ANNUAL REPORT
2018/19
Kalium Lakes Limited
ABN 98 613 656 643
Kalium
LAKES
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
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COMPANY
Kalium Lakes Limited (ABN: 98 613 656 643)
DIRECTORS
Malcolm Randall
Brett Hazelden
Stephen Dennis
Rudolph van Niekerk Executive Director
Chairman
Managing Director
Non-Executive Director
AUDITORS
RSM
Level 32, Exchange Tower
2 The Esplanade
Perth WA 6000
GPO Box R1253
Perth WA 6844
CHIEF FINANCIAL OFFICER
Chris Achurch
JOINT COMPANY SECRETARIES
Chris Achurch and Gareth Widger
REGISTERED OFFICE
Unit 1, 152 Balcatta Road
Balcatta WA 6021
WEBSITE AND EMAIL
Email: info@kaliumlakes.com.au
www.kaliumlakes.com.au
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
HOME EXCHANGE
Australian Securities Exchange
Level 40, Central Park,
152-158 St Georges Terrace
Perth WA 6000
ASX CODE
KLL
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CHAIRMAN’S ADDRESS
MANAGING DIRECTOR’S OVERVIEW
COMPANY SUMMARY
KEY RISKS
DIRECTOR’S REPORT
CORPORATE GOVERNANCE STATEMENT
INDEPENDENT AUDITOR’S DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
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CHAIRMAN’S ADDRESS
Dear Shareholder,
As the Chairman of Kalium Lakes Limited (KLL) and on behalf of the Board
and Management, I am pleased to present the Company’s 2019 Annual Report.
Our company has remained true to the philosophy of
a gated project evaluation and pilot testing focus, to
ensure the key project success factors are tested prior
to full scale development.
Kalium Lakes has consolidated its preparations to become
a genuine international “agri-resource” company.
The predictions of demand for premium fertiliser are
still showing an increase as the world population grows
and the many developing nations drive consumption of
various meat and food crops, so the forecasts for SOP
sales remain positive.
The ability to provide capacity to deliver a secure
agricultural supply chain for domestic and export
markets, as well as the close proximity to transport
infrastructure (roads and port) of the Beyondie SOP
Project, are vital attributes in developing a successful
and profitable SOP production business.
The efforts of your Directors and the management team
have not wavered as we strive to realise investment
returns to Kalium Lakes’ shareholders and stakeholders.
Remarkably, there have been more significant
achievements in the past 12 months than were recorded
in the previous financial period, which epitomises the
laser focussed determination and practical, hands-on
involvement of the small and dedicated team.
My congratulations and sincere thanks go to the Kalium
Lakes’ team, led by Managing Director, Brett Hazelden,
and Executive Director, Rudolph van Niekerk, for building
on the major achievements of the previous year and
successfully completing each significant new milestone.
Finally, on behalf of the Board, I take this opportunity
to express our appreciation to our increasing number of
dedicated shareholders who continue to invest in the
exciting and future potential of our company.
Yours faithfully
Malcolm Randall
Non-Executive Chairman
This report details the activities of the second
full financial year since the Company listed on the
Australian Securities Exchange in December 2016.
It is without the slightest hesitation that I am delighted
to point out that by any measure, to take a company
that was founded in 2014 to the point where it is today
poised to become Australia’s first Sulphate of Potash
producer, is a tribute to the determination, drive and
dedication of everyone involved.
In early October 2019 your Directors approved a Final
Investment Decision for the Beyondie SOP Project
which, less than three years after our IPO listing in
December 2016 and given the considerable number of
challenges, is an absolutely outstanding achievement.
Following a comprehensive Bankable Feasibility
Study and Front End Engineering and Design program
which clearly defined the evaporation and processing
operation, our aim is to initially produce 90,000 tonnes
of SOP per annum, before ramping up to the 180,000
tonnes per annum full scale SOP production facility.
Since my previous Chairman’s Address, I am pleased to
report that Kalium Lakes has recorded many significant
achievements, with the team continuing its enviable
record of completing each milestone on time and within
budget. Following on from my comments in previous
years we have continued to do what we
said we would do.
Some of the most significant milestones were:
► Bankable Feasibility Study and FEED Completed
► Offtake Agreement with K+S for 100% of Phase 1
SOP Production
► A$102 Million KfW IPEX-Bank Credit Approval
► A$74 Million Loan Package From NAIF
► Greenstone Resources A$20.8 million
Cornerstone Investment
► A$72 Million Capital Raise
► Mining Proposal Approved and Mining Tenure Granted
► EPBC Environmental Approval
► State Environment Minister Approval
Project Implementation
► Australian Federal Government Grants
Major Project Status
► Final Investment Decision
► 10 Mile Lake West – New Tenement
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MANAGING DIRECTOR’S OVERVIEW
The 2019 financial year was again a very
busy year dominated by a series of
milestone events, with each approval
and commitment taking our business
closer to a point culminating in the
recently announced Final Investment
Decision for the Beyondie Sulphate Of
Potash Project (BSOPP).
Listed on the Australian Securities Exchange in
December 2016 (the Company had started operations
as Kalium Lakes Potash Pty Ltd in October 2014), KLL
has developed a robust and flexible model which
continues to develop as the business grows.
The Company’s corporate and project activities are now
focused on ensuring that KLL delivers first product late
in the 2020 calendar year.
The development of this world class, long life, high margin
and low cost SOP project will see Kalium Lakes become
one of only a handful of primary SOP producers globally.
In summarising the activities undertaken during
this financial year, the following overview provides
only an small snapshot of the considerable amount
of resources, both human and financial, that have
contributed to setting the foundation of an Australian
industry that is set to participate on the global stage.
July 2018 to June 2019
(including subsequent events)
IN PRINCIPLE SUPPORT FROM GERMAN GOVERNMENT
EXPORT CREDIT GUARANTEE SCHEME
In July 2018, the Company announced that following a
meeting with Euler Hermes Aktiengesellchaft (Hermes)
in Germany and its preliminary evaluation of the Project,
Hermes had issued a Letter of Interest (LOI) confirming
in principle support under the export credit guarantee
scheme of the Federal Republic of Germany (ECA cover).
Hermes is the appointed export credit agency that
administers the ECA scheme for the German Government.
ECA cover from Hermes is an instrument for the
promotion of German exports. It provides a cover to bank
lenders to insure against the risk of an export loan.
Interest rates charged by lenders on debt guaranteed
by ECA cover are typically lower than commercial rates,
as repayment of the debt is insured, with longer tenor
also a feature of ECA supported debt, in accordance
with OECD guidelines. The LOI represented the first
milestone in the Company’s engagement with Hermes.
GERMAN GOVERNMENT PROGRESSES
CREDIT GUARANTEE SCHEME
One week later, on 23 July 2018, Kalium Lakes advised the
market that its export credit project finance application
with Hermes, had received a positive preliminary
assessment decision by the German Government
Inter-Ministerial Committee (IMC) and Hermes.
The Inter-Ministerial Committee comprises
representatives of the German Federal Ministry of
Economics and Technology, the Federal Ministry of
Finance, the German Foreign Office and the Federal
Ministry for Economic Cooperation and Development.
It is the decision making body of the Federal Republic
of Germany for Hermes ECA cover.
At the time, shareholders were asked to note that
the IMC decision did not, of itself, constitute a
commitment to provide the Hermes ECA cover and
there was no certainty of an agreement being reached
between the parties.
MINING PROPOSAL APPROVED AND MINING
TENURE GRANTED
On 31 August 2018, the Company announced that the
Mining Proposal and Mine Closure Plan had been
assessed and approved by the Department of Mines,
Industry Regulation and Safety (DMIRS) and determined
to provide the information required in the guidelines
approved under section 70O of the Mining Act 1978
(the Act). The Mining Proposal related to the Minor and
Preliminary Works for the BSOPP.
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
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FINANCIAL SUPPORT DISCUSSIONS - AUSTRALIAN
GOVERNMENT’S NORTHERN AUSTRALIA
INFRASTRUCTURE FACILITY
A significant announcement was released on 13
September 2018, advising that the Australian
Government’s Northern Australia Infrastructure Facility
(NAIF) had indicated it was going to investigate the
potential for it to provide debt finance for the Beyondie
SOP Project and associated infrastructure of benefit
to nearby pastoral stations, resource companies and
indigenous communities.
NAIF is a major long term initiative of the Australian
Government. NAIF provides access to up to A$5 billion
of finance which may be on concessional terms to
support infrastructure development that generates
public benefit for northern Australia. It also seeks to
encourage and complement private sector investment
to further that objective.
After several positive discussions KLL had received
written confirmation that the NAIF Board has
considered a Strategic Assessment Paper for the
Beyondie SOP Project and had consented to the NAIF
Executive continuing its investigation of the Project.
That announcement represented the first milestone
in KLL’s engagement with NAIF. The next step for KLL
was the submission of a formal Investment Proposal.
KLL continued to assist NAIF with its required due
diligence investigations regarding participation in the
debt facilities to fund the project capital expenditure
necessary to develop the Beyondie SOP Project
Earlier in that year, on 28 May 2018, KLL had announced
that it had received a notice of decision to Consent to
Minor and Preliminary Works under the Environmental
Protection Act 1986 (WA) from the Environmental
Protection Authority of Western Australia (EPA).
The approvals allowed for the construction, operation
and maintenance of:
► Site access road upgrade;
► Upgrade accommodation camp, including waste
water treatment plant;
► Workshop upgrade; and
► Upgrade of communication towers.
Kalium Lakes also advised that in addition to the
recently granted Mining Leases for the BSOPP, all of the
key Miscellaneous Licence Applications for the Project
had now been granted.
Those Miscellaneous Licences allowed for the
development of the following supporting infrastructure;
gas pipeline, water pipeline, power line, bridge/culverts,
search for groundwater, taking water, meteorological
station, communications facility, drainage channel,
pump station, mine site accommodation facility, bore
and borefield, water management facility, power
generation, storage and transport facility for mine
concentrate, mine site administration facility, workshop
and storage facility.
SIGNIFICANT RESOURCE UPGRADE
In the first week of September 2018, the Company
announced that the analysis of additional data
compiled from its industry leading hydrogeological data
collection program has delivered a 150% increase in the
BSOPP’s Measured and Indicated Resources.
The analysis delivered a Measured Resource of 1.72 Mt
@ 11,488 mg/l SOP; an Indicated Resource of 9.17 Mt @
12,459 mg/l SOP and an Inferred Resource of 7.79 Mt @
12,663 mg/l SOP.
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
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MANAGING DIRECTOR’S OVERVIEW
Bankable Feasibility Study Completed
► Bankable Staged Development Cost Base:
The completion of the Bankable Feasibility Study (BFS)
was announced on 18 September 2018. This was the first
BFS for any Australian deposit and one which confirmed
the Project is technically and financially robust, with
first production anticipated in 2020.
After taking into consideration operational, SOP market
and financing risk management perspectives, the
Company confirmed its strategy to pursue a phased
ramp-up development scenario involving commencing
with the commercial demonstration scale (82ktpa) SOP
operation, then ramping up to a full scale (164ktpa) SOP
production facility for domestic and international sale.
Kalium Lakes considered that the implementation of the
Project in two phases minimised initial upfront capital
costs, managed risk, reduced shareholder dilution and
allowed entry to the market in a sustainable, non-
disruptive manner. An initial mine life of between 30-50
years was anticipated for a project designed to be a low
cost, long life and high margin producer.
Other key points from the BFS included:
► 90% Increase in Ore Reserves: Based solely within
the Stage 1 Approval Footprint, which represents less
than a quarter of total lake surface area within the
tenement package:
– Proved Reserve of 1.65 Mt @ 13,830 mg/l SOP
at a cut-off grade of 2,500mg/l K
– Probable Reserve of 3.49 Mt @ 11,820 mg/l SOP
at a cut-off grade of 2,500mg/l K
► Improved Financial Outcomes for the Base Case:
– Pre-tax NPV8 A$575M, IRR of 20%
– Average EBITDA of A$116Mpa, EBITDA margin of 61%
– A payback period of 7 years and Life of Mine (LOM)
30 years
– Free cash flows of more than +A$2B
– Based on CRU forecast US$606/t nominal average
LOM SOP @ $A/$US exchange rate of 0.73
– Estimated LOM Operating Cash Cost of A$231/t
SOP FOB Fremantle Port. This would place the
Beyondie SOP Project among the lowest cost
global SOP production.
– Pre-production Capital Cost of A$159 million for
the initial 82ktpa phase. A deferred capital cost of
A$125 million was required to ramp up production
to 164ktpa SOP.
– Pricing had been received from contractors and
suppliers for more than 80% of Capex Costs.
– Option to install a gas pipeline at a capital cost of
A$29 million which would result in an operating
costs reduction of A$31-34 per tonne.
The BFS aimed to present information at the necessary
level of definition and accuracy in accordance with the
JORC Code and the AACE International® guidelines for
developing a Class 3 (Bankable / Definitive Feasibility
Study) estimate.
Following the completion of the BFS the Kalium Lakes’
Board endorsed the commencement of early works and
Front-End Engineering and Design (FEED) prior
to a Final Investment Decision (FID).
Research and Development – Tax Offset
On 22 October 2018, Kalium Lakes announced that the
company’s 2017/18 Research and Development (R&D)
Tax Incentive claim had been completed. Under the
self-assessment program, KLL had registered eligible
Australian R&D activities for the BSOPP.
KLL is also eligible to claim R&D tax offsets for
overseas R&D expenditure, on R&D activities described
in the approved Overseas Findings application, from
the beginning of the 2015/16 income year until the
completion of the approved overseas activities.
KLL received a total of A$3,863,050 in R&D tax
offsets for the 2017/18 income year for both
Australian and approved overseas R&D
activities in relation to the BSOPP.
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10 Mile Lake West – New Tenement
KLL advised on 29 October 2018, that it had entered into
an agreement with AIC Resources Limited (AIC) to acquire
a portion of AIC’s tenement E69/3247 and had lodged a
new tenement application in respect of the land acquired,
being the application for 10 Mile Lake West (E69/3594).
The new tenement is contiguous with the already sampled
area of 10 Mile Lake that currently has a Resource and
Reserve statement, as well as a granted Mining Lease.
The consideration paid to AIC for the new area was 5
million fully paid ordinary shares and 5 million options
to acquire shares in KLL. The Shares and Options issued
to AIC are subject to a 12 month escrow period from
the date of issue. The Options have an exercise price of
A$0.50 each and will expire on 30 June 2025.
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Basemap: Esri World Imagery
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Issued for Information
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Issued for Information
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Issued for Mining Lease Application
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Datum: GDA94
Datum: GDA94
Projection: MGA51
Projection: MGA51
Scale at A3:
Scale at A3:
New Ten Mile West Tenement
Ten Mile Lake Mining Lease
Lake Sunshine Mining Lease Area
Exploration Licence
Miscellaneous Licence
Beyondie Sulphate Of Potash Project
Beyondie Sulphate Of Potash Project
Tenements, October 2019
Tenements, October 2019
KLP_18004
KLP_18004
10/10/2019
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MANAGING DIRECTOR’S OVERVIEW
K+S Completes Offtake Due Diligence
Early in November 2018, KLL advised, that it has
received written confirmation from K+S that it had
satisfactorily completed its technical Due Diligence
(DD) review on the BSOPP. The offtake arrangement
for the entire Phase 1 SOP production from the 100%
owned Project remained subject to the parties agreeing
and entering into a formal binding offtake agreement
and the completion of DD had satisfied the condition
precedent required for the execution of the Binding
Offtake Agreement.
The DD review, undertaken during the previous five
months, was conducted by K+S working in close co-
operation with the Kalium Lakes’ team. It involved
a site visit to the BSOPP site, technical reviews with
K-UTEC, DRA Global, Advisian and others in Germany
and Australia. The assessment also included a detailed
review of the Bankable Feasibility Study, with emphasis
on the geology, brine analysis, processing, quality and
cost components of the Project.
Beyondie Gas Pipeline Licence Approval
On 13 November 2018 KLL announced it had received
confirmation that DMIRS, under delegation from the
Minister for Mines and Petroleum (under section 10(1)
of the Petroleum Pipelines Act 1969), had granted
licence PL117 to construct and operate a pipeline for the
conveyance of petroleum and for associated purposes
along the authorised route to the Beyondie SOP Project.
The formal grant of a licence allowed KLL, as part
of the BSOPP Front End Engineering and Design (FEED)
process, to continue its assessment of the option
of constructing the pipeline for Stage 1 in place of
trucked gas bullets.
Construction of the 78 km lateral gas pipeline, to
connect to the Goldfields Gas Pipeline at a cost of A$29
million, would result in a reduction in operating costs.
At that time the gas pipeline formed part of the
formal Investment Proposal being prepared for
submission to NAIF.
Early Works and FEED
Early Works had been underway since the third quarter
of the 2018 calendar year with the major focus being
the upgrade of the access road and communications
towers to enable a smooth transition into construction.
KLL had also purchased 60 ensuited accommodation
rooms, a kitchen that can support in excess of 120
people, administration area, gymnasium, laundries
and wet mess facilities.
During the December 2018 quarter Front End
Engineering and Design advanced substantially,
with works focused on plant optimisation, finalising
equipment selection, process plant recovery
improvements and debottlenecking of constraints
across the process flowsheet. KLL continued to utilise
K-UTEC as the principal process engineer and worked
with it to finalise process plant guarantees.
2018 / 2019 ASX Significant Announcement Timeline
German Government
Progresses CGS
Progressing NAIF Financial Support
Discussions
Gas Pipeline
Licence Approval
FEED Process
Recovery Optimisation
Mining Proposal and
Tenure Granted
10 Mile Lake West
– New Tenement
A$2.8 Million
Share Placement
All Mining
Tenure Granted
JUL
AUG
SEP
OCT
NOV
DEC
JAN
FEB
Carnegie Potash Project
Scoping Study Completed
Bankable Feasibility
Study Completed
EPC
Environmental
Approval
BSOPP Significant
Resource Upgrade
$3.8M R&D
Tax Offset
K+S Completes
Offtake DD
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Environmental Protection Authority
of Western Australia Approvals
Senior representatives from the Environmental
Protection Authority of Western Australia (EPA)
conducted a site visit to the Beyondie Project in late
November 2018. The EPA had previously advised, in
November 2017, that the level of assessment was an
“Environmental Review – no public review, with a
proponent prepared Environmental Scoping Document
(ESD)”. KLL submitted the final ESD and awaited
completion of the EPA assessment process and
recommendations from the Minister for Environment.
Completion of A$2.8 Million Share Placement
The successful completion of a bookbuild was
announced by Kalium Lakes in mid-December 2018.
This placement of 9,053,083 new fully paid ordinary
shares in the Company, at an issue price of A$0.31 per
share to both new and existing, domestic and overseas
institutional, sophisticated and professional investors
raised A$2,806,456.
Proceeds from the Placement were used to continue
to fund early capital works, Front End Engineering &
Design, to progress project financing, general overheads
and working capital, to advance the BSOPP.
FEED Process Recovery Optimisation
During January 2019, Kalium Lakes provided an update
in relation to process optimisation for the Purification
Plant and Evaporation Ponds. The optimisation work
was identified as part of the BFS outcomes, including
the required works to be completed during the Front
End Engineering and Design program for the BSOPP.
The FEED optimisation works were completed by
K-UTEC, in conjunction with a number of equipment
suppliers in Germany, which continued to build on
the previous work completed in the BFS. Additional
testwork had been performed in order to de-bottleneck
the process plant and increase recovery primarily from
the flotation tails stream. The work was identified
during the BFS but the recovery improvement was
not incorporated into the BFS until it could be
independently reviewed and confirmed to be of
bankable standard.
As a result of the optimisation works, overall potassium
recoveries (Brine to SOP product) increased from
72% in the BFS up to 91% during the FEED, including
evaporation pond losses associated with entrained
brine in harvested waste salts.
SOP product quality remained the same, at a premium
51-52% K2O product, with negligible chloride and
minimal insoluble material.
The recovery improvement and debottlenecking
resulted in a minor modification to the purification
plant and also the evaporation pond layout as well as
increasing the potential to improve production rates
with little change to the cost of the process plant.
This was compiled as part of the FEED works and the
associated report which was issued later in the quarter.
FEED
Low Operating
Cost & Increased
Produced
EPA Recommends
Environment
Approval
Toll Awarded Key
Haulage / Port
Contract
Final
Investment
Decision
K+S Binding
Offtake
Agreement
Key Purification
Plant Contracts
Awarded
KfW IPEX Bank
Credit Approval
Westpac
Working Capital/
Hedging Facilities
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
A$102 KfW Debt
Funding Terms
JORC Brine Guideline
Published
Shell Gas Supply and
APA Gas Transport
Contracts Awarded
Successful
$72M Capital Raise
A$74 Million NAIF
Loan Package
Greenstone Resources
A$20.8M Investment
WA Environment
Minister Approves
Project
German
ECA Cover
Major
Project Status
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MANAGING DIRECTOR’S OVERVIEW
Improved recoveries also meant that less brine is
required from the borefields and trenches, potentially
reducing the size of the evaporation ponds, requiring
less brine extraction and pumping infrastructure.
EPBC Environmental Approval
On 23 January the Company received approval in
accordance with Part 9 of the EPBC Act from the
Commonwealth Department of the Environment and
Energy (DotEE), for the BSOPP.
The official documentation stated that the approval is
for: “The abstraction of potassium-rich brine associated
with Sunshine and Ten Mile Lakes, approximately 160
km south-east of Newman, in the eastern Pilbara region
of WA and production of Sulphate Of Potash by means
of solar evaporation.”
The decision covered the Stage 1 area of the BSOPP (see
map below) which reflected the development base case
as set out in the BFS.
All Mining Tenure Granted
Kalium Lakes announced that it had been granted all
of the required Mining Tenure for the Beyondie Sulphate
Of Potash Project by the Department of Mines, Industry
Regulation and Safety on 18 February 2019. The Tenure
includes two Mining Leases, 15 Miscellaneous Licences
and a gas pipeline licence, in addition to the 15 granted
exploration Licences.
The tenure covers all required project activities, including:
► Mining (Brine Extraction)
► Evaporation Ponds
► SOP Purification
► All Roads including Product Haul Road Connecting
to the Great Northern Highway
► Water Supply Borefield and Pipelines
► Communications
► Gas Pipeline
► Power Generation
► Accommodation Facilities
► Supporting Infrastructure
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Comms Tower 2
Airstrip - Detail
Comms Tower 1
Access Road and
Gas Pipeline
Gas Pipeline
Admin
Power Station
Access Road
Camp
WWTP
Spray
Field
Processing Plant, Power Station, Camp and Admin Detail
KLI Tenements
KLP Tenements
Goldfields Gas Pipeline
State Road
Local Road
Basemap: Esri World Imagery
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UPDATED INFRASTRUCTURE
UPDATED INFRASTRUCTURE
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ISSUED FOR INFORMATION
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Datum: GDA94
Projection: MGA51
Scale at A3:
Beyondie Sulphiate Of Potash Project
KLP and KLI Tenements
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KL_19020
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7
0
0
0
0
7
2
7
0
0
0
0
6
2
7
0
0
0
0
5
2
7
0
0
0
0
4
2
7
0
0
0
0
3
2
7
12
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
13
Importantly, all Mining Tenure had been granted
with the consent of the Determined Native Title
holders, the Gingirana People and the Birriliburu
People, in accordance with the signed Mining Land
Access Agreements. Also, all of the Exploration Licences
had been granted in accordance with the Land Access
and Mineral Exploration Agreements.
A$74 Million Loan Package from NAIF
Two days later, on 20 February 2019, the Company
announced that the Board of the Northern Australia
Infrastructure Facility had made an Investment Decision
to support the development of the Beyondie SOP
Project by providing long-term debt facilities.
The NAIF Facilities are subject to final documentation
and conditions precedent to drawdown, including final
approval from the Western Australian Government as
outlined in the NAIF Act 2016.
NAIF and Kalium agreed non-binding term sheets
for the provision of a $48 million Infrastructure
Development Facility and up to A$26 million for
a Project Development Facility.
The long tenor and concessional terms of the
Infrastructure Development Facility allowed Kalium
to bring forward the construction of a A$29 million,
78 km lateral gas pipeline to connect to the Goldfields
Gas Pipeline and an on-site gas fuelled power station
into Phase 1 of the Project. This results in operating
cost reductions of approximately A$62-65 per tonne
from the base case in the BFS released in September
2018 as the BFS contemplated outsourcing the gas
supply and power generation to a third party provider
via Build-Own-Operate arrangements.
The Infrastructure Development Facility will also fund
upgrades to the 78 kilometre unsealed road connecting
the Beyondie SOP Project site to the Great Northern
Highway, new communication infrastructure, an airstrip
and an accommodation village that can support in
excess of 120 people.
FEED Report Results - Lower Operating Cost
and Increased Production For BSOPP
During the first week of March 2019 Kalium Lakes
confirmed the completion of the Front-End Engineering
and Design works. The FEED optimisation works were
completed by German experts K-UTEC in conjunction
with a number of equipment suppliers in Germany
which had continued to build on the previous work
completed in the BFS.
Key FEED works and outcomes included:
► Recovery Improvement: Overall system potassium
recovery improvement from 72% to 91% as a result
of de-bottlenecking of the process plant and
an increase in the potassium recovery from the
flotation tails stream.
► Increased Production Rate: As a result of the
recovery improvement, production rates have
increased by 10% to a 90ktpa SOP Stage 1 facility
ramping up to 180ktpa SOP Full Scale Facility.
► Initial Mine Life in excess of 30 years (up to 50
years): Mine plans have been updated to reflect the
recovery improvement.
► Reduction in Pond Size: Total evaporation pond size
has reduced from 445 ha to 399 ha.
► Less Brine Extraction: Improved recoveries also
mean that less brine is required to be extracted
from the borefields and trenches, reducing brine
extraction and pumping infrastructure.
► SOP product quality: Remains the same, at a
premium 51-52% K2O product, with negligible
chloride and minimal insoluble material.
► NAIF Infrastructure Funding: As a result of the
recently announced A$74 million NAIF loan package,
the base case project now includes installing
key infrastructure at the commencement of the
project including a gas pipeline and gas fired power
station. These items were included in the BFS as an
alternative outcome with capital and operating
costs highlighted.
► Decreased Life of Mine (LOM) Operating Cost: As
a result of Kalium Lakes owning and operating the
power station and gas pipeline (in place of trucked
LNG bullets and third party operated power station),
plus savings associated with recovery improvements,
LOM Operating costs have decreased significantly to
~US$178-207/t FOB AISC (previously ~US$226-263/t).
► Kalium Lakes to become the 2nd or 3rd lowest cost
producer in the world.
► Pre-production Capital Cost of ~A$216M: Capital
costs are reduced through less brine extraction
infrastructure and condensed pond size. Capital
costs increase as a result of the nett additional
NAIF-funded infrastructure (A$39M), a slightly
augmented back end of the process plant to boost
the production rate and a larger 15.6% contingency
(now A$29M, previously A$15M) to enhance certainty
of delivering to budget.
14
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
15
MANAGING DIRECTOR’S OVERVIEW
► Material Contracts Advanced: The Company’s
contracting strategy has been endorsed by proposed
funding groups and independent reviewers. Key
material contracts including process design and
equipment supply; EPC/M, power station, gas supply
and product haulage contracts are materially
advanced which continue to confirm the BFS/FEED
capital and operating cost outcomes.
► Capital Cost estimate meets AACE Class 2:
The FEED capital cost estimate complies with the
AACE International® guidelines for developing a
Class 2 estimate.
► Independent Technical Reviews: Independent
technical reviews initiated by the banks have
been completed confirming both the BFS and
FEED outcomes.
► No change to Ore Reserves or Mineral Resources.
► Improved Financial Outcomes:
– Pre-tax NPV8 $606M, IRR of 20.3% (previously
$575M and 20.4%).
– Average EBITDA of $126Mpa, EBITDA margin of 61%
(previously $116Mpa and 61%).
– No changes have been made to the material
assumptions utilised in the financial model, other
than as detailed in this announcement.
Low Cost Financing Identified: NAIF, German
Government Export Credit Agency (ECA) Scheme
(Euler Hermes).
$102 Million debt funding for Beyondie
Project with KfW IPEX-Bank
On 19 March 2019 the Company announced that it
had agreed a non-binding term sheet with German
KfW IPEX-Bank to provide approximately $102 million
of senior debt funding for the development of the
Beyondie SOP Project. On the basis of these terms, KfW
IPEX-Bank was finalising its due diligence and nearing
the completion of its credit approval process.
The KfW IPEX-Bank funding is on attractive terms
compared to traditional project financing, including a
long tenor of 10 years and complements the low cost,
long tenor funding approved by NAIF.
With KfW IPEX-Bank’s assistance, Kalium Lakes
continues to progress the export credit finance
application with Euler Hermes, having received a
positive preliminary assessment decision by the
German Government Inter-Ministerial Committee.
Historic Binding Offtake Agreement with
Global Potash Producer K+S
Kalium Lakes announced on 26 March 2019 the next in
what is a series of global associations, by entering into a
Binding Offtake Agreement with K+S, for SOP production
with initial revenues estimated to be ~A$650M.
The Agreement includes the following key elements:
► An initial 10-year term to provide K+S with 90,000tpa
of SOP products, representing 100% of the
anticipated production from Phase 1 of the Beyondie
Sulphate of Potash Project.
► Pricing is linked to the sales price realised by K+S,
which will also receive a marketing fee for selling
and distributing the SOP product.
► K+S offers Kalium Lakes unparalleled expertise and
technical support in relation to design, construction
and commissioning.
K+S is a customer-focused, independent minerals
company for the Agriculture, Industry, Consumers, and
Communities segments and wants to grow the EBITDA to
€3 billion by 2030. The Company has approximately 15,000
employees working to enable farmers to provide nutrition
for the world, develop solutions that sustain different
industries and improves daily life for consumers.
Greenstone Resources - A$20.8 million
cornerstone investment
On 3 April 2019, the Company announced it had
secured a conditional cornerstone equity investment
of A$20.8 million from Greenstone which is part of the
Greenstone Resources II LP group (Greenstone) for
Beyondie SOP Project.
The equity investment was undertaken via a two tranche
placement of 47,305,588 fully paid ordinary shares at
a price of A$0.44 per share, representing an equity
investment by Greenstone of approximately A$20.8
million or 19.99% of the shares on issue in Kalium
Lakes, based on the capital structure at the time. The
Company and Greenstone had also entered into certain
other strategic support arrangements to assist in the
development of the Company’s projects, which together
with the Placement, had been agreed pursuant to a
subscription and co-operation agreement.
The proposed use of funds included the purchase
of long lead items, pond construction, bores,
trenches, pumping equipment, accommodation
village installation, RFDS airstrip, administration
and work-shops.
14
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
15
EPA Board Recommends and Minister
Approves Environmental Approval
Review Document during 2018 and culminating in the
EPA Board recommending approval in April 2019.
The company announced that the Beyondie Sulphate
Of Potash Project had been recommended for approval
by the Western Australian Environmental Protection
Authority (EPA) on 8 April 2019 and that its report was
with the Hon Minister for Environment for a final decision.
Kalium Lakes had worked closely with the officers at
the EPA during the past four years, with project referral
in October 2017, followed by the completion of the
Environmental Scoping Document and the Environmental
Then, on 11 June 2019, Kalium Lakes was able to advise
the market that consistent with section 45(1) of the
Environmental Protection Act 1986, the Minister for
Environment, the Hon. Stephen Dawson MLC, had
consulted with other decision-making authorities and
reached agreement that EPA Report 1631, relating to the
BSOPP, may be implemented subject to the conditions
set out in Statement Number 1098.
AMEC JORC Brine Guidelines
In the first week of May (2 May 2019), Kalium Lakes
acknowledged that the Joint Ore Reserve Committee
(JORC) had adopted the “Guidelines for the Resource
and Reserve Estimation for Brines that had been jointly
developed by the Australian SOP Brine Industry and
its specialist hydrogeologists in conjunction with the
Association of Mining and Exploration Companies (AMEC).
The Guidelines were developed to assist the industry to
describe the technical considerations required to report
brine mineralisation, Resources and Reserves in relation
to the JORC Code 2012 which, unlike solid minerals,
requires an understanding and definition, of the aquifer
characteristics (hydrogeology) plus the host geology.
Kalium Lakes also confirmed that the Project’s Ore
Reserves and Mineral Resources are compliant with
JORC’s newly adopted Guidelines.
16
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
17
MANAGING DIRECTOR’S OVERVIEW
Key Contracts Awarded – Purification Plant
On 23 May 2019, Kalium Lakes announced that it
had awarded the key contracts for the engineering,
procurement, construction management and
commissioning associated with the development of
the Purification Plant facilities for the BSOPP. The total
value across the four key contracts awarded is in excess
of A$60 million. The contracts allowed commencement
of early works with the full scope subject to a Final
Investment Decision (FID).
Importantly, all the contracts awarded are within the
budget outlined in the BFS and FEED. The contracts
confirmed the 15-month construction schedule post a
FID, followed by a commissioning and ramp up period.
The consortium Ebtec GbR (Ebtec) is an arrangement
between K-UTEC AG Salt Technologies(K-UTEC)
and Ebner GmbR (Ebner) to provide Engineering,
Procurement and Supervision (EPS) services for the
BSOPP. Both parties have worked together recently
to provide similar services for a SOP plant in Austria
that has been successfully running for a number of
years. Ebtec will supply the process plant and provide
equipment installation supervision, followed by the
commissioning of the plant.
Ebtec’s contract includes performance guarantees to
ensure the quality of SOP production is in line with the
requirements of the K+S Offtake Agreement and includes
liquidated damages for performance and schedule.
The contract also includes a bonus arrangement.
An Engineering, Procurement and Construction
Management (EPCM) contract has been executed with
DRA, with that company taking the lead on overall
BSOPP development and commissioning. DRA brings
significant global and Western Australia specific project
development experience, combined with SOP specific
knowledge and experience that was developed with
the involvement of DRA, since the Pre-Feasibility Study
stage of the BSOPP. DRA have developed the basis for
the overall project scope, budget and schedule.
Maschinenfabrik Köppern GmbH & Co. KG has been
awarded the engineering and supply of key equipment
associated with the compaction plant for the production
of granular SOP. Köppern brings SOP specific compaction
experience and have successfully delivered these plants
for other SOP projects, including K+S.
A construction contract with Firm Construction Pty
Ltd (Firm) was also awarded various construction
services for the BSOPP. Firm is accredited under the
WHS Scheme with the Office of the Federal Safety
Commissioner, a requirement of Northern Australia
Infrastructure Facility (NAIF) financing.
Toll Awarded Key Haulage
and Port Contract
Thursday 20 June 2019 saw Kalium Lakes announce
that it had awarded the SOP product haulage and port
contract for the Project to Toll Mining Services. The
contract includes the full logistics chain of product
transport from mine site to shipping, including:
► Collection of various SOP products at the BSOPP site;
► Product haulage via existing road trains returning
from Newman to Perth;
► Receipt, storage & inventory control of SOP products
at a Toll provided depot in Perth; and
► Loading in containers, despatch, delivery and
shipping documentation for SOP products from
the depot to Fremantle or Kwinana Ports, ready for
shipping on a Free Carrier (FCA) basis.
The contract was subject to a Final Investment Decision
(FID) and subsequent notice from Kalium Lakes that it is
ready to commence haulage operations.
16
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
17
Shell Gas Supply and APA Gas Transport
Contracts Awarded
On the final business day of the financial year, 28 June
2019, Kalium Lakes announced it had secured key
contracts with well known, reputable organisations
for the transportation and supply of gas to meet
the requirements of the BSOPP. These contracts will
provide 1Tj of gas per day to produce 90ktpa of SOP
per annum and the contracts also allow for expansion
to support increased production and production of
magnesium by-products.
Shell Energy Australia Pty Ltd (Shell) has been awarded
the contract for supply of gas to the Project site, which
will be utilised for power generation, steam generation
and product drying during operations.
APA Group’s (ASX: APA) 88.2% owned Goldfields Gas
Pipeline (GGP) will transport and deliver gas via a new,
purpose-built metering and connection facility. Early
works had commenced with APA on the design of the
new metering facility.
These contracts are also subject to a Final Investment
Decision (FID) and subsequent notice from Kalium
Lakes that it is ready to commence commissioning and
production operations.
Subsequent Events
KFW IPEX-BANK CREDIT APPROVAL
MAJOR MILESTONE
On 2 July 2019, Kalium Lakes announced that it had
received a credit-approved offer of finance from
German KfW IPEX-Bank for the US / Euro dollar
equivalent of A$102 million of senior debt funding (KfW
IPEX-Bank Debt Facilities) for the development of the
Beyondie Sulphate of Potash Project (BSOPP).
The KfW IPEX-Bank Debt Facilities were subject
to securing a positive decision from the German
Government Inter-Ministerial Committee for the
export credit agency Euler Hermes, which was
expected in July 2019, together with the execution of
formal documentation. Other customary conditions
precedent were to apply to the debt facilities including,
completion of the residual equity requirement and a
Final Investment Decision by the Kalium Lakes’ Board.
These facilities form part of the overall funding package
for the BSOPP, which includes the previously announced
A$74M funding package provided by the Northern
Australia Infrastructure Facility (NAIF)
The KfW IPEX-Bank Debt Facilities will comprise
of two parts:
► Part A - US$ equivalent of €33 million facility
guaranteed by the German Government export
credit agency Euler Hermes, with a final maturity
of approximately 10 years after completion of
construction; and
► Part B - US$37 million facility, secured against the
BSOPP, with a final maturity of approximately 10
years after completion of construction.
JAYLON AWARDED LINER SUPPLY AND
INSTALLATION CONTRACT
On 9 July 2019, Kalium Lakes awarded the evaporation
pond liner, supply and install contract to Jaylon
Environmental Systems Pty Ltd (Jaylon) for its Beyondie
Sulphate of Potash Project (BSOPP). The contract
includes the installation, management of delivery
and installation of 1mm HDPE liner for a total of
approximately 400ha of evaporation area for the Stage
1 BSOPP 90ktpa SOP facility.
In 2017 Jaylon successfully completed the supply and
installation of the liner for the Project’s 10ha pilot
scale ponds (see images below). Jaylon had submitted
the most competitive and compliant offer for the full
project works, resulting in this A$15 million major
contract award.
18
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
19
MANAGING DIRECTOR’S OVERVIEW
GERMAN GOVERNMENT EULER HERMES EXPORT
CREDIT COVER POSITIVE DECISION
A number of existing founding shareholders had
committed to take up A$8 million in the equity raise.
Friday 19 July 2019 saw Kalium Lakes announce that it
had been advised that the German government inter-
ministerial committee (IMC) had reached a positive
decision on its application for the Euro / US dollar
equivalent of approximately A$50 million of project
finance export cover.
EQUITY RAISE FOR THE DEVELOPMENT
OF THE BEYONDIE SOP PROJECT
The Company announced, on 24 July 2019, that it was
undertaking A$17.5 million Institutional Placement
and A$54.6 million 1 for 2.19 Entitlement Offer to raise
approximately A$72 million to fund (in conjunction with
the Loan Facilities) the construction of the BSOPP and to
provide anticipated working capital until first production.
The new shares were to be issued at A$0.50 per
share and major shareholder Greenstone (19.8%) had
committed to subscribe for approximately A$14 million
under the Placement and the Entitlement Offer and to
sub-underwrite up to A$5 million of any retail shortfall.
10 MILE LAKE WEST TENEMENT GRANTED
On 1 August 2019, KLL advised the market the grant of 10
Mile Lake West Exploration Licence hand been completed
and that it now formed part of the BSOPP. Kalium had
previously announced (29 October 2018) that it had
entered into an agreement with AIC Resources Limited
(AIC) to acquire a portion of AIC’s tenements which now
forms the newly granted E69/3594.
The new tenement is strategically located adjacent
to the Company’s current BSOPP Mining Leases,
processing facilities and infrastructure, allowing future
potential to extend trench and bore network for brine
extraction, as well as being contiguous with the current
delineated lake surface and paleochannel.
Importantly the tenement has been granted with
the consent of the Traditional Owners of the area,
the Gingirana People.
18
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
19
SUCCESSFUL COMPLETION OF RETAIL
ENTITLEMENT OFFER
The announcement of the successful completion of
the retail component of its 1 for 2.19 accelerated, non-
renounceable, pro-rata entitlement offer occurred on
Monday 19 August 2019.
The Retail Entitlement Offer had closed on Wednesday
14 August 2019 and raised a total of A$16.4 million
at $0.50 per share. Together with the institutional
placement and institutional component of the
Entitlement Offer, the total amount raised equated
to approximately A$72 million.
WESTPAC TO PROVIDE WORKING CAPITAL
AND HEDGING FACILITIES
The Company announced, on 27 August 2019, that it had
received a credit-approved offer from Westpac Banking
Corporation for a A$15 million working capital facility
and a hedging facility. Together, these facilities will
support prudent capital and risk management during
construction, commissioning and operations of the
Beyondie SOP Project.
The working capital facility is an 18 month revolving
facility with a A$15 million limit that becomes available
from Practical Completion of the Beyondie SOP Project.
The hedging facility will be used to hedge risk in
accordance with the hedging policy of the Beyondie
SOP Project. Both facilities are senior secured.
The working capital and hedging facilities are both
subject to the execution of formal documentation and
other customary conditions precedent.
AUSTRALIAN FEDERAL GOVERNMENT
GRANTS MAJOR PROJECT STATUS
On 6 September 2019, Kalium Lakes advised the
market that the Australian Federal Government had
recognised the Beyondie Sulphate of Potash Project’s
strategic significance to Australia by granting it
Major Project Status.
Major Project Status is the Australian Government’s
formal recognition of the national strategic significance
of a project, through its contribution to economic
growth, employment, or contribution to regional
Australia. In addition, Major Project Status provides
coordination and facilitation support, as well as a
single entry point to a coordinated approvals process.
The Major Projects Facilitation Agency assessed the
BSOPP against the required eligibility criteria and
made the recommendation to the Minister for Industry,
Science and Technology, the Hon. Karen Andrews MP.
FINAL INVESTMENT DECISION
The most recent announcement, just prior to publication
of this report, occurred on 3 October 2019 and advised
that the Company’s Board had approved the full
development of the Beyondie Sulphate of Potash Project.
A Final Investment Decision (FID) allows the acceleration
of activities from the current approved Early Works
program to Full Scale Construction. As a result, the
Company commenced the finalisation of the remaining
key construction contracts and the Company advised
that it will keep shareholders updated on the progress
of those contracts through ASX announcements.
The decision followed the successful completion of
the Company’s A$72 million capital raise in August
in conjunction with the loan facilities to be provided
by KfW IPEX-Bank (approximately A$102 million) and
Northern Australia Infrastructure Facility (A$74 million)
plus a working capital facility from Westpac Banking
Corporation (A$15 million).
Next Steps
Kalium Lakes is now poised to become the first commercial
Sulphate Of Potash producer in Australia. The Project,
centred on an Australian deposit with an initial mine life
of between 30 to 50 years, has been designed to be a low
cost, long life and high margin producer.
Looking forward the key next steps for Kalium Lakes are:
► Ongoing award of construction contracts
► Full scale construction activities
► Operational readiness activities
► Commissioning and ramp up to name plate throughput
Founded in October 2014, Kalium Lakes has now
invested more than A$50 million in the exploration and
development of the Beyondie SOP Project and I wish
to thank our key consultants and employees for the
quality work undertaken. We now look forward to the
next challenges of construction and first production.
Everyone at Kalium Lakes is now preparing to achieve the
Company’s goal of assisting Australian and New Zealand
farmers through the delivery of an agronomically superior
product, while ensuring a satisfactory return to our
shareholders for a number of decades into the future.
Brett Hazelden
Managing Director and Chief Executive Officer
4 October 2019
20
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
COMPANY SUMMARY
Review Of Operations
The Company holds rights to granted tenure of approximately 2,300 square kilometres, as well as further tenement
applications covering approximately 2,700 square kilometres at the eastern margin of the East Pilbara region
of Western Australia, as shown in the map below.
KALIUM LAKES POTASH TENEMENT PORTFOLIO
21
20
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
21
Kalium Lakes Group Structure
Kalium Lakes LTD
Australian Pubic Company
ACN: 613 656 643
ABN: 98 613 656 643
TFN: 987 747 173
100%
100%
100%
Kalium Lakes
Infrastructure Pty Ltd
ACN: 631 042 450
ABN: 22 631 042 450
Kalium Lakes
Potash Pty Ltd
ACN: 601 436 060
ABN: 92 601 436 060
Carnegie Potash Pty Ltd
ACN: 627 461 278
ABN: 51 627 461 278
70%
BC Potash Pty Ltd
ABN: 19 165 728 745
30%
Carnegie Unincorporated
Joint Venture
22
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
23
COMPANY SUMMARY
Sulphate Of Potash Project
Production Process
Sulphate of Potash (SOP) is a widely-used agricultural fertiliser with annual global consumption of 6.6Mtpa.
Australia currently imports 100% of its potash requirements from overseas producers.
SOP can be produced by extracting brine (hypersaline water) from underground, then evaporating the water
to precipitate mixed potassium salts which are, in turn, purified to produce the SOP fertiliser, as illustrated in the
flow diagram below:
(a) Brine Pumping: brine is extracted from basal sands (or the lower aquifer) using submersible bores,
as well as pumping of trenches from the upper aquifer;
(b) Brine Solar Evaporation: brine is pumped to solar evaporation ponds where it sequentially precipitates calcium,
sodium, potassium and magnesium mixed salts in separate ponds;
(c) Salt Harvesting: the mixed potassium salts that have crystallized from the solar evaporation ponds
are mechanically harvested and stockpiled;
(d) Purification Processing: the mixed potassium salts are fed into a purification plant facility where the potassium
salts are converted into schoenite through a conversion and recycling process and are then separated from
halite via flotation. The resultant schoenite slurry undergoes thermal decomposition into SOP; and
(e) SOP Fertiliser: after drying and compaction in a purification plant, the SOP is ready to be sold and used
as a final product.
SOP PRODUCTION PROCESS
22
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
23
AUSTRALIA’S LARGEST SCALE PILOT PROGRAM
Beyondie Sulphate Of Potash Project
KLL is an exploration and development company
focused on developing the 100% Owned Beyondie
Sulphate Of Potash Project (BSOPP) in Western
Australia with the aim of commencing production at
90ktpa of Sulphate Of Potash (SOP) before ramping up
to 180ktpa of SOP for domestic and international sale.
The Project covers an area of approximately 1,760
square kilometres, comprising 16 granted exploration
licences, 15 granted miscellaneous licences, two
granted mining leases and a gas pipeline licence.
Kalium Lakes is developing a sub-surface Brine
deposit to produce a SOP product, by undertaking an
evaporation and processing operation 160 kilometres
south east of Newman.
KLL announced a Final Investment Decision on 3 October
2019 and is now proceeding with full construction
activities, with production anticipated in 2020.
In achieving FID the Company acknowledges the
contribution of leading industry specialists including
K-UTEC, DRA Global, Advisian, Shawmac, Wyntak, SRK,
Ebner GmbR and Preston Consulting as the principal
technical consultants, as well as RSM, DLA Piper
Australia, HopgoodGanim Lawyers, Macquarie Capital
(Australia) Limited and also BurnVoir Corporate Finance
as legal, commercial and financial advisors.
Kalium Lakes has entered into a Binding Offtake
Agreement with pre-eminent international SOP
producer and distributor, K+S. The Agreement includes
the following key elements:
► An initial 10-year term to provide K+S with 90,000tpa
of SOP products, representing 100% of the
anticipated production from Phase 1 of the Beyondie
Sulphate of Potash Project.
► Pricing is linked to the sales price realised by K+S,
which will also receive a marketing fee for selling
and distributing the SOP product.
► K+S offers Kalium Lakes unparalleled expertise and
technical support in relation to design, construction
and commissioning.
Kalium Lakes adheres to the JORC 2012 Code and the
Canadian Institute of Mining, Metallurgy and Petroleum
Best Practice Guidelines for Resource and Reserve
Estimation for Brines (CIM Guideline).
In addition, the Company is part of the Association
of Mining and Exploration Companies (AMEC) Potash
Working Group and recognises that the Joint Ore
Reserve Committee (JORC) has adopted the “Guidelines
for the Resource and Reserve Estimation for Brines”
that had been jointly developed by the Australian SOP
Brine Industry and its specialist hydrogeologists in
conjunction with AMEC.
24
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
25
COMPANY SUMMARY
KALIUM LAKES GATED INVESTMENT EVALUATION PROCESS
Kalium Lakes undertakes a gated project investment evaluation process that is accepted as industry best practice.
The illustration below confirms that the BSOPP has completed all gates from Concept Study to FEED and is now in
execution and development, prior to commencing operations.
BSOPP STAGES AND PHASES
The BSOPP covers an area of more than 200 kilometres in length and includes a 19.6 Mt SOP Resource.
Due to the size and longevity of the Project, the Company has identified a development pathway that includes
Stage 1 and Stage 2 as displayed in the map below.
There are two separate phases within the Stage 1 Approval Footprint, the first phase containing the construction
and operation of a 90 ktpa SOP Demonstration Scale Project Development, with the second phase containing the
ramping up to a 180 ktpa SOP Full Scale Project Development, to minimise operational and financial risk. Indicative
Phase 1 infrastructure is shown in the respective 10 Mile and Sunshine maps on the following page.
The 5.1Mt SOP Ore Reserve is related to Stage 1 only, with that stage covering 35 kilometres in length and including
only two of the 14 lakes located within the tenement package.
Stage 2 is 180 kilometres in length and includes 12 lakes, with similar high grades to the lakes also found in the Stage 1.
24
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
25
INDICATIVE INFRASTRUCTURE – 10 MILE
225000
230000
235000
240000
Evaporation Ponds
Process Plant
Airstrip
Trenches
Accommodation Camp,
Workshop & WWTP
Bores
0
0
0
0
6
2
7
0
0
0
5
5
2
7
Basemap: Ortho Imagery June 19
6
5
4
3
UPDATED BORE LAYOUT
UPDATED INFRASTRUCTURE
UPDATED INFRASTRUCTURE
HR
RvN BH
HR
HR
RvN BH
RvN BH
UPDATED INFRASTRUCTURE
HR
RvN BH
Rev
De��r�p��n
Drn
Chk
App
Datum: GDA94
Projection: MGA51
Scale at A3:
INDICATIVE INFRASTRUCTURE – SUNSHINE
Brine Production Bores
Trench Pumps
Trenches
Infrastructure
Brine Pipeline
Concentrate Pond
Excess Salt Stockpile
Kalium Lakes Tenements
Beyondie Sulphate Of Potash Project
Indicative Infrastructure
Lake Ten Mile
KLP_18037
25/9/2019
245000
250000
255000
260000
265000
0
0
0
5
7
2
7
0
0
0
0
7
2
7
Basemap: Ortho Imagery June 2019
5
4
3
2
1
UPDATED BORE LAYOUT
HR RvN BH
UPDATED INFRASTRUCTURE
HR RvN BH
AMENDED BORE LAYOUT
HR RvN BH
ISSUED FOR INFORMATION
HR RvN BH
ISSUED FOR INFORMATION
HR
RvN BH
Rev
De��r�p��n
Drn
Chk
App
Datum: GDA94
Projection: MGA51
Scale at A3:
Production Bores
Trench Pumps
Trenches
Tracks
Concentrate Pond
Kalium Lakes Tenements
Beyondie Sulphate Of Potash Project
Indicative Infrastructure
Sunshine Lake
KLP_18038
9/10/2019
0
0
0
0
6
2
7
0
0
0
5
5
2
7
0
0
0
5
7
2
7
0
0
0
0
7
2
7
26
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
27
COMPANY SUMMARY
Key BSOPP BFS and FEED Outcomes
Key works and outcomes include:
► Mineral Resources: Measured Resource of 1.72 Mt @
11,488 mg/l SOP; an Indicated Resource of 9.17 Mt @
12,459 mg/l SOP and an Inferred Resource of 7.79 Mt
@ 12,663 mg/l SOP.
► Ore Reserves: Proved Reserve of 1.65 Mt @ 13,830
mg/l SOP at a cut-off grade of 2,500mg/l K ; Probable
Reserve of 3.49 Mt @ 11,820 mg/l SOP at a cut-off
grade of 2,500mg/l K
► Increased Production Rate: As a result of the
recovery improvement, production rates have
increased by 10% to a 90ktpa SOP Stage 1 facility
ramping up to 180ktpa SOP Full Scale Facility.
► Initial Mine Life in excess of 30 years (up to 50
years): Mine plans have been updated to reflect the
recovery improvement.
► Recovery Improvement: Overall system potassium
recovery improvement from 72% to 91% as a result
of de-bottlenecking of the process plant and
an increase in the potassium recovery from the
flotation tails stream.
► Reduction in Pond Size: Total evaporation
pond size has reduced from 445 ha to 399 ha.
► Less Brine Extraction: Improved recoveries also
mean that less brine is required to be extracted
from the borefields and trenches, reducing brine
extraction and pumping infrastructure.
► SOP product quality: Remains the same, at a
premium 51-52% K2O product, with negligible
chloride and minimal insoluble material.
► Pre-production Capital Cost of ~A$216M: Capital
costs are reduced through less brine extraction
infrastructure and condensed pond size. Capital costs
increase as a result of the nett additional NAIF-funded
infrastructure ($39M), a slightly augmented back end
of the process plant to boost production rate and a
larger 15.6% contingency (now $29M, previously $15M)
to enhance certainty of delivering to budget.
► Capital Cost estimate meets AACE Class 2:
The FEED capital cost estimate complies with
the AACE International® guidelines for developing
a Class 2 estimate.
26
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
27
► Decreased Life of Mine (LOM) Operating Cost: As a result of Kalium Lakes owning and operating the power station
and gas pipeline (in place of trucked LNG bullets and third party operated power station), plus savings associated
with recovery improvements, LOM Operating costs have decreased significantly to ~US$178-207/t FOB AISC
(previously ~US$226-263/t).
► Kalium Lakes to become the 2nd or 3rd lowest cost producer in the world.
► Improved Financial Outcomes:
– Pre-tax NPV8 A$606M, IRR of 20.3% (previously A$575M and 20.4%).
– Average EBITDA of A$126Mpa, EBITDA margin of 61% (previously A$116Mpa and 61%).
– No changes have been made to the material assumptions utilised in the financial model, other than as
detailed in this announcement.
► Independent Technical Reviews: Independent technical reviews initiated by the banks have been completed
confirming both the BFS and FEED outcomes.
► Low Cost Financing Identified: NAIF, German Government Export Credit Agency (ECA) Scheme (Euler Hermes).
28
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
29
COMPANY SUMMARY
Sources and Uses Of Funds
Sources of Funds
A$M
Uses of Funds
Cash on hand2
15.4
Capital expenditure6
Balance equity raised3 in July / August
72.0
Capitalised Opex during construction
KfW facilities (including Euler Hermes covered facilities)4
102.0 Capital expenditure contingency
NAIF facilities5
74.0
Interest during construction and debt/equity costs
Services provided in return for Kalium Lakes shares
0.3
Cost overrun facility
DSRA balance and cash requirements
Total Sources
263.7 Total Uses
A$M
183.2
9.6
29.2
20.7
10.0
11.0
263.7
To minimise the chance of cost over runs and ramp up delays, as recently and historically observed in Australia,
the debt financiers have required debt service reserve accounts (DSRA) and minimum cash balance totalling $11M
plus a cost overrun facility of a further $10M, both of which are over and above the $29M contingency allowance.
1. Subject to the risk factors identified in pages 43 to 47
2. Unaudited 30 June 2019.
3. The sources above exclude the issue of New Shares equivalent to $250,000 to Mr Dennis, which will be subject to the Company obtaining
shareholder approval at a general meeting to be convened following completion of the Entitlement Offer and Placement and is in addition
to the amount raised under the Offer.
4. The KfW facility (including Euler Hermes) remains subject to the execution of formal documentation. Refer to KfW IPEX-Bank Credit Approval
Major Milestone ASX announcement dated 2 July 2019; https://www.kaliumlakes.com.au/site/wp-content/uploads/austocks/kll/2019_07_02_
KLL_1562024340.pdf and German Government Positive Decision for Export Credit Cover ASX announcement dated 19 July 2019.
5. The NAIF facility remains subject to the execution of formal documentation. Refer to ASX Announcement A$74 Million Loan Package from NAIF
dated 20 February 2019.
6. Total capital costs of $216.8 million less contingency of $29.2 million less capital of early works already incurred of $4.5 million as
at 30 June 2019 (unaudited).
► First Production End 2020: ramping up to name plate during 2021
28
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
29
Comprehensive BSOPP Construction Approvals Obtained
Legislation
Holder
Part IV - EPA Approval (early works)
Part IV - EPA Approval (full project)
Tecticornia Monitoring and Management Plan
Compliance Assessment Plan
Part V - Works Approval – Pilot Scale Evaporation Ponds
Part V - Works Approval Amendment; Evaporation Ponds (full project)
Status
Secured May 2018
EPA recommended approval April 2019.
Ministerial Statement June 2019.
Secured September 2019
Secured July 2019
Secured January 2016
Secured August 2019
Environmental
Protection Act 1986
Mining Act 1978
Mines Safety and
Inspection Act 1994
Rights in Water and
Irrigation Act 1914
Environment
Protection and
Biodiversity
Conservation Act
1999
Part V – Works Approval - Waste Water Treatment Plant / Sewage
Secured October 2018
Part V - Works Approval; Landfill
POW - Exploration Proposal – Pilot Ponds & Infrastructure
POW - Camp upgrade and communication towers
Secured June 2019
Secured April 2016
Secured July 2018
Mining Proposal and Closure Plan – Camp, Workshop and Comms Tower (early works)
Secured August 2018
Mining Proposal and Closure Plan (full project)
Secured September 2019
Registration of Exploration Manager and nominated site safety representatives
Completed August 2015
Registration of Construction Manager, Electrical Supervisor, Site Manager
Completed May 2019
Project Management Plan (early works)
Project Management Plan (full project)
26D Bore construction (early works)
5C Licence for 1.5Glpa pilot works (early works)
Secured February 2018
Secured February 2019
Secured June 2015
Secured August 2016
5C licences for production (brine) and supply (fresh) bores (full project)
Secured July 2019
26D Licence for production (brine) and supply (fresh) bores construction (full project)
Secured June 2019
EPBC Act approval
Night Parrot Management Plan
Groundwater Monitoring and Management Plan
Native Title Act 1993 Mining Land Access Agreements
Exploration Heritage Agreements
Heritage Surveys
Aboriginal Heritage
Act 1972
Excess Tonnage Consent Letter
Section 18 Clearance
Cultural Heritage Management Plans
Pipeline Licence to Construct
Construction Safety Case – Gas Pipeline Construction
Approval to construct or install an apparatus for sewage treatment
Certificate of Construction – Permit to Use (sewage)
Petroleum Pipelines
Act 1969
Health
(Miscellaneous
Provisions) Act 1911
Main Roads Act 1930
Great Northern Hwy Intersection Approval
Building Act 2011
Shire Building Permit for Camp
Dangerous Goods
Safety Act 2004
Medicines and
Poisons Act 2014
Dangerous Goods Site Licence
Poisons Permit (For Site Medic)
Secured January 2019
Secured July 2019
Secured June 2019
Secured March 2016 Gingirana
Secured January 2018 MNR
Secured March 2015
Completed during 2015/16/18/19
Secured December 2015
Not required for the BSOPP
Secured March 2016 Gingirana
Secured January 2018 MNR
Secured November 2018
Secured September 2019
Secured September 2018
Secured September 2019
Secured April 2019
Secured July 2019
Secured October 2019
Expected October 2019
30
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
31
COMPANY SUMMARY
Beyondie Sulphate of Potash Project - Tenement Interests
Tenement Name
Exploration Licences
E69/3306
Yanneri-Terminal
E69/3309
10 Mile Beyondie-
E69/3339
West Central
E69/3340
White
E69/3341
West Yanneri
E69/3342
Aerodrome
E69/3343
T Junction
E69/3344
Northern
E69/3345
Wilderness
E69/3346
NE Beyondie
E69/3347
10 Mile South
E69/3348
North Yanneri-Terminal
E69/3349
East Central
E69/3351
Sunshine
E69/3352
Beyondie Infrastructure
E69/3594
10 Mile West
Miscellaneous Licences
L52/162
L52/186
L52/187
L52/190
L52/193
L69/28
L69/29
L69/30
L69/31
L69/32
L69/34
L69/35
L69/36
L69/38
L69/40
L69/41
Access Road
G N Hwy Access Road
Comms Tower 2
Kumarina FW 1
Kumarina FW 2
Access Road Diversion
Access Road Village
Comms Tower 1
Sunshine Access Road
10MS FW A
10MS FW B
10MS FW C
10MS FW D
Access Road “S” Bend
10 Mile Airstrip
10 Mile Village
Mining Leases
M69/145
M69/146
10 Mile
Sunshine
Gas Pipelines
M69/145
10 Mile
Holder
State
Status
Grant Date
Interest
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLP
KLI
KLI
KLI
KLP
KLP
KLI
KLI
KLI
KLP
KLP
KLP
KLP
KLP
KLI
KLI
KLI
KLP
KLP
KLP
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
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
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
Application
-
Granted
Granted
Granted
Withdrawn
Granted
Granted
Granted
Granted
Granted
Granted
Granted
30-3-2016
30-5-2018
30-5-2018
13-8-2018
7-8-2018
7-8-2018
30-5-2018
7-8-2018
14-8-2018
14-8-2018
Granted
17-12-2018
Granted
17-12-2018
Granted
Granted
Granted
30-1-2019
8-2-2019
8-2-2019
WA
WA
Granted
Granted
6-6-2018
6-6-2018
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
WA
Granted
6-6-2018
100%
Note: Kalium Lakes Potash Pty Ltd (KLP) and Kalium Lakes Infrastructure Pty Ltd (KLI) are wholly owned subsidiaries of Kalium Lakes
Limited (KLL).
30
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
31
Annual Mineral Resources and Ore Reserves Statement - Resources Tables
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* The Kalium Lakes Beyondie SOP 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 (2012) and it is uncertain if future exploration will result in the
determination of a Mineral Resource or that the Exploration Target will add to the economics of the BSOPP.
32
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
33
COMPANY SUMMARY
PROVED ORE RESERVES
Aquifer Type
Production Bores
Total Proved Reserve
Note: Errors are due to rounding.
PROBABLE ORE RESERVES
Aquifer Type
Brine
Volume
(106 m3)
119
119
Brine
Volume
(106 m3)
K
(mg/L)
K Mass
(Mt)
SO4
(mg/L)
SO4 Mass
(Mt)
6,207
6,207
0.74
0.74
17,945
17,945
2.14
2.14
SOP
Grade
(kg/m3)
13.83
13.83
K2SO4
Mass (Mt)
1.65
1.65
K
(mg/L)
K Mass
(Mt)
SO4
(mg/L)
SO4 Mass
(Mt)
SOP
Grade
(kg/m3)
K2SO4
Mass (Mt)
Lake Surface Sediments
212
4,755
1.01
13,669
2.90
10.60
Production Bores
83
6,713
0.56
18,867
1.56
14.96
2.25
1.24
Total Probable Reserve
295
5,306
1.57
15,129
4.46
11.82
3.49
Note: Errors are due to rounding.
ORE RESERVES SUMMARY
Level
Proved Ore Reserve
Probable Ore Reserve
Total Ore Reserve
Drainable
Brine Volume
(106 m3)
K Grade
(mg/l)
K
(Mt)
SO4
(Mt)
K2SO4
Mass (Mt)
119
295
414
6,207
0.74
5,306
1.57
2.14
4.46
5,565
2.30
6.60
1.65
3.49
5.13
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
32
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
33
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.
Compliance Statement
The information in this document is extracted
from the report titled “TECHNICAL REPORT FOR THE
BEYONDIE POTASH PROJECT, AUSTRALIA, JORC (2012)
and NI 43-101 Technical Report – Bankable Feasibility
Study” and dated 17 September 2018 (Report), that
relates to Exploration Targets, Exploration Results,
Mineral Resources and Ore 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 Exploration Targets, Exploration Results, Mineral
Resources and Ore Reserves, 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.
34
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
35
COMPANY SUMMARY
Carnegie Potash Project – Joint Venture
Highlights from the Scoping Study are:
The Carnegie Joint Venture (CJV) is focussed on the
exploration and development of the Carnegie Potash
Project (CPP) in Western Australia, which is located
approximately 220 kilometres east-north-east of
Wiluna. The CJV comprises one granted exploration
licences (E38/2995) of 556 square kilometres and five
(5) exploration licence applications (E38/2973, E38/2928,
E38/3297, E38/5296 and E38/3295) of 2,495 square
kilometres covering a total area of approximately
3,051 square kilometres.
This Project is 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 (SOP). 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.
The CJV is a Joint Venture between Kalium Lakes
(KLL, 70% Interest) and BCI Minerals (BCI, 30% interest).
Under the terms of the agreement BCI can earn up to a
50% interest in the CJV by predominantly sole-funding
exploration and development expenditure across several
stages. KLL is the manager of the CJV and will leverage its
existing Intellectual Property to fast track work.
► Stage 1 - BCI can earn a 30% interest by sole
funding the $1.5M Scoping Study Phase - Complete
► Stage 2 - BCI can elect to earn a further 10%
interest by sole funding a further $3.5M Pre-
Feasibility Study Phase
► Stage 3 - BCI can elect to earn a further 10%
interest by sole-funding a further $5.5M Feasibility
Study Phase
► By end of the Feasibility Study the CJV would
have an ownership of 50% KLL and 50% BCI
On 27 July 2018 KLL and BCI Minerals Limited (BCI)
(together the JV Companies), as the owners of the
Carnegie Potash Project (CPP) via the Carnegie Joint
Venture (CJV), announced the completion of the Scoping
Study and a maiden Resource and Exploration Target
for the CPP.
► Scoping Study, Maiden Resource and Exploration
Target confirmed the CPP has potential to be a
technically and economically viable project.
► Inferred Resource of 0.88 Mt SOP @ 3,466 mg/l K
(equivalent to 7,724 mg/l SOP) based only on the
top 1.7 metres of the 27,874 hectare surficial aquifer
on granted tenement E38/2995 plus an Exploration
Target1 for material below the top 1.7 metres.
► Exploration Target of 3.46 Mt – 7.33 Mt SOP @ 3,410
mg/l K – 3,420 mg/l K within the deeper aquifers
on granted tenement E38/2995.
► A further 82,000 hectares of lake surface on pending
tenements is not included in the current Inferred
Resource or Exploration Target, providing further
resource upside potential.
► The JV Companies endorsed proceeding to a staged
Pre-Feasibility Study, with an initial focus on securing
tenure and access to all required tenements.
The Joint Venture Project will progress PFS activities
during the next 12-18 months. The initial focus will be
on securing tenure and access to all CPP tenements,
followed by various approvals to undertake site based
exploration activities, including drilling, trenching and
test pumping, with the aim of expanding the Resource
(including from conversion of the Exploration Target).
The key PFS activities include:
► Native Title agreements and Section 18
heritage approvals;
► Various stakeholder discussions, approvals and
permits to allow PFS field works to be undertaken
including, Programme of Work approvals, Native
Vegetation Clearing Permits, 26D licences and 5C
water bore approvals;
► Secure the grant of the exploration tenement
applications, to facilitate a PFS on the full extent
of the Carnegie lake system;
► Drilling, trenching and test pumping to expand
the current Resource;
► Pond, purification plant and infrastructure design; and
► Completion of the PFS.
1. The Exploration Target is conceptual in nature, as there is insufficient exploration to define a Mineral Resource. It is uncertain if further
exploration will convert an Exploration Target to a Mineral Resource.
CARNEGIE JV PROJECT REGIONAL OVERVIEW MAP
34
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
35
279200
479200
!!
NEWMAN
Kalium Lakes
Beyondie Potash Project
0
0
0
9
5
3
7
0
0
0
9
5
1
7
0
0
0
9
5
9
6
0
0
0
9
5
7
6
H w y
n
r
e
th
o
N
r
t
a
e
r
G
!! Places
State Highways
Goldfields Gas Pipeline
BCI Minerals / Kalium Lakes JV
Carnegie JV Project
Kalium Lakes Ltd
Beyondie Potash Project
Salt Lake Potash
Lake Wells Project
Australian Potash
Lake Wells Potash Project
Date: 22/05/2018
Paper Size: A3
File Name: CA_17006 r0
Location: G:\Maps\Carnegie_JV\2017\CA_17006 Location.mxd
0
0
0
9
5
3
7
0
0
0
9
5
1
7
0
0
0
9
5
9
6
0
0
0
9
5
7
6
BCI Minerals / Kalium Lakes
Carnegie JV Project
GunbarrelHwy
Salt Lake Potash
Lake Wells Project
!!
WILUNA
G
o
l
d
f
i
e
ld
s
H
w
y
Australian Potash
Lake Wells Project
!!
LEINSTER
Great Central H w y
!!
LAVERTON
!!
LEONORA
Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AeroGRID,
IGN, and the GIS User Community
Carnegie JV Project Regional Overview Map
±
Scale
1:2,000,000
0
25
50
75
100
125
Kilometers
Coordinate System: GDA 1994 MGA Zone 51
Projection: Transverse Mercator
Datum: GDA 1994
36
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
37
COMPANY SUMMARY
Carnegie Potash Project – Tenement Interests
Tenement Tenement Name
Holder
State
Status
Grant Date
Interest
E38/2995
Carnegie East
KLP
E38/2973
Carnegie Central
Rachlan
E38/2982
Carnegie West
Rachlan
E38/3295
Carnegie South West
KLP
E38/3296
Carnegie South East
E38/3297
Carnegie North
KLP
KLP
WA
WA
WA
WA
WA
WA
Granted
31-7-2015
Application
Application
Application
Application
Application
-
-
-
-
-
70%
70%
70%
70%
70%
70%
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).
36
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
37
Carnegie Potash Project - Mineral Resources Summary
MEASURED MINERAL RESOURCES
Geological
Layer
Maximum
Thickness
(m)
Coverage
(km2)
Sediment
Volume
(106 m3)
Porosity
(P)
Total
Stored
Brine
(106 m3)
Specific
Yield
(Sy)
Drainable
Brine
(106 m3)
K Grade
(mg/L)
K Mass
(Mt)
SO4 Grade
(mg/L)
SO4 Mass
(Mt)
K2SO4
(Mt)
Lake Sediments
1.7
278.3
473.13
40%
189
0.24
113.55
3,466
0.39
11,715
1.33
0.88
EXPLORATION TARGET*
Alluvium
Clays
Basal Sands
Total
Alluvium
Clays
Basal Sands
Total
7
40
7
12
60
17
278
287
80
561
287
80
1,948
11,471
557
6,727
17,207
1,353
0.35
0.40
0.28
0.40
0.45
0.35
682
4,589
156
5,427
2,691
7,743
474
10,908
0.05
0.03
0.15
0.14
0.06
0.25
88
287
84
459
377
465
118
960
3,500
3,400
3,300
3,410
3,500
3,400
3,300
3,420
0.31
0.98
0.28
1.57
1.32
1.58
0.39
3.29
12,963
12,593
12,222
12,963
12,593
12,222
1.14
3.61
1.02
5.77
5.00
5.85
1.45
12.30
0.68
2.17
0.61
3.46
2.94
3.52
0.87
7.33
* The Carnegie Potash 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 (2012) and it is uncertain if future exploration will result in the
determination of a Mineral Resource or that the Exploration Target will add to the economics of the Carnegie Potash Project.
38
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
39
COMPANY SUMMARY
Forward-Looking Information
Compliance Statement
Certain information in this document refers to the
intentions of Kalium Lakes and BCI Minerals , 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’ and/or BCI Minerals actual results, performance
or achievements to differ from those referred to in this
document. Accordingly Kalium Lakes, BCI Minerals and
their 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 and BCI
Minerals, 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 and
BCI Minerals . Actual results, performance, actions and
developments of Kalium Lakes and BCI Minerals 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,
BCI Minerals and any of their 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.
The information in this document is extracted from the
report titled “CARNEGIE POTASH PROJECT, AUSTRALIA,
JORC (2012) and NI 43-101 TECHNICAL REPORT” and dated
30 June 2018 (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 and BCI Minerals
confirm they are 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 and
BCI Minerals confirm 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, BCI Minerals or any of their 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
Kalium Lakes, BCI Minerals and Carnegie 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, BCI Minerals or the Carnegie
Potash Project and consequently considers itself to be
independent of Kalium Lakes and BCI Minerals.
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.
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
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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.
POTASH PROSPECTS
Tenement
Tenement
Name
Holder
State
Status
Grant Date
Interest
E45/4436
Dora
Rachlan
E45/4437
Blanche
Rachlan
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).
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
41
COMPANY SUMMARY
Safety
Kalium Lakes places the health, safety and wellbeing 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 and mentally
healthy workplace, through the implementation of
a Health and Safety Management System and the
promotion of health and safety awareness and workforce
wellbeing among their employees and contractors.
Kalium Lakes will abide by all legal and other
requirements that are directly related to Health, Safety
wellbeing issues related to its activities.
During the financial year to 30 June 2019 a total
of 29,370 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.
ENVIRONMENT
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 build trust and respect, as
well as ensuring 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 that are
endorsed by local community representatives and
establish mutually beneficial long term relationships,
employment and contracting opportunities as part of a
culturally aware workplace.
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
41
Mr Dennis has also held senior operational and
commercial positions in MIM Holdings Limited, Minara
Resources Limited, and Brambles Australia Limited.
He retired from office and was re-elected as a Director
at the General Meeting held on Tuesday 21 May 2019.
Following the completion of the formal process to
appoint Mr Dennis as a Director, Mr Brendan O’Hara
advised the Board of his decision to step down from
his role as Director.
Mr O’Hara had been a valued Kalium Lakes’ Director
since March 2016 and provided expert guidance during
the transition from a private entity to a public company
listed on the Australian Securities Exchange (ASX).
Corporate
BOARD AND MANAGEMENT
Four Directors, Mr Malcolm Randall, Mr Brett Hazelden,
Mr Rudolph van Niekerk and Mr Brendan O’Hara were
appointed to the Kalium Lakes Limited Board on 14 July
2016, coinciding with the incorporation of the public
Company.
At the Annual General Meeting held on 21 November
2018, Mr Rudolph van Niekerk, in accordance with the
Company’s Constitution retired and being eligible, was
re-elected as a Director.
On 26 April 2019 Kalium Lakes announced the
appointment of Mr Stephen Dennis as a Non-Executive
Director of the Company.
Mr Dennis has a career spanning more than 30 years
as an experienced and well regarded company director
and has been appointed on a number of senior boards
in the Australian and international resources sector.
He was the Managing Director and Chief Executive
Officer of CBH Resources Limited and is currently the
non-executive chairman of several ASX listed resource
companies, including Heron Resources Limited, Rox
Resources Limited, EHR Resources Limited and Graphex
Mining Limited.
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43
COMPANY SUMMARY
BUSINESS DEVELOPMENT
DIVIDENDS
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.
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
FINANCIAL POSITION
The Company had $15.5 million cash on hand as at
30 June 2019 (prior to A$72 million capital raise in July
/ August 2019).
SECURITIES ON ISSUE
The Company had 238,966,103 ordinary shares on issue
as at 30 June 2019
The following is a list detailing other securities on issue:
► 3,500,000 options exercisable at $0.25 each,
expiring on 16 December 2019, will be escrowed
for a period of 24 months from the date of official
quotation on the ASX.
► 15,000,000 performance rights
► 330,882 options exercisable at $0.425 each
and expiring on 29 September 2020.
► 843,936 options exercisable at $0.525 each,
expiring on 16 January 2020.
► 1,000,000 options exercisable at $0.525 each,
expiring on 17 May 2021.
► 5,000,000 options exercisable at $0.50 each, expiring
on 30 June 2025, escrowed until 26 October 2019.
The Company has adopted comprehensive 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 the
true spirit of 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
(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
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
43
KEY RISKS
The Shares are considered highly speculative. An
investment in the Company is not risk free. 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.
Development of the Beyondie
Potash Project
The Company has prepared estimates of future
production targets, revenue profiles, operating cash
costs and capital costs for its operations. No assurance
can be given that such estimates will be achieved or
that the Company will have access to sufficient capital
to develop the Beyondie Potash Project.
Production targets and operating costs may be affected
by a variety of factors, including the acquisition
and/or delineation of economically recoverable
mineralisation, favourable geological conditions,
receiving the necessary approvals from all relevant
authorities and parties, seasonal weather patterns,
unanticipated technical and operational difficulties
encountered in extraction and production activities,
mechanical failure of operating plant and equipment,
shortages or increases in the price of consumables,
spare parts and plant and equipment, cost overruns,
access to the required level of funding and contracting
risk from third parties providing essential services.
Other risks impacting production and operating cost
estimates include increases in labour costs, general
inflationary pressures, currency exchange rates and
other unforeseen circumstances such as health and
safety outcomes. The success of the Company will also
depend upon the Company having access to sufficient
capital, being able to maintain permits and obtaining
all required approvals for its activities.
No assurance can be given that the assumptions in
respect to the bankable feasibility study and subsequent
results in respect to the Front-End Engineering
and Design works undertaken (refer to the ASX
announcements dated 18 September 2018 and 4 March
2019), including in respect to the production target ramp
up from 90ktpa to 180ktpa, will be achieved. Failure
to achieve any of these key assumptions, including
production or cost estimates or material increases in
costs, could have an adverse impact on the Company’s
future cash flows, profitability, results of operations and
financial condition.
Financing
The Company will require significant financing for
capital expenditure to develop the Beyondie Potash
Project and to fund its operating costs. The Company
will require financing from external sources to meet
such requirements. Although the Company has received
a credit approved offer of finance from German KfW
IPEX-Bank (KfW) and Euler Hermes Aktiengesellchaft
(Hermes) (refer to the ASX announcements dated 2
July 2019 and 19 July 2019) and an investment decision
from the Board of the Northern Australia Infrastructure
Facility (NAIF) in respect to a loan package (refer to
the ASX announcement dated 20 February 2019), the
financing arrangements remain subject to the execution
of formal binding documentation.
It is anticipated that these financing arrangements will
be contingent on certain restrictions on the Company,
including in respect to future financing and operating
activities. If these conditions are not satisfied or certain
events occur, the Company may be unable to draw
down on these facilities and/or the financiers may have
the right to terminate the arrangement. Any such event
will have an adverse impact on the Company’s financial
condition and operating activities.
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KEY RISKS
Commodity price volatility
Operational risks
If the Beyondie Potash Project achieves production,
during the production ramp up and operational phase
of the Beyondie Potash Project, there is a risk that
difficulties may arise as part of the processing and
production of the SOP Product, including failures in
plant and equipment, difficulties in obtaining and
importing replacement equipment, spares or necessary
consumables in a timely or cost effective manner.
Other risks during the production ramp up and
operational phase include, and are not limited to,
weather, availability of materials, availability, continuity
and productivity of skilled and experienced workers
and contractors, industrial and environmental
accidents, industrial disputes and unexpected
shortages or increases in costs of labour.
Although the Company has completed the Front-End
Engineering and Design optimisation works in respect
to the Beyondie Potash Project, there is no certainty
that the production ramp up process will not uncover
failures or deficiencies in processes, systems, plant
and equipment required for the Beyondie Potash
Project, and addressing such failures or deficiencies
may result in the Company incurring unexpected costs
and production ramp-up delays. Any of these outcomes
could have a material adverse impact on the Company’s
results of operation and financial performance.
Any inability to resolve any unexpected problems
relating to these operational risks or adjust costs
profiles on commercial terms could adversely impact
continuing operations, production targets, Mineral
Resources and Ore Reserves estimates and the
assessment of recoverable amount of the Company’s
assets. As stated in this document, production
guidance and targets are subject to assumptions
and contingencies which are subject to change as
operations performance and market conditions change
or other unexpected events arise.
If the Company achieves success leading to production,
the revenue the Company will derive through the sale
of sulphate of potash product (SOP Product) exposes
the Company to commodity price and exchange rate
risk (see below). Commodity prices fluctuate and are
affected by numerous factors beyond the control of the
Company. Such factors include the supply and demand
for commodities such as potash, forward selling
activities, technological advancements and other
macro-economic factors.
If the Company achieves development success which
leads to viable production, its financial performance
will be highly dependent on the prevailing commodity
prices and exchange rates. These factors can affect
the value of the Company’s assets and the supply
and demand characteristics of potash and may have
an adverse effect on the viability of the Company’s
development and production activities, its ability to
fund those activities and the value of its assets.
Currency volatility
International prices of various commodities are
denominated in United States dollars, whereas the
income and expenditure of the Company are and will
be taken in account in Australian Dollars, consequently
exposing the Company to the fluctuations and volatility
of the rate of exchange between the United States
Dollar and the Australian Dollar as determined in
international markets.
Project delays and cost overruns
The Company’s ability to successfully develop and
potentially commercialise its Beyondie Potash Project
on schedule may be affected by factors including project
delays and costs overruns. If the Company experiences
project delays or cost overruns, this could result in the
Company not realising its operational or development
plans or result in such plans costing more than expected
or taking longer to realise than expected.
There is also a risk that the associated commissioning
and ramp up (refer below for further details) may take
longer than planned and that costs may be higher
than anticipated.
The Company will endeavour to take appropriate
action to mitigate these risks or to insure against
them, but the occurrence of an event that results
in project delays and/or costs overruns may
have a material adverse effect on the Company’s
performance and the value of its assets.
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
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Offtake
The Company has entered into an offtake agreement
with German fertiliser producer and distributor K+S. Risks
associated with the offtake agreement include, but are
not limited to, rising contract prices (as pricing under the
offtake agreement is linked to the sales price realised
by K+S), disputes regarding variations and extensions of
time and costs, all of which may give rise to delays and/
or increased costs. If any of these risks materialise, this
could have a material adverse impact on the Company’s
profitability, financial performance and position.
Further, if and when the Beyondie Potash Project
commence operations, if K+S, being the Company’s only
offtake party, reneged on its contractual obligations or
otherwise failed to pay for the SOP Product delivered,
or decline to receive further product, this would have
a consequential effect on the Company’s financial
position. If this occurs, there is a risk that future offtake
contracts may not be negotiated on favourable terms.
Resource and Reserve estimates and
classification
The Mineral Resource and Ore Reserve estimates for
the Beyondie Potash Project are estimates only and
are expressions of judgement based on knowledge,
experience and industry practice. In addition, by
their very nature, Mineral Resource estimates are
necessarily imprecise and depend to some extent on
interpretations, which may prove to be inaccurate. No
assurances can be given that any particular level of
recovery of potash will in fact be realised.
Purification facility design, operation,
recovery and product specification
The Company is using internationally recognised
consultants in the design of the process and selection
of suitable equipment to achieve production capacity
and specification to market requirements. However,
project development remains inherently risky due to
the number of variables that need to be managed.
This could lead to equipment not performing as
required or expected, resulting in difficulty maintaining
product specification, not achieving name plate design
capacity, not achieving expected potassium recoveries,
increased maintenance and overall operating costs.
This risk also applies to non-process plant equipment
and facilities, recognising that the Beyondie Potash
Project by its nature is operating with corrosive fluids
and subject to environmental impacts of salinity which
may result in premature or otherwise unexpected
failure of critical equipment such as bore pumps.
Inability to abstract brine volume
The Company has utilised a number of specialist
consultants in determining its ability to abstract brine
consistently from the deposits but there is a risk that
the Company will be unable to abstract the brine in
volumes required to meet project timetables and
production. This can occur due to low permeability
of aquifer material, variability in the deposit and
continuity of the various aquifer layers.
As a result pumping rates may be lower than expected,
or require additional bores and/or trenches. Each bore
and trench is likely to have a specific life expectancy
and will eventually run dry as brine is extracted. This life
expectancy maybe variable and shorter than expected.
Variability in brine
The brine deposit may be variable due to the geological
layering of the host rock, the location within the
palaeochannel, inflows of other waters carrying other
impurities or fresh water all of which will affect the
brine chemistry across the deposit. Added to this there
is also the potential for dilution after rainfall which may
influence changes in the chemistry of brine recovery.
The variability may cause different evaporation
rates, alternative salt evaporites being formed in
the evaporation ponds, require additional pumping
volumes due to lower grades.
Environmental and other statutory
approvals
The Company’s project and operations are subject
to Commonwealth and State laws, regulations and
specific conditions regarding approvals to explore,
construct and operate. There is a risk that such laws,
regulations and specific conditions may impact the
profitability of the project and the ability for the project
to be satisfactorily permitted. Key approvals from the
Environmental Protection Authority (EPA), Department
of Environmental and Energy (EPBC), Department of
Mines and Petroleum (DMIRS), Department of Water
and Environmental Regulation (DWER) plus many other
agencies, and on-going approvals required, may take
longer to be obtained or may not be obtainable at all.
The Company has identified that the process will
have disturbances associated with ponds, purification
facility, pipelines, bores, trenches, roads, waste NaCl,
residue bitterns which may be subject to specific
disposal conditions.
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
47
KEY RISKS
Evaporation pond design
The Company has undertaken a large scale
pilot evaporation pond program to enhance its
understanding of the construction methodology,
evaporation rates, leakage rates and other potential
performance parameters of the brine.
There is a scale up risk that, in the construction and
operation of the evaporation ponds, these performance
parameters could vary to the current pond and pump
testing findings and therefore may impact the basis of
design and operation, and potentially the capital and
operation costs, of the full size project. There is also a
risk of structural failures or leakage.
Dependence on key personnel
The responsibility of overseeing the day-to-day
operations and the strategic management of the
Company depends substantially on the efforts of senior
management and its key personnel. There can be no
assurance that there will be no detrimental impact on
the Company if one or more of these employees cease
their employment. The loss of key personnel could
cause a significant disruption to the business and could
adversely affect our operations.
New commodity and lack of
operational experience
The Company recognises that as a potential leader in
the Australian production of potash products there
may initially be a lack of suitably trained operators for
the overall project which has been explicitly designed
for the extraction and treatment of brine to produce
this group of products to market specifications.
Furthermore, this risk could manifest itself during the
commissioning stage for the same reasons expressed
above which could lead to increased capital costs and
delays in achieving operational ramp up.
Inclement weather and Natural Disasters
The Company’s operational activities are subject to
a variety of risks and hazards which are beyond its
control, including hazardous weather conditions such
as excessive rain, flooding and fires.
Severe storms and high rainfall leading to flooding
and associated damage may result in disruption to the
evaporation process in the ponds, scouring damage to
trenches, roadways and pond walls. Flood waters within
the pond areas will increase the total evaporation time
and impact the production schedule.
Additionally, as some of the brine production is from
surface trenches, these trenches may become flooded
during severe weather. This may impact the quality and
consistency of the brine and the ability to continue
surface extraction by trenches within the lakes areas,
until the flood waters subside.
Any of the above occurrences will impact profitability.
Title Risk
The Company’s activities are dependent upon the
maintenance (including renewal) of the tenements
in which the Company has or acquires an interest.
Maintenance of the Company’s tenements is dependent
on, among other things, the Company’s ability to meet
the licence conditions imposed by relevant authorities
including compliance with the Company’s work program
requirements, which in turn, is dependent on the
Company being sufficiently funded to meet those
expenditure requirements.
Although the Company has no reason to think that the
tenements in which it currently has an interest will not
be renewed, there is no assurance that such renewals
will be given as a matter of course and there is no
assurance that new conditions will not be imposed by
the relevant granting authority.
Exploitation, exploration
and mining licences
The Company has been granted two Mining Leases,
various miscellaneous licences and exploration
licences. The Company’s activities are dependent upon
the grant, or as the case may be, the maintenance
of appropriate licenses and leases, which may be
withdrawn or made subject to limitations.
The maintaining of licences and leases, obtaining
renewals, or getting licences and leases granted, often
depends on the Company being successful in obtaining
required statutory approvals for its proposed activities
and that the licences and tenements, leases, permits or
consents it holds will be renewed as and when required.
There is no assurance that such renewals will be given
as a matter of course and there is no assurance that new
conditions will not be imposed in connection therewith.
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
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Change in regulations
Contractual disputes
As with any contract, there is a risk that the business
could be disrupted in situations where there is a
disagreement or dispute in relation to a term of the
contract. Should such a disagreement or dispute occur,
this may have an adverse impact on the Company’s
operations and performance generally. It is not possible
for the Company to predict or protect itself against all
such risks.
Third party risk
The operations of the Company require the involvement
of a number of third parties, including suppliers,
contractors and clients.
Financial failure, default or contractual non-compliance
on the part of such third parties may have a material
impact on the Company’s operations and performance.
It is not possible for the Company to predict or protect
the Company against all such risks.
Competition
Although there is currently no Australian production of
SOP, there are other mining exploration companies in
Australia that are currently seeking to explore, develop
and produce SOP.
The Company will have no influence or control over
the activities or actions of its competitors and other
industry participants, whose activities or actions may
positively or negatively affect the operating and financial
performance of the Company’s projects and business.
Adverse changes in Federal or Western Australia
government policies or legislation may affect
ownership of mineral interests, taxation, royalties, land
access, labour relations and mining and exploration
activities of the Company.
It is possible that the current system of exploration
and mine permitting in Western Australia may
change resulting in impairment of rights and possibly
expropriation of the Company’s properties without
adequate compensation. Increased royalties or any
other changes to the royalty regime could result in
higher operating costs for the Company’s operations
and may have an adverse effect on the Company’s
business, results, financial condition and prospects.
Environmental risk
The operations and proposed activities of the Company
are subject to State and Federal laws and regulations
concerning the environment. As with most mining and
exploration projects, the Company’s activities including
the Beyondie Potash Project are expected to have an
impact on the environment.
It is the Company’s intention to conduct its activities
to the required standard of environmental obligation,
including compliance with all environmental laws.
Although the Company believes that it is in
compliance in all material respects with all applicable
environmental laws and regulations, there are certain
risks inherent to its activities, such as accidents or
other unforeseen circumstances, which could subject
the Company to extensive liability.
Insurance
The Company intends to insure its operations in
accordance with industry practice. However, in certain
circumstances, the Company’s insurance may not be
available or of a nature or level to provide adequate
insurance cover. The occurrence of an event that is
not covered or fully covered by insurance could have
a material adverse effect on the business, financial
condition and results of the Company. In addition, there
is a risk that an insurer defaults in the payment of a
legitimate claim by the Company.
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
DIRECTOR’S REPORT
Your Directors submit the financial report of the Consolidated Entity for the year ended 30 June 2019.
Directors
The names of Directors who held office during or since the end of the year:
Malcolm Randall
Non-Executive Chairman
Brett Hazelden
Managing Director
Rudolph van Niekerk
Executive Director
Brendan O’Hara
Non-Executive Director (resigned 26 April 2019)
Stephen Dennis
Non-Executive Director (appointed 26 April 2019)
Directors’ Qualifications and Experience
The Directors’ qualifications and experience are set out below:
Malcolm Randall
NON-EXECUTIVE CHAIRMAN
Malcolm Randall, (Bachelor of Applied Chemistry; Fellow of the Australian Institute
of Company Director), has more than 45 years of extensive experience in corporate,
management and marketing in the resources sector, including more than 25 years
with the Rio Tinto group of companies.
With many roles as a company director and a chairman Malcolm Randall’s experience
extends over a broad range of commodities including iron ore, base metals, uranium,
mineral sands and coal, both in Australia and overseas.
Malcolm Randall’s list of previous ASX listed company directorships comprises Consolidated
Minerals Limited, Titan Resources Limited, Northern Mining Limited, Iron Ore Holdings Limited,
MZI Resources Limited, Summit Resources Limited and United Minerals Corporation NL.
Malcolm Randall is also a director on the Boards of Ora Gold Limited, Argosy Minerals
Limited, Hastings Technology Metals and Magnetite Mines Limited.
Brett Hazelden
MANAGING DIRECTOR
Brett Hazelden (B.Sc. MBA GAICD) is a Metallurgist who brings more than 20 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 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 has also been involved in numerous mergers, acquisitions and
due diligence reviews in recent years.
49
Rudolph van Niekerk
EXECUTIVE DIRECTOR
Rudolph van Niekerk (B.Eng. Mechanical GAICD) is a professional in the mining and resources
industry with more than 15 years’ experience in project and business management.
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 (RESIGNED 26 APRIL 2019)
Brendan O’Hara (BJuris, LLB) holds a Bachelor of Jurisprudence (Hons) and Bachelor of Laws.
He is a former 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 Manager – Listings), underpin a wealth
of experience involving international transactions, corporate governance, risk management
systems, contract negotiation / execution and government relations.
Stephen Dennis
NON-EXECUTIVE DIRECTOR (APPOINTED 26 APRIL 2019)
Mr Stephen Dennis (B Com, LLB GDipAppFin (FINSIA)) has a career spanning more than 30 years
as an experienced and well regarded company director and has been appointed on a number
of senior boards in the Australian and international resources sector.
Mr Dennis was the Managing Director and Chief Executive Officer of CBH Resources Limited and is
currently the non-executive chairman of several ASX listed resource companies, including Heron
Resources Limited, Rox Resources Limited, EHR Resources Limited and Graphex Mining Limited.
He has also held senior operational and commercial positions in MIM Holdings Limited, Minara
Resources Limited, and Brambles Australia Limited.
Chris Achurch
CHIEF FINANCIAL OFFICER AND JOINT COMPANY SECRETARY
Chris Achurch (B Com, CA) has worked with a number of major businesses across the exploration, mining and agricultural
sectors. Having spent 10 years in public practice with RSM Australia based in Perth, with transfers to Dallas and New York,
Chris has a comprehensive understanding of commercial accounting, audit functions and corporate finance.
Gareth Widger
JOINT COMPANY SECRETARY AND CORPORATE AFFAIRS MANAGER
Gareth (BA, GIA (Cert)) has over 30 years’ experience in senior roles managing corporate administration and
strategic communication activities for public and private companies within the agriculture, industrial chemical,
mining, civil engineering, retail and wholesale sectors. His responsibilities have included corporate/investor
relations, stakeholder engagement, marketing and media liaison.
50
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
51
DIRECTOR’S REPORT
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
Stephen Dennis
Board
10
Audit
Committee
2
Remuneration
Committee
2
Nomination
Committee
3
9
10
9
9
1
2
2
2
2
-
2
2
1
1
1
3
3
1
2
1
All Directors were eligible to attend all Board Meetings held.
SHARE OPTIONS
As at the date of this report the following unlisted options were on issue:
-
-
-
-
-
3,500,000 unlisted options for ordinary shares at an exercise price of $0.25 each (expiring
16 December 2019)
330,882 unlisted options for ordinary shares at an exercise price of $0.425 each (expiring
29 September 2020)
843,936 unlisted options for ordinary shares at an exercise price of $0.525 each (expiring
16 January 2020)
1,000,000 unlisted options for ordinary shares at an exercise price of $0.525 (expiring 17
May 2021)
5,000,000 unlisted options for ordinary shares at an exercise price of $0.50 (expiring 30
June 2025 and escrowed until 26 October 2019)
SHARES ISSUED AS A RESULT OF THE EXERCISE OF OPTIONS
-
-
2,059,641 shares were issued to directors of the Company as a result of the exercise of
options during the financial year (Note 15), and
1,350,000 shares were issued to directors of the Company as a result of the exercise of
performance rights during the financial year (Note 15).
There were no options or performance rights exercised into shares by directors, subsequent to
the reporting date.
Kalium Lakes Limited and Consolidated Entities
5
50
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
51
DIRECTORS’ REPORT continued
DIRECTORS’ INTERESTS AND BENEFITS
The relevant interest of each Director in the shares, options over shares and performance rights
issued by the Company at the date of this report is as follows:
Number of Ordinary
Shares
Number of Options
Listed
Unlisted
Malcolm Randall*
Brett Hazelden
Rudolph van Niekerk
Brendan O’Hara **
Stephen Dennis ***
Directly
-
-
-
-
-
Indirectly Directly
-
1,713,207
-
14,719,066
-
3,615,600
-
1,025,618
-
-
Indirectly
Directly
- 2,000,000
-
-
-
-
-
-
-
-
Indirectly
-
-
-
-
-
Number of
Performance Rights
Directly
-
-
-
-
-
Indirectly
-
3,150,000
900,000
-
-
Malcolm Randall
Brett Hazelden
Rudolph van Niekerk
Brendan O’Hara **
Stephen Dennis ***
* This includes 200,000 shares issued subsequent to the reporting date in accordance with the Entitlement Offer and
Placement, which raised a total of A$72,000,000 before costs as announced to the market on the 19 August 2019.
** Brendan O’Hara resigned as Director on 26 April 2019. Totals represent the holdings of Ordinary Shares and Options
on the date of resignation.
*** Stephen Dennis was appointed as Director on 26 April 2019.
Kalium Lakes Limited and Consolidated Entities
6
52
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
53
DIRECTOR’S REPORT
DIRECTORS’ REPORT continued
REMUNERATION REPORT
Introduction
The Directors present the Remuneration Report for the Consolidated Entity for the year ended 30
June 2019. 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
2019.
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”) or any other General Meeting of Shareholders. The maximum aggregate
amount of fees payable is currently $500,000.
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
2019.
Remuneration Report Approval at FY2019 AGM
The remuneration report for the year ended 30 June 2019 will be put to shareholders for approval
at the Company’s AGM.
Kalium Lakes Limited and Consolidated Entities
7
52
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
53
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
c. 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.
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
regard to the circumstances in which the securities may be sold to satisfy a margin call).
Kalium Lakes Limited and Consolidated Entities
8
54
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
55
DIRECTOR’S REPORT
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
$
65,000
75,000
39,583
56,249
8,840
-
290,000
306,125
267,366
275,000
Year
2019
2018
2019***
2018
2019***
*
2018
2019
2018
2019
2018
2019
2018**
165,000
20,731
Non-Executive Directors
Malcolm Randall
Brendan O’Hara
Stephen Dennis
Executive Directors
Brett Hazelden
Rudolph van Niekerk
KMP
Chris Achurch
Chris Achurch
Frederick Kotzee
2018*
132,196
Total
Total
2019
2018
835,789
865,301
Superannuation1
$
Performance
rights
$
Equity-settled
options
$
Total
$
6,175
5,700
3,761
4,394
840
-
25,254
25,000
25,000
23,750
15,675
1,969
12,001
76,705
72,814
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
115,659
13,942
71,175
80,700
43,344
60,643
9,680
-
315,254
331,125
292,366
298,750
296,334
36,642
-
144,197
115,659
13,942
1,028,153
952,057
(*) Chief Financial Officer - Appointed on 13 November 2017, resigned 17 May 2018.
(**) Chief Financial Officer - Appointed on 17 May 2018. On 17 May 2018 1,000,000 options with an 18-month vesting
period and a total value of $173,488 were issued to the incoming Chief Financial Officer. The amount recognised is a
representation of the vesting period elapsed during the reporting period.
(***) Brendan O’Hara resigned as Director on 26 April 2019.
(****) Stephen Dennis was appointed as Director on 26 April 2019.
1 Includes superannuation payment in Australia and any voluntary fee sacrifice to superannuation.
Kalium Lakes Limited and Consolidated Entities
9
54
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
55
DIRECTORS’ REPORT continued
B. Service Agreements
The Company has entered into executive service agreements with the Managing Director, Chief
Development Officer and Chief Financial Officer as detailed below:
Brett Hazelden in respect to his employment as the Managing Director of the Company. The
principal terms are as follows:
• An annual salary of $290,000 excluding superannuation for the financial year ended
30 June 2019;
• Brett 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 (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,
in which case no notice is required). During this 12-month period, Brett cannot seek
alternative employment, unless permission is granted by the Board; and
If Brett’s employment ends due to the position being made redundant, Brett will be
entitled to a minimum of 12 months of base salary.
•
Rudolph van Niekerk in respect to his employment as the Chief Development Officer and
Executive Director of the Company. The principal terms are as follows:
• An annual salary of $265,000 excluding superannuation for the financial year ended
30 June 2019;
• Rudolph may terminate the agreement by giving 3 months’ notice in writing to the
Company;
• The Company may terminate the agreement (without cause) by giving 3 months’
notice in writing to Rudolph (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
Rudolph, in which case no notice is required); and
• Rudolph is subject to non-compete restrictions during his employment and for a
maximum period of 9 months following termination of his employment.
Chris Achurch in respect to his employment as the Chief Financial Officer of the Company. The
principal terms are as follows:
• An annual salary of $165,000 excluding superannuation for the financial year ended
30 June 2019;
• Chris may terminate the agreement by giving 3 months’ notice in writing to the
Company;
• The Company may terminate the agreement (without cause) by giving 3 months’
notice in writing to Chris (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 Chris,
in which case no notice is required);
If Chris’s employment ends due to the position being made redundant, Chris will be
entitled to a minimum of 6 months of base salary; and
•
• Chris is subject to non-compete restrictions during his employment and for a
maximum period of 9 months following termination of his employment.
Kalium Lakes Limited and Consolidated Entities
10
56
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
57
DIRECTOR’S REPORT
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 2019.
Balance at
30 June
2018
Grant Date
Exercise
Price
Expiry Date
Granted as
Remuneration
Fair Value per
Option at
Grant Date
Exercised
Expired
Non-Executive Directors
Malcolm Randall
Brendan O’Hara
Stephen Dennis***
Executive Directors
Brett Hazelden
Rudolph van Niekerk
KMP
Chris Achurch (CFO)*
4,000,000
2,000,000
-
16-Dec-16
16-Dec-16
-
$0.25
$0.25
-
16-Dec-19
16-Dec-19
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
17-May-18
$0.525
17-May-21
1,000,000
$0.173
Balance at
30 June
2019
2,000,000
**
-
-
-
1,000,000
-
-
-
-
-
-
$0.089
$0.089
-
(2,000,000)
(2,000,000)
-
-
-
-
-
-
Total
7,000,000
(4,000,000)
3,000,000
(*) On 17 May 2018 1,000,000 options with an 18-month vesting period and a total value of $173,488 were issued to
the incoming Chief Financial Officer. The amount recognised is a representation of the vesting period elapsed during
the reporting period.
(**) Brendan O’Hara resigned on 26 April 2019. On his date of resignation, Brendan had exercised all his options.
(***) Stephen Dennis was appointed on 26 April 2019.
Kalium Lakes Limited and Consolidated Entities
11
56
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
57
DIRECTORS’ REPORT continued
The following table sets out the details of unlisted share option movements during the year
ended: 30 June 2018.
Balance at
30 June
2017
Grant Date Exercise
Price
Expiry
Date
Granted as
Remuneration
4,000,000
2,000,000
16-Dec-16
16-Dec-16
$0.25
$0.25
16-Dec-19
16-Dec-19
-
-
-
-
-
-
-
-
-
-
Non-Executive Directors
Malcolm Randall
Brendan O’Hara
Executive Directors
Brett Hazelden
Rudolph van
Niekerk
KMP
Chris Achurch
(CFO)
-
-
-
Total
6,000,000
1,000,000
Fair Value
per Option
at Grant
Date
$0.089
$0.089
-
-
Exercised
Expired Balance at
30 June
2018
4,000,000
2,000,000
-
-
1,000,000
7,000,000
-
-
-
-
-
-
-
-
-
-
17-May-18
$0.525
17-May-21
1,000,000
$0.173
The following table sets out the details of performance rights movements during the year ended:
30 June 2019.
Balance at
30 June 2018
Grant Date
Expiry
Date
Granted as
Remuneration
Fair Value of
Performance
Right at Grant
Date
Exercised
Balance at
30 June 2019
Non-Executive Directors
Malcolm Randall
Brendan O’Hara
Stephen Dennis
Executive Directors
Brett Hazelden
Rudolph van
Niekerk
KMP
Chris Achurch
-
-
-
-
-
-
-
-
-
4,200,000
02-Sep-16
02-Sep-21
1,200,000
02-Sep-16
02-Sep-21
Total
5,400,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.15
$0.15
-
-
-
-
-
-
-
-
(1,050,000)
3,150,000
(300,000)
900,000
-
-
(1,350,000)
4,050,000
Kalium Lakes Limited and Consolidated Entities
12
58
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
59
DIRECTOR’S REPORT
DIRECTORS’ REPORT continued
The following table sets out the details of performance rights movements during the year ended:
30 June 2018.
Balance at
30 June
2017
Grant Date
Expiry Date
Granted as
Remuneration
Fair Value of
Performance
Right at Grant
Date
Exercised
Balance at
30 June
2018
Non-Executive Directors
Malcolm Randall
Brendan O’Hara
Executive Directors
Brett Hazelden
Rudolph van Niekerk
KMP
Frederick Kotzee
Chris Achurch
Total
-
-
-
-
-
-
4,200,000
1,200,000
02-Sep-16
02-Sep-16
02-Sep-21
02-Sep-21
-
-
5,400,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.15
$0.15
-
-
-
-
-
-
-
-
-
-
-
-
4,200,000
1,200,000
-
-
5,400,000
D. Interest in Shares
The following table sets out the details of ordinary share movements during the year ended: 30
June 2019.
Balance at
30 June 2018
(No. of Shares)
Additions
Disposals
Malcolm Randall
Brendan O’Hara *
Stephen Dennis **
Brett Hazelden
Rudolph van Niekerk
Chris Achurch
Total
479,184
-
-
13,669,066
3,315,600
-
17,463,850
-
-
-
-
-
2,000
2,000
-
-
-
-
-
-
-
Performance
Rights/Options
Exercised
(No. of Shares)
1,034,023
1,025,618
-
1,050,000
300,000
-
3,409,641
Received
Remuneration
(No. of Shares)
Balance at
30 June 2019
(No. of Shares)
-
-
-
-
-
-
-
1,513,207
*
-
14,719,066
3,615,600
2,000
19,849,873
(*) Brendan O’Hara resigned as Director on the 26 April 2019. The above table represents holdings and movements up
to the date of resignation.
(**) Stephen Dennis was appointed as Director on 26 April 2019.
Kalium Lakes Limited and Consolidated Entities
13
58
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
59
DIRECTORS’ REPORT continued
The following table sets out the details of ordinary share movements during the year ended: 30
June 2018.
Balance at
30 June 2017
(No. of Shares)
Additions
Disposals
Malcolm Randall
Brendan O’Hara
Brett Hazelden
Rudolph van Niekerk
Total
445,375
-
13,609,543
3,315,600
17,370,518
33,809
-
59,523
-
93,332
Performance
Rights/Options
Exercised
(No. of Shares)
-
-
-
-
-
-
-
-
-
-
Received
Remuneration
(No. of Shares)
Balance at
30 June 2018
(No. of Shares)
-
-
-
-
-
479,184
-
13,669,066
3,315,600
17,463,850
Other Director and KMP Transactions
There were no other transactions relating to Directors and KMP’s during the FY2019 period.
Additional Information
The earnings of the Consolidated Entity for the five years to 30 June 2019 are summarised below:
2019
$
2018
$
2017
$
2016
$
2015
$
Revenue
EBITDA
EBIT
Loss after income tax
1,705,960
(11,469,093)
(11,885,909)
(11,762,018)
4,261,759
(10,696,683)
(10,900,473)
(10,757,324)
2,519,040
(5,917,009)
(5,952,926)
(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)
$0.59
-
$0.54
-
$0.36
-
#
-
(4.30)
# Kalium Lakes Limited was admitted to the official List of the Australian Securities Exchange (ASX), on the 21st of
December 2016.
(6.95)
(5.40)
(6.15)
-
-
-
End of Audited Remuneration Report.
Kalium Lakes Limited and Consolidated Entities
14
60
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
61
DIRECTOR’S REPORT
DIRECTORS’ REPORT continued
PRINCIPAL ACTIVITIES
The principal activity of the Consolidated Entity is the exploration and mining of mineral
resources.
REVIEW OF RESULTS
The loss after tax for the year ended 30 June 2019 was $11,762,018 (2018: $10,757,324 loss),
primarily as a result of exploration and development of the Beyondie Project.
CORPORATE
In late July 2018 Kalium Lakes Limited and BCI Minerals Limited (BCI), the owners of the Carnegie
Potash Project (CPP) via the Carnegie Joint Venture (CJV), announced the completion of the
Scoping Study and a maiden Resource and Exploration Target for the CPP in Western Australia.
The results of the Beyondie Sulphate of Potash Project (BSOPP), Bankable Feasibility Study with
an updated Ore Reserve were released on 18 September 2018, confirming the project is
technically and financially robust, with production anticipated in 2020.
In late October 2018, Kalium Lakes entered into an agreement with AIC Resources Limited (AIC)
to acquire a portion of AIC’s tenement E69/3247 and lodged a new tenement application in
respect of the land acquired, being the application for 10 Mile Lake West (E69/3594). The new
tenement is located adjacent to the BSOPP tenements and the grant of the new tenement was
subject to the usual statutory processes. The consideration paid to AIC for the new area was 5
million fully paid ordinary Shares and 5 million Options to acquire Shares in KLL. The Shares and
Options issued to AIC are subject to a 12-month escrow period from the date of issue. The Options
have an exercise price of $0.50 each and will expire on 30 June 2025.
During November 2018 the company received confirmation that the Department of Mines,
Industry Regulation and Safety (DMIRS), under delegation from the Minister for Mines and
Petroleum (under section 10(1) of the Petroleum Pipelines Act 1969), had granted licence PL117
to construct and operate a pipeline for the conveyance of petroleum and for associated purposes
along the authorised route. The Company then held its Annual General Meeting on 21 November
2018, having released its Annual Report to shareholders one month earlier in October 2018.
On 17 December 2018 KLL announced that it had successfully completed a bookbuild for its
placement of 9,053,083 new fully paid ordinary shares in the Company at an issue price of $0.31
per Share to both new and existing, domestic and overseas institutional, sophisticated and
professional investors to raise $2,806,456.
January 2019 saw the Company announce it had identified Front End Engineering and Design
(FEED) optimisation and improvements, followed by the advice that it had received approval in
accordance with Part 9 of the Environment Protection and Biodiversity Conservation Act 1999
from the Commonwealth Department of the Environment and Energy.
Kalium Lakes Limited and Consolidated Entities
15
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
61
DIRECTORS’ REPORT continued
The following month, in February 2019, Kalium Lakes announced that all of the required Mining
Tenure for the BSOPP had been granted by the Department of Mines, Industry Regulation and
Safety; the Board of the Northern Australia Infrastructure Facility (NAIF) had made an Investment
Decision to support the development of the Project by providing long-term debt facilities totalling
up to A$74 million; and the passing of all resolutions at the General Meeting held on 27 February
2019.
An announcement advising the FEED works had been completed was made on 4 March 2019 and
two weeks later, on 19 March 2019, KLL announced that it had agreed a non-binding term sheet
with German bank (KfW IPEX-Bank) to provide approximately A$102 million of senior debt funding
for the development of the BSOPP.
On 26 March 2019, Kalium Lakes then announced the latest in a series of global associations by
entering into a Binding Offtake Agreement with K+S. The Agreement included the important fact
that there will be an initial 10-year term to provide K+S with 90,000tpa of SOP products,
representing 100% of the anticipated production from Phase 1 of the Beyondie Sulphate of Potash
Project.
Greenstone Resources agreed to make a $20.8 million cornerstone investment in the Company
which was announced on 3 April 2019 and the Environmental Protection Authority of Western
Australia recommended that the BSOPP receive ministerial approval on 8 April 2019.
Later in April 2019, KLL announced the appointment of Mr Stephen Dennis as a Non-Executive
Director of the Company and following the completion of the formal process to appoint Mr
Dennis, Mr Brendan O’Hara advised of his decision to step down from his role as a Director.
The results of a General Meeting ratifying the issue of shares to Greenstone Resources and the
re-election of Mr Stephen Dennis to the Board were announced following the 21 May 2019
General Meeting.
On 23 May 2019, Kalium Lakes announced that a number of key purification plant contracts had
been awarded, then in mid-June the Company advised that the Western Australian Environment
Minister had approved the implementation of the Project.
In the last two weeks of the financial year, on 20 June and 28 June 2019 respectively, the Company
announced the award of the key haulage and port contract to Toll Mining Services, which was
then followed by the award of two contracts, the first being the gas supply contract to Shell Energy
Australia Pty Ltd and the second the award of the gas transport and delivery contract to the APA
Group.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs.
Kalium Lakes Limited and Consolidated Entities
16
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
63
DIRECTOR’S REPORT
DIRECTORS’ REPORT continued
LIKELY DEVELOPMENTS AND EXPECTECTED RESULTS OF OPERATIONS
The Consolidated Entity intends to continue its development of the Beyondie Sulphate of Potash
Project (BSOPP), of which early works construction continues as at the date of this report. In
addition, the Consolidated Entity will continue to progress the development of the Carnegie
Project, in accordance with the terms of the joint venture 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 has been made as to
payment of dividends.
EVENTS SUBSEQUENT TO REPORTING DATE
No matter or circumstance has arisen since the end of the financial 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:
- As announced to the market on the 6 September 2019, the Company was granted Major
Project Status, by the Australian Federal Government, recognising the Beyondie Sulphate
of Potash Projects strategic significance to Australia;
- As announced to the market on the 27 August 2019, a credit approved offer was received
from Westpac for a A$15 million working capital and hedging facility;
-
-
Entitlement offer and Placement, raising a total of approximately A$72 million before
costs was successfully completed by the Company, as announced to the market on the 19
August 2019;
10 Mile Lake West tenement granted, with the consent of the traditional owners of the
area, the Gingirana People. Strategically located next to the Company’s granted Mining
Lease, processing facilities and infrastructure, allowing future potential to extend trench
and bore network for brine extraction. The new tenement is contiguous with the current
delineated lake surface and paleochannel mineral resources and ore reserves, with SOP
concentrations increasing into the new tenement, as announced to the market on the 1
August 2019;
- Credit approved offer of finance received from German KfW IPEX-Bank for A$102 million
of senior debt funding for the Beyondie SOP Project. These facilities are in addition to the
A$74 million NAIF loan package approved earlier in February 2019, and
Kalium Lakes Limited and Consolidated Entities
17
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
63
DIRECTORS’ REPORT continued
- As announced to the market on the 19 July 2019, the German Government export credit
agency, Euler Hermes, reached a positive decision regarding the Company’s application
for project finance export credit cover. Approximately A$50 million of the A$176 million
credit approval loan package will be guaranteed by Euler Hermes.
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.
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.
Kalium Lakes Limited and Consolidated Entities
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
65
DIRECTOR’S REPORT
DIRECTORS’ REPORT continued
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
12 September 2019
Kalium Lakes Limited and Consolidated Entities
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
65
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 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
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
INDEPENDENT AUDITOR’S DECLARATION
67
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Kalium Lakes Limited for the year ended 30 June 2019, 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, Western Australia
12 September 2019
D J WALL
Partner
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
67
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
FOR THE YEAR ENDED
30 JUNE 2019
Revenue
Other income
Note
30 June 2019
$
30 June 2018
$
3
1,705,960
4,261,759
Expenditure
Accounting fees
Compliance fees
Depreciation
Directors and executive remuneration
Employee expenses
Exploration expenditure
Legal fees
Share based payment expense
Travel expenses
Other expenses
Loss before tax
Income tax expense
(135,214)
(116,890)
(416,816)
(912,494)
(1,141,245)
(4,976,077)
(1,209,522)
(2,954,557)
(441,189)
(1,163,974)
(11,762,018)
(134,321)
(73,173)
(203,790)
(938,115)
(1,402,405)
(10,589,212)
(83,008)
(13,942)
(702,561)
(878,556)
(10,757,324)
-
-
22
5
4
6
Net loss for the year from operations
(11,762,018)
(10,757,324)
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
-
-
Total comprehensive loss for the year
(11,762,018)
(10,757,324)
Loss attributable to:
Owners of the parent
Total comprehensive loss attributable to:
Owners of the parent
(11,762,018)
(11,762,018)
(10,757,324)
(10,757,324)
(11,762,018)
(11,762,018)
(10,757,324)
(10,757,324)
Basic and diluted loss per share (cents)
8
(6.15)
(6.95)
The accompanying notes form part of these financial statements.
Kalium Lakes Limited and Consolidated Entities
22
69
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
AS AT 30 JUNE 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Property, plant and equipment
Work in progress
Mine in development
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
Note
30 June
2019
$
30 June
2018
$
9
10
11
12
15,467,180
2,717,996
7,671,286
4,230,158
18,185,176
11,901,444
2,061,425
6,947,206
643,725
1,865,404
-
-
9,652,356
1,865,404
27,837,532
13,766,848
13
14
4,372,422
681,776
3,751,621
337,438
5,054,198
4,089,059
5,054,198
4,089,059
22,783,334
9,677,789
15
16
17
53,053,533
3,249,635
(33,519,834)
29,265,527
2,170,078
(21,757,816)
22,783,334
9,677,789
The accompanying notes form part of these financial statements.
Kalium Lakes Limited and Consolidated Entities
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
69
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
FOR THE YEAR ENDED
30 JUNE 2019
Balance at 1 July 2017
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 2018
Balance at 1 July 2018
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 2019
Contributed
Equity
$
Reserves
$
Accumulated
losses
$
Total
$
15,667,451
-
-
2,008,500
-
-
(11,000,492)
(10,757,324)
-
6,675,459
(10,757,324)
-
-
-
(10,757,324)
(10,757,324)
14,600,654
(1,002,578)
-
29,265,527
-
-
161,578
2,170,078
-
-
-
(21,757,816)
14,600,654
(1,002,578)
161,578
9,677,789
29,265,527
-
-
2,170,078
-
-
(21,757,816)
(11,762,018)
-
9,677,789
(11,762,018)
-
-
-
(11,762,018)
(11,762,018)
23,620,913
(1,707,907)
1,875,000
53,053,533
-
-
1,079,557
3,249,635
-
-
-
(33,519,834)
23,620,913
(1,707,907)
2,954,557
22,783,334
The accompanying notes form part of these financial statements.
Kalium Lakes Limited and Consolidated Entities
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
71
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED
30 JUNE 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows from operating activities
Receipts from operations
Payments to suppliers and employees
Payment for exploration and evaluation assets
Payment for Mine Development
Note
30 June
2019
$
3,994,886
(5,180,615)
(8,250,977)
(4,500,000)
30 June
2018
$
2,201,604
(4,170,410)
(9,019,369)
-
Net cash (used in) operating activities
19
(13,936,706)
(10,988,175)
Cash flows from investing activities
Interest received
Payments for plant and equipment
123,462
(303,868)
130,341
(1,358,383)
Net cash (used in) investing activities
(180,406)
(1,228,042)
Cash flows from financing activities
Proceeds from equity issues
Payment for costs of equity issues
23,620,376
(1,707,370)
14,600,654
(854,942)
Net cash provided by financing activities
21,913,006
13,745,712
Net increase in cash held
7,795,894
1,529,495
Cash and cash equivalents at beginning of the
financial year
7,671,286
6,141,791
Cash and cash equivalents at year end
9
15,467,180
7,671,286
The accompanying notes form part of these financial statements.
Kalium Lakes Limited and Consolidated Entities
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
71
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
Corporate information
This annual report 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 2019 (the
“Consolidated Entity”). 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.
The following Accounting Standards and Interpretations are most relevant to the Company.
AASB 9 Financial Instruments
The Company has adopted AASB 9 from 1 July 2018. The standard introduced 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 that are solely principal and interest. A
debt investment shall be measured at fair value through other comprehensive income if it is held
within a business model whose objective is to both hold assets in order to collect contractual cash
flows which arise on specified dates that are solely principal and interest as well as selling the
asset on the basis of its fair value. All other financial assets are 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 or contingent
consideration recognised in a business combination) in other comprehensive income ('OCI').
Despite these requirements, a financial asset may be irrevocably designated as measured at fair
value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For
financial liabilities designated at fair value through profit or loss, 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 use an 'expected credit loss' ('ECL') model to recognise
an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a
financial instrument has increased significantly since initial recognition in which case the lifetime
Kalium Lakes Limited and Consolidated Entities
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Accounting policies (continued)
ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses
using a lifetime expected loss allowance is available.
AASB 15 Revenue from Contracts with Customers
The Company has adopted AASB 15 from 1 July 2018. The standard provides a single
comprehensive model for revenue recognition. The core principle of the standard is that an entity
shall recognise revenue to depict the transfer of promised goods or services to customers at an
amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. The standard introduced a new contract-based revenue recognition
model with a measurement approach that is based on an allocation of the transaction price. This
is described further in the accounting policies below. Credit risk is presented separately as an
expense rather than adjusted against revenue. Contracts with customers are 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.
Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be
capitalised as an asset and amortised over the contract period.
Impact of adoption
AASB 9 and AASB 15 were adopted using modified retrospective approach an as such
comparatives have not been restated. There was no impact on adoption.
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 2019. 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.
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
Kalium Lakes Limited and Consolidated Entities
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73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Accounting policies (continued)
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 the impact of this standard will not be material to the financial
statements.
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 2019 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.
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 20.
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. 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
Kalium Lakes Limited and Consolidated Entities
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Accounting policies (continued)
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.
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 Consolidated Entity’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
Kalium Lakes Limited and Consolidated Entities
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
Accounting policies (continued)
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.
Mine in Development
Costs will 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. Upon the satisfaction of either
of these limbs, mine development expenditure incurred by, or on behalf of the Company is
accumulated separately for each area of interest in which economically recoverable resources
have been identified. Such expenditure comprises costs directly attributable to the construction
of a mine and related infrastructure.
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.
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
30
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2(a). Critical accounting judgements, estimates and assumptions (continued)
Rehabilitation provision
A provision has been made for the anticipated costs for future rehabilitation of land explored or
mined. The Consolidated Entity's mining and exploration activities are subject to various laws and
regulations governing the protection of the environment. The Consolidated Entity recognises
management's best estimate for assets retirement obligations and site rehabilitations in the
period in which they are incurred. Actual costs incurred in the future periods could differ
materially from the estimates. Additionally, future changes to environmental laws and regulations
could affect the carrying amount of this provision.
Mine in development & Work in progress
These costs are capitalised to the extend they are expected to be recouped through the successful
exploitation of the related mining leases. Once production commences, these costs are
transferred to property, plant and equipment and mine properties, as relevant.
3.
Other income
Foreign exchange gain
Other income
Interest income
Research and development tax offset - International
Research and development tax offset - Domestic
30 June
2019
$
30 June
2018
$
35,331
159,313
123,891
281,094
1,106,331
68,425
182,176
143,149
1,660,634
2,207,375
1,705,960
4,261,759
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.
Kalium Lakes Limited and Consolidated Entities
31
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
4.
Other expenses
Bank charges
Insurance
Subscriptions
Other consultants
Head office and administration
30 June
2019
$
4,245
122,622
16,125
397,989
622,993
30 June
2018
$
3,978
33,826
62,813
350,803
427,136
1,163,974
878,556
5.
Share based payment expense
Unlisted options to executive – vesting over multiple periods *
Acquisition of tenements (options) **
Acquisition of tenements (shares) **
115,659
963,898
1,875,000
30 June
2019
$
30 June
2018
$
13,942
-
-
2,954,557
13,942
Year ended 30 June 2019: Entity issued the following Options:
-
-
* 1,000,000 Options issued to KMP (CFO) in the prior year, with a fair value of $173,488
and a vesting period of 18 months. Amount recognised as an expense during the financial
year ended 30 June 2019 was $115,659 (2018: $13,942). The total fair value will continue
to be recognised over the remaining vesting period.
** Issue of 5,000,000 fully paid ordinary shares and 5,000,000 unlisted options for
acquisition of tenements adjacent to the Consolidated Entity’s existing tenements, from
AIC Resources, as announced to the market on the 29 October 2018. The unlisted options
had a grant date of 26 October 2018 and are escrowed until 26 October 2019, each with
an exercise price of $0.50 and expiring on 30 June 2025. These options vested
immediately.
Year ended 30 June 2018: Entity issued the following Options:
-
-
-
29 September 2017: 330,882 Options issued to advisors with a fair value of $57,276.
9 January 2018: 843,936 Options issued to advisors with a fair value of $90,360.
17 May 2018: 1,000,000 Options issued to KMP (CFO) with a fair value of $173,488 and a
vesting period of 18 months. Amount recognised as an expense during the financial year
ended 30 June 2018 was $13,942. The total fair value will be recognised over the
remaining vesting period.
Kalium Lakes Limited and Consolidated Entities
32
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
5.
Share based payment expense (continued)
(i) Set out below are summaries of options granted and outstanding at 30 June 2019:
Options
Grant
Date
Expiry
Date
Granted
Exercised
Expired Balance at
the end of
the period
1 July 2016
Director *
16-12-16
16-12-19
6,000,000
(4,000,000)*
Officers
16-12-16
16-12-19
1,500,000
(1,500,000)*
Advisors
16-12-16
16-12-19
1,500,000
30 June 2017
9,000,000
Advisors
Advisors
KMP
29-09-17
29-09-20
330,882
09-01-18
09-01-20
843,936
17-05-18
17-05-21 1,000,000
30 June 2018
11,174,818
AIC Resources
29-10-18
30-06-25
5,000,000
-
-
-
-
-
-
-
30 June 2019
16,174,818
(5,500,000)
-
-
-
-
-
-
-
-
-
-
2,000,000
-
1,500,000
3,500,000
330,882
843,936
1,000,000
5,674,818
5,000,000
10,674,818
(*) See Note 15 for unlisted options exercised into ordinary shares during the financial year ended 30 June 2019.
Options issued 1 July 2018 to 30 June 2019:
Stock Price
Exercise Price
Expiry Period
Expected future volatility
Risk free rate
Dividend yield
Amount of Options
Fair value of Options
* Note 16
AIC
Resources
$0.375
$0.50
6.67 Years
58%
2.20%
0%
5,000,000
$963,898 *
Kalium Lakes Limited and Consolidated Entities
33
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
5.
Share based payment expense (continued)
Options issued 1 July 2017 to 30 June 2018:
Assumptions
Stock Price
Exercise Price
Expiry Period
Expected future volatility
Risk free rate
Dividend yield
Amount of Options
Fair value of Options
Officers
Directors
$0.410
$0.420
$0.525
$0.425
2 Years
3 Years
60%
60%
1.94%
2.12%
0%
0%
843,936
330,882
$57,276* $90,360*
KMP
$0.460
$0.525
3 Years
60%
2.24%
0%
1,000,000
$173,488
* Fair value of Options issued to advisors were treated as share issue costs in the consolidated statement of changes in
equity (Note 16).
Accounting policy:
Equity settled compensation
The Consolidated Entity provides benefits to employees (including Directors and Consultants) 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:
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
conditional upon a market condition. However, if a new award is substituted for the cancelled
Kalium Lakes Limited and Consolidated Entities
34
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
5.
Share based payment expense (continued)
award and designated as a replacement award on the date that it is granted, the cancelled and
new award are treated as if they were a modification of the original award, as described in the
previous paragraph. 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.
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:
Loss before Income tax
30 June
2019
$
(11,762,018)
30 June
2018
$
(10,757,324)
Prima facie benefit on operating loss at 27.5% (2018: 27.5%)
Non allowable expenditure
Unrecognised deferred tax assets attributable to tax losses
Income tax expenses
3,234,555
(1,195,872)
(2,038,683)
-
2,958,264
(1,257,604)
(1,700,660)
-
Tax losses available
15,523,825
8,110,433
A potential deferred tax asset, attributable to tax losses carried forward, amounts to
approximately $4,269,052 (2018: $2,230,369) 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
35
80
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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
36
82
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
7.
Auditor’s remuneration
Audit and review of the financial report
Research and development tax
Taxation and technical advice services
8.
Earnings/(loss) per share
30 June
2019
$
30 June
2018
$
40,250
53,503
41,461
38,000
29,464
61,067
135,214
128,531
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:
30 June
2019
(6.15)
(6.15)
(11,762,018)
191,370,743
191,370,743
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 divided 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
37
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
9.
Cash and cash equivalents
Cash at bank *
Cash on deposit
30 June
2019
$
30 June
2018
$
10,454,090
5,013,090
4,157,744
3,513,542
15,467,180
7,671,286
(*) Includes EURO 520,918; AUD $844,927 (2018: EURO 671,450; AUD $1,061,632)
Accounting policy:
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
Fuel rebate
30 June
2019
$
30 June
2018
$
803,095
419,947
1,387,425
26,100
81,429
306,434
16,382
3,868,009
25,671
13,662
2,717,996
4,230,158
Allowance for expected credit losses
The Consolidated Entity has not recognised any loss (Nil 2018) in respect of expected credit losses,
for the year ended 30 June 2019
Kalium Lakes Limited and Consolidated Entities
38
84
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
10.
Trade and other receivables (continued)
Accounting policy:
Trade receivables are initially recognised at fair value and subsequently measured at amortised
cost using the effective interest method, less any allowance for expected credit losses. Trade
receivables are generally due for settlement within 30 days.
The Company has applied the simplified approach to measuring expected credit losses, which uses
a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have
been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
11.
Property, plant and equipment
Exploration
Equipment
$
Office
Equipment
$
Motor
Vehicles
$
Leasehold
Improvements
Rehabilitation
asset
Computer
Software
Total
$
Carrying value
30 June 2017
350,798
14,140
101,606
-
-
Additions
Depreciation
1,300,726
(169,298)
7,037
(6,856)
43,677
(27,636)
Carrying value
30 June 2018
1,482,226
14,321
117,647
6,832
-
6,832
244,378
-
244,378
-
-
-
-
466,544
1,602,650
(203,790)
1,865,404
Additions
Depreciation
125,722
(361,140)
4,976
(8,116)
71,811
(40,728)
-
(6,832)
308,969
-
101,359
-
612,837
(416,816)
Carrying value
30 June 2019
1,246,808
11,181
148,730
-
553,347
101,359
2,061,425
Kalium Lakes Limited and Consolidated Entities
39
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
11.
Property, plant and equipment (continued)
Accounting policy:
Property, plant and equipment is recorded at historical cost less accumulated depreciation and
any impairment. The carrying value of assets are 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%
Leasehold Improvements: 50%
Computer Software 33%
Rehabilitation asset: *
(*) Rehabilitation asset and the corresponding provision (Note 14), is undiscounted and has not
been depreciated. Depreciation and corresponding finance charges incurred in the unwinding of
the provision will be recognised from the commencement of production.
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 (or period of the lease term if the
shorter there-of), 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.
12. Work in progress
Brine supply and ponds
Purification facility
Village accommodation
Access road
Other infrastructure
30 June
2019
$
2,702,415
2,302,125
1,152,135
332,621
457,910
6,947,206
30 June
2018
$
-
-
-
-
-
-
Kalium Lakes Limited and Consolidated Entities
40
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
12. Work in progress (continued)
Greenstone Resources made a A$20.8 million cornerstone equity investment in the Consolidated
Entity, as announced to the market on the 3 April 2019. This investment allowed the
Consolidated Entity to expand its early works program and include the purchase of long lead
items, pond construction and key infrastructure. The investment by Greenstone was undertaken
in two tranches, with the transaction being completed on the 23 April 2019. After the successful
completion of the Greenstone investment in the Consolidated Entity, and as a result of the
purpose of the funds being to fast track early works, the Consolidated Entity used this as a trigger
to commence capitalising costs into two key categories, Mine Development Expenditure and
Work in Progress.
13.
Trade and other payables
Current
Accounts payable
Other payables
Accrued expenses
Accounting policy:
30 June
2019
$
30 June
2018
$
3,472,370
21,531
878,521
3,285,903
117,683
348,035
4,372,422
3,751,621
Trade and other payable amounts represent liabilities for goods and services provided to the
entity prior to the end of the financial year and which are unpaid. Due to their short-term nature
they are measured at amortised cost and are not discounted. The amounts are unsecured and
are usually paid within 30 days of recognition.
14.
Provisions
Current
Employee entitlements
Rehabilitation
Accounting policy:
128,429
553,347
681,776
93,060
244,378
337,438
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.
Kalium Lakes Limited and Consolidated Entities
41
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
14.
Provisions (continued)
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.
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.
Kalium Lakes Limited and Consolidated Entities
42
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
15.
Contributed equity
30 June
2018/2019
No.
$
Balance at 1 July 2017
135,030,035
15,667,451
Share Issue: 29-Nov-17
Share Issue: 01-Dec-17
Share Issue: 19-Dec-17
Share Issue: 22-Jan-18
Share Issue Costs
29,471,793
476,191
1,005,922
3,809,524
12,378,154
200,000
422,500
1,600,000
-
(1,002,578)
Balance at 30 June 2018
169,793,465
29,265,527
Conversion of Performance rights: 17-Oct-18 (i)
Issue of shares for tenement acquisition: 26-Oct-18
Placement: 21-Dec-18
Placement: 01-Mar-19
Exercise of options - Directors: 14-Mar-19 (ii)
Exercise of options - Directors: 21-Mar-19 (iii)
Exercise of options - Directors: 04-Apr-19 (iv)
Exercise of options - Officers: 04-Apr-19 (iv)
Placement: 09-Apr-19
Exercise of options - Directors: 18-Apr-19 (v)
Placement: 23-Apr-19
Share issue costs
5,000,000
5,000,000
7,440,179
1,612,904
254,110
240,017
704,036
754,326
18,904,487
861,478
28,401,101
-
1,875,000
2,306,455
500,000
-
-
-
-
8,317,974
-
12,496,484
-
(1,707,907)
Balance at 30 June 2019
238,966,103
53,053,533
(i)
(ii)
(iii)
(iv)
(v)
1,350,000 of the 5,000,000 performance rights were exercised by Directors of the Company.
550,000 options exercised by a Director of the Company.
500,000 options exercised by a Director of the Company.
1,400,000 options exercised by Directors and 1,500,000 by Officers of the Company.
1,550,000 options exercised by Directors of the Company.
Kalium Lakes Limited and Consolidated Entities
43
88
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
15.
Contributed equity (continued)
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.
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.
Kalium Lakes Limited and Consolidated Entities
44
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
16.
Reserves
Options reserve (i)
Performance rights reserve (ii)
Movements in reserves
(i) Options reserve
30 June
2019
$
30 June
2018
$
2,049,635
1,200,000
970,078
1,200,000
3,249,635
2,170,078
No of Options
Value
$
Balance at 1 July 2017
9,000,000
808,500
New options issued and vested
Unlisted advisor options – security issue expenses
Unlisted advisor options – security issue expenses
New options issued and vesting over 18 months
Unlisted KMP options *
330,882
843,936
57,276
90,360
1,000,000
13,942
Balance at 30 June 2018
11,174,818
970,078
Options issued in prior year and vesting over 18 months
Unlisted KMP options
New options issued and vested
Issue of options for tenement acquisition: 26-Oct-18 **
Options exercised
Exercise of options into shares by a Director: 14-Mar-19
Exercise of options into shares by a Director: 21-Mar-19
Exercise of options into shares by Directors: 4-Apr-19
Exercise of options into shares by Officers: 4-Apr-19
Exercise of options into shares by Directors: 18-Apr-19
-
115,659
5,000,000
963,898
(550,000)
(500,000)
(1,400,000)
(1,500,000)
(1,550,000)
-
-
-
-
-
Balance at 30 June 2019
10,674,818
2,049,635
(*) On 17 May 2018, 1,000,000 options with an 18-month vesting period and a total value of $173,488 were issued to the
incoming Chief Financial Officer. The amount recognised is a representation of the vesting period elapsed as at the
reporting date.
(**) Issue of 5 million fully paid ordinary shares and 5 million unlisted options for acquisition of tenements adjacent to
the Consolidated Entity’s existing tenements, from AIC Resources, as announced to the market on the 29 October 2018.
The unlisted options had a grant date of 26 October 2018 and are escrowed until 26 October 2019, each with an exercise
price of $0.50 and expiring on 30 June 2025. These options vested immediately.
Kalium Lakes Limited and Consolidated Entities
45
90
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
16.
Reserves (continued)
(ii) Performance rights
Balance at 30 June 2017
Balance at 30 June 2018
Balance at 30 June 2019 *
Value
$
1,200,000
1,200,000
1,200,000
(*) 5,000,000 performance rights were converted into shares on 17 October 2018 (Note 15). The Company has elected
not to recognise a transfer from Reserves into Issued Capital, although the number of performance rights on issue has
reduced from 20,000,000 as at 30 June 2018 to 15,000,000 at 30 June 2019, and correspondingly the number of shares
on issue also increased on the date of conversion, by 5,000,000 (Note 15).
30 June
2019
$
30 June
2018
$
17.
Accumulated losses
Balance at beginning of year
Loss after tax attributable to the equity holders of the parent
entity during the year
(21,757,816)
(11,000,492)
(11,762,018)
(10,757,324)
Balance at end of year
(33,519,834)
(21,757,816)
18.
Operating segments
The Consolidated Entity has considered the requirements of AASB8 – Operating Segments and has
identified its operating segments based on the internal reports that are reviewed and used by the
board of directors (chief operating decision makers) in assessing performance and determining the
allocation of resources.
The Consolidated Entity operates as a single segment being the exploration for and development
of minerals in Australia.
The Consolidated Entity is domiciled in Australia. All revenue from external parties is generated
from Australia only and all assets are located in Australia only.
Kalium Lakes Limited and Consolidated Entities
46
92
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
19.
Reconciliation of cashflows from operating activities
Loss before tax
Depreciation
Share based payment expense
Interest income
Movement in trade & other receivables
Movement in trade & other payables
Movement in work in progress
Movement in mine development
30 June
2019
$
30 June
2018
$
(11,762,018)
416,816
2,954,557
(123,462)
1,512,162
656,170
(6,947,206)
(643,725)
(10,757,324)
203,790
13,942
(130,341)
(1,929,813)
1,611,571
-
-
Net cash used in operating activities
(13,936,706)
(10,988,175)
20.
Parent company information
Current assets
Total assets
Current liabilities
Total liabilities
Net Assets
Loss of the parent entity
Total comprehensive loss of the parent entity
16,131,454
22,973,133
(189,799)
(189,799)
22,783,334
3,738,924
9,964,064
(296,275)
(296,275)
9,677,789
(11,762,018)
(11,762,018)
(876,075)
(876,075)
Guarantees
Kalium Lakes Limited has not entered into any guarantees, with exception of the parent guarantee
under the Offtake agreement.
Other Commitments and Contingencies
Kalium Lakes Limited has no commitments and contingencies, except for operating lease
commitments of $21,600.
Plant and Equipment Commitments
Kalium Lakes Limited has no commitments to acquire property, plant and equipment.
Significant 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
47
92
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
21.
Events after the end of the reporting period
No matter or circumstance has arisen since the end of the financial 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:
- As announced to the market on the 6 September 2019, the Company was granted Major
Project Status, by the Australian Federal Government, recognising the Beyondie Sulphate
of Potash Projects strategic significance to Australia;
- As announced to the market on the 27 August 2019, a credit approved offer was received
from Westpac for a A$15 million working capital and hedging facility;
-
-
Entitlement offer and Placement, raising a total of approximately A$72 million before costs
was successfully completed by the Company, as announced to the market on the 26 July
2019 and 19 August 2019;
10 Mile Lake West tenement granted, with the consent of the traditional owners of the
area, the Gingirana People. Strategically located next to the Company’s granted Mining
Lease, processing facilities and infrastructure, allowing future potential to extend trench
and bore network for brine extraction. The new tenement is contiguous with the current
delineated lake surface and paleochannel mineral resources and ore reserves, with SOP
concentrations increasing into the new tenement, as announced to the market on the 1
August 2019;
- Credit approved offer of finance received from German KfW IPEX-Bank for A$102 million
of senior debt funding for the Beyondie SOP Project, as announced to the market on the 2
July 2019. These facilities are in addition to the A$74 million NAIF loan package approved
earlier in February 2019, and
- As announced to the market on the 19 July 2019, the German Government export credit
agency, Euler Hermes, reached a positive decision regarding the Company’s application for
project finance export credit cover. Approximately A$50 million of the A$176 million credit
approval loan package will be guaranteed by Euler Hermes.
Kalium Lakes Limited and Consolidated Entities
48
94
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
22.
Related party transactions
Parent Entity
Kalium Lakes Limited is the Parent Entity.
Subsidiaries
Interests in subsidiaries are set out in Note 23.
Key Management Personnel (KMP)
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’ and KMP remuneration
Equity based payments
30 June
2019
$
30 June
2018
$
835,789
76,705
912,494
115,659
865,301
72,814
938,115
13,942
1,028,153
952,057
Transactions with Related Parties
Salaries and wages to the value of $44,128 were incurred and paid to Tanya Hazelden, a related
party of managing director, Brett Hazelden, in addition to $275 incurred and paid to Matthew
Randall, a related party of executive director and chairman, Malcolm Randall.
Receivables from and Payables to Related Parties
There were no payables to or receivables from related parties at the current and previous
reporting date.
Loans to/from Related Parties
There were no loans payable to or receivable from related parties at the current and previous
reporting date.
23.
Controlled Entities
Subsidiary
Kalium Lakes Potash Pty Ltd
Kalium Lakes Infrastructure Pty Ltd*
Carnegie Potash Pty Ltd**
* Incorporated on 16 January 2019
** Incorporated on 11 July 2018.
Country of
Incorporation
Australia
Australia
Australia
% of Equity Interest
30 June
2019
100%
100%
100%
30 June
2018
100%
-
-
Kalium Lakes Limited and Consolidated Entities
49
94
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
24.
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.
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.
The Consolidated Entity has adopted a lifetime expected loss allowance in estimating expected
credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit
loss provisioning. These provisions are considered representative across all customers of the
consolidated entity based on recent sales experience, historical collection rates and forward-
looking information that is available.
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.
Kalium Lakes Limited and Consolidated Entities
50
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K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
24.
Financial risk management (continued)
Consolidated
As at 30 June 2019
Trade and other payables
Total liabilities
As at 30 June 2018
Trade and other payables
Total liabilities
30 days
$
3,472,370
3,472,370
3,285,903
3,285,903
1-3
months
$
3-12
months
$
Total
$
-
-
-
-
- 3,472,370
- 3,472,370
- 3,285,903
- 3,285,903
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 movements through term deposits and online savers at fixed and variable rates of
between 0.2% and 2.2% per annum, dependant on market rates on the day of investment and the
length of the investment. The following table sets out the variable interest bearing and fixed
interest-bearing financial instruments of the Consolidated Entity:
2019
Financial assets
Cash and cash equivalents
Total
2018
Financial assets
Cash and cash equivalents
Total
Variable interest
$
Fixed interest
$
10,454,090
10,454,090
4,157,744
4,157,744
5,013,090
5,013,090
3,513,542
3,513,542
The following table illustrates the estimated sensitivity to a 1% increase and decrease to fixed,
variable interest rate fluctuations.
Impact on pre-tax profit
Interest rates + 1%
Interest rates – 1%
30 June 2019
$
104,541
(104,541)
30 June 2018
$
41,577
(41,577)
d) Foreign currency risk
The Consolidated Entity undertakes certain transactions denominated in foreign currency and is
exposed to foreign currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets
and financial liabilities denominated in a currency that is not the entity's functional currency. The
risk is measured using sensitivity analysis and cash flow forecasting.
Kalium Lakes Limited and Consolidated Entities
51
96
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
24.
Financial risk management (continued)
The Consolidated Entity periodically transfers amounts held in its functional currency, into foreign
currency, based on committed expenditures payable, in order to effectively mitigate against
fluctuations in foreign exchange rates.
in EUR of AUD$844,927 and AUD$803,852
The Consolidated Entity had cash and cash equivalents and trade and other payables/accruals
denominated
(2018 AUD$1,061,632 and
AUD$1,896,923) respectively. At 30 June 2019, if EUR/AUD rates had changed by 10% with all
other variables held constant, the consolidated entity's loss before tax for the year would have
been AUD$ 4,107 (2018 AUD$83,529) lower/higher.
A sensitivity of 10% (10%: 2018) has been selected as this is considered reasonable given the
current level of volatility in the EUR/AUD rate.
Accounting policy:
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are
included as part of the initial measurement, except for financial assets at fair value through profit
or loss. Such assets are subsequently measured at either amortised cost or fair value depending
on their classification. Classification is determined based on both the business model within which
such assets are held and the contractual cash flow characteristics of the financial asset unless, an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the consolidated entity has transferred substantially all the risks and rewards of
ownership. When there is no reasonable expectation of recovering part or all of a financial asset,
it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive
income are classified as financial assets at fair value through profit or loss. Typically, such financial
assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the
short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon
initial recognition where permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments
which the consolidated entity intends to hold for the foreseeable future and has irrevocably
elected to classify them as such upon initial recognition.
Kalium Lakes Limited and Consolidated Entities
52
98
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
24.
Financial risk management (continued)
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets
which are either measured at amortised cost or fair value through other comprehensive income.
The measurement of the loss allowance depends upon the consolidated entity's assessment at
the end of each reporting period as to whether the financial instrument's credit risk has increased
significantly since initial recognition, based on reasonable and supportable information that is
available, without undue cost or effort to obtain.
For financial assets measured at fair value through other comprehensive income, the loss
allowance is recognised within other comprehensive income. In all other cases, the loss allowance
is recognised in profit or loss.
25.
Contingent liabilities
The Consolidated Entity has no contingent liabilities as at 30 June 2019 (2018:Nil).
26.
Commitments
Kalium Lakes Limited had the following commitments as at 30 June 2019:
- Rental, rates and expenditure commitments relating to its tenements - $2,438,611;
- Operating lease commitments - $21,600 over 5 years; and
- Other commitments relating to the construction of the Beyondie Sulphate of Potash
Project (BSOPP) - $12,034,097.
No other commitments existed at the reporting date.
27.
Interests in joint operations
On 1 March 2017, the Consolidated Entity and BC Potash Pty Ltd announced that the companies
had entered into a joint operation over Kalium’s 100% owned Carnegie Project.
The Carnegie Joint Operation (CJO) is focussed on the exploration and development of the
Carnegie Potash Project (CPP) in Western Australia, which is located approximately 220
kilometres east-north-east of Wiluna. The CJO comprises one granted exploration licence and five
exploration licence applications, covering a total area of approximately 3,081 square kilometres.
As announced to the market, the Scoping Study, Maiden Resource and Exploration Target
confirmed that the CPP has potential to be a technically and economically viable project, with an
Inferred Resource of 0.88 Mt SOP @ 3,466 mg/l K (equivalent to 7,724 mg/l SOP) based only on
the top 1.7 metres of the 27,874 hectare surficial aquifer on granted tenement E38/2995 plus an
Exploration Target for material below the top 1.7 metres.
Kalium Lakes Limited and Consolidated Entities
53
98
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
27.
Interests in joint operations (continued)
Under the terms of the agreement BC Potash Pty Ltd can earn up to a 50% interest in the CJO by
predominantly sole-funding exploration and development expenditure across several stages.
Kalium Lakes Potash Pty Ltd is the manager of the CJO and will leverage its existing Intellectual
Property to fast track work. The JO Companies have endorsed proceeding to a staged Pre-
Feasibility Study, with an initial focus on securing tenure and access to all required tenements.
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 2019 30 June 2018
85%*
70%*
* Kalium Lakes Pty Ltd ownership interest
Kalium Lakes Limited and Consolidated Entities
54
101
100
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
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;
b. comply with Accounting Standards;
c. are in accordance with International Financial Reporting Standards issued by the
International Accounting Standards Board, as stated in Note 2 to the financial
statements; and
d. give a true and fair view of the financial position as at 30 June 2019 and of the
performance for the year ended on that date of the Company and the
Consolidated Entity;
The Managing Director and Chief Financial Officer have each declared that:
a. the financial records of the Company for the financial year have been properly
maintained in accordance with s 286 of the Corporations Act 2001;
b. 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;
c.
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
12 September 2019
Kalium Lakes Limited and Consolidated Entities
55
100
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
101
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
To the Members of Kalium Lakes Limited
Opinion
We have audited the financial report of Kalium Lakes Limited (Company) and its subsidiaries (Group), which
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit
or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies, and the directors' declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i) Giving a true and fair view of the Group's financial position as at 30 June 2019 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.
102
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
103
INDEPENDENT AUDITOR’S REPORT
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
Exploration expenditure
As reported in the consolidated statement of profit or
loss and other comprehensive income, the Group
expensed total exploration expenditure of $4,976,077.
This expenditure has been expensed as incurred in
accordance with AASB 6 Exploration
for and
Evaluation of Mineral Resources and the Group’s
accounting policy.
Exploration expenditure was a key audit matter as it is
material and constituted 37% of the Group’s total
expenses for the year. The Group must also correctly
classify the expenditure in accordance with AASB 6.
In addition, the results of exploration and evaluation
work determines to what extent the mineral reserves
and resources may or may not be commercially viable
for extraction.
Share based payments – tenement acquisition
Refer to Note 5 in the financial statements
During the year, the Group incurred share-based
payment expenses of $963,898 in accordance with
issue of
AASB 2 Share-based Payment
tenements
5,000,000 options
adjacent to the Group’s existing tenements.
for acquisition of
from
Management has used an option valuation model to
value these options.
We determined this to be a key audit matter due to the
significant judgement involved in assessing the fair
value of the options issued during the year.
Our audit procedures included:
• Understanding how the expenditure is incurred
and agreeing a sample of the expenditure to
supporting documentation
the
expenditure has been properly authorised,
recorded in the correct period and appropriately
classified in accordance with AASB 6 and the
Group's accounting policy;
to ensure
• Obtaining evidence that the Group has valid rights
to explore in each specific area for which the
expenditure is recorded;
• Considering the Group’s assessment of the
commercial viability of
to
exploration and evaluation activities carried out in
each specific area; and
relating
results
• Assessing the appropriateness of the Group’s
disclosures in the financial report.
Our audit procedures included:
• Reviewing the key terms and conditions of the
options issued;
• Obtaining
the valuation model prepared by
management and assessing whether the model
was appropriate for valuing the options;
• Challenging
the
key
assumptions used by management to value the
options; and
reasonableness
of
• Reviewing the relevant disclosures in the financial
statements to ensure compliance with Accounting
Standards.
102
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
103
Work in progress
Refer to Note 12 in the financial statements
Capitalised expenditure incurred as part of early
works on the Beyondie Sulphate of Potash Project
was a key audit matter due to the size of the
capitalised expenditure of $6,947,206 representing
25% of total assets. The Group used judgement in
the identification and allocation of cost between
operating expenditure and capital expenditure. The
risks we focused on included:
• The existence of capital expenditure; and
• The appropriateness for capitalisation of the
expenditure in accordance with AASB Accounting
Standard AASB 116 Property, Plant and
Equipment and the Group’s accounting policy.
Our audit procedures included:
• Test of controls relating to the authorisation and
accuracy of the recording and classification of
capitalised expenditure;
• Assessment of the allocation of costs between
operating expenditure and capital expenditure by
inspecting underlying documentation on a sample
basis and assessing the nature of the underlying
activity;
• Selecting a sample of supplier and contractor
invoices raised prior to year-end and post year-
end. Checking the timing of recorded expenditure
against the details of the service description on the
invoice; and
• Reviewing the relevant disclosures in the financial
statements to ensure compliance with Accounting
Standards and the Group’s accounting policy.
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 2019, 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.
104
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
105
INDEPENDENT AUDITOR’S 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/ar2.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of Kalium Lakes Limited, for the year ended 30 June 2019, 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.
D J WALL
Partner
RSM AUSTRALIA PARTNERS
Perth, Western Australia
13 September 2019
104
K ALIUM LAKES LIMITED I CONSOLIDATED ANNUAL REPORT 2018/19
105
ADDITIONAL INFORMATION FOR
PUBLIC LISTED COMPANIES
ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES
As at 30 June 2019
Issued Securities
(cid:3)
Fully paid ordinary shares
$0.25 unlisted options
expiring 16-Dec-19
$0.425 unlisted options
expiring 29-Sep-20
$0.525 unlisted options
expiring 16-Jan-20
$0.525 unlisted options
expiring 17-May-21
$0.50 unlisted options
expiring 26-Oct-19
Performance rights
Total
Quoted
on ASX
238,966,103
-
-
-
238,966,103
Unlisted
-
3,500,000
330,882
843,936
Total
238,966,103
3,500,000
330,882
843,936
1,000,000
1,000,000
5,000,000
15,000,000
25,674,818
5,000,000
15,000,000
264,640,921
Distribution of Listed Ordinary Fully Paid Shares
Spread of Holdings
1
1,001
5,001
10,001
100,001
Total
- 1,000
- 5,000
- 10,000
- 100,000
- and over
Number of Holders
(cid:3)
129
291
278
604
157
1,459
Number of Units
33,121
836,354
2,472,667
21,627,317
213,996,644
238,966,103
% of Total Issued Capital
0.01%
0.35%
1.03%
9.05%
89.56%
100%
Top 20 Listed Ordinary Fully Paid Shareholders
Rank
Shareholder
(cid:3)
GREENSTONE MANAGEMENT (DELAWARE) II LLC
VINCE SMOOTHY SUPER PTY LTD
KUMARINA HOLDINGS PTY LTD
HAZELDEN CORPORATE PTY LTD
MR BRETT WILLIAM HAZELDEN + MS TANYA PHYLLIS BOZIKOVIC
THOMAS CHUTE ELLIS + SALLY ANNE ELLIS
AIC RESOURCES LIMITED
THOMAS ELLIS + SALLY ELLIS
COOLA STATION PTY LTD
MR BENJAMIN JOHN HAAN
NEWLIFE CAPITAL PTY LTD
MR STACEY RADFORD
MR DALE JAMES CHAMPION + MRS ANITA MARIA CHAMPION
BIGA NOMINEES PTY LTD
P GOYDER SUPERANNUATION PTY LTD
CITICORP NOMINEES PTY LIMITED
NOWHERETOGO PTY LTD
ANDIUM PTY LIMITED
MR DANIEL GEORGE CLARK + MISS JOHANNE GILLINGHAM
BLUEBAY ASSET PTY LTD
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Total
Shares Held
47,305,588
40,339,800
21,128,187
8,328,452
% Issued
Capital
19.80%
16.88%
8.84%
3.49%
6,390,614
2.67%
6,232,493
5,000,000
5,000,000
3,315,600
3,100,000
3,066,995
2,843,127
2.61%
2.09%
2.09%
1.39%
1.30%
1.28%
1.19%
2,839,350
1.19%
2,814,068
2,799,000
2,466,723
2,157,800
2,095,172
1.18%
1.17%
1.03%
0.90%
0.88%
1,797,447
0.75%
1,781,500
170,801,916
0.75%
71.48%
Kalium Lakes Limited and Consolidated Entities
60
NOTES
KALIUM LAKES LIMITED
Office Address
Unit 1, 152 Balcatta Road
Balcatta WA 6021
Postal Address
PO Box 610
Balcatta WA 6914
Telephone: +61 (0)8 9240 3200
Email: info@kaliumlakes.com.au
www.kaliumlakes.com.au
ABN 98 613 656 643