Kalium
LAKES
CONSOLIDATED
ANNUAL REPORT
2016 - 2017
Kalium Lakes Limited I ABN 98 613 656 643 CORPORATE DIRECTORY
DIRECTORS
Mr Malcolm Randall
Mr Brett Hazelden
Non-Executive Chairman
Managing Director and
Chief Executive Officer
Mr Rudolph van Niekerk Executive Director
Mr Brendan O’Hara
Non-Executive Director
COMPANY SECRETARY
Mr Gareth Widger
REGISTERED OFFICE AND
PRINCIPLE PLACE OF BUSINESS
Unit 1, 152 Balcatta Road
Balcatta WA 6021
PO Box 610
Balcatta WA 6914
Phone: +61 (0)8 9240 3200
WEBSITE AND EMAIL
Email: info@kaliumlakes.com.au
www.kaliumlakes.com.au
AUDITORS
RSM Australia Partners
Level 32 Exchange Plaza
2 The Esplanade
Perth WA 6000
SHARE REGISTRY*
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
Phone (within Australia): 1300 850 505
Phone (outside Australia): +61 3 9415 4000
SOLICITORS
DLA Piper Australia
Level 31, Central Park
152-158 St Georges Terrace
Perth WA 6000 Australia
HOME EXCHANGE
Australian Securities Exchange
Level 40, Central Park,
152-158 St Georges Terrace
Perth WA 6000
ASX CODE
KLL
CONTENTS
CHAIRMAN’S ADDRESS
MANAGING DIRECTOR’S OVERVIEW
COMPANY SUMMARY
DIRECTORS’ REPORT
CORPORATE GOVERNANCE STATEMENT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT AND 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
ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES
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2
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 CHAIRMAN’S ADDRESS
Dear Shareholder
As the Chairman of Kalium Lakes Limited
(KLL) and on behalf of the Board and
Management, it is my pleasure to
present to you the Chairman’s Address
as part of the Company’s first Annual
Report as a public company and now
listed on the Australian Securities
Exchange (ASX).
Our Company, which was established in 2014, is on
track to be the first in Australia to develop a sub-
surface brine deposit to produce Sulphate Of Potash
(SOP) through the Beyondie Sulphate Of Potash Project.
Involving an evaporation and processing operation,
our aim is to produce 150,000 tonnes per annum in
a staged project located 160 kilometres south east of
Newman, in Western Australia’s Pilbara Region.
Kalium Lakes was admitted to the ASX official list and
quotation of its securities on the ASX commenced on
Thursday 22 December 2016.
Since that time, we have made extraordinary progress
in a relatively short period or to be specific, less than 12
months.
Our scorecard is very impressive:
► Successful and oversubscribed Initial Public Offer
raising of $6 million.
► Established a fully operational camp and workshop
facility in the Pilbara.
► Constructed the first large scale pilot evaporation
ponds in Australia.
► Raised $4.5 million through an oversubscribed
placement.
► Joint ventured our Carnegie Potash Project with
BC Iron.
► On track to become Australia’s first SOP producer.
► Share price has more than doubled since listing.
► Successfully completed a Pre-Feasibility Study and
now fast tracking a Bankable Feasibility Study.
Of course, this would not have been achieved without
the focussed, committed and hardworking operational
team led by our Managing Director, Brett Hazelden and
Chief Development Officer, Rudolph van Niekerk.
While our SOP project is located in the heart of a
resources and mining province, we are unique in being
an “agri-business” company preparing to produce the
agricultural fertiliser SOP.
As a premium potassium fertiliser, SOP is a source of
one of the three major nutrients that plants require for
healthy plant metabolism, development of strong roots,
stalks and stems and at the same time enhancing the
appearance, taste, nutritional value and shelf life of
harvested crops.
Importantly, demand for premium fertiliser is predicted
to gradually increase with world population growth and
as developing nations increase consumption of various
meat and food crops.
Australia’s capacity to deliver robust agricultural supply
chains to both domestic and export markets, as well
as the Beyondie Project’s close proximity to transport
infrastructure (providing access to rail, roads and port),
remain key attributes within our vision to deliver a
successful and profitable SOP production business.
Both the Board and the management team are
focussed on delivering a satisfactory return to Kalium
Lakes’ shareholders and stakeholders. In this first year
as a public company, Kalium Lakes has surpassed all
the objectives set out in the Prospectus for the Initial
Public Offer.
The achievements during the past year are both
remarkable and a testament to the challenging work,
tenacity and practical problem solving of the small and
dedicated team at Kalium Lakes.
On behalf of the Board and the shareholders, I
congratulate the Kalium Lakes team on delivering an
outstanding first year, which has set solid foundations
for the future and sincerely thank them for a
tremendous effort.
Yours faithfully
Malcolm Randall
Non-Executive Chairman
3
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 MANAGING DIRECTOR’S OVERVIEW
Kalium Lakes Limited (KLL) was
incorporated as a public company on
14 July 2016, as part of the restructure
of Kalium Lakes Potash Pty Ltd which
has been operating since October 2014.
The majority of the first half of this
financial year, apart from the ongoing
site activities at the Beyondie Sulphate
Of Potash (SOP) Project, was dedicated
to preparations necessary to become a
public listed company.
The Company successfully completed an
oversubscribed Initial Public Offer, listing on the
Australian Securities Exchange (ASX) in December 2016.
The team at KLL has been busy developing a strong,
flexible and successful public business, based on the
foundations established as a private company.
In briefly summarising the activities undertaken since
listing, the pages of this overview not only record
the many milestones but also demonstrate the
effectiveness of the small team driving the Kalium
Lakes’ business.
2017 – A Busy Year
As mentioned earlier, Kalium Lakes successfully listed
on the ASX on 22 December 2016 and experienced six
days of trading on ASX before the new calendar year
commenced.
The Initial Public Offering raised $6 million
($3 million subscription and $3 million over
subscription) and enabled the Company to commence
work on increasing the confidence of Mineral
Resources, begin test pumping the various bores, install
supporting infrastructure, continue regulatory and
other approvals, as well as meet corporate and ongoing
working capital requirements.
Kalium Lakes continued to utilise K-UTEC AG Salt
Technologies from Germany to prepare a Technical
Report according to the guidelines of the JORC Code
with reference to the CIM Best Practice Guidelines for
Resource and Reserve Estimation for Brines.
Through the adoption of both the JORC Code and the
Canadian Institute of Mining, Metallurgy and Petroleum
(CIM) NI 43-101 standard of disclosure for the reporting
of Mineral Resources, Kalium Lakes recognised that the
CIM has developed best practice guidelines for Mineral
Resource and Reserve estimation of Brines.
In January 2017, KLL immediately commenced works
on access roads, the installation of water bore drill
pads and initial orders were placed for support
infrastructure, camp accommodation and specialised
test pumping equipment.
In February, the Company announced that Innovation
Science Australia had approved the overseas Research
and Development (R&D) activities for the Beyondie
Sulphate of Potash Project in relation to its previously
lodged Overseas Findings application for the 2015/16
income year. A total of $1,371,736 in R&D tax offsets
for the 2015/16 income year, for both Australian and
overseas R&D activities, was received.
BC Iron Limited (BCI) and Kalium Lakes announced
that the companies had entered into a joint venture
agreement over Kalium’s 100 per cent owned Carnegie
Project early in March 2017.
The Carnegie Project is a potash exploration project
located approximately 220 kilometres north east of
Wiluna that comprises one granted exploration licence
and two exploration licence applications, covering
a total area of approximately 1,700 kilometres. The
Carnegie Project remains highly prospective for hosting
a large sub-surface brine deposit.
Under the terms of the Agreement, BCI is able to earn
up to a 50 per cent interest in the Carnegie Project,
by predominantly sole-funding exploration and
development expenditure across several stages, with
KLL as the manager of the joint venture.
Also in March, a new drilling campaign was initiated
and focussed on increasing the confidence in the
Mineral Resource for the Project, with an aim of
enabling conversion of the Mineral Resource to an
Ore Reserve.
In that same month, a range of supporting
infrastructure was installed at the Project and the
Company appointed Rudolph van Niekerk to the role of
Chief Development Officer.
4
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 In that same month, the Company successfully
completed an oversubscribed book build and received
commitments for a placement of 13,235,295 new fully
paid ordinary shares at an issue price of $0.34 per
share to both new and existing, domestic and overseas,
sophisticated and professional investors raising $4.5
million.
Proceeds from the placement were immediately
used to fast track the establishment of large scale
pilot evaporation ponds, production bores and the
installation of pumps, pipelines and other equipment,
as well as advancing regulatory approvals for the
Beyondie SOP Project.
In mid-June, KLL announced excellent ongoing
production bore brine test pumping flowrates
with pump rates up to 25 litres per second and an
outstanding 10 Mile Trench Test Pumping at flowrates
up to 20 litres per second per kilometre of trench.
Another important factor was the consistently high
potassium grades for both production bores and
trenches delivering up to an equivalent SOP grade of
24,000 milligrams per litre.
On the final day of the financial year, Kalium Lakes
signed a Non-Binding Off-Take Memorandum of
Understanding with WITTRACO Düngmittel GmbH
for the sale of SOP. Based in Hamburg, Germany,
WITTRACO is a global business focused on the
marketing and distribution of commodity, soluble and
specialty fertilisers.
“By May 2017, fully operational camp
facilities, workshop and a dedicated
78 kilometre access road were
in place”
During April, the Kalium Lakes team moved the
corporate office to premises with an appropriate mix of
office and warehouse space in Balcatta, continued bore
installation activities and commenced test pumping.
May 2017 was another very busy period for Kalium
Lakes with drilling results delivering outstanding
potassium grades up to 11,500 milligrams per litre
(equivalent to a SOP grade of 25,600 milligrams per
litre), as well as revealing consistently low impurity
levels in the Stage 1 Development Area, with Na:K ratios
between 7.2 and 8.3.
Early in May, in an update to the market, Kalium
Lakes provided a short list of significant exploration
achievements:
► Seven production bores had been installed and
more than 20 million litres pumped from the basal
aquifer, at continuous rates varying between 5-32
litres per second.
► More than five kilometres of 250 millimetre
production pipeline was being installed between the
current bore field and the trial pilot pond site.
► Approvals were in place for up to 3.4 kilometres
of initial trenches with approximately 800 metres
installed.
► Test pumping confirmed the potential for the Project
to extract brine from both palaeochannel bores
and surficial trenches, providing flexibility on brine
sources.
► Pond verification testing involving four different
construction methods and materials which will
allow the optimisation of pond leakage, potassium
recovery losses and capital/operating cost
requirements, were in progress.
► The trenching trials had shown significant inflows
and further confirmed off-lake evaporation ponds
are optimal and more practical when considering
the use of heavy earthmoving equipment.
► All regulatory approvals were in place for up to 150
hectares of pilot ponds and the extraction of 1.5
gigalitres of brine per annum.
► More than 1,105 kilometres of geophysical traverses
had been completed utilising gravity and passive
seismic methods.
► Fully operational camp facilities, workshop and a
dedicated 78 kilometre access road were in place.
5
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 MANAGING DIRECTOR’S OVERVIEW (CONTINUED)
► During early September, Kalium Lakes advised that
the first salts had precipitated in the large scale
pilot ponds and that the realised cost of installing
the lined ponds was approximately $5.40 per square
metre, inclusive of cut and fill earthworks to create
level tiered pond floors, pond wall construction, liner
supply and liner installation.
► In the last week of September KLL signed a
Memorandum Of Understanding with Yunnan
Jingyifeng Supply Chain Management Co Ltd (JYF) for
the sale of Sulphate Of Potash. Based in Kunming
City, JYF is focused on the marketing and distribution
of liquid and solid chemicals and fertilisers
throughout south west China.
► At the end of another busy quarter, the Company
received a total of $1,881,570 in Research and
Development (R&D) tax offsets for the 2016/17 income
year, for both Australian and approved overseas R&D
activities.
Subsequent Achievements
The pace has not slowed at Kalium Lakes since 30 June
2017, if anything the team’s determination to “get on
with the job” has allowed the Company to pursue new
initiatives:
► On 4 July 2017, the Company signed an exclusive Letter
of Intent with EcoMag Limited, to trial the recovery
of high value Hydrated Magnesium Carbonate (HMC).
EcoMag is currently building a transportable pilot
plant that will be used to trial the recovery of HMC
which may, in turn, generate additional revenue.
► The Company continued to record high grade
potassium results -up to 8,800 milligrams per litre
equivalent to an SOP grade of 19,600 milligrams per
litre. The milestone of pumping more than 55 million
litres of brine from bores and trenches was passed
during this month.
► Kalium Lakes commenced commissioning of the
Large Scale Pilot Evaporation Ponds at the Beyondie
in mid-August 2017 and informed the market that SOP
Recovery for lined ponds was estimated at up to 87
per cent excluding purification plant recovery losses.
► Later in August, the Company announced additional
assay results from auger holes located in the eastern
tenements Resource Area, which comprise Stage 2 of
the Project. These Stage 2 results, collected two years
apart, confirmed consistent high potassium grades
up to 11,600 milligrams per litre - equivalent to a SOP
grade of 25,850 milligrams per litre, including low
impurity levels with Na:K (sodium to potassium) ratios
averaging 8.6.
ASX Announcement Timeline
Site Works
Commenced
ASX
Listing
Carnegie
Potash JV
Outstanding
Potassium Grades
Overseas R&D
– Tax Offset
Infrastructure
Installed –
Under Budget
JANUARY
FEBRUARY
MARCH
APRIL
MAY
Resource
Statement and
Technical Report
PFS
Update
Drilling
Recommences /
CDO Appointed
Project
Update
6
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 MANAGING DIRECTOR’S OVERVIEW (CONTINUED)
Pre-Feasibility Study
On 3 October 2017, Kalium Lakes delivered the Beyondie
SOP Project Pre-Feasibility Study, which contained the
following key points:
► Pre-Feasibility Study (PFS) confirms that Kalium
Lakes’ 100% Owned, Beyondie Sulphate Of Potash
Project, is technically and financially robust.
► Indicated Resource of 4.37 Mt @ 14,000 mg/l SOP
at a cut-off grade of 3,500mg/l K and an Inferred
Resource of 13.74 Mt @ 12,788 mg/l SOP at a cut-off
grade of 3,500mg/l K.
► Maiden Probable Reserve of 2.66 Mt @ 14,210
mg/l SOP at a cut-off grade of 3,500mg/l K based
solely within the Stage 1 Approval Footprint, which
represents ~21% of total lake surface area within the
tenement package.
► Development base case of 150 ktpa SOP, with the
option to incrementally phase the project, through
a ramp up from 75 ktpa to 150 ktpa SOP, to minimise
operational and financial risks.
► Development base case pre-tax NPV10 of A$388M, IRR
of 28.7%, average EBITDA of A$83 Mpa, EBITDA margin
of 62%, a payback period of 3.7 years and Life of
Mine (LOM) free cash flows of more than $1B, based
on an initial 21 year LOM and a US$500/t SOP sales
price @ $A/$US exchange rate of 0.75.
► Estimated LOM Operating Cash Cost of A$244-253/t
SOP FOB Geraldton or Fremantle Port. This places
the BSOPP in the lowest quartile cost of global SOP
production.
► Pre-production Capital Cost of A$220 million,
including a 78 kilometre gas pipeline for the base
case or A$124 million for the phased ramp-up
scenario.
► Significant potential upside to increase production
levels or extend the LOM.
► Potential additional revenue associated with
recovery of magnesium by-products which have not
been included in the current financial outcomes.
► Approvals are well advanced and the Company
intends to make submissions to the relevant
authorities during the next quarter. Offtake
discussions are progressing and the Company has
entered into two non-binding off-take MOUs, as
announced on the ASX.
► An independent review by Snowden Mining Industry
Consultants Pty Ltd (Snowden) considered that
the PFS content meets or exceeds the appropriate
standard to support the estimation of Ore Reserves.
► Kalium Lakes’ Board, which previously approved the
undertaking of Pilot Scale Works, has now endorsed the
commencement of a Bankable Feasibility Study (BFS).
Excellent Brine
Test Pumping
Flowrates
High Grade
Potassium
Results
First Salts
Large Scale
Pilot Ponds
R&D - Tax
Offset
Share
Placement
A$4.5 Million
Off-Take
MOU – German
Brine Fills Large
Scale Pilot Ponds
Off-Take
MOU -
Chinese
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
EcoMag
- LOI
Large Scale
Pilot Ponds –
Construction
Consistent High
Grade Results –
2 Years
Pre-Feasibility
Results
7
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 MANAGING DIRECTOR’S OVERVIEW (CONTINUED)
Next Steps
Following the completion of the PFS, the Board has
now endorsed the commencement of the BFS. The BFS
program will run in conjunction with the previously
approved Pilot Scale Works, including ongoing
submissions for the various regulatory approvals
required to develop the Project.
The key next steps are:
► Continue the ongoing pilot pond evaporation
program to provide bulk salts for the pilot scale
purification works and confirm operational and scale
up parameters
► Undertake bulk salts sample processing at K-UTEC’s
facilities in Germany for the purification plant pilot
works to confirm recovery and design parameters
► Further Resource and Reserve drilling to meet BFS
requirements
► Ongoing test pumping of bores and trenches
► Update the Hydrogeological Numerical Modelling
and associated Mine Plan
► Engineering and design activities to allow tendered
construction prices to be received
► Project Approval submissions to the relevant
authorities commencing in the coming quarter
► Finalisation of the second Native Title Mining
Agreement
► Advance product sales discussions with the objective
of securing Binding Offtake Agreements
► Undertake detailed investigations of magnesium
by-product recoveries to a level sufficient for
incorporation into the BFS
► Pilot trial recovery of Hydrated Magnesium
Carbonate in parallel to ongoing pilot ponds
► Advance discussions with various lenders and
strategic investors, with the objective of securing
binding funding proposals prior to the Final
Investment Decision
Kalium Lakes is well placed to progress to the next
stages of it development path. The Company remains
committed to continuing to de-risk the Project,
minimise initial capital requirements and become
Australia’s first SOP producer, which will provide the
early cashflow that will allow expansion with the
market.
In doing these things we will ultimately be assisting
Australian farmers by providing an agronomically
superior product, while delivering a satisfactory
return to our shareholders for potentially, a number
of decades.
Brett Hazelden
Managing Director and Chief Executive Officer
06 October 2017
8
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 COMPANY SUMMARY
Review Of Operations
The Company holds rights to granted tenure of more than 2,400 square kilometres, as
well as further tenement applications at the eastern margin of the East Pilbara region
of Western Australia.
► Kalium Lakes Tenement and Location
9
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 COMPANY SUMMARY (CONTINUED)
Beyondie Sulphate Of Potash Project
KLL is an exploration and development company
focussed on developing the Beyondie Sulphate Of
Potash Project (BSOPP) in Western Australia with
the aim of producing Sulphate Of Potash (SOP) for
domestic and international sale.
The Project, comprising 15 granted exploration
licences and a miscellaneous licence, covers an
area of approximately 2,400 square kilometres.
Kalium Lakes intends to develop a sub-surface Brine
deposit to produce a SOP product, by undertaking an
evaporation and processing operation 160 kilometres
south east of Newman.
The BSOPP is among Australia’s highest grade SOP
deposit at an average of 13.1 kilograms per cubic metre
SOP and is located close to key infrastructure. The
Project is already well progressed and has completed
detailed technical reports, initial test pumping of
brine, undertaken environmental and heritage surveys,
negotiated a Native Title agreement covering the initial
project development area (with a second currently
being negotiated) and has approvals in place from the
WA Department of Mines and Petroleum (DMP), the WA
Department of Environmental Regulation (DER) and the
WA Department of Water (DoW).
The Beyondie Sulphate Of Potash Project currently
has Indicated Resources of 4.37 million tonnes (Mt) at
14,000 milligrams per litre (mg/l) SOP using a cut-off
grade of 3,500mg/l K, Inferred Resources of 13.74 Mt
@ 12,788 mg/l SOP using a cut-off grade of 3,500 mg/l
K and a Maiden Probable Reserve of 2.66 Mt @ 14,210
mg/l SOP at a cut-off grade of 3,500mg/l K based solely
within the Stage 1 Development Area (Note: Stage 1
represents approximately 21 per cent of total lake
surface area of the tenement package).
The founders of Kalium Lakes initiated a Concept
Study in November 2014 after initial encouraging
results from surface water samples containing high
potential for potash production and concluded that
study in April 2015. Work on the Pre-Feasibility Study
commenced immediately and this was completed
during September 2017.
10
► Beyondie SOP Project Footprint
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 Carnegie Project – Joint Venture
The Carnegie Project, a joint venture between BC Iron
Limited (BCI) and KLL, is a potash exploration project
located approximately 220 kilometres north east of
Wiluna that comprises one granted exploration licence
and two exploration licence applications covering a
total area of approximately 1,700 square kilometres.
This project is highly prospective for hosting a large
sub-surface brine deposit which could be developed
into a solar evaporation and processing operation
that produces Sulphate of Potash. The Carnegie
Project tenements are located directly north of Salt
Lake Potash Limited’s (SO4) – Lake Wells tenements
and Australian Potash Limited’s (APC) – Lake Wells
tenements.
Under the terms of the Agreement, BC Iron can
earn up to a 50 per cent interest in this project, by
predominantly sole-funding up to $10.5 million in
exploration and development expenditure across
several stages. Kalium Lakes is the manager of the
joint venture.
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Carnegie JV
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PENDING
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GRANTED
E 38/2982
PENDING
Salt Lake Potash
Lake Wells Project
Australian Potash
Lake Wells Project
Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AEX,
Getmapping, Aerogrid, IGN, IGP, swisstopo, and the GIS User Community
Carnegie JV Project Overview
Scale
1:1,500,000
0 10 20 30 40 50
Kilometers
Coordinate System: GDA 1994 MGA Zone 51
Projection: Transverse Mercator
Datum: GDA 1994
Wiluna
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Carnegie JV Project
Kalium Lakes
Beyondie Potash Project
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Salt Lake Potash
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Australian Potash
Lake Wells Potash Project
S a
Date: 25/02/2017
Paper Size: A3
File Name: CA_17001_v3
Location: F:\Maps\BCI\CA_17001_v3.mxd
► Carnegie Potash Projet JV Tenement Location
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KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 COMPANY SUMMARY (CONTINUED)
Potash Prospects – Dora and Blanche
The Company has applied for exploration licences that could, if granted, introduce a new prospective area, the Dora/
Blanche Prospect, for potassium exploration.
12
► Project Deposit Locations
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 Safety
Kalium Lakes places the health and safety of its
employees and contractors above all other business
considerations. Health and safety performance is
integral to an efficient and successful company. KLL
strives to create a culture where safety is a core
value and every individual takes responsibility for
their own actions and will act to stop the unsafe
actions of others.
In support of this culture, management accepts the
responsibility for the creation of a safe workplace,
through the implementation of a Health and Safety
Management System and the promotion of safety
awareness among their employees and contractors.
Kalium Lakes will abide by all legal and other
requirements that are directly related to the Health and
Safety activities.
During the year to 30 June 2017 a total of 15,907 hours
were worked at the Beyondie SOP Project site with no
Lost Time Injuries and no Medical Treatment Injuries.
Sustainability
NATIVE TITLE AND HERITAGE
Kalium Lakes recognises the importance of country,
law and culture of the Traditional Owners. It is
committed to the effective management of indigenous
and community matters which form an integral part
of its successful operations. KLL also expects its
managers to be educated and active in fostering long-
term relationships with both Indigenous People and
the Community.
The Traditional Owners’ belief that the health and
vitality of people (martu), country (ngurra) and law
and culture (tjukurrpa) are connected, is formally
acknowledged by Kalium Lakes.
The Company recognises that culturally significant
sites and issues may from time to time be identified
on its leases. Its management, employees, contractors
and associates undertake to comply with the
requirements of the Aboriginal Heritage Act 1972 in
recognising these sites.
Risk Factors and Management
ENVIRONMENT
The proposed future activities of the Company are
subject to a number of risks and other factors which
may impact its future performance. Some of these
risks can be mitigated by the use of safeguards
and appropriate controls. However, many of the
risks are outside the control of the Directors and
management of the Company and cannot be
mitigated. An investment in the Company is not risk
free and should be considered speculative
Section 8 of the Prospectus issued in November 2016
provides a non-exhaustive list of the risks faced by
the Company or by investors in the Company. The
risks described in that section of the Prospectus
also include forward looking statements. Actual
events may be materially different to those
described and may therefore affect the Company in
a different way.
Investors should be aware that the performance
of the Company may be affected by these risk
factors and the value of its Shares may rise or fall
over any given period. None of the Directors or any
person associated with the Company guarantee the
Company’s performance or the market price at which
the Shares will trade.
Kalium Lakes Limited is committed to responsible
environmental management and environmental
performance as an essential attribute of an efficient
and successful company. This will be achieved through
leadership and the use of reliable systems that provide
timely and accurate information, in a transparent
manner to support effective decision making.
COMMUNITY
Kalium Lakes strives to engage and work with those
local communities near to where it operates. In
doing so, it will continually work to ensure that key
stakeholders are informed in a timely, open and
transparent manner.
The Company will maintain a clear and concise
approach to consultation and negotiations with
landholders, adhere to acceptable protocols and
establish mutually beneficial long term relationships,
employment and contracting opportunities as part of a
culturally aware workplace.
13
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 COMPANY SUMMARY (CONTINUED)
Corporate
BOARD AND MANAGEMENT
FINANCIAL POSITION
The Company had $6.1 million cash on hand as at
30 June 2017.
The Directors were appointed on 14 July 2016, coinciding
with the incorporation of Kalium Lakes Limited.
SHARES ON ISSUE
In March 2017, Mr Rudolph van Niekerk
(B.Eng. Mechanical, GAICD) was appointed to the role of
Chief Development Officer for the Company.
Mr van Niekerk had been involved with the Company for
some time as a Director and his responsibilities include
the development of the Beyondie SOP Project.
During his career he has held various responsibilities
that included financial evaluation, risk review
and management, project management, study
management, development of capital and operating
cost estimates, budget development and cost control,
design management, planning, reporting, contract
administration, quality control, expediting, construction,
commissioning, production ramp-up and project
hand-over to operations.
BUSINESS DEVELOPMENT
The Company plans to continue to actively assess
business development opportunities that relate to its
existing project portfolio.
As and when acquisitions, divestments or partnerships
are completed the Company will make announcements
to the market under continuous disclosure requirements.
INITIAL PUBLIC OFFER - USE OF FUNDS
As set out in the Prospectus for the Initial Public Offer,
the funds raised under the Offer have been used to fund
the Company’s main objectives, namely to:
► Increase confidence of Mineral Resources – continue
hydrogeological definition with the aim of increasing
confidence in the current Mineral Resource for the
Beyondie Potash Project;
► Test pumping of bores – conduct short term test
pumping to verify the Company’s resource estimates
in accordance with the JORC Code and CIM Code;
► Install supporting infrastructure – construct access
roads, a camp, workshops, utilities and buildings;
► Regulatory and other approvals – continuing
environmental, Native Title and regulatory approvals
and agreement processes; and
► Meet corporate and working capital requirements.
As at 30 June 2017 the Company had 135,030,035 Ordinary
Shares on Issue.
The following is a list detailing the ASX Restricted Securities:
► 57,769,847 fully paid ordinary shares are currently
escrowed for a period of 24 months from the date of
official quotation on the ASX;
► 9,000,000 options exercisable at $0.25 each, expiring
on 16 December 2019, are currently escrowed for
a period of 24 months from the date of official
quotation on the ASX;
► 20,000,000 performance rights with terms and
conditions as set out at pages 190 to 192 of the
Prospectus are currently escrowed for a period of 24
months from the date of official quotation; and
► 129,999 fully paid ordinary shares were escrowed until
4 August 2017.
DIVIDENDS
The extent, timing and payment of any dividends in the
future will be determined by the Directors based on a
number of factors, including future earnings and the
financial performance and position of the Company.
ASX CORPORATE GOVERNANCE COUNCIL’S CORPORATE
GOVERNANCE PRINCIPLES AND RECOMMENDATIONS
The Company has adopted systems of control and
accountability as the basis for the administration of
corporate governance. The Board is committed to
administering the Company’s policies and procedures
with openness and integrity, pursuing corporate
governance commensurate with the Company’s needs.
To the extent applicable, the Company has adopted
the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations.
The Board considers that, due to the Company’s size and
nature, the current Board composition and structure is
a cost effective and practical method of directing and
managing the Company. As the Company’s activities
develop in size, nature and scope, the size of the
Board and the implementation of additional corporate
governance policies and structures will be reviewed.
The Company’s Corporate Governance Statement is
available on the Company’s website at
www.kaliumlakes.com.au
14
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 Tenement Interests
Below is a schedule of tenement interests by project as at 30 June 2017.
BEYONDIE SULPHATE OF POTASH PROJECT
Tenement Tenement Name
Holder
State
Status
Grant Date
Interest
E69/3306
Yanneri-Terminal
E69/3309
Beyondie - 10-Mile
E69/3339
West Central
E69/3340
White
E69/3341
West Yanneri
E69/3342
Aerodrome
E69/3343
E69/3344
E69/3345
E69/3346
E69/3347
E69/3348
E69/3349
E69/3351
E69/3352
L52/162
T Junction
Northern
Wilderness
NE Beyondie
South 10 Mile
North Yanneri-Terminal
East Central
Sunshine
Beyondie Infrastructure
Access Road
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
17-3-2015
17-4-2015
22-6-2015
22-6-2015
11-8-2015
22-6-2015
22-5-2015
22-5-2015
22-5-2015
11-8-2015
11-8-2015
11-8-2015
22-6-2015
31-8-2015
31-8-2015
30-3-2016
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Note: Kalium Lakes Potash Pty Ltd (KLP) is a wholly owned subsidiary of Kalium Lakes Limited (KLL)
CARNEGIE POTASH PROJECT - JOINT VENTURE
Tenement Tenement Name
Holder
State
E38/2995
Carnegie East
E38/2973
Carnegie Central
E38/2982
Carnegie West
KLP
Rachlan
Rachlan
WA
WA
WA
Status
Granted
Application
Application
Grant Date
Interest
31-7-2015
-
-
85%
85%
85%
Note: Kalium Lakes Potash Pty Ltd (KLP) entered into a declaration of trust with Rachlan Holdings Pty Ltd (Rachlan) where Rachlan will hold
for the benefit of KLP certain exploration licence applications and deal with the applications as directed by KLP (including transferring title).
POTASH PROSPECTS
Tenement Tenement Name
E45/4436
Dora
E45/4437
Blanche
Holder
Rachlan
Rachlan
State
Status
Grant Date
Interest
WA
WA
Application
Application
-
-
100%
100%
Note: Kalium Lakes Potash Pty Ltd (KLP) entered into a declaration of trust with Rachlan Holdings Pty Ltd (Rachlan) where Rachlan will hold
for the benefit of KLP certain exploration licence applications and deal with the applications as directed by KLP (including transferring title).
15
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
COMPANY SUMMARY (CONTINUED)
Annual Mineral Resources and Ore Reserves Statement - Resources Tables as at 6 October 2017
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Refer to Disclaimer & Compliance Statement. The Beyondie Project Exploration Target is based on a number of assumptions and limitations
and is conceptual in nature. It is not an indication of a Mineral Resource Estimate in accordance with the JORC Code and it is uncertain if
future exploration will result in the determination of a Mineral Resource
16
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
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Compliance Statement
The information in this document is extracted from the
report titled “TECHNICAL REPORT FOR THE BEYONDIE
SULPHATE OF POTASH PROJECT, AUSTRALIA, JORC (2012)
and NI 43-101 Technical Report” and dated 29 September
2017 (Report), that relates to Exploration Targets,
Exploration Results, Mineral Resources and Mineral
Reserves and is based on information compiled by
Thomas Schicht, a Competent Person who is a Member
of a ‘Recognised Professional Organisation’ (RPO), the
European Federation of Geologists, and a registered
“European Geologist” (Registration Number 1077) and
Anke Penndorf, a Competent Person who is a Member
of a RPO, the European Federation of Geologists, and a
registered “European Geologist” (Registration Number
1152). Kalium Lakes confirms that it is not aware of any
new information or data that materially affects the
information included in the original announcement
regarding the Report and, in the case of estimates of
Mineral Resources, which all material assumptions and
technical parameters underpinning the estimates in the
relevant announcement continue to apply and have not
materially changed. Kalium Lakes confirms that the form
and context in which the Competent Persons’ findings
are presented have not been materially modified from
the original announcement regarding the Report.
Thomas Schicht and Anke Penndorf are full-term
employees of K-UTEC AG Salt Technologies (K-UTEC).
K-UTEC, Thomas Schicht and Anke Penndorf are not
associates or affiliates of Kalium Lakes or any of its
affiliates. K-UTEC will receive a fee for the preparation
of the Report in accordance with normal professional
consulting practices. This fee is not contingent on the
conclusions of the Report and K-UTEC, Thomas Schicht
and Anke Penndorf will receive no other benefit for the
preparation of the Report. Thomas Schicht and Anke
Penndorf do not have any pecuniary or other interests
that could reasonably be regarded as capable of
affecting their ability to provide an unbiased opinion in
relation to the Beyondie Potash Project.
K-UTEC does not have, at the date of the Report, and has
not had within the previous years, any shareholding in
or other relationship with Kalium Lakes or the Beyondie
Potash Project and consequently considers itself to be
independent of Kalium Lakes.
Thomas Schicht and Anke Penndorf have sufficient
experience that is relevant to the style of mineralisation
and type of deposit under consideration and to the
activity being undertaken to qualify as a Competent
Person as defined in the 2012 Edition of the JORC
‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Thomas Schicht
and Anke Penndorf consent to the inclusion in the
Report of the matters based on their information in the
form and context in which it appears.
Cautionary Statement Regarding Forward
Looking Information
Certain information in this document refers to the
intentions of Kalium Lakes, but these are not intended
to be forecasts, forward looking statements or
statements about the future matters for the purposes
of the Corporations Act or any other applicable law. The
occurrence of the events in the future are subject to risk,
uncertainties and other actions that may cause Kalium
Lakes’ actual results, performance or achievements
to differ from those referred to in this document.
Accordingly Kalium Lakes and its affiliates and their
directors, officers, employees and agents do not give any
assurance or guarantee that the occurrence of these
events referred to in the document will actually occur as
contemplated.
Statements contained in this document, including
but not limited to those regarding the possible or
assumed future costs, performance, dividends, returns,
revenue, exchange rates, potential growth of Kalium
Lakes, industry growth or other projections and any
estimated company earnings are or may be forward
looking statements. Forward-looking statements can
generally be identified by the use of words such
as ‘project’, ‘foresee’, ‘plan’, ‘expect’, ‘aim’, ‘intend’,
‘anticipate’, ‘believe’, ‘estimate’, ‘may’, ‘should’, ‘will’ or
similar expressions. These statements relate to future
events and expectations and as such involve known
and unknown risks and significant uncertainties, many
of which are outside the control of Kalium Lakes. Actual
results, performance, actions and developments of
Kalium Lakes may differ materially from those expressed
or implied by the forward-looking statements in this
document. Such forward-looking statements speak
only as of the date of this document. There can be
no assurance that actual outcomes will not differ
materially from these statements. To the maximum
extent permitted by law, Kalium Lakes and any of its
affiliates and their directors, officers, employees, agents,
associates and advisers:
disclaim any obligations or undertaking to release
any updates or revisions to the information to reflect
any change in expectations or assumption;
do not make any representation or warranty,
express or implied, as to the accuracy, reliability or
completeness of the information in this document,
or likelihood of fulfilment of any forward-looking
statement or any event or results expressed or
implied in any forward-looking statement; and
disclaim all responsibility and liability for these
forward-looking statements (including, without
limitation, liability for negligence.
17
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Your Directors submit the financial report of the Consolidated Entity for the year ended 30 June
2017.
DIRECTORS
The names of Directors who held office during or since the end of the year:
Malcolm Randall
Brett Hazelden
Rudolph van Niekerk
Brendan O’Hara
Non-Executive Chairman
Managing Director and Chief Executive Officer
Executive Director
Non-Executive Director
DIRECTORS’ QUALIFICATIONS AND EXPERIENCE
The Directors’ qualifications and experience are set out below:
Malcolm Randall
Non-Executive Chairman
Malcolm Randall
Non-Executive Chairman
Malcolm Randall (Dip Applied Chem, FAICD) holds a Bachelor of Applied Chemistry Degree and
has more than 45 years’ of experience in corporate, management and marketing in the resources
sector, including more than 25 years with the Rio Tinto group of companies.
Malcolm Randall (Dip Applied Chem, FAICD) holds a Bachelor of Applied Chemistry
Degree and has more than 45 years’ of experience in corporate, management and
marketing in the resources sector, including more than 25 years with the Rio Tinto
group of companies.
His experience has covered a diverse range of commodities including iron ore, base metals,
uranium, mineral sands and coal.
His experience has covered a diverse range of commodities including iron ore, base
metals, uranium, mineral sands and coal.
Malcolm Randall has held the position of chairman and director of a number of ASX listed
Malcolm Randall has held the position of chairman and director of a number of
companies. Past directorships include Consolidated Minerals Limited, Titan Resources Limited,
ASX listed companies. Past directorships include Consolidated Minerals Limited,
Northern Mining Limited, Iron Ore Holdings Limited and United Minerals Corporation NL. Current
Titan Resources Limited, Northern Mining Limited, Iron Ore Holdings Limited
directorships include Thundelarra Limited, Summit Resources Limited, Magnetite Mines Limited
and United Minerals Corporation NL. Current directorships include Thundelarra
and Argosy Minerals Limited.
Limited, Summit Resources Limited, Magnetite Mines Limited and Argosy Minerals
Limited.
Brett Hazelden
Managing Director and Chief Executive Officer
Brett Hazelden
Managing Director and Chief Executive Officer
Brett Hazelden (B.Sc. MBA GAICD) is a Metallurgist who brings more than 19 years’ experience in
project management, engineering design and operations servicing the Australasian resources
industry. His previous responsibilities include project management, feasibility study evaluation,
engineering and design, estimating, financial evaluation, cost control, scheduling, contracts and
procurement, business risk and strategic development.
Brett Hazelden (B.Sc. MBA GAICD) is a Metallurgist who brings more than 19 years’
experience in project management, engineering design and operations servicing
the Australasian resources industry. His previous responsibilities include project
management, feasibility study evaluation, engineering and design, estimating,
financial evaluation, cost control, scheduling, contracts and procurement, business
risk and strategic development. As well as other roles, he has held senior positions
at Rio Tinto, Fluor, Newcrest Mining and Iron Ore Holdings.
Brett Hazelden has studied, managed and executed projects from small scale works up to multi-
billion dollar complex developments. He has been responsible for environmental permitting and
approvals, heritage, native title negotiations, external relations, as well as tenure management.
Brett Hazelden has studied, managed and executed projects from small scale
Brett has also been involved in numerous mergers, acquisitions and due diligence reviews in
works up to multi-billion dollar complex developments. He has been responsible
recent years.
for environmental permitting and approvals, heritage, native title negotiations,
external relations, as well as tenure management. Brett has also been involved in
numerous mergers, acquisitions and due diligence reviews in recent years.
Kalium Lakes Limited and Consolidated Entities
2
18
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
Rudolph van Niekerk
Executive Director
Rudolph van Niekerk (B.Eng. Mechanical GAICD) is a professional in the mining
and resources industry with more than 12 years’ experience in project and
business management. Previous positions include senior engineering roles for
Ausenco, Anglo God Ashanti and BC Iron.
During his career Rudolph van Niekerk has held a range of different roles
in the management of projects and operations. His various responsibilities
have included financial evaluation, risk review and management, project
management, development of capital and operating cost estimates,
budget development and cost control, design management, planning,
reporting, contract administration, quality control, expediting, construction,
commissioning, production ramp-up and project hand-over to operations.
Brendan O’Hara
Non-Executive Director
Brendan O’Hara (BJuris, LLB, SF Fin) holds a Bachelor of Jurisprudence (Hons)
and Bachelor of Laws. He is a Senior Fellow of FINSIA, a former legal practitioner
of the Supreme Court of WA and former member of the Business Law Section of
the Law Council of Australia.
Brendan O’Hara has many years’ experience as a director of Australian listed
companies, including eight years as Executive Chairman of an ASX listed
company (Summit Resources Limited).
His earlier roles with the ASX (as State Director and Manger – Listings),
underpin a wealth of experience involving international transactions, corporate
governance, risk management systems, contract negotiation / execution and
government relations.
Gareth Widger
Company Secretary
Gareth has more than 28 years’ experience managing corporate administration
and strategic communication activities for public and private companies. He
has held senior roles within the agriculture, industrial chemical, mining, civil
engineering, retail and wholesale sectors incorporating a diverse range of
corporate support, investor relations, stakeholder engagement, marketing and
media liaison responsibilities.
19
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 DIRECTORS’ REPORT (CONTINUED)
DIRECTORS’ REPORT continued
MEETINGS OF DIRECTORS
The number of meetings for Kalium Lakes Limited held during the year and the number of
meetings attended by each Director was as follows:
Number of Meetings Held
Number of Meetings Attended:
Malcolm Randall
Brett Hazelden
Rudolph van Niekerk
Brendan O’Hara
Board
9
9
9
9
9
Audit
Committee
1
Remuneration
Committee
1
Nomination
Committee
-
1
1
1
1
1
1
-
1
-
-
-
-
All Directors were eligible to attend all Board Meetings held.
SHARE OPTIONS
As at the date of this report, there were 9,000,000 unlisted options for ordinary shares at an
exercise price of $0.25 each (expiring 16 December 2019) and escrowed until 21 December 2018)
on issue.
SHARES ISSUED AS A RESULT OF THE EXERCISE OF OPTIONS
No shares as a result of the exercise of the options were issued as at the date of this report.
DIRECTORS’ INTERESTS AND BENEFITS
The relevant interest of each Director in the shares and options over shares issued by the
Company at the date of this report is as follows:
Number of Ordinary
Shares
Number of Options
Listed
Unlisted
Indirectly
Directly
445,375
-
- 13,609,543
Directly
-
-
Indirectly
Directly
- 4,000,000
-
-
Indirectly
-
-
-
-
3,315,600
-
-
-
-
-
- 2,000,000
-
-
Malcolm Randall
Brett Hazelden
Rudolph van
Niekerk
Brendan O’Hara
Kalium Lakes Limited and Consolidated Entities
4
20
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ REPORT continued
REMUNERATION REPORT
Introduction
The Directors present the Remuneration Report for the Consolidated Entity for the year ended 30
June 2017. This Remuneration Report forms part of the Directors’ Report in accordance with the
requirements of the Corporations Act 2001 and its regulations. For the purposes of this report,
Key Management Personnel (“KMP”) of the Consolidated Entity are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of
the Company and the Consolidated Entity, directly or indirectly, including any director (whether
executive or otherwise) of the Parent Entity.
Remuneration Policy
The remuneration policy has been designed to align KMP objectives with Shareholders’ interests
and business objectives by providing a fixed remuneration component and offering specific long-
term incentives based on key performance areas affecting the Consolidated Entity’s financial
results. The Board believes that the remuneration policy is appropriate and effective in its ability
to attract and retain the best KMP to run and manage the Consolidated Entity, as well as create
goal congruence between Directors, Executives and Shareholders.
Executive Directors and Key Management Personnel
The Board’s policy for determining the nature and amount of remuneration for Executive
Directors and KMP of the Consolidated Entity was in place for the financial year ended 30 June
2017.
Non-Executive Directors
The Board’s policy is to remunerate Non-Executive Directors based on market practices, duties
and accountability. Independent external advice is sought when required. The fees paid to Non-
Executive Directors are reviewed annually. The maximum aggregate amount of fees that can be
paid to Non-Executive Directors is subject to approval by Shareholders at the Annual General
Meeting (“AGM”). The maximum aggregate amount of fees payable is currently $250,000.
Use of Remuneration Consultants
To ensure the Remuneration Committee is fully informed when making remuneration decisions,
it may seek external remuneration advice. The Board did seek external remuneration advice in
2017.
Remuneration Report Approval at FY2017 AGM
The remuneration report for the year ended 30 June 2017 will be put to shareholders for approval
at the Company’s AGM.
Kalium Lakes Limited and Consolidated Entities
5
21
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ REPORT (CONTINUED)
DIRECTORS’ REPORT continued
Share Trading and Margin Loans by Directors and Executives
Directors, executives and employees are prohibited from:
a. Short term trading: trading in securities (or an interest in securities) on a short-term
trading basis other than when a director, employee or executive exercises employee
options or performance rights to acquire shares at the specified exercise price. Short-term
trading includes buying and selling securities within a 3-month period, and entering into
other short-term dealings (e.g. forward contracts).
b. Hedging unvested awards: trading in securities which operate to limit the economic risk
of an employee’s holdings of unvested securities granted under an employee incentive
plan; or
Short positions: trading in securities which enable an employee to profit from or limit the
economic risk of a decrease in the market price of shares.
c.
KMP may not include their securities in a margin loan portfolio or otherwise trade in securities
pursuant to a margin lending arrangement without first obtaining the consent of the Chairman.
Such dealing would include:
a. Entering into a margin lending arrangement in respect of securities;
b. Transferring securities into an existing margin loan account; and
c.
Selling securities to satisfy a call pursuant to a margin loan except where they have no
control over such sale.
The Company may, at its discretion, make any consent granted in accordance with the above
paragraph conditional upon such terms and conditions as the Company sees fit (for example, in
regards to the circumstances in which the securities may be sold to satisfy a margin call).
Kalium Lakes Limited and Consolidated Entities
6
22
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ REPORT continued
A. Details of Remuneration
Table 1: Details of remuneration of the Directors and KMP of the Consolidated Entity (as defined
by AASB 124 Related Party Disclosures) and specified executives are set out below:
Short-term
benefits
Post-
employment
benefits
Share-based payments
Cash salary, fees
and other
benefits
$
Super-
annuation1
$
Performance
rights
$
Equity-settled
options
$
Total
$
Non-Executive Directors
Malcolm Randall
Brendan O’Hara
Executive Directors
Brett Hazelden
Rudolph van Niekerk
Total
Total
Year
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
57,903
-
42,178
-
265,390
33,000
114,461
-
479,932
33,000
5,501
-
4,007
-
25,212
3,135
7,917
-
42,637
3,135
-
-
-
-
356,000
-
178,000
-
419,404
-
224,185
-
542,602
36,135
194,378
-
-
-
-
-
534,000
-
1,380,569
36,135
252,000
-
72,000
-
324,000
-
B. Service Agreements
The Company has entered into an executive service agreement with Brett Hazelden in
respect to his employment as the Managing Director of the Company. The principal terms
are as follows:
•
•
•
•
Brett Hazelden will receive an annual salary of $275,000 (excluding superannuation);
Brett Hazelden may terminate the agreement by giving 6 months’ notice in writing
to the Company;
The Company may terminate the agreement (without cause) by giving 12 months’
notice in writing to Brett Hazelden (or make payment in lieu of notice), unless the
Company is terminating as a result of a serious misconduct (or on other similar
grounds by Brett Hazelden, in which case no notice is required; and
Brett Hazelden is subject to non-compete restrictions during his employment and for
a maximum period of 6 months following termination of his employment.
1 Includes superannuation payment in Australia and any voluntary fee sacrifice to superannuation.
Kalium Lakes Limited and Consolidated Entities
7
23
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ REPORT (CONTINUED)
DIRECTORS’ REPORT continued
C. Share Based Payments
The following table sets out the details of unlisted share option movements during the year ended
30 June 2017.
** Kalium Lakes Potash Pty Ltd completed an approved restructure and consolidation of share
capital, the net effect of which resulted in the total number of ordinary shares in Kalium Lakes
Grant Date Exercise
Price
Expiry
Date
Balance
at 30
June
2016
Granted as
Remunera
tion
Fair Value
per Option
at Grant
Date
Exercis
ed
Expired
Non-Executive Directors
Malcolm Randall
Brendan O’Hara
Executive Directors
Brett Hazelden
Rudolph van Niekerk
Total
-
-
-
-
-
16-Dec-16
16-Dec-16
$0.25
$0.25
16-Dec-19
16-Dec-19
4,000,000
2,000,000
$0.089
$0.089
-
-
-
-
-
-
-
-
-
-
-
6,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
30 June
2017
4,000,000
2,000,000
-
-
6,000,000
The following table sets out the details of performance rights movements during the year ended
30 June 2017.
Balance at
30 June
2016
Grant Date
Expiry Date
Granted as
Remuneration
Fair Value of
Performanc
e Right at
Grant Date
Exercised
Balance at
30 June
2017
-
-
-
-
-
-
-
-
-
-
-
02-Sep-16
02-Sep-16
02-Sep-21
02-Sep-21
4,200,000
1,200,000
-
-
$0.15
$0.15
-
-
5,400,000
-
-
-
-
-
-
-
-
4,200,000
1,200,000
5,400,000
Non-Executive Directors
Malcolm Randall
Brendan O’Hara
Executive Directors
Brett Hazelden
Rudolph van Niekerk
Total
D.
Interest in Shares
Balance at
30 June
2016 (No. of
Shares)
Additions
(before
Restructure)
(No. of Shares)
Restructure
(No. of
shares) **
Additions
(after
Restructure)
(No. of
Shares)
Performance
Rights/Option
s Excerised
(No. of
Shares)
Received
Remunerati
on (No. of
Shares)
Balance at
30 June
2017 (No. of
Shares)
DIRECTORS’ REPORT continued
Potash Pty Ltd decreasing by 35,823,432.
Other Director and KMP Transactions
There were no other transactions relating to Directors and KMP’s during the FY2017 period.
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2017 are summarised below:
2017
$
2016
$
2015
$
2014
$
2013
$
Revenue
EBITDA
EBIT
Loss after income tax
2,519,040
(5,852,392)
(5,889,309)
(5,889,309)
849,748
(3,645,685)
(3,647,069)
(3,647,069)
849,765
(1,464,114)
(1,464,114)
(1,464,114)
The factors that are considered to affect total shareholders return (“TSR”) are summarised below:
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic and diluted earnings per share
(cents per share)
$0.36
-
(5.40)
#
-
(4.30)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Kalium Lakes Limited (“Company”) is a public company which was incorporated in Western
Australia on 14 July 2016 as part of the restructure of Kalium Lakes Potash Pty Ltd (“KLP”) which
has been operating since October 2014. The financial statements represent a continuation of
KLP’s financial statements and as such the comparatives reflect those of KLP.
# Kalium Lakes Limited was admitted to the official List of the Australian Securities Exchange
(ASX), on the 21st of December 2016.
End of Audited Remuneration Report.
Non-Executive Directors
Malcolm Randall
Brendan O’Hara
Executive Directors
Brett Hazelden
Rudolph van Niekerk
250,000
-
375,000
-
(279,625)
-
100,000
-
22,451,280
6,000,000
2,176,920
-
(11,018,657)
(2,684,400)
-
-
Total
28,701,280
2,551,920
(13,982,682)
100,000
-
-
-
-
-
-
-
-
-
-
445,375
-
13,609,543
3,315,600
17,370,518
Kalium Lakes Limited and Consolidated Entities
8
Kalium Lakes Limited and Consolidated Entities
9
24
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ REPORT continued
** Kalium Lakes Potash Pty Ltd completed an approved restructure and consolidation of share
capital, the net effect of which resulted in the total number of ordinary shares in Kalium Lakes
Potash Pty Ltd decreasing by 35,823,432.
Other Director and KMP Transactions
There were no other transactions relating to Directors and KMP’s during the FY2017 period.
Additional Information
The earnings of the consolidated entity for the five years to 30 June 2017 are summarised below:
2017
$
2016
$
2015
$
2014
$
2013
$
Revenue
EBITDA
EBIT
Loss after income tax
2,519,040
(5,852,392)
(5,889,309)
(5,889,309)
849,748
(3,645,685)
(3,647,069)
(3,647,069)
849,765
(1,464,114)
(1,464,114)
(1,464,114)
The factors that are considered to affect total shareholders return (“TSR”) are summarised below:
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic and diluted earnings per share
(cents per share)
$0.36
-
(5.40)
#
-
(4.30)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Kalium Lakes Limited (“Company”) is a public company which was incorporated in Western
Australia on 14 July 2016 as part of the restructure of Kalium Lakes Potash Pty Ltd (“KLP”) which
has been operating since October 2014. The financial statements represent a continuation of
KLP’s financial statements and as such the comparatives reflect those of KLP.
# Kalium Lakes Limited was admitted to the official List of the Australian Securities Exchange
(ASX), on the 21st of December 2016.
End of Audited Remuneration Report.
Kalium Lakes Limited and Consolidated Entities
9
25
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ REPORT (CONTINUED)
DIRECTORS’ REPORT continued
PRINCIPAL ACTIVITIES
The principal activity of the Consolidated Entity is intended to be an exploration and mining
company.
REVIEW OF RESULTS
The loss after tax for the year ended 30 June 2017 was $5,889,309 (2016: $3,647,069 loss),
primarily as a result of exploration, development of the Beyondie Project and share based
payment expenditure.
CORPORATE
On 27 February 2017 KLL announced that Innovation Science Australia had approved the overseas
Research and Development (R&D) activities for the Beyondie Sulphate of Potash Project in
relation to its previously lodged Overseas Findings application for the 2015/16 income year. KLL
received an R&D tax offset of $536,278 which was in addition to the $835,459 received in July
2016.
On 1 March 2017 KLL and BC Potash Pty Ltd announced that the companies had entered into a
joint operation over Kalium’s 100% owned Carnegie Project. The Carnegie Project is a potash
exploration project located approximately 220km north-east of Wiluna that comprises one
granted exploration licence and two exploration licence applications covering a total area of
approximately 1,700 square kilometres. The Carnegie Project is highly prospective for hosting a
large sub-surface brine deposit which could be developed into a solar evaporation and processing
operation that produces sulphate of potash.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs.
LIKELY DEVELOPMENTS AND EXPECTECTED RESULTS OF OPERATIONS
The consolidated entity intends to continue its exploration activities and mining activities on its
existing projects as well as develop the Carngie Project according to the terms of agreement.
ENVIRONMENTAL REGULATIONS
The consolidated entity is subject to and is compliant with all aspects of environmental regulation
of its exploration and mining activities. The directors are not aware of any environmental law that
is not being complied with.
DIVIDENDS
No dividends were paid during the financial year and no recommendation is made as to payment
of dividends.
Kalium Lakes Limited and Consolidated Entities
10
26
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ REPORT continued
EVENTS SUBSEQUENT TO REPORTING DATE
There are no matters or circumstances that have arisen since the end of the year which will
significantly affect, or may significantly affect, the state of affairs or operations of the reporting
entity in future financial periods other than the following:
Since 30 June 2017, KLL announced that it had has signed a Letter of Intent (LOI) with EcoMag
Limited to trial the recovery of high value Hydrated Magnesium Carbonate (HMC). EcoMag is
currently building a transportable pilot plant that will be deployed to the Beyondie SOP Project
for the trial.
EcoMag is the developer of a process for recovering magnesium-based materials from brines and
bitterns, including HMC, which is used in the manufacture of chemically-toughened glass and fire
retardants. It has a current market price of US$800 – $1,000 per tonne.
INDEMNITY AND INSURANCE OF OFFICERS
The company has indemnified the directors and executives of the company for costs incurred, in
their capacity as a director or executive, for which they may be held personally liable, except
where there is a lack of good faith. During the financial year, the company paid a premium in
respect of a contract to insure the directors and executives of the company against a liability to
the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure
of the nature of the liability and the amount of the premium.
INDEMNITY AND INSURANCE OF AUDITOR
The company has not, during or since the end of the financial year, indemnified or agreed to
indemnify the auditor of the company or any related entity against a liability incurred by the
auditor. During the financial year, the company has not paid a premium in respect of a contract
to insure the auditor of the company or any related entity.
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 part
of those proceedings.
NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor for non-audit services provided during the
financial year by the auditor are outlined in note 7 to the financial statements. The directors are
satisfied that the provision of non-audit services during the financial year, by the auditor (or by
another person or firm on the auditor's behalf), is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
Kalium Lakes Limited and Consolidated Entities
11
27
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ REPORT continued
NON-AUDIT SERVICES (CONTINUED)
The directors are of the opinion that the services as disclosed in note 7 to the financial statements
do not compromise the external auditor's independence requirements of the Corporations Act
2001 for the following reasons:
•
•
all non-audit services have been reviewed and approved to ensure that they do not
impact the integrity and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional Accountants issued by the
Accounting Professional and Ethical Standards Board, including reviewing or auditing the
auditor's own work, acting in a management or decision-making capacity for the
company, acting as advocate for the company or jointly sharing economic risks and
rewards.
OFFICERS OF THE COMPANY WHO ARE FORMER PARTNERS OF RSM AUSTRALIA PARTNERS
There are no officers of the company who are former partners of RSM Australia Partners.
AUDITOR’S DECLARATION OF INDEPENDENCE
A copy of the auditor's independence declaration as required under section 307C of the
Corporations Act 2001 is set out immediately after this directors' report.
AUDITOR
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act
2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of
the Corporations Act 2001.
Brett Hazelden
Managing Director and Chief Executive Officer
7 September 2017
Kalium Lakes Limited and Consolidated Entities
12
28
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
The Board of Directors is responsible for the corporate governance of Kalium Lakes Limited (the
Company). The Board of Directors has established a corporate governance framework which
follows the recommendations as set out in the ASX Corporate Governance Council’s Principles and
Recommendations 3rd edition (“Principles and Recommendations”).
The Company has followed each recommendation where the Board has considered the
recommendation to be an appropriate benchmark for the Company's corporate governance
practices. Where the Company's corporate governance practices follow a recommendation, the
board board has made appropriate statements reporting on the adoption of the recommendation.
In compliance with the "if not, why not" reporting regime, where the Company's corporate
governance practices do not follow a recommendation, the Board explained its reasons for not
following the recommendation and disclosed what, if any, alternative practices the Company has
adopted instead of those in the recommendation.
The Company’s corporate governance framework can be viewed on the Company’s website:
www.kaliumlakes.com.au
Kalium Lakes Limited and Consolidated Entities
13
29
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
AUDITOR’S INDEPENDENCE DECLARATION
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Kalium Lakes Limited for the year ended 30 June 2017, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
Any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 7 September 2017
D J WALL
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
30
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Other income
Expenditure
Accounting fees
Compliance fees
Depreciation
Directors’ remuneration
Employee expenses
Exploration expenditure
Legal fees
Share based payment expense
Travel expenses
Other expenses
Loss before tax
Income tax expense
Note
30 June 2017
$
30 June 2016
$
3
2,519,040
849,748
(145,722)
(158,150)
(35,917)
(522,569)
(445,607)
(4,591,452)
(60,749)
(1,867,500)
(201,997)
(378,686)
(5,889,309)
-
(106,104)
(99,576)
(1,384)
(36,135)
(8,007)
(3,978,401)
(34,231)
-
(71,701)
(161,278)
(3,647,069)
-
21
5
4
6
Net loss for the year from operations
(5,889,309)
(3,647,069)
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
-
-
Total comprehensive loss for the year
(5,889,309)
(3,647,069)
Loss attributable to:
Owners of the parent
Total comprehensive loss attributable to:
Owners of the parent
(5,889,309)
(5,889,309)
(3,647,069)
(3,647,069)
(5,889,309)
(5,889,309)
(3,647,069)
(3,647,069)
Basic and diluted loss per share (cents)
8
(5.40)
(4.30)
The accompanying notes form part of these financial statements.
Kalium Lakes Limited and Consolidated Entities
15
31
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Note
30 June
2017
$
30 June
2016
$
9
10
6,141,791
2,300,344
621,707
879,162
Total Current Assets
8,442,135
1,500,869
Non-Current Assets
Property, plant and equipment
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total Equity
11
466,544
466,544
11,101
11,101
8,908,679
1,511,970
12
13
2,179,799
53,421
269,732
-
2,233,220
269,732
2,233,220
269,732
6,675,459
1,242,238
14
15
16
15,667,451
2,008,500
(11,000,492)
6,353,421
-
(5,111,183)
6,675,459
1,242,238
The accompanying notes form part of these financial statements.
Kalium Lakes Limited and Consolidated Entities
16
32
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Contributed
Equity
Reserves
$
Accumulated
losses
$
Total
$
$
2,856,201
-
-
-
3,576,875
(79,655)
-
6,353,421
6,353,421
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,464,114)
(3,647,069)
-
(3,647,069)
1,392,087
(3,647,069)
-
(3,647,069)
-
-
-
(5,111,183)
3,576,875
(79,655)
-
1,242,238
(5,111,183)
(5,889,309)
-
(5,889,309)
1,242,238
(5,889,309)
-
(5,889,309)
10,663,200
(1,349,170)
-
15,667,451
-
-
2,008,500
2,008,500
-
-
-
(11,000,492)
10,663,200
(1,349,170)
2,008,500
6,675,459
Balance at 1 July 2015
Loss for the year
Other comprehensive income
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Shares issued during the year
Security issue expenses
Share based payments
Balance at 30 June 2016
Balance at 1 July 2016
Loss for the year
Other comprehensive income
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Shares issued during the year
Security issue expenses
Share based payments
Balance at 30 June 2017
The accompanying notes form part of these financial statements.
Kalium Lakes Limited and Consolidated Entities
17
33
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Cash flows from operating activities
Receipts from operations
Payments to suppliers and employees
Payment for exploration and evaluation assets
Note
30 June
2017
$
30 June
2016
$
1,371,737
(2,068,911)
(2,768,160)
849,766
(233,811)
(3,378,401)
Net cash (used in) operating activities
18
(3,465,334)
(2,762,446)
Cash flows from investing activities
Interest received
Payments for plant and equipment
51,235
(491,360)
13,843
(12,485)
Net cash (used in)/provided by investing activities
(440,125)
1,358
Cash flows from financing activities
Proceeds from equity issues
Payment for costs of equity issues
10,603,000
(1,177,457)
2,862,894
(79,655)
Net cash provided by financing activities
9,425,543
2,783,239
Net increase in cash held
5,520,084
22,151
Cash and cash equivalents at beginning of the
financial year
621,707
599,556
Cash and cash equivalents at year end
9
6,141,791
621,707
The accompanying notes form part of these financial statements.
Kalium Lakes Limited and Consolidated Entities
18
34
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1.
Corporate information
Kalium Lakes Limited (“Company”) is a public company which was incorporated in Western
Australia on 14 July 2016 as part of the restructure of Kalium Lakes Potash Pty Ltd (“KLP”) which
has been operating since October 2014. As a result of the restructure, KLP is now a wholly owned
subsidiary of the Company following a share for share exchange, with each fully paid ordinary
share in KLP being exchanged for one fully paid ordinary share in the Company.
This annual reports covers Kalium Lakes Limited (the “Company”), a company incorporated in
Australia, and the entities it controlled at the end of, or during, the year ended 30 June 2017 (the
“Consolidated Entity”). The financial statements represent a continuation of KLP’s financial
statements and as such the comparatives reflect those of KLP. The presentation currency of the
Consolidated Entity is Australian Dollars (“$”). A description of the Consolidated Entity’s
operations is included in the review and results of operations in the Directors’ report. The
Directors’ report is not part of the financial statements. The Company is a for-profit entity limited
by shares and incorporated in Australia whose shares are traded under the ASX code “KLL”.
2.
Accounting policies
Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set
out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory
for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have
not been early adopted.
Basis of preparation
The consolidated general purpose financial statements of the Consolidated Entity have been
prepared in accordance with the requirements of the Corporations Act 2001, Australian
Accounting Standards and other authoritative pronouncements of the Australian Accounting
Standards Board. Compliance with Australian Accounting Standards results in full compliance with
the International; Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The financial report has also been prepared on a historical cost base. It
is recommended that the annual financial report be considered together with any public
announcements made by the Company during the year ended 30 June 2017 and up to the issue
date of this report, which the Consolidated Entity has made in accordance with its continuous
disclosure obligations arising under the Corporations Act 2001.
Kalium Lakes Limited and Consolidated Entities
19
35
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for,
where applicable, the revaluation of available-for-sale financial assets, financial assets and
liabilities at fair value through profit or loss, investment properties, certain classes of property,
plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the
consolidated entity's accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements,
are disclosed in note 2(a).
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of
the consolidated entity only. Supplementary information about the parent entity is disclosed in
note 19.
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities
controlled by the Company at the end of the reporting period. The 30 June 2016 financial
statements were not consolidated on the basis that Kalium Lakes Limited acquired Kalium Lakes
Potash Pty Ltd during the current financial year. A controlled entity is any entity over which the
Company has the power to govern the financial and operating policies so as to obtain benefits
from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly
through subsidiaries more than half of the voting power of the entity. In assessing the power to
govern, the existence and effect of holdings of actual and potential voting rights are considered.
The Company and its controlled entities together are referred to as the Consolidated Entity. The
effects of all transactions between entities in the Consolidated Entity are eliminated in full. Where
control of an entity is obtained during a financial year, its results are included in the consolidated
income statement from the date on which control commences. Where control of an entity ceases
during a financial year its results are included for that part of the year during which control
existed. The financial statements of subsidiaries are prepared for the same reporting period as
the parent company, using consistent accounting policies.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and
non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or
consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose
of trading; it is expected to be realised within 12 months after the reporting period; or the asset
is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period. All other assets are classified as non-current.
Kalium Lakes Limited and Consolidated Entities
20
36
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
A liability is classified as current when: it is either expected to be settled in the consolidated
entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled
within 12 months after the reporting period; or there is no unconditional right to defer the
settlement of the liability for at least 12 months after the reporting period. All other liabilities are
classified as non-current.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets, and obligations for the liabilities, relating to the
arrangement. The consolidated entity has recognised its share of jointly held assets, liabilities,
revenues and expenses of joint operations. These have been incorporated in the financial
statements under the appropriate classifications.
Exploration, evaluation and development expenditure
Exploration and evaluation are written off as incurred. The group’s policy is that such costs will
only be carried forward when development of the area indicates that recoupment will occur or
where activities in the area have reached an advanced stage which permits reasonable
assessment of the existence of economically recoverable reserves.
Exploration, evaluation and development costs comprise acquisition costs, direct exploration and
evaluation costs and an appropriate portion of related overhead expenditure but do not include
general overhead expenditure which has no direct connection with a particular area of interest.
Revenue received from the sale or disposal of product, materials or services during the
exploration and evaluation phase of operation is offset against expenditure in respect of the area
of interest concerned.
When an area of interest is abandoned or the Directors decide that it is not commercially viable,
any accumulated costs in respect of that area are written off in the financial period the decision
is made. Each area of interest is also reviewed at the end of each accounting period and
accumulated costs written off to the extent that they will not be recoverable in the future.
Restoration costs arising from exploration activities are provided for at the time of the activities
which give rise to the need for restoration.
Amortisation is not charged on costs carried forward in respect of areas of interest in the
development phase until production commences. When production commences, carried forward
exploration, evaluation and development costs are amortised on a units of production basis over
the life of the economically recoverable reserves.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended
but are not yet mandatory, have not been early adopted by the consolidated entity for the annual
reporting period ended 30 June 2017. The consolidated entity's assessment of the impact of these
new or amended Accounting Standards and Interpretations, most relevant to the consolidated
entity, are set out below.
Kalium Lakes Limited and Consolidated Entities
21
37
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
•
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39
'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and
measurement models for financial assets. A financial asset shall be measured at amortised cost,
if it is held within a business model whose objective is to hold assets in order to collect contractual
cash flows, which arise on specified dates and solely principal and interest. All other financial
instrument assets are to be classified and measured at fair value through profit or loss unless the
entity makes an irrevocable election on initial recognition to present gains and losses on equity
instruments (that are not held-for-trading) in other comprehensive income ('OCI'). For financial
liabilities, the standard requires the portion of the change in fair value that relates to the entity's
own credit risk to be presented in OCI (unless it would create an accounting mismatch). New
simpler hedge accounting requirements are intended to more closely align the accounting
treatment with the risk management activities of the entity. New impairment requirements will
use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be
measured under a 12-month ECL method unless the credit risk on a financial instrument has
increased significantly since initial recognition in which case the lifetime ECL method is adopted.
The standard introduces additional new disclosures. The consolidated entity has made an
assessment and determined that this standard will have little to no impact on the entity as it does
not have any financial instruments.
•
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The
standard provides a single standard for revenue recognition. The core principle of the standard is
that an entity will recognise revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. The standard will require: contracts (either written,
verbal or implied) to be identified, together with the separate performance obligations within the
contract; determine the transaction price, adjusted for the time value of money excluding credit
risk; allocation of the transaction price to the separate performance obligations on a basis of
relative stand-alone selling price of each distinct good or service, or estimation approach if no
distinct observable prices exist; and recognition of revenue when each performance obligation is
satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue.
For goods, the performance obligation would be satisfied when the customer obtains control of
the goods. For services, the performance obligation is satisfied when the service has been
provided, typically for promises to transfer services to customers. For performance obligations
satisfied over time, an entity would select an appropriate measure of progress to determine how
much revenue should be recognised as the performance obligation is satisfied. Contracts with
customers will be presented in an entity's statement of financial position as a contract liability, a
contract asset, or a receivable, depending on the relationship between the entity's performance
and the customer's payment. Sufficient quantitative and qualitative disclosure is required to
enable users to understand the contracts with customers; the significant judgments made in
applying the guidance to those contracts; and any assets recognised from the costs to obtain or
fulfil a contract with a customer. The consolidated entity has made an assessment and determined
that this standard will have little to no impact on the entity as it currently does not earn revenue.
Kalium Lakes Limited and Consolidated Entities
22
38
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
•
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The
standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating
leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the
statement of financial position, measured at the present value of the unavoidable future lease
payments to be made over the lease term. The exceptions relate to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and small office
furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is
recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding
to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives
received, initial direct costs incurred and an estimate of any future restoration, removal or
dismantling costs. Straight-line operating lease expense recognition will be replaced with a
depreciation charge for the leased asset (included in operating costs) and an interest expense on
the recognised lease liability (included in finance costs). In the earlier periods of the lease, the
expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results will be improved as the operating expense is replaced by interest expense
and depreciation in profit or loss under AASB 16. For classification within the statement of cash
flows, the lease payments will be separated into both a principal (financing activities) and interest
(either operating or financing activities) component. For lessor accounting, the standard does not
substantially change how a lessor accounts for leases. The consolidated entity has made an
assessment and determined that this standard will have little to no impact on the entity as it does
not have any material leases.
2(a). Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions
on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Kalium Lakes Limited and Consolidated Entities
23
39
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which they are granted. The
fair value is determined by using either the Binomial or Black-Scholes model, taking into account
the terms and conditions upon which the instruments were granted. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact
profit or loss and equity.
Research & Development tax rebate
The receivable and corresponding revenue recognised at the reporting date for R&D is based on
estimates made by R&D tax specialists from the utilisation of historical cost data.
Kalium Lakes Limited and Consolidated Entities
24
40
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
3.
Other income
Foreign exchange gain
Other income
Interest received
Research and development tax offset - International
Research and development tax offset - Domestic
30 June
2017
$
30 June
2016
$
-
37,745
63,617
655,577
1,762,101
446
-
13,843
-
835,459
2,519,040
849,748
Accounting policy:
Research and development tax offset
Research and development tax offset revenue is recognised when it is received or when the right
to receive payment is established. Revenue is measured at the fair value of the consideration
received or receivable.
Interest
Revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the
relevant period using the effective interest rate, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to the net carrying amount of
the financial asset.
4.
Other expenses
Administration
Bank charges
Couriers and freight
Insurance
Interest paid
Subscriptions
Other administrative expenses
31,696
1,635
55,396
23,411
-
21,607
244,941
46,800
1,053
9,190
4,575
6,118
38,088
55,454
378,686
161,278
Kalium Lakes Limited and Consolidated Entities
25
41
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
5.
Share based payment expense
Unlisted director, officers & advisor options (i)
Performance rights (ii)
30 June
2017
$
30 June
2016
$
667,500
1,200,000
1,867,500
-
-
-
On 16 December 2016, the entity issued 9,000,000 Options at a fair value of $808,500. $141,000
of this was for options issued to advisors.
(i) Set out below are summaries of options granted
Options
Grant
Date
Expiry
Date
Balance at
the start of
the period
Granted
Exercised
Director
Officers
Advisors
16-12-16
16-12-16
16-12-16
16-12-19
16-12-19
16-12-19
- 6,000,000
- 1,500,000
- 1,500,000
- 9,000,000
Expired Balance at
the end of
the period
-
-
-
-
- 6,000,000
- 1,500,000
- 1,500,000
- 9,000,000
Assumptions
Stock Price
Exercise Price
Expiry Period
Expected future volatility
Risk free rate
Dividend yield
Amount of Options
Fair value of Options
Directors
$0.20
$0.25
3 Years
80%
1.5%
0%
Officers
$0.20
$0.25
3 Years
80%
1.5%
0%
6,000,000 1,500,000 1,500,000
$534,000 $133,500 $141,000*
Advisor
$0.20
$0.25
3 Years
80%
1.5%
0%
* Fair value of Options issued to advisors were treated as share issue costs in the consolidated
statement of changes in equity.
Kalium Lakes Limited and Consolidated Entities
26
42
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
5.
Share based payment expense (continued)
(ii) Set out below are performance rights granted
A total of 20,000,000 Performance Rights were granted to the founding shareholders of KLP
during the year. The following performance criteria is required to be achieved from the date of
issue:
Performance criteria Probability %
- 5 million Performance Rights upon completion of a Definitive Feasibility Study; 60%
- 5 million Performance Rights upon securing funding for the development 40%
and construction of the commercial sulphate of potash (SOP) product operation; and
- 10 million Performance Rights upon achievement of the first 30%
commercial production of SOP.
Performance rights
granted to directors
Performance rights
granted to a consultant
Number
Grant Date
Expiry Date
Share price at grant date
Share based payment expense
5,400,000
2nd September 2016
2nd September 2021
$0.15
$324,000
14,600,000
2nd September 2016
2nd September 2021
$0.15
$876,000
The Consolidated Entity used judgement in estimating the probability of the performance
criteria being met at grant date.
Based on the probability of the non vesting conditions being met (performance criteria), as at
the grant date, $1,200,000 was recognised as a share based payment. As at the date of this
report, none of the performance criteria had been met.
Accounting policy:
Equity settled compensation
The Consolidated Entity provides benefits to employees (including Directors and a Consultant) of
the Consolidated Entity and other service providers or strategic equity partners in the form of
share-based payment transactions, whereby employees or other parties render services or
provide goods in exchange for shares or rights over shares (“equity-settled transactions”). The
cost of these equity-settled transactions with employees is measured by reference to the fair
value at the date at which they are granted. The fair value is determined using an option pricing
method. In valuing equity-settled transactions, no account is taken of any vesting conditions,
other than conditions linked to the price of the shares of the Company (“market conditions”). The
cost of equity-settled transactions is recognised in the statement of comprehensive income,
together with a corresponding increase in equity, over the period in which the performance
and/or 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 the vesting date reflects:
Kalium Lakes Limited and Consolidated Entities
27
43
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
5.
Share based payment expense (continued)
i)
ii)
The extent to which the vesting period has expired; and
The number of awards that, in the opinion of the Directors of the Consolidated Entity,
will ultimately vest. This opinion is formed based on the best available information at
reporting 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.
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. No
expense is recognised for awards that do not ultimately vest, except for awards where vesting is
condition upon a market condition. However, if a new award is substituted for the cancelled
award, and designated as a replacement award on the date that it is granted, the cancelled and
new award are treated as if they were a modification of the original award, as describe in the
previous paragraph. Where shares are issued at a discount to fair value either by reference to the
current market price or by virtue of the Consolidated Entity providing financing for the share
purchase on favourable terms, the value of the discount is considered a share based payment.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings per share.
30 June
2017
$
30 June
2016
$
6.
Income tax expense
A reconciliation between the income tax expense and the product of accounting profit before
income tax multiplied by the consolidated entity’s applicable income tax rate is as follows:
Prima facie benefit on operationg loss at 27.5% (2016: 28.5%)
Tax losses not brought to account
Income tax benefit attributable to operating loss
(1,619,560)
1,619,560
-
(1,039,415)
1,039,415
-
A potential deferred tax asset, attributable to tax losses carried forward, amounts to
approximately $1,926,213 and has not been brought to account at reporting date because the
directors do not believe it is appropriate to regard realisation of the deferred tax asset as probable
at this point in time. This benefit will only be obtained if:
• the consolidated entity derives future assessable income of a nature and of an amount sufficient
to enable the benefit from the deductions for the loss incurred;
• the consolidated entity continues to comply with the conditions for deductibility imposed by
law; and
• no changes in tax legislation adversely affect the consolidated entity in realising the benefit from
the deductions for the loss incurred.
Kalium Lakes Limited and Consolidated Entities
28
44
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
6.
Income tax expense (continued)
Accounting policy:
Income tax
Current income tax assets and liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted by the
reporting date.
Deferred income tax is provided on all temporary differences at the reporting date between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax assets and liabilities are recognised for all taxable temporary differences:
•
•
Except for deferred income tax liabilities arising from the initial recognition of an asset or
liability in a transaction that is not a business combination and at the time of the
transaction affects neither the accounting profit nor taxable profit or loss; and
In respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures except where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences
will not reverse in the foreseeable future.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow
all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax
assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred income tax to be recovered. Deferred
income tax assets and liabilities are measured at the tax rates that are expected to apply to the
year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date. Income taxes relating to items
recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets
and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
Goods and services and sales tax
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST)
except:
• Where the amount of GST incurred is not recoverable from the taxation authority, it is
recognised as part of the cost of the asset or as part of an item of expense; or
For receivables and payables which are recognised inclusive of GST.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part
of receivables or payables.
Kalium Lakes Limited and Consolidated Entities
29
45
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
7.
Auditor’s remuneration
Audit and review of the financial report
Research and development tax
Other financial services
8.
Earnings/(loss) per share
30 June
2017
$
30 June
2016
$
42,450
18,796
45,296
18,000
51,131
46,973
106,542
116,104
The following reflects the earnings/(loss) and number of shares used in the calculation of the basic
and diluted earnings/(loss) per share.
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Net loss attributable to ordinary shareholders ($)
Weighted average number of ordinary shares used in the
calculation of basic loss per share
Weighted average number of ordinary shares used in the
calculation of diluted loss per share
Accounting policy:
(5.40)
(5.40)
(5,889,309)
(4.30)
(4.30)
(3,647,069)
Shares
Shares
109,115,547
84,890,894
109,115,547
84,890,894
Basic earnings per share is calculated as net profit/(loss) attributable to members of the parent,
adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted
average number of ordinary shares, adjusted for any bonus element. The diluted earnings per
share is calculated as net profit or loss attributable to members of the parent dividend by the
weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for
any bonus element. The weighted average number of shares was based on the consolidated
weighted average number of shares in the reporting period. The net profit or loss attributable to
members of the parent is adjusted for:
•
•
Costs of servicing equity (other than dividends) and preference share dividends;
The after-tax effect of dividends and interest associated with dilutive potential ordinary
shares that have been recognised as expenses; and
• Other non-discretionary changes in revenue or expenses during the period that would
result from the dilution of potential ordinary shares.
Kalium Lakes Limited and Consolidated Entities
30
46
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
9.
Cash and cash equivalents
Cash at bank
Accounting policy:
30 June
2017
$
30 June
2016
$
6,141,791
621,707
6,141,791
621,707
Cash and cash equivalents include cash on hand and in the bank, and other short-term deposits.
Bank overdrafts are shown separately in current liabilities on the Statement of Financial Position.
For the purposes of the Statement of Cash Flows, cash and cash equivalents as defined above are
net of outstanding bank overdrafts.
10.
Trade and other receivables
Current
GST refundable
Prepayments
Research and development tax offset
Accrued interest
Accounting policy:
30 June
2017
$
30 June
2016
$
386,683
19,878
1,881,400
12,383
43,705
-
835,457
-
2,300,344
879,162
Trade receivables, which are due for settlement no more than 30 days from the date of the final
invoice, are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method, less any allowance for uncollectable amounts. The difference
between the carrying value of receivables and the present value of the expected future cash flows
are accounted for against the carrying value of receivables as an interest charge.
Kalium Lakes Limited and Consolidated Entities
31
47
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
11.
Property, plant and equipment
Exploration
Equipment
$
Office
Equipment
$
Motor
Vehicles
$
Carrying value at 30 June 2015
Additions
Depreciation
Carrying value at 30 June 2016
Additions
Depreciation
-
11,350
(1,351)
9,999
370,498
(29,699)
-
1,135
(33)
1,102
15,425
(2,387)
-
-
-
-
105,437
(3,831)
Total
$
-
12,485
(1,384)
11,101
491,360
(35,917)
Carrying value at 30 June 2017
350,798
14,140
101,606
466,544
Accounting policy:
Property, plant and equipment are recorded at historical cost less accumulated depreciation and
any impairment. The carrying value of assets is reviewed for impairment at the reporting date. An
asset is immediately written down to its recoverable amount if the carrying value of the asset
exceeds its estimated recoverable amount. The depreciation rates per annum for each class of
fixed asset are as follows:
20%
Exploration equipment:
Office equipment:
33%
Motor vehicles: 20%
Subsequent expenditure relating to an item of property, plant and equipment, that has already
been recognised, is added to the carrying amount of the asset if the recognition criteria are met.
All assets are depreciated over their anticipated useful lives up to their residual values using a
straight-line depreciation basis. These useful lives are determined on the day of capitalisation and
are re-assessed annually by Management.
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes
in circumstances indicate the carrying value may not be recoverable or at least on an annual basis.
For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs. If any such indication exists
and where the carrying values exceed the estimated recoverable amounts, the assets or cash
generating units are written down to their recoverable amount.
Kalium Lakes Limited and Consolidated Entities
32
48
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
12.
Trade and other payables
Current
Accounts payable
Other payables
Accrued expenses
Accounting policy:
30 June
2017
$
30 June
2016
$
2,061,056
88,643
30,100
257,484
12,248
-
2,179,799
269,732
Trade and other payables amounts represent liabilities for goods and services provided to the
entity prior to the end of the financial year and which are unpaid. The amounts are unsecured
and are usually paid within 30 days of invoice.
13.
Provisions
Current
Employee entitlements
Accounting policy:
53,421
53,421
-
-
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service
leave expected to be settled wholly within 12 months of the reporting date are measured at the
amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months
of the reporting date are measured at the present value of expected future payments to be made
in respect of services provided by employees up to the reporting date using the projected unit
credit method. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using
market yields at the reporting date on corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
Kalium Lakes Limited and Consolidated Entities
33
49
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
13.
Provisions (continued)
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive)
obligation as a result of a past event, it is probable the consolidated entity will be required to
settle the obligation, and a reliable estimate can be made of the amount of the obligation. The
amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at the reporting date, taking into account the risks and uncertainties
surrounding the obligation. If the time value of money is material, provisions are discounted using
a current pre-tax rate specific to the liability. The increase in the provision resulting from the
passage of time is recognised as a finance cost.
14.
Contributed equity
Balance at beginning of year
Reconstruction of KLP capital**
Share issue: 04-Aug-16
Share issue: 02-Nov-16 (Advisor shares)
Share issue: 16-Dec-16 (Pursuant to the IPO)
Share issue: 23-May-17
Share issue costs
Balance at end of year
30 June
2017
No.
$
126,631,507
(35,823,432)
686,665
300,000
30,000,000
13,235,295
-
6,353,421
-
103,000
60,000
6,000,000
4,500,000
(1,349,170)
135,030,035
15,667,251
** Kalium Lakes Potash Pty Ltd completed an approved restructure and consolidation of share
capital, the net effect of which resulted in the total number of ordinary shares in Kalium Lakes
Potash Pty Ltd decreasing by 35,823,432.
Ordinary shares
Ordinary shares have no par value and have the right to receive dividends as declared and, in the
event of the winding up of the Company, to participate in proceeds from the sale of all surplus
assets in proportion to the number of and amounts paid up on the shares held. Ordinary shares
entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Capital management
Management controlled the capital of the Consolidated Entity in order to maintain a capital
structure that ensured the
lowest cost of capital available to the Consolidated Entity.
Management’s objective is to ensure the Consolidated Entity continues as a going concern as well
as to maintain optimal returns to shareholders.
Kalium Lakes Limited and Consolidated Entities
34
50
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
14.
Contributed equity (continued)
Accounting Policy:
Share capital
Share capital represents the nominal value of shares that have been issued. Any transaction costs
associated with the issuing of shares are deducted from share capital, net of any related income
tax benefits. Accumulated losses include all current and prior period retained profits. Dividend
distributions payable to equity shareholders are included in ‘other liabilities’ when the dividends
have been approved in a general meeting prior to the reporting date. All transactions with owners
of the parent are recorded separately within equity.
15.
Reserves
Options reserve (i)
Performance rights reserve (ii)
Movements in reserves
(i) Options reserve
Balance at 1 July 2016
New options issued and vested
Unlisted director & officers options
Unlisted advisor options – security issue expenses
Balance at 30 June 2017
(i) Performance rights reserve
Balance at 1 July 2016
Performance rights issued
Balance at 30 June 2017
30 June
2017
$
30 June
2016
$
808,500
1,200,000
2,008,500
-
-
-
No of Options
Value
$
-
-
7,500,000
1,500,000
667,500
141,000
9,000,000
808,500
Value
$
-
1,200,000
1,200,000
Kalium Lakes Limited and Consolidated Entities
35
51
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
30 June
2017
$
30 June
2016
$
16.
Accumulated losses
Balance at beginning of year
Loss after tax attributable to the equity holders of the parent
entity during the year
(5,111,183)
(1,464,114)
(5,889,309)
(3,647,069)
Balance at end of year
(11,000,492)
(5,111,183)
17.
Operating segments
The Consolidated Entity has determined operating segments based on the information provided
to the Board of Directors. The Consolidated Entity operates predominantly in one business
segment, being the exploration for minerals in Australia. There is no material difference between
the financial information presented to the Board of Directors and the financial information
presented in this report.
Geographic information
Revenue
Australia
Total revenue
Non-current assets
Australia
Total non-current assets
Accounting policy:
2,519,040
849,748
2,519,040
849,748
466,544
11,101
466,544
11,101
Operating segments are identified based on the internal reports that are regularly reviewed by
the Board of Director’s, the entities’ Chief Operation Decision Maker, for the purpose of allocating
resources and assessing performance. The adoption of this “management approach” has resulted
in the identification of one reportable segment.
Kalium Lakes Limited and Consolidated Entities
36
52
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
18.
Reconciliation of cashflows from operating activities
Loss before tax
Depreciation
Share based payment expense
Interest income
Invoices paid via issue of securities
Movement in trade & other receivables
Movement in trade & other payables
30 June
2017
$
30 June
2016
$
(5,889,309)
35,917
1,867,500
(51,235)
-
(1,421,182)
1,992,975
(3,647,069)
1,384
-
(13,843)
904,309
155,307
(162,534)
Net cash used in operating activities
(3,465,334)
(2,762,446)
19.
Parent company information
Current assets
Total assets
Current liabilities
Total liabilities
Net Assets
Total shareholders’ equity
Loss of the parent entity
Total comprehensive loss of the parent entity
8,907,876
8,908,333
106,619
106,619
8,801,714
11,686,872
(2,885,158)
(2,885,158)
*
*
*
*
*
*
*
*
* Kalium Lakes Limited (“Company”) is a public company which was incorporated in Western
Australia on 14 July 2016.
Guarantees
Kalium Lakes Limited has not entered into any guarantees.
Other Commitments and Contingencies
Kalium Lakes Limited had $241,561 worth of rental and rates expenditure commitments as at 30
June 2017 relating to its tenements.
Plant and Equipment Commitments
Kalium Lakes Limited has no commitments to acquire property, plant and equipment.
Signficant Accounting Policies
Kalium Lakes Limited accounting policies do not differ from the Consolidated Entity as disclosed
in Note 2.
Kalium Lakes Limited and Consolidated Entities
37
53
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
20.
Events after the end of the reporting period
There are no matters or circumstances have arisen since the end of the year which will
significantly affect, or may significantly affect, the state of affairs or operations of the reporting
entity in future financial periods other than the following:
Since 30 June 2017, KLL announced that it had has signed a Letter of Intent (LOI) with EcoMag
Limited to trial the recovery of high value Hydrated Magnesium Carbonate (HMC). EcoMag is
currently building a transportable pilot plant that will be deployed to the Beyondie SOP Project
for the trial. EcoMag is the developer of a process for recovering magnesium-based materials
from brines and bitterns, including HMC, which is used in the manufacture of chemically-
toughened glass and fire retardants. It has a current market price of US$800 – $1,000 per tonne.
21.
Related party transactions
Parent Entity
Kalium Lakes Limited is the Parent Entity.
Subsidiaries
Interests in subsidiaries are set out in Note 22.
Key Management Personnel
Disclosures relating to key management personnel are set out below and in the remuneration
report in the Directors' Report.
Short term employee benefits
Post-employment benefits
Directors’ remuneration
Equity based payments
30 June
2017
$
30 June
2016
$
479,932
42,637
522,569
858,000
33,000
3,135
36,135
-
1,380,569
36,135
Transactions with Related Parties
There were project engineering, support, surveying, bookkeeping and equipment hire fees
incurred from Inceptioneer Pty Ltd of $194,371 during the period. Mr Brett Hazelden (executive
director) is a director of Inceptioneer Pty Ltd.
There were consulting fees incurred from SimplyBusi Pty Ltd of $31,128 during the period. Mr
Rudolph van Niekerk (executive director) is a director of SimplyBusi Pty Ltd.
Receivables from and Payables to Related Parties
There were no payables to or receivables from related parties at the current and previous
reporting date.
Kalium Lakes Limited and Consolidated Entities
38
54
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
21.
Related party transactions (continued)
Loans to/from Related Parties
There were no loans payable to or receivables from related parties at the current and previous
reporting date.
22.
Controlled Entities
Subsidiary
Kalium Lakes Potash Pty Ltd *
Country of Incorporation
Australia
% of Equity Interest
30 June 2017 30 June 2016
Nil%
100%
* Kalium Lakes Limited (“Company”) is a public company which was incorporated in Western
Australia on 14 July 2016 as part of the restructure of Kalium Lakes Potash Pty Ltd (“KLP”) which
has been operating since October 2014. As a result of the restructure, KLP is now a wholly owned
subsidiary of the Company following a share for share exchange, with each fully paid ordinary
share in KLP being exchanged for one fully paid ordinary share in the Company.
23.
Financial risk management
The Consolidated Entity’s overall financial risk management strategy is to ensure that the
Consolidated Entity is able to fund its business operations and expansion plans. Exposure to credit
risk, liquidity risk, foreign currency risk, interest rate risk and commodity price risk arises in the
normal course of the Consolidated Entity’s business. The Consolidated Entity’s risk management
strategy is set by and performed with the close co-operation with the Board and focuses on
actively securing the Consolidated Entity’s short to medium-term cash flows by limiting credit risk
of customers, regular review of its working capital and minimising the exposure to financial
markets. The Consolidated Entity does not actively engage in the trading of financial assets for
speculative purposes nor does it write options. The most significant financial risks to which the
Consolidated Entity is exposed are described below.
Financial assets and liabilities
The financial assets and liabilities for financial years ended 30 June 2017 and 30 June 2016 are
reflected at amortised cost, and are not fair valued through the Statement of comprehensive
income.
Specific financial risk exposures and management
The main risks the Consolidated Entity is exposed to through its financial instruments are credit
risk, liquidity risk and interest rate risk.
a) Credit risk
Credit risk arises from the financial assets of the Consolidated Entity, which comprise cash and
cash equivalents and trade and other receivables. Exposure to credit risk relating to financial
assets arises from the potential non-performance by counterparties of contractual obligations
that could lead to a financial loss to the Consolidated Entity.
Kalium Lakes Limited and Consolidated Entities
39
55
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
23.
Financial risk management (continued)
b) Liquidity Risk
Liquidity risk is the risk that there will be inadequate funds available to meet financial
commitments as they fall due. The Consolidated Entity recognises the on-going requirements to
have committed funds in place to cover both existing business cash flows and provide reasonable
headroom for cyclical debt fluctuations and capital expenditure programs. The key funding
objective is to ensure the availability of flexible and competitively priced funding from alternative
sources to meet the Consolidated Entity’s current and future requirements. The Consolidated
Entity utilises a detailed cash flow model to manage its liquidity risk. This analysis shows that
available sources of funds are expected to be sufficient over the lookout period. The Consolidated
Entity attempts to accurately project the sources and uses of funds which provide an effective
framework for decision making and budgeting. The table below summarises the maturity profile
of the Company’s contractual cash flow financial liabilities based on contractual undiscounted
repayment obligations. Repayments, which are subject to notice, are treated as if notice were to
be given immediately.
Consolidated
As at 30 June 2017
Trade and other payables
Total liabilities
As at 30 June 2016
Trade and other payables
Total liabilities
30 days
$
1-3
months
$
3-12
months
$
Total
$
1,771,683
1,771,683
410,316
410,316
(2,200) 2,179,799
(2,200) 2,179,799
-
-
269,732
269,732
-
-
269,732
269,732
Interest Rate Risk
c)
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Consolidated Entity is exposed to
interest rate movement through the term deposits at a fixed rate or 1.5% per annum. The
following table sets out the variable interest bearing and fixed interest bearing financial
instruments of the Consolidated Entity:
2017
Financial assets
Cash and cash equivalents
Total
2016
Financial assets
Cash and cash equivalents
Total
Variable interest
$
Fixed interest
$
1,592,744
1,592,744
621,707
621,707
4,549,047
4,549,047
-
-
Kalium Lakes Limited and Consolidated Entities
40
56
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
23.
Financial risk management (continued)
The following table illustrates the estimated sensitivity to a 1% increase and decrease to interest
rate movements.
Impact on pre-tax profit
Interest rates + 1%
Interest rates – 1%
Accounting policy:
30 June 2017
$
15,927
(15,927)
30 June 2016
$
6,217
(6,217)
Financial assets
Initial recognition and measurement
Financial assets are categorised as financial assets at fair value through profit and loss, loans and
receivables, held-to-maturity investments, available for sale financial assets or as derivatives
designated as hedging instruments in an effective hedge, as appropriate. The Consolidated Entity
determines the categorisation of its financial assets at initial recognition. Categorisation is re-
evaluated at each financial year end. When financial assets are recognised initially, they are
measured at fair value plus transaction costs, except where the instrument is classified as “at fair
value through profit or loss”, in which case transaction costs are expensed to profit and loss
immediately.
Subsequent measurement
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market and are subsequently re-measured at amortised cost.
Loans and receivables are included in current assets, except for those which are not expected to
mature in twelve months after the end of the period.
De-recognition of financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar
financial assets is de-recognised when:
•
•
The rights to receive cash flows from the asset have expired; or
The Consolidated Entity has transferred its rights to receive cash flows from the asset or
has assumed an obligation to pay the received cash flows in full without material delay to
a third party under a ‘pass-through’ arrangement; and either
o The Consolidated Entity has transferred substantially all the risks and rewards of
the asset, or
o The Consolidated Entity has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
Kalium Lakes Limited and Consolidated Entities
41
57
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017 (CONTINUED)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
23.
Financial risk management (continued)
Impairment of financial assets
The Consolidated Entity assesses at each reporting date whether there is any objective evidence
that a financial asset or a group of financial assets is impaired. A financial asset or a group of
financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment
as a result of one or more events that have occurred after the initial recognition of the asset (an
incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the
financial asset or the group of financial assets that can be reliably estimated. Evidence of
impairment may include indications that the debtors or a group of debtors is experiencing
significant financial difficulty, default or delinquency in interest or in principal payments, the
probability that they will enter bankruptcy or other financial reorganisation and where observable
data indicates that there is a measurable decrease in the estimated future cash flows, such as
changes in arrears or economic conditions that correlate with defaults.
Financial liabilities
Initial recognition
Financial liabilities within the scope of AASB139 are classified as financial liabilities at fair value
through profit or loss, loans and borrowings, or as derivatives designated as heading instruments
in an effective hedge, as appropriate. The Consolidated Entity determines the classification of its
financial liabilities at initial recognition. Financial liabilities are recognised initially at fair value
and in the case of loans and borrowings include directly attributable transaction costs. The
Consolidated Entity’s financial liabilities include trade and other payables, bank overdraft, loans
and borrowings and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
i.
At fair value through profit and loss
Financial liabilities at fair value through profit or loss includes financial liabilities held for trading
and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are acquired for the purpose of selling
in the near term. This category includes derivative financial instruments entered into by the
Consolidated Entity that are not designated as hedging instruments in hedge relationships as
defined by AASB 39. Separate embedded derivatives are also classified as held for trading unless
they are designated as effective hedging instruments. Gains or losses on liabilities held for trading
are recognised in the income statement. The Consolidated Entity has not designated any financial
liabilities upon initial recognition as at fair value through profit or loss. Options granted that are
not part of a continuing share based payment relationship (i.e. there is no ongoing provision of
goods and/or services and are denominated in a currency other than the entity’s functional
currency) are accounted for as derivative liabilities in accordance with AASB 139: “Financial
Instruments: Recognition and Measurement” and IFRIC guidelines. Such options are recorded on
the balance sheet at fair value with movements in fair value of the derivative liability, during the
period and cumulatively, is not attributable to changes in the credit risk of that liability. In
addition, contractual arrangements whereby the Company agrees to issue a variable number of
shares are accounted for as a liability. To the extent that these contractual arrangements meet
the definition of a derivative, the value of the contractual arrangement is recorded on the balance
sheet at fair value with movements in fair value being recorded in the income statement.
Kalium Lakes Limited and Consolidated Entities
42
58
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
23.
Financial risk management (continued)
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such as an exchange or modification is treated as a de-recognition of the original liability
and the recognition of a new liability, and the difference in the respective carrying amounts is
recognised in the income statement.
24.
Contingent liabiltiies
The Consolidated Entity has no contingent liabilities as at 30 June 2017.
25.
Commitments
Kalium Lakes Limited had $241,561 worth of rental and rates expenditure commitments as at 30
June 2017 relating to its tenements.
26.
Interests in joint operations
On 1 March 2017 KLL and BC Potash Pty Ltd announced that the companies had entered into a
joint operation over Kalium’s 100% owned Carnegie Project. The Carnegie Project is a potash
exploration project located approximately 220km north-east of Wiluna that comprises one
granted exploration licence and two exploration licence applications covering a total area of
approximately 1,700 square kilometres. The Carnegie Project is highly prospective for hosting a
large sub-surface brine deposit which could be developed into a solar evaporation and processing
operation that produces sulphate of potash.
The consolidated entity has recognised its share of jointly held assets, liabilities, revenues and
expenses of joint operations. These have been incorporated in the financial statements under the
appropriate classifications. Information relating to joint operations that are material to the
consolidated entity are set out below:
Name
Carnegie Joint Operation
Country of Incorporation
Australia
% of Ownership Interest
30 June 2017 30 June 2016
Nil%
85%*
* Kalium Lakes Limited Pty Ltd ownership interest
Kalium Lakes Limited and Consolidated Entities
43
59
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
DIRECTORS’ DECLARATION
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
a.
the financial statements and notes are in accordance with the Corporations Act
2001;
comply with Accounting Standards;
b.
c. are in accordance with International Financial Reporting Standards issued by the
International Accounting Standards Board, as stated in Note 1 to the financial
statements; and
d. give a true and fair view of the financial position as at 30 June 2017 and of the
performance for the year ended on that date of the Company and the
Consolidated Entity;
The Chief Executive Officer and Chief Financial Officer have each declared that:
a.
b.
c.
the financial records of the Company for the financial year have been properly
maintained in accordance with s 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the
Accounting Standards; and
the financial statements and notes for the financial year give a true and fair view;
In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable.
This declaration is signed in accordance with a resolution of the Board of Directors.
Brett Hazelden
Managing Director and Chief Executive Officer
7 September 2017
Kalium Lakes Limited and Consolidated Entities
44
60
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
INDEPENDENT AUDITOR’S REPORT
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
KALIUM LAKES LIMITED
Opinion
We have audited the financial report of Kalium Lakes Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement
of profit and loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and the directors' declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i) Giving a true and fair view of the Group's financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Pty Ltd is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Pty Ltd ACN 009 321 377 atf Birdanco Practice Trust ABN 65 319 382 479 trading as RSM
Liability limited by a scheme approved under Professional Standards Legislation
61
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed this matter
Joint operation with BC Potash Pty Ltd
Refer to Note 26
Our audit procedures included, among other things:
Reading the agreement in order to gain an
understanding of the key terms of the joint
arrangement;
considerations, we
Evaluating management’s considerations of the
accounting treatment for the joint operation. In
such
the
assessment of the requirements of AASB 11 as
well as the significant matters relied upon to
determine that the parties have joint control of the
arrangement;
discussed
Recalculating the relative share of the project held
by each party based on the amount spent to date
by BCP in order to validate their subsequent earn
in into the project; and
We also assessed the adequacy of the Company’s
disclosure in Note 26 Interests in joint operations.
Our audit procedures included:
Challenging
the
reasonableness of
key
assumptions used by management relative to
the valuation on grant date
the
probabilities of the performance conditions being
met;
including
Checking the mathematical accuracy of the
computation; and
Assessing
the
appropriateness
of
the
Company’s disclosures in the financial report.
to
form an unincorporated
During the financial year, the Company entered into
an agreement
joint
operation with BC Potash Pty Ltd (BCP). Under the
terms of the agreement, BCP has the ability to earn up
to a 50% interest in the Carnegie Potash Project by
funding exploration and development expenses.
The joint agreement has been accounted for as a joint
operation
in accordance with AASB 11 Joint
Arrangements. The accounting for the joint operation
with BCP is significant to our audit due to the initial
assessment of how to treat the project under AASB
11, in accordance with the terms of the agreement and
the subsequent varying interest the Company has in
the joint operation.
In addition, the Company considered its obligations for
liabilities relating to the arrangement and made an
assessment of whether there were any indicators of
potential impairment to the carrying value of the rights
to the assets.
Share-based payment
Refer to Note 5
On the 2nd September 2016, the Company issued
performance rights
to various directors and a
consultant. The performance rights did not impose any
service conditions that required the counterparties to
complete a specified period of service with the
Company and, in accordance with AASB 2 Share-
based Payment, they vested immediately on the grant
date. The Company used judgement in estimating the
most likely outcome of the performance conditions
being met at grant date. In addition, the Company
referred to the value of the shares immediately prior to
the issue of the performance rights to estimate the
value of the share-based payment.
We have determined this to be a key audit matter due
to the significant judgement involved in assessing the
fair value of the share-based payment expense.
62
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
Other information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2017, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This
description forms part of our auditor's report.
63
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2017.
In our opinion, the Remuneration Report of Kalium Lakes Limited, for the year ended 30 June 2017, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 7 September 2017
D J WALL
Partner
64
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES
ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES
As at 30 June 2017
Issued Securities
Fully paid ordinary shares
$0.25 unlisted options expiring 16-Dec-19
Performance rights
Total
Distribution of Listed Ordinary Fully Paid Shares
Quoted
on ASX
Unlisted
Total
77,130,189 57,899,846 135,030,035
9,000,000
- 9,000,000
- 20,000,000 20,000,000
77,130,189 86,899,846 164,030,035
Spread of Holdings
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Total
Number of Holders Number of Units % of Total Issued Capital
-%
-%
1%
8%
91%
100%
2,383
191,719
1,500,392
11,297,793
122,037,748
135,030,035
74
67
160
289
110
700
Top 20 Listed Ordinary Fully Paid Shareholders
Rank Shareholder
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
VINCE SMOOTHY SUPER PTY LTD
KUMARINA HOLDINGS PTY LTD
HAZELDEN CORPORATE PTY LTD
MR BRETT WILLIAM HAZELDEN + MS TANYA PHYLLIS BOZIKOVIC
THOMAS ELLIS + SALLY ELLIS
COOLA STATION PTY LTD
P GOYDER SUPERANNUATION PTY LTD
MR DANIEL GEORGE CLARK + MISS JOHANNE GILLINGHAM
NOWHERETOGO PTY LTD
MR DALE JAMES CHAMPION + MRS ANITA MARIA CHAMPION
J P MORGAN NOMINEES AUSTRALIA LIMITED
BLUEBAY ASSET PTY LTD
EQUITY TRUSTEES LIMITED
THOMAS CHUTE ELLIS + SALLY ANNE ELLIS
11.
12.
13.
14.
15. MR STACEY RADFORD
16. MR EDWARD EARL MARSHALL
17.
18.
19.
PATINA RESOURCES PTY LTD
ANDIUM PTY LIMITED
ANDIUM PTY LTD
MR PHILIPPUS RUDOLPH VAN NIEKERK + MS JEAN-MARIE VAN
NIEKERK
20.
Total
Shares
Held
40,339,800
12,055,759
6,629,414
% Issued
Capital
30%
9%
5%
5,854,797
5,000,000
3,315,600
2,730,140
2,265,660
2,157,800
2,019,825
1,997,250
1,881,500
1,500,000
1,470,588
1,423,680
1,385,854
1,352,600
1,200,000
1,176,471
1,157,800
4%
4%
2%
2%
2%
2%
2%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
96,914,538
72%
Kalium Lakes Limited and Consolidated Entities
65
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017
NOTES
66
KALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2017 www.kaliumlakes.com.au
KALIUM LAKES LIMITED
Unit 1, 152 Balcatta Road
Balcatta WA 6021
PO Box 610
Balcatta WA 6914
Phone: +61 (0)8 9240 3200
info@kaliumlakes.com.au
www.kaliumlakes.com.au
ABN 98 613 656 643