Expired
Cancelled
Other
Balance at
31 December
2023
Vested
and
exercisable
Unvested
Options
Directors
S Cornelius
Other KMP
G MacPherson
R McEachern
TOTAL
6,000,000
2,000,000
2,250,000
10,250,000
-
-
-
-
-
-
-
-
-
-
-
-
(4,000,000)
-
(250,000)
(4,250,000)
-
-
-
-
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
6,000,000
6,000,000
-
-
-
-
DANAKALI LIMITED ABN 56 097 904 302
18
Directors’ Report
(iii) Performance Rights held by KMP
There remain no performance rights held by KMP at 31 December 2023.
h) Loans to KMP
There were no loans to KMP during the period.
i) Cancellation of option for consideration
The shareholders approved that 4,250,000 options held by key management be cancelled for a total consideration of
$302,500 (DNK Announcement 24 November 2023).
(j) Other Transactions with KMP
There were no other transactions with KMP during the period.
k) Additional Information
The remuneration structure has been set up with the objective of attracting and retaining the highest calibre staff who
contribute to the success of the Company’s performance and individual rewards. The remuneration policies seek a balance
between the interests of stakeholders and competitive market remuneration levels. The overall level of KMP compensation
takes into account the performance of the Group over a number of years and the stage of activities the Company is engaged
in.
The table below shows the performance of the Group over the last 5 reporting periods:
Financial Year
Basic profit/(loss) per share
– Continuing Operations
– Discontinued Operations
Share Price
31 Dec 2023 31 Dec 2022
31 Dec 2021
31 Dec 2020 31 Dec 2019
0.3632
0.0041
0.3591
$0.41(1)
(0.095)
(0.0122)
0.0027
$0.39
(0.0287)
(0.0287)
N/A
$0.43
(0.0259)
(0.0259)
N/A
$0.315
(0.0116)
(0.0116)
N/A
$0.60
Profit/(Loss) for the period
133,787,133
(3,502,352)
($10,037,168)
($8,259,370)
($3,148,734)
– Continuing Operations
1,515,444
(4,500,780)
(0.0287)
(0.0259)
(0.0116)
– Discontinued Operations
132,271,689
998,428
N/A
N/A
N/A
(i) Closing share price on date of suspension on 3 April 2023.
The Company continues to review its remuneration framework to ensure it reflects current business needs, shareholder
views and contemporary market practice and remains appropriate to attract, motivate, retain and reward employees.
- - END OF REMUNERATION REPORT - -
DANAKALI LIMITED ABN 56 097 904 302
19
Directors’ Report
Directors’ resolution
This report is signed in accordance with a resolution of the Board of Directors dated 27 March 2024.
Mr Seamus Cornelius
Executive Chairman
27 March 2024
DANAKALI LIMITED ABN 56 097 904 302
20
To the Board of Directors,
AUDITOR’S
CORPORATIONS ACT 2001
INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
As lead audit Director for the audit of the financial statements of Danakali Limited for the financial year ended
31 December 2023, I declare that to the best of my knowledge and belief, there have been no contraventions
of:
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• any applicable code of professional conduct in relation to the audit.
Yours Faithfully
HALL CHADWICK WA AUDIT PTY LTD
MARK DELAURENTIS CA
Director
Dated this 27th day of March 2024
Perth, Western Australia
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2023
CONTINUING OPERATIONS
Revenue and Other Income
Interest revenue
Sundry
Expenses
Depreciation expense
Loss on disposal of plant and equipment
Administration expenses
Share based payment expense
Foreign exchange gain/(loss)
Notes
2023
$
2022
$
Restated
4
9
9
5
22
5,829,251
87,743
89,484
-
(5,089)
(849)
(4,287,875)
-
(107,737)
(8,335)
(6,475)
(4,222,734)
(235,310)
(117,411)
Profit/(Loss) before Income Tax from Continuing Operations
1,515,444
(4,500,449)
Income tax expense
Profit/(Loss) for the Year from Continuing Operations
7
-
-
1,515,444
(4,500,449)
DISCONTINUED OPERATIONS
Profit after tax for the year from discontinued operations
10
132,271,689
998,428
Profit/(loss) for the year
133,787,133
(3,502,352)
OTHER COMPREHENSIVE INCOME
Divestment of subsidiary - Foreign exchange
(2,590,023)
-
Total Comprehensive Profit/(Loss) for the Year
131,197,110
(3,502,352)
Earnings/(loss) per share attributable to the ordinary equity holders
of the Company:
Basic profit/(loss) per share (cents per share)
Diluted profit/(loss) per share (cents per share)
Earnings/(loss) per share from continuing operations:
Basic profit/(loss) per share (cents per share)
Diluted profit/(loss) per share (cents per share)
17
17
17
17
36.32
36.32
0.41
0.41
(0.95)
(0.95)
(1.22)
(1.22)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
DANAKALI LIMITED ABN 56 097 904 302
22
Consolidated Statement of Financial Position
AS AT 31 DECEMBER 2023
Notes
2023
$
CURRENT ASSETS
Cash and cash equivalents
Receivables
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Investment in joint venture
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
6
8
8
11
9
12
13
13
14
15
16
2022
$
Restated
14,873,027
25,163
78,013
14,976,203
13,398,870
36,482,469
15,464
49,896,803
193,109,430
2,264,324
165,982
195,539,736
-
-
9,526
9,526
195,549,262
64,873,006
488,196
184,280
672,476
761,675
141,024
902,699
64,029
64,029
52,160
52,160
736,505
954,859
194,812,757
63,918,147
135,716,735
1,244,959
57,851,063
194,812,757
127,866,319
16,458,029
(80,406,201)
63,918,147
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
DANAKALI LIMITED ABN 56 097 904 302
23
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2023
Notes
Issued Capital
$
Share Based
Payments
$
Foreign Currency
Translation
$
Accumulated Profit /
(Losses)
$
Total Equity
$
Reserves
BALANCE AT 1 JANUARY 2023
127,866,319
13,868,006
2,590,023
(80,406,201)
63,918,147
Profit for the period
Other comprehensive income
Total comprehensive loss for the period
-
-
-
-
-
-
Transactions with owners in their capacity as owners:
Share based payments
15
- Transfer reserve due to exercise share based payments
- Cancellation of Share Based payments
BALANCE AT 31 DECEMBER 2023
7,850,416
-
135,716,735
(12,320,547)
(302,500)
1,244,959
-
(2,590,023)
-
-
-
-
133,787,133
-
133,787,133
133,787,133
(2,590,023)
131,197,110
4,470,131
-
-
(302,500)
57,851,063
194,812,757
BALANCE AT 1 JANUARY 2022
127,866,319
13,632,696
1,475,207
(75,789,033)
67,185,189
Loss for the period
Other comprehensive income
Total comprehensive loss for the period
-
-
-
-
-
-
-
1,114,816
1,114,816
(4,617,168)
-
(4,617,168)
Transactions with owners in their capacity as owners:
Share based payments
15
-
235,310
-
-
BALANCE AT 31 DECEMBER 2022
127,866,319
13,868,006
2,590,023
(80,406,201)
(4,617,168)
1,114,816
(3,502,352)
235,310
63,918,147
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
DANAKALI LIMITED ABN 56 097 904 302
24
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 31 DECEMBER 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year
Adjusted for:
Finance Income
Foreign exchange losses
(Gains)/loss from discontinued operations
Depreciation of property plant and equipment
Loss on disposal of assets
Share based payments
Increase/(decrease) in provisions
Operating cashflows before movement in working capital
Decrease/(increase) in trade and other receivables
Increase/(Decrease in trade and other payables
NET CASH INFLOW/(OUTFLOW) USED IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Funding of joint venture
Net proceeds from the disposal of investment
Interest received
Payments for plant and equipment
NET CASH INFLOW/(OUTFLOW) USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for the cancellation of options
NET CASH OUTFLOW FROM FINANCING ACTIVITIES
NET INCREASE / (DECREASE) IN CASH
Cash at the beginning of the financial year
Net foreign exchange differences
CASH AT THE END OF THE YEAR
6
Notes
2023
$
2022
$
133,787,133
(3,502,352)
(5,829,251)
27,149
(132,939,627)
5,089
849
-
55,126
(4,893,532)
(91,953)
364,216
(4,621,269)
(16,301)
179,609,548
3,594,074
-
183,187,321
(302,500)
(302,500)
178,263,552
14,873,027
(27,149)
193,109,430
(89,484)
50,727
(998,428)
8,335
6,475
235,310
36,188
(4,162,899)
55,282
(707,445)
(4,905,062)
(3,141,640)
-
89,484
(3,445)
(3,055,601)
-
-
(7,960,663)
22,884,417
(50,727)
14,873,027
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
DANAKALI LIMITED ABN 56 097 904 302
25
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
1. GENERAL INFORMATION
Danakali Ltd (Danakali or the Company) is a for profit company limited by shares, incorporated and domiciled in Australia,
and whose shares are publicly listed on the Australian Securities Exchange (ASX). The consolidated financial report of the
group as at, and for the year ended 31 December 2023 comprises the Company and its subsidiaries (together referred to
as the Group). The address of the registered office is Level 1, 2A / 300 Fitzgerald Street, North Perth, WA, 6006.
The financial statements are presented in the Australian currency.
The financial report of Danakali for the year ended 31 December 2023 was authorised for issue by the Directors on 27
March 2024. The directors have the power to amend and reissue the financial statements.
The nature of the operations and principal activities of the consolidated entity are described in the Directors’ Report.
2. BASIS OF PREPARATION
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 periods presented, unless otherwise stated.
The general purpose consolidated financial statements have been prepared in accordance with Australian Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting
Interpretations and the Corporations Act 2001.
The consolidated financial statements of the Danakali Ltd Group also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
These consolidated financial statements have been prepared under the historical cost convention, except for the loan to
the joint venture that was measured at fair value.
(a) New standards, interpretations and amendments adopted by the Group
The Group applied all new and amended Accounting Standards and Interpretations that were effective as at 1 January
2023.
(b) New accounting standards and interpretations not yet effective
Australian Accounting Standards and interpretations that have recently been issued or amended but are not yet effective
and have not been adopted by the Group for the annual reporting year ended 31 December 2023. The Group assessed
that the new accounting standards and interpretation not yet effective do not have a significant impact on the Group. The
standards relevant to the Group are outlined in the table below.
Reference
Title
Summary
AASB 2021-5
Amendments to AASs -
Deferred Tax related to
Assets and Liabilities
arising from a Single
Transaction
AASB 112 Income Taxes requires entities to account for
income tax consequences when economic transactions take
place, and not at the time when income tax payments or
recoveries are made. Accounting for such tax consequences,
means entities need to consider the differences between tax
rules and accounting standards. These differences could
either be:
• Permanent – e.g., when tax rules do not allow a certain
expense to ever be deducted
Or
• Temporary – e.g., when tax rules treat an item of income
as taxable in a period later than when included in the
accounting profit
Deferred taxes representing amounts of income tax payable
or recoverable in the future must be recognised on
temporary differences unless prohibited by AASB 112 in
certain circumstances. One of these circumstances, known
as the initial recognition exception, applies when a
transaction affects neither accounting profit nor taxable profit,
and is not a business combination. Views differ about
applying this exception to transactions that, on initial
recognition, create both an asset and liability (and could give
rise to equal amounts of taxable and deductible temporary
differences) such as:
• Recognising a right-of-use asset and a lease liability
when commencing a lease
DANAKALI LIMITED ABN 56 097 904 302
26
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
Reference
Title
Summary
AASB 2021-2
Amendments to AASB 108
– Definition of Accounting
Estimates
• Recognising decommissioning, restoration and similar
liabilities with corresponding amounts included in the
cost of the related asset
The amendments to AASB 112 clarify that the exception
would not normally apply. That is, the scope of this exception
has been narrowed such that it no longer applies to
transactions that, on initial recognition, give rise to equal
amounts of taxable and deductible temporary differences.
The amendments apply from the beginning of the earliest
comparative period presented to:
• All transactions occurring on or after that date
• Deferred tax balances, arising from leases and
decommissioning, restoration and similar liabilities,
existing at that date
The cumulative effect of initial application is recognised as
an adjustment to the opening balance of retained earnings or
other component of equity, as appropriate.
Earlier application of the amendments is permitted.
The Group assessed that this amended accounting
standards does not have a significant impact on the Group.
An accounting policy may require items in the financial
statements to be measured using information that is either
directly observable,or estimated. Accounting estimates use
inputs and measurement techniques that require judgements
and assumptions based on the latest available, reliable
information.
The amendments to AASB 108 clarify the definition of an
accounting estimate, making it easier to differentiate it from
an accounting policy. The distinction is necessary as their
treatment and disclosure requirements are different.
Critically, a change in an accounting estimate is applied
prospectively whereas a change in an accounting policy is
generally applied retrospectively.
The new definition provides that ‘Accounting estimates are
monetary amounts in financial statements that are subject to
measurement uncertainty.’ The amendments explain that a
change in an input or a measurement technique used to
develop an accounting estimate is considered a change in an
accounting estimate unless it is correcting a prior period
error.
• For example, a change in a valuation technique used to
measure the fair value of an investment property from
market approach to income approach would be treated
as a change in estimate rather than a change in
accounting policy.
• In contrast, a change in an underlying measurement
objective, such as changing the measurement basis of
investment property from cost to fair value, would be
treated as a change in accounting policy.
The amendments did not change the existing treatment for a
situation where it is difficult to distinguish a change in an
accounting policy from a change in an accounting estimate.
In such a case, the change is accounted for as a change in
an accounting estimate.
DANAKALI LIMITED ABN 56 097 904 302
27
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
(c) Going concern
The financial statements have been prepared on a going concern basis which contemplates the continuity of normal
business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
At the date of this report, the directors are satisfied there are reasonable grounds to believe that the Group will be able to
continue business activities and the Group will be able to meet its obligations as and when they fall due.
At balance date, the Group had cash and cash equivalents of $193,109,430 (31 December 2022: $14,873,027) and a net
working capital surplus of $194,867,260 (31 December 2022: $14,073,504). The existing cash reserves are sufficient to
cover the working capital requirements of the Group for the next 12 months.
(d) Principles of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are de-consolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group. Intercompany
transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses
are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies
of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
(e) Non-current assets held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified
as held for sale are measured at the lower of their carrying amount and fair value less cost to sell. Costs to sell are the
incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax
expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset or
disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate
that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management
must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of
classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial
position.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as
profit or loss after tax from discontinued operations in the statement of profit or loss.
(f) Segment reporting
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.
(g) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Australian dollars, which is Danakali's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
(iii) Foreign operations
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency as
follows:
•
•
assets and liabilities for each statement of financial position presented are translated at the closing rate at the
date of that statement of financial position;
income and expenses for each statement of comprehensive income are translated at average exchange rates
(unless that is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions); and
DANAKALI LIMITED ABN 56 097 904 302
28
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
•
all resulting exchange differences are recognised in other comprehensive income.
When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of
such exchange differences is reclassified to profit or loss, as part of the gain or loss on sale where applicable.
(h)
Interest revenue
Interest revenue is recognised using the effective interest rate method.
(i)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period’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 Company’s subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject
to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities.
Deferred income tax is provided, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements at the reporting date. 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.
The Group offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off
current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to
settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in
each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
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.
(j) Leases
Group as Lessee
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the
right to control the use of an identified asset for a period of time in exchange for consideration.
(i) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption for those leases that have a lease term of 12 months or less
from the commencement date and do not contain a purchase option. It also applies the lease of low-value assets
recognition exemption to leases of plant and equipment that are considered of low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
(k)
Impairment of assets
Assets are reviewed for impairment annually to determine if events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. The recoverable amount
is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those
from other assets or group if assets, For the purposes of assessing impairment, assets are consolidated at the smallest
identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets
or group of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are
reviewed for possible reversal of the impairment at each reporting date.
(l) Cash and cash equivalents
For Consolidated Statement of Cash Flows presentation purposes, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions and, 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.
DANAKALI LIMITED ABN 56 097 904 302
29
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
(m) Receivables
(i) Initial recognition
Receivables are initially recognised and measured at fair value. Receivables that are held to collect contractual cash flows
and are expected to give rise to cash flows representing solely payments of principal and interest are classified and
subsequently measured at amortised cost. Receivables that do not meet the criteria for amortised cost are measured at
fair value through profit or loss (FVTPL). The loan to CMSC is measured at FVTPL.
(ii) Subsequent measurement
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject
to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net
changes in fair value recognised in the statement of profit or loss.
(iii) Impairment
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract
and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest
rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are
integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).
The Group considers an event of default has occurred when a financial asset is more than 90 days past due or external
sources indicate that the debtor is unlikely to pay its creditors. A financial asset is credit impaired when there is evidence
that the counterparty is in significant financial difficulty or a breach of contract, such as a default or past due event has
occurred. The Group writes off a financial asset when there is information indicating the counterparty is in severe financial
difficulty and there is no realistic prospect of recovering the contractual cash flow.
(n)
Investment in joint venture
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to
the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The Group’s investment in a joint venture is accounted for using the equity method.
Under the equity method, the investment in a joint venture is initially recognised at cost. The carrying amount of the
investment is adjusted to recognise changes in the Group’s share of net assets of the joint venture since the acquisition
date. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither amortised nor
individually tested for impairment.
The statement of profit or loss reflects the Group’s share of the results of operations of the joint venture. Any change in
other comprehensive income of those investees is presented as part of the Group’s other comprehensive income. In
addition, when there has been a change recognised directly in the equity of the joint venture, the Group recognises its
share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from
transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint venture.
The aggregate of the Group’s share of profit or loss of a joint venture is shown on the face of the statement of profit or loss
outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the joint
venture.
The financial statements of the joint venture are prepared for the same reporting period as the Group. When necessary,
adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on
its investment in its joint venture. At each reporting date, the Group determines whether there is objective evidence that
the investment in the joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment
as the difference between the recoverable amount of the joint venture and its’ carrying value, then recognises the loss as
‘Share of profit of the equity accounted investment’ in profit or loss.
Upon loss of joint control over a joint venture, the Group measures and recognises any retained investment at its fair value.
Any difference between the carrying amount of the joint venture upon loss of joint control and the fair value of the retained
investment and proceeds from disposal is recognised in profit or loss.
DANAKALI LIMITED ABN 56 097 904 302
30
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
(o) Plant and equipment
All plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is de-recognised
when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they
are incurred.
Depreciation of plant and equipment is calculated using the straight-line basis so as to write off the net cost or other
revalued amount of each asset over its expected useful life to its estimated residual value.
The assets’ residual values and useful lives are reviewed, and adjusted prospectively if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit
or loss. When revalued assets are sold, it is Group’s policy to transfer the amounts included in other reserves in respect of
those assets to retained earnings.
(p) Exploration and evaluation costs
Acquired exploration and evaluation costs are capitalised. Ongoing exploration and evaluation costs are expensed in the
period they are incurred.
(q) Development Expenditure costs
When proven mineral reserves are determined and an application for development has been submitted subsequent
development expenditure is capitalised as development capital, a non-current asset, provided commercial viability
conditions continue to be satisfied. Capitalised exploration and evaluation expenditure is reclassified into capitalised
development costs and evaluated for impairment annually. On completion of development, all capitalised development
costs including capitalised exploration and evaluation expenditure are transferred to mine properties and depreciation
commences.
(r) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial period
which are unpaid. The amounts are unsecured, non-interest bearing and are paid on normal commercial terms.
(s) Employee benefits
(i) Wages and salaries, annual leave and long service leave
Liabilities for wages and salaries, including non-monetary benefits, and other short terms benefits expected to be settled
within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting
date and are measured at the amounts expected to be paid when the liabilities are settled.
Long-term employee benefits are measured using the projected unit credit valuation method.
(ii) 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 options or rights over shares (‘equity-settled
transactions’) refer to note 22.
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 of options is determined by an internal valuation using a Black-Scholes option pricing
model. The fair value of performance rights is determined by consideration of the Company’s share price at the grant date.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which the performance and service conditions are fulfilled, ending on the date on which the relevant employees become
fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the
extent to which the vesting period has expired and (ii) the number of options or rights 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 or awards with non-vesting conditions.
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
DANAKALI LIMITED ABN 56 097 904 302
31
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
were a modification of the original award.
(t)
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the
effective interest rate method.
Borrowings are classified as current liabilities unless the Consolidated Entity has the unconditional right to defer settlement
of the liability for at least 12 months after the reporting date.
(u) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of
that asset. Borrowing costs are capitalised from the date that sufficient funding has been secured and unconditional and
the project development execution has started. This judgment will be reviewed periodically relative to the Project
development. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the borrowing of funds.
(v)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
(w) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss 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 period, adjusted for bonus elements in ordinary shares issued during the period.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
(x) Critical accounting judgements, estimates and assumptions
The preparation of 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.
(y) 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.
(z) Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached
conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic
basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates
to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.
3. SEGMENT INFORMATION
The Group was organised into one main operating segment which involves the exploration of minerals in Eritrea upto the
date of disposal (29 March 2023). All of the Group’s activities were interrelated and discrete financial information was
reported to the Board (Chief Operating Decision Maker) as a single segment. The disposal of this segment has been
included seperately under discontinued operation.
Accordingly, all significant operating decisions were based upon analysis of the Group as one segment. The financial
results from this segment are equivalent to the financial statements of the Group as a whole as at 31 December 2023.
DANAKALI LIMITED ABN 56 097 904 302
32
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
4. REVENUE
Interest revenue
5. EXPENSES
Employee benefits (net of recharges)
Financial advisory & consultancy fees
Directors’ fees
Compliance and regulatory expenses
Lease payments relating to short term leases
Insurance
Investor and public relations
Other administration expenses
6. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Cash at bank earns interest at floating rates and at a fixed rate on term deposit.
7.
INCOME TAX
(a) Income tax recognised in profit or loss
Current tax
Deferred tax
Total tax benefit/(expense)
(b) Reconciliation of income tax expense to prima facie tax payable
Profit/(loss) before income tax expense
Prima facie tax benefit at the Australian tax rate of 30.0% (2022: 30.0%)
Adjustment of under-provision of deferred tax in prior year
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Net (gain)/ loss on discontinued operations
Share-based payments
Movements in unrecognised temporary differences
Income tax expense/(benefit)
2023
$
5,829,251
2022
$
89,484
2023
$
2,009,062
365,364
532,357
108,057
64,500
374,304
162,187
672,044
4,287,875
2023
$
193,109,430
193,109,430
2022
$
1,452,072
1,116,726
479,863
91,198
59,785
407,179
164,681
451,230
4,222,734
2022
$
14,873,027
14,873,027
2023
$
2022
$
-
-
-
-
-
-
133,787,133
(3,502,352)
40,136,140
(968,600)
(1,050,706)
(351,974)
(39,237,346)
-
69,806
-
(144,352)
70,593
1,476,439
-
DANAKALI LIMITED ABN 56 097 904 302
33
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
(c) Deferred Income Tax
Deferred income tax at 31 December relates to the following:
Statement of
Financial Position
2022
2023
$
$
Statement of
Comprehensive Income
2023
$
2022
$
Statement of
Change in Equity
2023
$
2022
$
-
(49,794)
(139,029)
(23,404)
139,029
(26,390)
624,614
(23,404)
-
-
-
-
74,493
121,380
261,595
9,822,798
57,955
-
564,158
10,003,550
16,538
121,380
-
(180,752)
10,856
(217,200)
-
1,081,573
-
-
(302,563)
-
-
(302,563)
-
(10,230,472)
-
(10,463,230)
-
(69,805)
-
(1,476,439)
-
302,563
-
302,563
-
Deferred Tax Liabilities:
Unrealised foreign
exchange gain/loss
Prepayments
Deferred Tax Assets:
Provision for employee
entitlements
Accrued expenditure
Share issue expenses
Tax losses
Net deferred tax assets not
recognised as utilisation is not
probable
8. RECEIVABLES
Current
Net GST receivable
Interest receivable on term deposit
Non-Current
Loan to Colluli Mining Share Company – at fair value
Carrying value of loans
2023
$
2022
$
29,148
2,235,176
2,264,324
25,163
-
25,163
-
-
13,398,870
13,398,870
Until the sale of the Group’s interest in CMSC on March 29, 2023, Danakali’s wholly owned subsidiary, Danakali
Investments Pty Ltd (previously STB Eritrea Pty Ltd), was funding CMSC for the development of the Colluli Potash Project
and 50% of the funding was represented in the form of a shareholder loan. This loan was repaid as part of the sale
agreement. Until the sale, the value of the loan was discounted by applying a market interest rate of 25%.
Reconciliation of movement in loan to Colluli Mining Share Company
Opening carrying amount at beginning of the year
Additional loans during the year
Reversal of employee benefits recharged to JV
Foreign exchange gain/(loss)
Net gain/(loss) on financial assets at fair value through profit or loss
Repayment via sale
Closing carrying amount at end of the year
2023
$
2022
$
13,398,870
1,790
-
540,186
781,873
(14,722,719)
-
10,597,238
122,784
(791,467)
745,484
2,724,831
-
13,398,870
DANAKALI LIMITED ABN 56 097 904 302
34
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
9. PLANT AND EQUIPMENT
Plant and equipment
Gross carrying value – at cost
Accumulated depreciation
Net book amount
Plant and equipment
Opening net book amount at beginning of the year
Additions
Disposals/Retirement
Depreciation charge
Closing net book amount at end of the year
10. DISCONTINUED OPERATIONS
2023
$
2022
$
36,471
(26,945)
9,526
15,464
-
(849)
(5,089)
9,526
38,518
(23,054)
15,464
26,829
-
(3,030)
(8,335)
15,464
On 12 January 2023, the Group executed a binding share sale agreement with Sichuan Road and Bridge Group Co., Ltd.
(SRBG) for the sale of all its interest in CMSC’s shares including the outstanding shareholders loan receivable from CMSC.
On 2 March 2023, the Group’s shareholders approved the transaction. The Group satisfied the conditions precedent under
the share sale agreement on 29 March 2023 and the investment in CMSC was then classified as a discontinued operation.
The Group’s share in the profits from its former interest in CMSC are presented below:
REVENUE
Net gain/(loss) on financial assets at fair value through profit or loss
Realised foreign exchange gain
Unrealised foreign exchange gain
Net interest on loan (Unwinding discount)
Gain on disposal of interest in CMSCa
EXPENSES
Share of loss from JV
Other Expenses
Profit/(Loss) before tax from discontinued operations
Tax: Foreign taxes on disposal
Share of Foreign Currency Translation Reserve (OCI)
Profit/(Loss) for the year from discontinued operations
Earnings per share for discontinued operations:
Basic profit per share (cents per share)
Diluted profit per share (cents per share)
a Details of Gain on Disposal:
Total consideration for the sale of investment (USD 135M)
Satisfied by cash, and net cash inflow arising on disposal (net of tax paid)
The net cash flows incurred by the Group for its share in CMSC are as follows:
Operating
Investing
Financing
Net cash (outflow)/inflow
DANAKALI LIMITED ABN 56 097 904 302
2023
$
2022
$
27,861,476
5,413,267
1,757,791
783,238
164,543,879
(417,378)
(733)
199,941,540
(67,669,851)
-
132,271,689
2,724,831
517,853
-
(3,358,802)
-
(116,388)
-
1,114,816
998,428
35.91
35.91
0.27
0.27
$
201,132,300
133,462,449
2023
$
-
155,198,028
-
155,198,028
2022
$
-
(3,141,640)
-
(3,141,640)
35
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
11. INVESTMENT IN JOINT VENTURE
The Group has an interest in the following joint arrangement:
Project
Activities
Equity Interest
Carrying Value
2023
%
2022
%
2023
$
2022
$
Colluli Potash Mineral Exploration
-
50
-
36,482,469
The group acquired an interest in CMSC at the date of its incorporation on 5 March 2014. This acquisition was in
accordance with the Shareholders Agreement entered into with the ENAMCO and executed in November 2013. CMSC
was incorporated in Eritrea, in accordance with the Shareholders Agreement, to hold the Colluli project with Danakali and
ENAMCO holding 50% of the equity each. On 29 March 2023, the Group disposed its interest in the CMSC to SRBG.
Up to the date of disposal, the Group’s 50% interest in CMSC was accounted for as a joint venture using the equity method.
The following tables summarise the financial information of the Group’s investment in CMSC at 31 December 2023.
2023
$
2022
$
Reconciliation of movement in investments accounted for using the
equity method:
Opening carrying amount at beginning of the year
Net additional investment during the year
Technical recharge reversal
Share of net (loss)/profit for the year
Other comprehensive income for the year
Disposal via sale
Closing carrying amount at end of the year
Summarised financial information of joint venture:
36,482,469
15,866
-
(417,378)
-
(36,080,957)
-
Financial position (Aligned to Danakali accounting policies)
Current Assets:
Cash
Other current assets
Non-current assets
Fixed Assets
Development costs capitalised
Current liabilities
Trade & other payables and provisions
Non-current liabilities
Loan from Danakali Ltd – at amortised cost
NET ASSETS
Group’s share of net assets
Reconciliation of Equity Investment:
Group’s share of net assets
Equity contributions
Carrying amount at the end of the period
34,916,132
3,018,856
791,467
(3,358,802)
1,114,816
-
36,482,469
2022
$
306,301
669,750
976,051
70,555
42,390,996
42,461,551
(121,691)
(121,691)
(14,782,060)
(14,782,060)
28,533,851
14,266,926
14,266,926
22,215,544
36,482,469
DANAKALI LIMITED ABN 56 097 904 302
36
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
Financial performance
Interest expense relating to the unwinding of discount on joint venture loan
(Loss)/gain on re-measurement of loan to joint venture carried at amortised
cost
General administrative costs
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
Group’s share of total gain/(loss) for the year
During the year ended 31 December 2023 no dividends were paid or declared (2022: Nil).
12. TRADE AND OTHER PAYABLES
2022
$
(2,806,575)
-
(3,911,029)
(6,717,604)
(3,358,802)
Trade payables (i)
Accrued expenses
Other payables
2023
$
58,703
404,602
2022
$
702,130
-
24,891 59,545
488,196 761,675
(i) Includes Financial Advisor fees payable for an amount of $642,532 on the cancellation of the CMSC debt facility with AFC and Afrexim.
13. PROVISIONS
Current
Employee entitlements
Non-Current
Employee entitlements
2023
$
2022
$
184,280
141,024
64,029
248,309
52,160
193,184
Employee entitlements relate to the balance of annual leave and long service leave accrued by the Group’s employees.
Recognition and measurement criteria have been disclosed in note 2.
14. ISSUED CAPITAL
(a) Share capital
Ordinary shares fully paid
Total issued capital
(b) Movements in ordinary share capital
2023
2022
Number
of shares
$
Number
of shares
$
368,334,346 135,716,735
368,334,346 127,866,319
368,334,346 135,716,735
368,334,346 127,866,319
Balance at the beginning of the year
368,334,346 127,866,319
368,334,346 127,866,319
Issued during the year:
− Re-allocated from share-based payment reserve
-
7,850,416
-
-
Balance at the end of the year
368,334,346 135,716,735
368,334,346 127,866,319
DANAKALI LIMITED ABN 56 097 904 302
37
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
(c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote,
and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(d) Movements in options on issue
Balance at beginning of the year
Issued during the year:
− Exercisable at $0.450, on or before 31 December 2024
Exercised, lapsed, cancelled or expired during the year:
− Cancelled, exercisable at $0.450 on or before 31 December 2024
− Cancelled, exercisable at $0.501 on or before 3 December 2023
− Expired, exercisable at $0.664 on or before 8 July 2023
− Expired, exercisable at $0.527 on or before 29 January 2023
− Expired, exercisable at $0.780 on or before 24 March 2023
− Expired, exercisable at $1.031 on or before 24 January 2022
− Expired, exercisable at $1.108 on or before 13 March 2022
− Expired, exercisable at $1.119 on or before 28 March 2022
− Expired, exercisable at $1.114 on or before 30 May 2022
Balance at end of the year
(e) Movements in performance rights on issue
2023
Options
2022
Options
15,200,000
15,264,112
-
4,000,000
(4,000,000)
(250,000)
(200,000)
(500,000)
(250,000)
-
-
-
-
10,000,000
-
-
-
-
-
(1,469,312)
(583,000)
(561,800)
(1,450,000)
15,200,000
There were no performance rights on issue on 31 December 2023, and no movements during the year.
15. RESERVES
(a) Reserves
Share-based payments reserve
Balance at beginning of the year
Transferred to share capital
Transfer to retained earnings
Employee and contractor share options and performance rights (note 22)
Balance at end of the year
Foreign currency translation reserve
Balance at beginning of the year
Written off on sale of investment
Currency translation differences arising during the year/ period
Balance at end of the year
Total reserves
(b) Nature and purpose of reserves
2023
$
2022
$
13,868,006
(7,850,416)
(4,470,131)
(302,500)
1,244,959
2,590,023
(2,590,023)
-
13,632,696
235,310
13,868,006
1,475,207
1,114,816
2,590,023
1,244,959
16,458,029
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of share options and performance rights issued.
Foreign currency translation reserve
The foreign currency translation reserve records the exchange differences arising on translation of a foreign joint
arrangement.
DANAKALI LIMITED ABN 56 097 904 302
38
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
16. ACCUMULATED LOSSES
Balance at beginning of the year
Transfer from share-based payment reserve
Profit/(loss) for the year
Other comprehensive income from discontinued operations
Balance at end of the year
17. EARNINGS PER SHARE
(a) Reconciliation of earnings used in calculating earnings per share (EPS)
Profit/(Loss) attributable to ordinary equity holders of the company
- Continuing Operations
- Discontinuing Operations
Profit/(Loss) attributable to the owners of the Company used in calculating
basic and diluted loss per share
(b) Weighted average number of shares used as the denominator
2023
$
(80,406,201)
4,470,131
133,787,133
-
57,851,063
2022
$
(75,789,033)
(3,502,352)
(1,114,816)
(80,406,201)
2023
$
2022
$
Restated
1,515,444
132,271,689
(4,500,780)
998,428
133,787,133
(3,502,352)
2023
No. of Shares
2022
No. of Shares
Weighted average number of ordinary shares used as the denominator in
calculating basic loss per share
368,334,346
368,334,346
Weighted average number of ordinary shares used as the denominator in
calculating diluted loss per share
368,334,346
368,334,346
A total of 10,000,000 (2022: 15,200,000) share options and 0 (2022: 360,000) performance rights were outstanding at the
end of the year, which were excluded in the diluted EPS calculation. As the strike price of the outstanding options are
significantly above the current market price they have been excluded. The diluted EPS was equal to the basic EPS because
as they were anti-dilutive for that year.
18. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to market, liquidity and credit risks arising from its financial instruments.
The Group’s management of financial risk is aimed at ensuring net cash flows are sufficient to meet all of its financial
commitments and maintain the capacity to fund the activities of the business. The Board of Directors has overall
responsibility for the establishment and oversight of the risk management framework. Management monitors and manages
the financial risks relating to the operations of the Group through regular reviews of risks.
Market (including foreign exchange and interest rate risks), liquidity and credit risks arise in the normal course of business.
These risks are managed under Board approved treasury processes and transactions.
The principal financial instruments as at reporting date include cash, receivables and payables.
This note presents information about exposures to the above risks, the objectives, policies and processes for measuring
and managing risk, and the management of capital.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a
currency that is not the entity’s functional currency and net investments in foreign operations. The Group has not formalised
a foreign currency risk management policy however, it monitors its foreign currency expenditure in light of exchange rate
movements.
The loan receivable of $nil (2022: $13,398,870) to CMSC is denominated in US Dollars.
As at 31 December 2023, the Group held $378 (2022: $nil) of cash and term deposits denominated in US Dollars.
Included within trade and other payables are $nil (2022: $642,532) trade payables and $nil (2022: nil) accrued expenses
denominated in US Dollars.
DANAKALI LIMITED ABN 56 097 904 302
39
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
The following table demonstrates the sensitivity to a reasonably possible change in US Dollar exchange rates, with all
other variables held constant. A strengthening of the Australian Dollar rate results in an increased loss before tax. The
Group’s exposure to foreign currency changes for all other currencies is not material.
Year to 31 December 2023
Year to 31 December 2022
(ii) Interest rate risk
Change in
USD Rate
%
+5%
-5%
+5%
-5%
Effect on Loss
before tax
$
(increase)
decrease
-
-
(652,220)
652,220
Effect on
Equity
$
(increase)
decrease
-
-
652,220
(652,220)
The Group is exposed to movements in market interest rates on cash. The Group’s 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 for the Group of $193,109,430 (2022: $14,873,027) is subject to interest rate risk. The
weighted average interest rate received on cash by the Group was 4.7% (2022: 0.60%).
The Group was also exposed to interest rate risk on the loan receivable for the year ending 31 December 2022 which was
measured at fair value.
(b) Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash
and marketable securities are available to meet the current and future commitments of the Group. Due to the nature of the
Group’s activities, being mineral exploration, the Group does not have ready access to credit facilities, with the primary
source of funding being equity raisings.
The Board of Directors constantly monitors the state of equity markets in conjunction with the Group’s current and future
funding requirements, with a view to initiating appropriate capital raisings as required.
The financial liabilities of the Group are confined to trade and other payables as disclosed in the Consolidated Statement
of Financial Position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date.
(c) Credit risk
The Group’s significant concentration of credit risk includes cash, which is held with a major Australian bank with AA3
credit rating, accordingly the credit risk exposure is minimal. The maximum exposure to credit risk at balance date is the
carrying amount of cash as disclosed in the Consolidated Statement of Financial Position and Notes to the Consolidated
Financial Statements.
The Group does not presently have any material debtors. A formal credit risk management policy is not maintained in
respect of debtors.
(d) Fair values
The company had no financial instruments, other than cash at bank and on hand and short-term deposits, held by the
group as at 31 December 2023.
Set out below is an overview of financial instruments, other than cash at bank and on hand and short-term deposits, held
by the group as at 31 December 2022:
Fair value
through profit and
loss
$
through other
comprehensive
income
$
At amortised cost
$
Financial Assets:
Receivable
Total non-current
Total Assets
-
-
-
13,398,870
13,398,870
13,398,870
DANAKALI LIMITED ABN 56 097 904 302
-
-
-
40
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
Set out below is a comparison of the carrying amount and fair values of financial instruments as at 31 December 2022:
Financial Assets:
Receivable
Total non-current
Total Assets
Carrying Value
$
Fair Value
$
13,398,870
13,398,870
13,398,870
13,398,870
13,398,870
13,398,870
The fair value of the long-term receivable for the year ending 31 December 2022 was determined by discounting future
cashflows using a current market interest rate of 25% which incorporates an appropriate adjustment for credit. The timing
of cash receipts had been adjusted according to management’s best estimate.
19. CAPITAL MANAGEMENT
The Group’s objectives when managing capital are 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.
Capital managed by the Board includes Shareholder equity, which was $194,812,757 (2022: $63,918,147). The focus of
the Group’s capital risk management is the current working capital position against the requirements of the Group to
develop its new business activities plus corporate overheads. The Group’s strategy is to ensure appropriate liquidity is
maintained to meet anticipated business requirements, with a view to initiating appropriate capital raisings when required
in the future.
20. CONTINGENCIES
There are no material contingent liabilities or contingent assets of the Group as at 31 December 2023 and 2022.
21. COMMITMENTS
Short-term lease commitments:
Minimum lease payments
- within one year
Advisory fees pursuant to contracts
Total Commitments
Operating Leases:
2023
$
2022
$
-
-
-
10,009
-
10,009
The minimum future payments above relate to non-cancellable leases for offices.
22. SHARE-BASED PAYMENTS
(a) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Options issued to directors, employees and contractors
Performance Rights issued to directors, employees and contractors
Cancellation of options for value
(b) Options
2023
$
-
-
(302,500)
(302,500)
2022
$
375,550
(140,240)
-
235,310
The Group provides benefits to employees (including directors), contractors and consultants of the Group in the form of
share-based payment transactions, whereby employees, contractors and consultants render services in exchange for
options to acquire ordinary shares.
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. Set out below is a summary of the options granted (being those the
subject of share-based payments).
DANAKALI LIMITED ABN 56 097 904 302
41
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
Outstanding at the beginning of the year
Granted
Exercised
Expired
Cancelled
Outstanding at end of the year
Exercisable at end of the year
2023
2022
Number of
options
15,200,000
-
-
(950,000)
(4,250,000)
10,000,000
10,000,000
Weighted average
exercise price
$0.587
-
-
$1.084
$0.640(i)
$0.640(i)
Number of
options
15,264,112
4,000,000
-
(4,064,112)
-
15,200,000
15,200,000
Weighted average
exercise price
$0.755
$0.450
-
$1.084
-
$0.587
$0.587
(i)
In accordance with Listing Rule 7.22.3, the exercise price of each option was reduced by the equivalent of the return of capital per
share made to shareholders on the 8 January 2024. The options strike price was reduced by $0.273 per option to $0.367 (DNK
Announcement 19 January 2024).
Movements within specific classes of unlisted options (being those the subject of share-based payments) during the year
is as follows:
Unlisted Options – Class
Exercise price $0.501 expiry date 03/12/2023(i)
Exercise price $0.664 expiry date 08/07/2023
Exercise price $0.527 expiry date 29/01/2023
Exercise price $0.780 expiry date 24/03/2023
Exercise price $0.640(i) expiry date 30/07/2025
Exercise price $0.640(i) expiry date 30/07/2025
Exercise price $0.450 expiry date 31/12/2024
Opening
balance
1 Jan 2023
250,000
200,000
500,000
250,000
2,000,000
8,000,000
4,000,000
Granted
Cancelled
Expired
-
-
-
-
-
-
-
(250,000)
-
-
-
-
-
(4,000,000)
-
(200,000)
(500,000)
(250,000)
-
-
-
Closing
balance
31 Dec 2023
-
-
-
-
2,000,000
8,000,000
-
(i)
10,000,000
In accordance with Listing Rule 7.22.3, the exercise price of each option was reduced by the equivalent of the return of capital per
share made to shareholders on the 8 January 2024. The options strike price was reduced by $0.273 per option to $0.367 (DNK
Announcement 19 January 2024).
(4,250,000)
15,200,000
(950,000)
-
Remaining contractual life
The weighted average remaining contractual life of share options outstanding at the end of the period was 1.5 years
(31 December 2022: 2.253 years), with exercise prices ranging from $0.64.
Options granted during the year
No options were granted during the year ended 31 December 2023
As detailed in the Company’s Annual Report, a short-term incentive (STI) scheme applies to executives in the Company
and is designed to link any STI payment with the achievement of specified key performance indicators (KPI’s) which are
in turn linked to the Company’s strategic objectives and targets.
A summary of options granted during the year ended 31 December 2022 is included in the following table. The weighted
average fair value of the options granted during the year ended 31 December 2022 was $0.094. The value was calculated
by using the Black &Scholes Option Pricing Model applying the following inputs, to produce the fair value per option:
Number
of Options
4,000,000
Grant
Date
Expiry Date
26/05/2022 31/12/2024
Fair Value
per Option
$0.094
Exercise
Price
$0.450
Share Price
at
Grant Date
$0.315
Risk Free
Interest Rate
1.25%
Estimated
Volatility
63.83%
Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is
indicative of future trends, which may not eventuate. The life of the options is based on historical exercise patterns, which
may not eventuate in the future.
DANAKALI LIMITED ABN 56 097 904 302
42
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
(c) Performance Rights
Movements in the number of performance rights on issue during the year is as follows:
Performance Rights - Class Opening balance
Granted
Vested
Forfeited
Cancelled
1 Jan 2023
Class 1 (i)
Class 5 (i)
280,000
80,000
360,000
-
-
-
-
-
-
(280,000)
(80,000)
(360,000)
-
-
-
Closing
balance
31 Dec 2023
-
-
-
(i)
Issued under the Performance Rights Plan which was re-approved at the annual general meeting of the Company held
17 November 2014.
Movements in the number of performance rights during the prior year is as follows:
Performance Rights - Class Opening balance
Granted
Vested
Forfeited
Cancelled
1 Jan 2022
Class 1 (i)
Class 5 (i)
Class 10
280,000
80,000
-
-
-
2,250,000
360,000
2,250,000
-
-
-
-
-
-
(2,250,000)
(2,250,000)
-
-
-
-
Closing
balance
31 Dec 2022
280,000
80,000
-
360,000
(i)
Issued under the Performance Rights Plan which was re-approved at the annual general meeting of the Company held 17 November
2014.
23. RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent entity within the Group is Danakali Limited.
(b) Subsidiary
Interests in the subsidiary is set out in note 25.
(c) Investment in Joint Venture
Transactions with CMSC are set out in note 10 and note 11 of this report.
(d) Key management personnel compensation
Short-term benefits
Post-employment benefits
Share-based payments
Performance bonus
2023
$
2022
$
983,837
155,359
-
534,857
984,664
83,555
690,550
-
1,674,053
1,758,769
(e) Transactions with directors, director related entities and other related parties
AFC is deemed to be a related party of the Company on the basis of significant influence. The related party status applies
from 23 April 2020, being when AFC held an interest of 14.4% (2022:14.4%) in the issued capital of the Company and the
date that Danakali appointed two AFC nominees to its Board of Directors.
AFC President and CEO, Samaila D. Zubairu, and AFC Senior Director for Investment Operations & Execution, Taiwo
Adeniji, joined Danakali’s Board as Non-Executive Directors on 23 April 2020. These appointments are in accordance with
the terms of the Subscription Agreement which provides AFC the right to appoint two nominees to the Board of Danakali
provided AFC’s Danakali ownership remains above certain thresholds. On 15 June 2023, Samaila D. Zubairu resigned as
a director. As at the date of release of this report, AFC holds one out of four board seats on the Company.
(e) Cancellation of options for consideration
The shareholders approved that 4,250,000 options held by key management be cancelled for a total consideration of
$302,500 (DNK Announcement 24 November 2023).
There were no other material related party transactions.
DANAKALI LIMITED ABN 56 097 904 302
43
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
24. REMUNERATION OF AUDITORS
During the year, the following fees were paid or payable for services provided by the auditor of the Company, its related
practices and non-related audit firms:
Assurance related
- Hall Chadwick
-
Ernst & Young
Fees for regulatory services
25. SUBSIDIARIES
2023
$
2022
$
38,016
84,736
-
122,752
-
114,091
-
114,091
Interest in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy:
Name
Danakali Investments Pty Ltd(a)
Mount Street Accounting
Services Pty Ltd
Principal Activities
Investment in
Exploration
Country of
Incorporation
Class of
Shares
Australia
Ordinary
Business Services
Australia
Ordinary
Equity Holding
2023
%
2022
%
100
100
100
0
The proportion of ownership interest is equal to the proportion of voting power held.
(a) Previously STB Eritrea Pty Ltd.
26. PARENT ENTITY INFORMATION
The following information relates to the parent entity, Danakali Limited. The information presented here has been prepared
using accounting policies consistent with those presented in note 2.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Issued capital
Share-based payments reserve
Accumulated profit/(loss)
Total equity
Profit/(Loss) for the year
Total Comprehensive profit/(loss) for the year
27. DIVIDENDS
No dividends were paid in 2023 and 2022.
2023
$
195,539,736
9,526
195,549,262
2022
$
14,976,203
22,628,964
37,605,167
672,476
64,030
736,506
194,812,757
902,699
52,160
954,859
36,650,308
135,716,725
1,244,959
57,851,073
194,812,757
127,866,319
13,868,006
(105,084,017)
36,650,308
133,787,133
133,787,133
932,387
932,387
At the shareholders meeting held on 24 November 2023, the shareholders approved a return of capital of $100,466,735
and the Board approved a special dividend of $54,233,691 to shareholders as at 5:00pm (AWST) on 2 January 2024
(Record Date). The total distribution amounted to $154,700,426 and was paid on 8 January 2024.
DANAKALI LIMITED ABN 56 097 904 302
44
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2023
28. EVENTS OCCURRING AFTER THE BALANCE DATE
Return of capital and dividends
At the shareholders meeting held on 24 November 2023, the shareholders approved a total return of capital of
$100,466,735 and the Board approved a special dividend of $54,233,691 to shareholders as at 5,00pm (AWST) on
2 January 2024. The total distribution amounted to $154,700,426 and was paid on 8 January 2024.
Options
As at 31 December 2023, there was a total of 10,000,000 unlisted options on issue $0.640 which expire on 30 July 2025.
In accordance with Listing Rule 7.22.3, the exercise price of each option was reduced by the equivalent of the return of
capital per share made to shareholders on the 8 January 2024. The options strike price was reduced by $0.273 per option
to $0.367 (DNK Announcement 19 January 2024).
ATO class ruling
On 15 February 2024 the Australian Taxation Office (ATO) published a Class Ruling (CR 2024/8) in relation to Danakali’s
distribution to shareholders which confirmed the Capital Return of 27.3 cents per share and Special dividend of 14.7 cents
per share which was paid on 8 January 2024.
Other matters
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 years.
DANAKALI LIMITED ABN 56 097 904 302
45
Directors’ Declaration
In the Directors’ opinion:
(a)
the financial statements and notes of Danakali Limited for the financial year ended 31 December 2023 are in
accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(ii) giving a true and fair view of the Group’s financial position as at 31 December 2023 and of its performance for
the year ended on that date;
(b)
(c)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
note 2;
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable subject to achieving the matters set out in note 2(c); and
The directors have been given the declarations by the Executive Chairman and Chief Financial Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Seamus Cornelius
EXECUTIVE CHAIRMAN
Perth, 27 March 2024
DANAKALI LIMITED ABN 56 097 904 302
46
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DANAKALI LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Danakali Limited (“the Company”) and its subsidiaries (“the
Consolidated Entity”), which comprises the consolidated statement of financial position as at 31 December
2023, the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended, and
notes to the financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion:
a.
the accompanying financial report of the Consolidated Entity is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2023
and of its financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
b.
the financial report also complies with International Financial Reporting Standards as disclosed in Note
2.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Consolidated Entity in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial report of the current period. These matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
47
Key Audit Matter
How our audit addressed the Key Audit Matter
Discontinued operations
As disclosed in note 10 to the financial statements,
the Group entered into a binding share sale
As part of our audit procedures, the following audit
procedures were performed:
agreement with Sichuan Road and Bridge Group Co
Ltd for the sale of all its interest in CMSC’s shares
for a total consideration of $201,132,300 in cash. ,
the Group has presented the sale as a discontinued
operations in the income statement. The result of the
discontinued operations amounts to $132,271,689
We considered this as a key audit matter because of
the size and nature of the transactions.
•
•
•
Evaluation of management’s assumptions
applied as discontinued operation by
reviewing of minutes and other relevant
discontinue
documentation
the
of
operations;
Evaluated the substance of the sale using
the terms and conditions of the underlying
transaction agreements against the criteria
for discontinued operations in accounting
standards;
Assessed of
associated with discontinued operations;
the reallocation of costs
• Calculation of the loss on the discontinue of
operations;
•
•
Verified proceeds to bank statements; and
Assessing the adequacy of the disclosures
included
statements.
in notes 10
to
the
financial
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Consolidated Entity’s annual report for the year ended 31 December 2023, but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
48
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2, the
directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Consolidated Entity’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Consolidated Entity’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to
continue as a going concern.
49
•
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Consolidated Entity to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Consolidated Entity audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during
our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial report of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 31 December
2023. The directors of the Company are responsible for the preparation and presentation of the remuneration
report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion, the Remuneration Report of Danakali Limited, for the year ended 31 December 2023, complies
with section 300A of the Corporations Act 2001.
HALL CHADWICK WA AUDIT PTY LTD
MARK DELAURENTIS CA
Director
Dated this 27th day of March 2024
Perth, Western Australia
50
ASX Additional Information
Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as at 25 March 2024.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
-
-
-
-
1
1,001
5,001
10,001
100,001
TOTAL
1,000
5,000
10,000
100,000
and over
Holders
Securities
503
801
347
705
202
174,477
2,053,849
2,731,012
24,756,773
338,618,235
2,558
368,334,346
%
0.05%
0.56%
0.74%
6.72%
91.93%
100%
The number of shareholders holding less than a marketable parcel was 1,213 (based on a cash backing of approximately
10.5 cents per share).
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Listed ordinary shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
AFC EQUITY INVESTMENTS LIMITED
WELL EFFICIENT LIMITED
CITICORP NOMINEES PTY LIMITED
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LTD
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
NGE CAPITAL LIMITED
BNP PARIBAS NOMS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CALDWELL NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
SINO WEST ASSETS PTY LTD
SINO WEST ASSETS PTY LTD
MR SEAMUS CORNELIUS
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR GABRIEL BERRA
GJEWA PTY LTD
ARLINGTON GROUP ASSET MGT LTD
MR JOHN JOSEPH WALLACE
Number of shares
52,958,908
35,000,000
34,292,030
31,191,756
21,048,099
20,000,000
18,105,849
13,082,280
9,871,191
6,717,388
6,000,000
4,811,698
4,672,992
4,308,037
3,654,097
3,351,959
3,248,490
3,100,000
3,000,000
2,848,983
Percentage of
ordinary shares
14.38
9.50
9.31
8.47
5.71
5.43
4.92
3.55
2.68
1.82
1.63
1.31
1.27
1.17
0.99
0.91
0.88
0.84
0.81
0.77
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
281,263,757
76.36
AFC Equity Investments Limited (AFC Equity) and Africa Finance Corporation (AFC)
Well Efficient Ltd
Mitsubishi UFJ Financial Group, Inc.
Morgan Stanley and its subsidiaries
NGE Capital Limited
DANAKALI LIMITED ABN 56 097 904 302
Number of Shares
52,958,908
35,000,000
31,407,942
31,407,942
20,000,000
51
ASX Additional Information
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction. Holders of unlisted options and
performance rights do not have voting rights.
e) Unquoted securities
At 25 March 2024 the Company has on issue 10,000,000 unlisted options over ordinary shares and no performance rights.
The names of security holders holding more than 20% of an unlisted class of security are listed below.
Holders
Seamus Ian Cornelius
Mark Riseley
Gregory Ian MacPherson
Rod McEachern
Tony Harrington
Total
Unlisted
Options
$0.367
30/07/2025
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
10,000,000
DANAKALI LIMITED ABN 56 097 904 302
52