LAKE RESOURCES
Annual Report 2018
Lake Resources – Annual Report 2018 2
Lake Resources NL
Corporate Directory
Lake Resources NL
30 June 2018
Corporate directory
30 June 2018
Directors
Stuart Crow - Non-executive Chairman
Steve Promnitz - Managing Director
Nicholas Lindsay - Non-executive Director
Company secretary
Andrew Bursill
Notice of annual general meeting
The annual general meeting of Lake Resources NL will be held on 13 November
2018 at 10am.
Registered office and
Principal Place of Business
Share register
Auditor
Solicitors
Bankers
Level 5
126 Phillip Street
Sydney NSW 2000
Tel: +61 2 9299 9690
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Tel: +61 2 8280 7111
Fax: +61 2 9287 0303
Stanley & Williamson
HopgoodGanim
National Australia Bank
Stock exchange listing
Lake Resources NL shares are listed on the Australian Securities Exchange (ASX
code: LKE)
Website
www.lakeresources.com.au
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Lake Resources NL
Directors’ Report
Lake Resources NL
30 June 2018
Directors' report
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Chairman’s Report
This past year has shown significant advancement for Lake Resources by proving up a major large lithium brine discovery at
Kachi and securing access to drill in producing lithium basins at Olaroz-Cauchari. Lake has separated itself as a significant
lithium participant with a focus on Argentina.
Your company has been able to advance its two flagship projects with different approaches. Kachi is a 100% owned large
basin which appeals to downstream lithium battery and cathode producers, especially in China and Japan. Olaroz-Cauchari
is located within the same basin as current production and development, adjacent to a major acquisition by one of the
world’s largest and rapidly growing producers. This has positioned your company well to deliver a new future with scale and
optionality to develop each of the future projects separately with different partners, products and timelines.
The disruptive and fundamental step change towards electric vehicles (EV’s), mainly as cars and buses, together with
energy storage, is well underway, especially in China, California and Europe. Legislative change has been central to this
shift to EV’s. The lithium ion battery technology is the accepted standard for electric vehicles, with adjustments being made
to the balance of lithium with cobalt, nickel and manganese. This is supported by the rapid growth in lithium ion battery
“gigafactories” increasing from three plants 3 years ago to 50 gigafactory manufacturing plants being built, expanded or
planned. One of the new technologies reaching small scale production is the lithium solid state battery, which requires even
more lithium. Other technologies are still at a research and development stage.
Your company’s aim is to become a future provider of lithium by developing lithium projects in prime locations in conjunction
with the downstream lithium battery producers or cathode producers or key participants in the supply chain to assist in the
development of the projects.
Both myself and the Managing Director have put significant effort into increasing awareness of Lake Resources with
downstream participants together with equity investors in Asia, North America and Europe. This is why equity research was
initiated this last year in the UK, North America, China and Australia. These efforts are attracting interest from investors and
industry participants despite the recent softness in early 2018 in the equity markets for battery minerals. Recent corporate
acquisitions adjacent to our projects reinforces that the main industry players will secure prime projects in the best locati ons
despite equity market ructions.
I would like to thank all shareholders for their support, both past and new, especially in converting options at a slight
premium to market. I would also like to thank the management and staff for efforts over the past year as the team expanded
on the ground in some difficult drilling conditions. I thank my fellow directors for their advice and guidance of the company
and shareholders.
A special mention must be made of the tireless efforts of our Managing Director who operates across different time zones
and languages seamlessly, whether on the road presenting our company’s prospects to potential investors or on site in
Argentina, Steve has shown incredible commitment to delivering a successful outcome for shareholders throughout the
year.
In the coming year, I look forward to being able to report a major maiden resource at Kachi, significant high grade lithium
drill intersections at Cauchari and Olaroz, advancement of the hard rock project and potentially at least one major strategic
partner. This should deliver a number of catalysts for a market rerating as positive news flow continues.
Stu Crow
Chairman
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Managing Director’s Report
Lake Resources has advanced two flagship projects this year – Kachi and Olaroz-Cauchari - of the four lithium projects that
Lake Resources owns 100% in prime locations in heartland of lithium in north west Argentina. The Company uses the
phrase ‘prime location’ because the projects are located in the best and most sought-after areas for lithium production
globally – proven to be the lowest cost producers – and sought after by large producers and battery manufacturers.
The Kachi Lithium Brine Project has become a large new discovery this year. Lake own virtually the entire basin with 54,000
Ha over a basin currently measuring 22km x 8km with brines from surface to 400-600m depth. The maiden resource is
anticipated in late 2018 which will be followed by a Pre-Feasibility Study (PFS) with development optionality. Kachi is one of
the last wholly owned lithium brine basins available for partnership in Argentina, located 100 kilometres south of FMC’s
producing mine, in production for 20 years. A new direct extraction method is being assessed in partnership with Lilac
Solutions which shows a promising reduction in time to production with lower operating costs, being reviewed in tandem with
conventional methods.
The Olaroz-Cauchari Lithium Brine Project, covering 18,000 Ha, has advanced to drilling stage with drilling commencing in
early October at Cauchari to extend adjoining world class lithium resources into Lake’s leases. Lake’s Cauchari project
adjoins Ganfeng Lithium/Lithium Americas development project. Geophysics has shown the lithium brine bearing sequence
extends into Lake’s leases and drilling is aimed to demonstrate that the grades are similar to the adjoining high grades (400-
700 mg/L lithium). Drilling will then move to Olaroz to show likely extensions of the high-grade sequence used in Orocobre’s
production into Lake’s leases.
Lake’s subsidiary pegged open ground in early 2016 after a detailed technical review of all of NW Argentina. The aim was to
locate at least one entire basin that was not drilled or developed in the last boom (2006-08) – and that produced Kachi – and
to locate a significant block of prime leases in a basin that was producing – and that was Cauchari-Olaroz.
A landmark agreement was signed on 1 March 2018 with the provincial government of Jujuy over the Olaroz-Cauchari
Lithium Brine Project and the Paso project, which confirmed tenure. Community discussions and environmental approvals
have led to final drilling approvals. An exploration play takes longer to reach key milestones than buying into a known
project. Argentina’s bureaucratic but careful approach to ensuring all approvals are in place is a familiar approach in leading
resource nations.
Much of the focus has been on Lake’s brine projects but the Catamarca Pegmatite Project covers a large area (70,000 Ha)
in a newly recognised 150km long belt of pegmatites with past small scale lithium mining history. Our view is that the belt
has not undergone modern exploration for large deposits with the target being lithium mineralisation as spodumene in large
pegmatite swarms. Recent field work created new exploration models with potential for the belt to host large scale deposits
which was why in September 2018, Lake acquired Petra Energy SA for 20 million LKE shares.
Our long-term plans are to find a strategic downstream partner for each project. That partner would be a lithium battery
producer, cathode producer or a key participant in the lithium supply chain as this provides more certainty around
development. At Kachi, the plan is to develop the lithium brine using both conventional evaporation ponds and a new direct
extraction technique, together with the possibility of producing a lithium brine concentrate (3 different revenue streams). This
will provide optionality without committing to one method. The new low cost direct extraction technique promises a
significantly reduced lead time to production, with increased recoveries and offers the opportunity to produce a very clean
product which is demanded by battery makers. At Olaroz - Cauchari, the lease holding favours a stand-alone development,
but could be developed in conjunction with neighbouring facilities. The Catamarca Pegmatite hard rock project, albeit at an
early stage, has the opportunity to provide staged supply fairly quickly with the right results as the pegmatites outcrop over a
long distance in a supportive province.
Through this approach, the Company aims to unlock significant value for shareholders through positive drilling results,
resource statements, feasibility studies and through agreements with strategic partners and potential offtake partners.
Steve Promnitz
Managing Director
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Lake Resources NL
Lake Resources NL
Directors’ Report
Directors' report
30 June 2018
30 June 2018
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity') consisting of Lake Resources NL (referred to hereafter as the 'company' or 'parent entity') and the
entities it controlled at the end of, or during, the year ended 30 June 2018.
Directors
The following persons were directors of Lake Resources NL during the whole of the financial year and up to the date of this
report, unless otherwise stated:
S. Crow (Non-Executive Chairman)
S. Promnitz (Managing Director)
N. Lindsay (Non-Executive Director) (appointed 18 July 2017)
P.J. Gilchrist (resigned 18 July 2017)
Principal activities
The principal activities of the entities within Lake Resources NL (Lake) are:
●
●
Exploration and development of lithium brine projects and lithium hard rock projects
Exploration for minerals.
Lake holds four prime lithium projects in Argentina with one of the largest lease holdings of lithium. During the year ended
30 June 2018, Lake made a major discovery of a new large deep lithium basin (20km x 12 km) similar to those in
production as it conducted a major drilling program over the 100% owned Kachi Lithium Brine Project in Argentina. Further
leases have been added to consolidate ownership. An initial resource is anticipated in late CY2018.
At the Olaroz – Cauchari Lithium Brine Projects in Argentina, a landmark agreement was signed on 1 March 2018 which
confirmed tenure within a prime lithium producing basin. The initial drilling is planned for early October 2018 at Cauchari
with Olaroz to follow. Corporate activity adjacent to the Lake projects has reaffirmed the prime location of the projects.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $3,540,391 (30 June 2017: $1,170,745).
Corporate
The Company has advanced significantly this financial year in demonstrating the size and scale of its Kachi Lithium project
and in securing access to its Olaroz-Cauchari Lithium Project. These two flagship projects are well positioned to deliver
shareholders significant growth as substantial stand alone development projects to be developed solely or in conjunction
with a strategic partner. Together with a further brine project and a hard rock project, these make Lake one of the largest
lease holders of lithium brine and hard rock projects (~180,000 hectares) of a listed entity on the ASX.
The lithium project areas were pegged before the mid-late 2016 “rush” to acquire leases in Argentina. The Company
completed a transaction on 14 November 2016 (announced May 2016) which acquired the unlisted company LithNRG Pty
Ltd, with well-located prime lithium brine projects in three large packages of tenement applications around salt lakes in
North West Argentina. The last remaining tranche of shares and options was issued in March 2018 upon completion of the
last milestone, involving tenure at Olaroz-Cauchari.
Lake controls 100% of the subsidiary LithNRG Pty Ltd with its Argentine subsidiaries, Minerales Australes SA and Morena
del Valle Minerals SA, and post 30 June, acquired control of Petra Energy SA which holds the hard rock leases.
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30 June 2018
A capital raising of $4.5 million before costs (33.33 million LKE shares at $0.135), by way of private placement, was
completed in March 2018, with an attached 1-for-2 option at $0.20 (16.66 million options, expiry 15 Dec 2018). Broker
options were issued as part of the transaction at $0.20 (9.5 million options, expiry 15 Dec 2018). On 4 April 2018 the
Company issued 25,000,000 new Ordinary Shares in LKE at $0.05 per share following the conversion of Class A options,
with an exercise price of $0.05. On 3 November 2017, the Company secured commitments to raise $1.665 million before
costs by way of the issue of 1,665,000 unsecured notes (Notes) to sophisticated and professional investors with a right to
purchase a 1-for-2 option at $0.20 (16.66 million options, expiry 15 Dec 2018), and these notes were repaid in April
2018. The three tranches of 20c options were converted into 42.81 million listed LKEO1 options (at $0.20, expiry 15 Dec
2018). on 18 June 2018, after a short form prospectus and shareholder approval.
The Company had 305,638,867 shares on issue at 30 June 2018, with 42,816,667 listed LKEO1 options at $0.20 (expiry
15 Dec 2018) and 19,200,000 listed LKEO options at $0.10 (expiry 27 Aug 2018) and 5,042,494 unlisted options at $0.05
(expiry 30 Nov 2018), 6,250,000 unlisted options at $0.05 (expiry 21 Oct 2019) and 9,500,000 unlisted options at $0.28
(expiry 31 Dec 2020), plus LTI Performance Rights of 2,500,000 with an option agreement over hard rock leases (now
exercised post 30 June) which would result in an issuance of 19,000,000 LKE shares.
Lake has held a number of initial discussions with potential strategic partners and offtake partners, predominantly in China,
Japan, Korea and India, to secure a down stream partner to develop each project, with a focus on the Kachi Project once
the resource is released. The Company has engaged corporate advisors in Asia, North America and the UK, together with
public research analyst commentary on the Company.
Corporate activity adjacent to the Lake projects has reaffirmed the prime location of the projects. POSCO announced the
US$280 million acquisition of the northern resource of Galaxy’s lithium brine project, approximately 100 km north of the
Kachi Project. Post 30 June, Gangfeng Lithium (#2 lithium producer) announced the US$237 million acquisition of SQM’s
37% of the Cauchari project, together with Lithium Americas – and this project is located 450 metres from Lake’s Cauchari
project.
Operations
Argentina
Kachi Lithium Brine Project - Catamarca Province, Argentina
A major maiden discovery was confirmed by drilling at the Kachi Lithium Brine Project in Catamarca province, Argentina,
with the presence of a large scale, deep salt lake basin 22 x 8 kilometres, with brines from surface to over 400 metres
deep. This is a similar size to globally significant lithium producers and one of the few remaining salt lakes in Argentina with
substantial identified lithium brines and controlled 100% by a single owner, Lake. An initial resources is anticipated in late
CY2018 with the brine body showing potential to increase further under covered areas.
The Kachi Lithium Brine Project is located in Catamarca province, approximately 100km south of FMC Corp’s Hombre
Muerto Lithium brine operation and Galaxy Resources (GXY.ASX) Limited’s Sal de Vida lithium brine project. Albemarle
Corp’s Antofalla lithium potash brine development project is in the adjacent basin.
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The Kachi Project is a consolidated package of ~54,000 hectares of mining leases owned 100% by Lake centred around a
previously undrilled salt lake within a large basin. The area has been recently recognised as a lithium brine bearing basin,
and this is the first time the area has been consolidated under one owner. Near-surface brines show high conductivities
and auger sampling has displayed positive lithium results. Kachi covers the lowest point of drainage from a large area of
over 5000 square kilometres containing lithium bearing volcanics and hot springs.
Lake’s Argentine subsidiary, Morena del Valle Minerals SA, has completed fourteen rotary and diamond drill holes (8 holes
at 30 June) which ended in lithium brine-bearing sediments. Results have been reported from drill holes with variable
depths up to 405 metres and demonstrate that lithium brine is present from near surface to over 400m depth in drill holes
spaced 11 km apart across the project.
Highest grades to date are from drill-hole K03R03, averaging 306 mg/L lithium, low impurities and low average Mg/Li ratio
of 4.3. These results indicate higher concentrations of lithium bearing brines occur at depth and drilling is underway to
explore deeper sections below the best results from K03. Drilling is ongoing to produce a maiden resource at Kachi in late
CY2018.
A maiden drilling programme of lithium brines commenced in November 2017, although running sands caused drilling
problems and a change of service provider. Since Feb/March 2018, rotary and diamond drill holes have been completed
between 100 to 405 metres with slotted casing in place to allow testing and sampling. Conductive brines were intersected
in aquifers from near surface to below 400m in different interlayered lithologies which are dominated by permeable sandy
sediments. Initial indications from field hydraulic testing indicate high permeabilities for the sandy material, which will be
further tested with the installation of large diameter production test bores and samples have been collected for porosity
tests in a laboratory in the USA.
Brines with high density (1.18 - 1.22 g/cm3) have been intersected in thick sandy and gravelly aquifers, with the best
results to date being 306 mg/L after 27 hours of airlifting from hole K03R03, installed with filters over an interval of 3 – 242
m. To date the lithium brines analysed show positive chemistry with low combined impurities (boron, sulphate, calcium,
magnesium, iron).
A seismic geophysical survey has been undertaken using passive seismic techniques, with the aim of developing an
understanding of basin geometry and thickness of the sediments hosting the brine. The distinct reflectors identified in the
survey correlate well with dense lithologies such as a number of ignimbrite units within the predominantly sandy
sediments. Drilling at K06 provides a correlation with the seismic survey and indicates the presence of unconsolidated
sediments to a depth in excess of 500 m under gravel cover away from the areas of surface salt where drilling is currently
being conducted and in excess of 600 m in the vicinity of site K03. Importantly the seismic survey also suggests the
majority of the volcanic material visible at surface forms a thin veneer overlying lake sediments, which is very positive for
the project as it further increases the volume of sediments that potentially host brines.
It is anticipated that following the release of the resource statement, a pre-feasibility study will commence assessing new
direct extraction techniques to be reviewed in tandem with conventional methods Post 30 June, the Company announced a
partnership to leverage Lilac Solutions’s proprietary ion exchange technology (the “Lilac Technology”) for the Kachi brine
with the goal of establishing a rapid, robust, and low-cost process for producing lithium at Kachi. Lilac is initiating
engineering work to confirm low operating costs for direct production of lithium carbonate or lithium chloride at Kachi using
the Lilac Technology.
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Olaroz/Cauchari & Paso Lithium Brine Projects - Jujuy Province, Argentina
Lake holds mining leases over ~45,000 hectares in two areas in Jujuy Province, in NW Argentina - Lake’s Olaroz –
Cauchari Lithium Brine Project and Paso Lithium Brine Project, both owned 100% by Lake.
Drilling is planned to commence in early October 2018 at Cauchari, to be followed later by Olaroz, once final approvals
have been provided.
A landmark agreement was entered into with Jujuy Province, Argentina on 28 Feb 2018 that confirms tenure of Lake’s
~45,000 hectares of mining leases at Olaroz-Cauchari and Paso. Lake’s leases adjoin the production leases owned by
Orocobre and SQM/Gangfeng/Lithium Americas and are in the same basin with strong potential to display lithium in the
same aquifers. These prime lithium brine areas were applied for “pre-boom” by the entities acquired by Lake Resources.
In Cauchari, Lake’s leases extend 11 km north-south of the adjoining SQM/Gangfeng/Lithium Americas and Advantage
Lithium/Orocobre’s Cauchari lithium development leases to the west. Advantage Lithium/Orocobre have recently reported
a 6-fold increase in resources to 3 million tonnes LCE. Immediately across Lake’s lease boundary, drill holes showed high-
grade lithium brine results between 450-600 mg/L lithium with high flow rates of 19-35 litre/s (ORE.ASX release 29 June
2018). Lake is keen to replicate these results by targeting the same aquifers.
In Olaroz, Lake’s leases extend 30 km north-south of the adjoining Orocobre’s Olaroz lithium production leases to the
east. Approvals are being sought to access and drill these areas.
Ground geophysics will commence as soon as possible prior to drill access. Substantial ground geophysics and drilling has
been completed in the surrounding leases at Olaroz/Cauchari.
Significant corporate transactions continue in adjacent leases. Post 30 June, Gangfeng Lithium (#2 lithium producer)
announced the US$237 million acquisition of SQM’s 37% of the Cauchari project, together with Lithium Americas – and
this project is located 450 metres from Lake’s Cauchari project. Gangfeng plans to commence production in just over two
years.
Catamarca Hardrock Pegmatite Project – Catamarca Province, Argentina
Lake held an option agreement with Petra Energy SA (now exercised post 30 June) over exploration leases and mining
leases and applications over almost 72,000 hectares in a 150km long belt of outcropping pegmatites with lithium potential
as spodumene within Catamarca Province, in NW Argentina.
A recent field programme (post 30 June) had reinforced the view that the 150 kilometre-long belt favourably hosts
significant lithium mineralisation as spodumene in large pegmatite swarms. The lithium pegmatites are part of a newly
recognised 150km long belt of pegmatite swarms outcropping at relatively low altitudes (300-1500m) in Ancasti, Catamarca
province, which has good year-round access.
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The transaction was announced on 1 March 2017 and the first tranche of 1,000,000 LKE shares were issued. The option
agreement was initially for six months and had been extended under the same terms to allow completion of the formation
of the Argentine entity. Post 30 June, a single tranche of 19 million ordinary LKE shares were issued to the vendors in late
September 2018 to acquire 100% of the local company and the project, of which 50% of the shares will be escrowed for 6
months.
Recent field work (post 30 June) in the Ancasti area resulted in new exploration models being developed which clearly
show potential for the belt to host large scale deposits. Previously, coarse grained spodumene crystals 30-70cm long had
been identified in a number of locations. Further exploration activities will be conducted in FY2019. Field based XRF
analysis to vector in on potential new targets will be undertaken first, followed by trenching and auger sampling. Drill
locations will then be defined by these results.
Pakistan Copper/Gold
Lake holds an interest in a copper-gold project, the Chagai Project, in Pakistan. The Chagai Project is situated in the
Tethyan magmatic arc, which extends from Turkey, through Iran into Pakistan and hosts a number of world-class copper
gold deposits including the Saindak copper-gold mine and the giant Reko Diq copper-gold deposits. Previously, Colt
Resources Middle East (CRME) and Aamir Resources Consultants could earn a majority interest in the Chagai project
through exploration expenditure of US$1.9 million by 2018, which was not possible due to the lack of government security
clearances for key personnel, among other issues. Lake Resources 27.5% interest in Chagai Resources (Pvt) Limited, a
Pakistan incorporated operating entity, is held through a wholly owned Pakistan incorporated subsidiary, Lake Mining
Pakistan (Pvt) Limited. During the year, no significant exploration activities were undertaken with further discussions
planned.
Significant changes in the state of affairs
Equity of $4.5 million before costs (33.33 million LKE shares at $0.135), by way of private placement, was completed in
March 2018, with an attached 1-for-2 option at $0.20 (16.66 million options, expiry 15 Dec 2018). On 4 April 2018 the
Company issued 25,000,000 new Ordinary Shares in LKE at $0.05 per share following the conversion of Class A options,
with an exercise price of $0.05. These funds were primarily to assist the exploration campaign in Argentina, focussed on
the Kachi Lithium Brine Project but also included the retirement of the notes issued in November 2017 and for working
capital requirements and corporate costs.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
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Matters subsequent to the end of the financial year
Lake exercised an option agreement in September 2018 with Petra Energy SA over leases and applications over almost
72,000 hectares of outcropping pegmatites with lithium potential as spodumene within Catamarca Province, in NW
Argentina. A single tranche of 19 million ordinary LKE shares were issued to the vendors in late September 2018 to
acquire 100% of the local company and the project, of which 50% of the shares will be escrowed for 6 months. The
transaction was announced on 1 March 2017 and the first tranche of 1,000,000 LKE shares were issued.
Lake and Lilac Solutions, Inc. (“Lilac”) announced in September 2018 that the companies have entered into a partnership
to leverage Lilac’s proprietary ion exchange technology (the “Lilac Technology”) for the Kachi Lithium Brine with the goal of
establishing a rapid, robust, and low-cost process for producing lithium at Kachi. Lilac has initiated engineering work to
confirm low operating costs for direct production of lithium carbonate or lithium chloride at Kachi using the Lilac
Technology. Lilac deploys unique ion exchange media and related processes to extract lithium from a wide variety of brine
resources with high recoveries, minimal costs, and rapid processing times. Benchtop testing of other brines has indicated
recoveries over 95% in less than 2 hours versus 9-24 months in evaporation ponds. This approach eliminates the need for
evaporation ponds, which are expensive to build, slow to ramp up, and vulnerable to weather fluctuations.
Lake’s $0.10 listed LKEO options (expiry 27 August 2018) were almost all converted to LKE ordinary shares in
August/September 2018. The Company issued (in tranches) 17,915,783 new Ordinary Shares in LKE at $0.10 per share
following the conversion of LKEO options, with an exercise price of $0.10. Approximately $0.8 million were converted by
the holders and a further $1 million was subscribed by a New York based investor, Long State Investments.
Lake entered into a corporate advisory agreement with Long State Investments to assist in introducing Lake to Asian
based investors, potential offtakers and strategic investors. The Company further agreed to an equity participation
arrangement of $575,000 per quarter with Long State. The potential funding receivable by the Company under this
arrangement, which is based upon the performance of its Shares, has no upper limit. Under the arrangement, the
Company's participation will be determined and payable in 2 settlement tranches payable quarterly as measured against a
Benchmark Price of $0.115 per share. If the measured share price exceeds the Benchmark Price, for that quarter, the
Company will receive quarterly settlement on a pro rata basis, and vice versa should the measured share price be below
the Benchmark Price
On 31 July 2018, the Company entered into a Controlled Placement Agreement (CPA) with Acuity Capital. The CPA
provides LKE with up to $4.5 million of standby equity capital over the coming 29 month period. Importantly, LKE retains
full control of all aspects the placement process: having sole discretion as to whether or not to utilise the CPA, the quantum
of issued shares, the minimum issue price of shares and the timing of each placement tranche (if any). There are no
requirements on LKE to utilise the CPA and LKE may terminate the CPA at any time, without cost or penalty. Acuity Capital
and the CPA do not place any restrictions at any time on LKE raising capital through other methods. If LKE does decide to
utilise the CPA, LKE is able to set a floor price (at its sole discretion) and the final issue price will be calculated as the
greater of that floor price set by LKE and a 10% discount to a Volume Weighted Average Price (VWAP) over a period of
LKE's choosing (again at the sole discretion of LKE). As collateral for the CPA, LKE has agreed to place 15m shares from
its LR7.1 capacity, at nil consideration to Acuity Capital (Collateral Shares) but may, at any time, cancel the CPA and buy
back the Collateral Shares for no consideration (subject to shareholder approval).
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
Likely developments and expected results of operations
The focus for the company is the continuation of drilling to produce further assay results at the Kachi Lithium Brine Project
in the Catamarca province. Alongside this, the Company has announced that it intends to commence drilling at its 100%
owned Cauchari Lithium Brine project in the Jujuy province after recent positive discussions with the relevant authorities in
Argentina and confirmation of the drill hole locations for the drill program.
Environmental regulation
The consolidated entity is subject to and compliant with all aspects of environmental regulation of its exploration and
mining actives. The directors are not aware of any environmental law that is not being complied with.
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Information on directors
Name:
Title:
Experience and expertise:
Stuart Crow
Non-Executive Chairman
Mr Crow has global experience in financial services, corporate finance, investor
relations, international markets, salary packaging and stock broking. Stuart is
passionate about assisting emerging listed companies to attract investors and capital
and has owned and operated his own businesses.
None
Other current directorships:
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
Interests in rights:
3,534,600 Shares
3,312,500 Options
None
Name:
Title:
Experience and expertise:
Stephen Promnitz
Managing Director
Mr Promnitz has considerable technical and commercial experience in Argentina, a
geologist fluent in Spanish, and a history of exploring, funding and developing
projects. Mr Promnitz has previously been CEO and 2IC of mid-tier listed mineral
explorers and producers (Kingsgate Consolidated, Indochine Mining), in corporate
finance roles with investment banks (Citi, Westpac) and held technical, corporate and
management roles with major mining companies (Rio Tinto/CRA, Western Mining).
None
Other current directorships:
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
Interests in rights:
14,008,124 Shares
5,625,511 Options
2,500,000 Performance Rights
Name:
Title:
Experience and expertise:
Dr Nick Lindsay
Non-Executive Director
Nick has over 25 years’ experience in Argentina, Chile and Peru in technical and
commercial roles in the resources sector with major and mid-tier companies, as well
as start-ups. Nick has an BSc (Hons) degree in Geology, a PhD in Metallurgy and
Materials Engineering as well as an MBA. A fluent Spanish speaker, he has
successfully taken companies in South America, such as Laguna Resources which
he led as Managing Director, from inception to listing, development and subsequent
acquisition. Mr Lindsay is currently CEO of Manuka Resources Ltd, an unlisted
company, having previously held the position of President – Chilean Operations for
Kingsgate Consolidated Ltd and is a member of the AusIMM and the AIG.
Valour Resources Limited (ASX: VAL)
Other current directorships:
Former directorships (last 3 years): Paradigm Metals Group (resigned June 2016) and Castillo Copper Limited (resigned
Interests in shares:
Interests in options:
Interests in rights:
August 2015)
None
1,500,000 Options
None
Name:
Title:
Qualifications:
Experience and expertise:
Peter J. Gilchrist
Executive Director
B.Eng(Civil), M.Eng Sc, MBA.
Over 30 years experience as an engineer in mining, construction and manufacturing
in Australia and USA. He is Executive Chairman of the Aquatec Maxcon Group, which
manufacture and install water treatment equipment for a wide range of customers in
the municipal, power and mining industries.
Other current directorships:
None
Former directorships (last 3 years): None
Interests in shares:
Interests in options:
Interests in rights:
21,104,048 (at date of resignation)
None (at date of resignation)
None (at date of resignation)
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
10 Lake Resources – Annual Report 2018
10
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Lake Resources NL
Directors' report
30 June 2018
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Andrew Bursill became Company Secretary on 14 November 2016. Mr Bursill currently holds the position of Company
Secretary for a number of publicly listed companies and has experience in accounting, administration, capital raisings and
ASX compliance and regulatory requirements.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2018, and
the number of meetings attended by each director were:
S. Crow
S. Promnitz
N. Lindsay
Full Board
Attended
Held
2
2
2
2
2
2
Held: represents the number of meetings held during the time the director held office.
No board meetings were held for the period that P.J. Gilchrist was in office during the year.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The board policy is to remunerate directors at market rates for time, commitment, responsibilities and overall performance.
The board determines payments to the directors and reviews their remuneration annually, based on market practice, duties
and accountability. Independent external advice is sought when required. The maximum aggregate amount of directors’
fees that can be paid is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive
directors are not linked to the performance of the consolidated entity. However, to align directors’ interests with shareholder
interests, the directors are encouraged to hold shares in the Company. The consolidated entity did not utilise the services
of a remuneration consultant for the year.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the
delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for
good reward governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy
is to attract, motivate and retain high performance and high quality personnel.
11
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Lake Resources NL
Directors' report
30 June 2018
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Board. The Board may, from time to time, receive advice from
independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line
with the market. The Chairman is not present at any discussions relating to the determination of his own remuneration.
The current non-executive directors' fees are determined within an aggregate directors' fee limit. The maximum current
aggregate non-executive directors' fee limit stands at $350,000 per annum.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Board of Directors based on individual and business unit performance, the overall performance of the consolidated entity
and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
Long Term Incentive (LTI) Plan
At the 2016 Annual General Meeting, the shareholders of the Company approved the Long Term Incentive (LTI) Plan. The
main purpose of the plan is to give incentives to eligible participants (or their nominee) to provide dedicated and ongoing
commitment and effort to the Company aligning the interest of both employees and shareholders and for the Company to
reward eligible employees for their effort. The LTI Plan contemplates the issue to eligible employees of performance rights
which may have milestones. Under the Plan, the Company allocated 8.5 million performance rights to two Directors, Mr
Steve Promnitz (7.5 million) and Mr Stuart Crow (1 million). The performance shares were issued at nil consideration.
Mr Promnitz's performance shares vest on the following performance criteria:
a) a third vest when initial exploration can commence, triggered by commencement of the first ground based geophysical
survey over a minimum of 10 tenement applications; criteria has been met and ordinary shares have been issued;
b) a third vest when initial drilling can commence, triggered by the commencement of the first drill hole over a
minimum of 10 of the tenement applications; criteria has been met and ordinary shares have been issued; and
c) a third vest when the Company's market capitalisation reaches $22.287 million calculated based on the volume
weighted average market price (VWAP) on the ASX over 20 day trading period multiplied by the number of shares on issue
at the time.
12 Lake Resources – Annual Report 2018
12
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Lake Resources NL
Directors' report
30 June 2018
●
●
●
a third vest when initial exploration can commence, triggered by commencement of the first ground based geophysical
survey over a minimum of 10 tenement applications; criteria has been met and ordinary shares have been issued;
a third vest when initial drilling can commence, triggered by the commencement of the first drill hole over a minimum
of 10 of the tenement applications; criteria has been met and ordinary shares have been issued; and
a third vest when the Company's market capitalisation reaches $22.287 million calculated based on the volume
weighted average market price (VWAP) on the ASX over 20 day trading period multiplied by the number of shares on
issue at the time. Criteria has not yet been met.
Mr Crow's performance shares vest when the Company's market capitalisation reaches $22.287 million calculated based
on the volume weighted average market price (VWAP) on the ASX over 20 day trading period multiplied by the number of
shares on issue at the time, criteria has been met and ordinary shares have been issued.
Voting and comments made at the company's 2017 Annual General Meeting ('AGM')
In excess of 75% of the votes received supported the adoption of the remuneration report for the year ended 30 June
2017. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the consolidated entity consisted of the following directors of Lake Resources NL:
●
●
●
●
S. Crow (Non-Executive Chairman)
S. Promnitz (Managing Director)
N. Lindsay (Non-Executive Director)
P.J. Gilchrist (resigned 18 July 2017)
And the following person:
●
Andrew Bursill - Company Secretary
Short-term benefits
Post-
employment
benefits
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary*** annuation
$
$
Long-term benefits
Long
service
leave
$
Performanc
e
Rights
$
Total
$
36,667
28,900
-
-
-
-
-
-
-
-
415,034
207,517
451,701
236,417
230,384
295,951
50,000
50,000
29,535
29,535
24,366
24,366
691,723 1,026,008
-
- 1,314,274 1,714,126
2018
Non-Executive Directors:
S. Crow
N. Lindsay*
Executive Directors:
S. Promnitz
*
**
appointed 18 July 2017. N. Lindsay received $25,000 in directors fees and $3,900 in consulting fees as part of his
cash salary and fees.
Peter Gilchrist resigned 18 July 2017. He did not receive any consideration for his services in the year ended 30 June
2018.
*** includes provision for annual leave.
During the year, the consolidated entity paid Salaris Consulting Pty Ltd, a company associated with Stuart Crow (Director),
consultancy services relating to capital raising. Total fees paid (excluding GST) to Salaris Consulting Pty Ltd for the
consultancy services was $27,645 (2017: $28,160).
During the year, the Company engaged Franks & Associates Pty Ltd, a company associated with Andrew Bursill (Company
Secretary) to provide company secretarial and accounting services. Total fees paid (excluding GST) to Franks &
Associates Pty Ltd during the year was $123,588 (2017: $81,890).
13
Lake Resources – Annual Report 2018 13
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Lake Resources NL
Directors' report
30 June 2018
These services are provided in normal commercial terms and conditions and no more favourable that those provided by
other parties.
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary*** annuation
$
$
Long
service
leave
$
Equity-
settled
$
Total
$
14,000
153,590
167,590
-
-
-
-
-
-
55,000
69,000
4,430
4,430
13,077
13,077
-
-
412,500
467,500
583,597
652,597
2017
Non-Executive Directors:
S. Crow *
Executive Directors:
S. Promnitz *
*
**
appointed on 14 November 2016.
R. Johnson and J.G. Clavarino resigned as directors on 14 November 2016. R. Johnson, J.G. Clavarino and P.J.
Gilchrist did not receive any remuneration for their services as directors in the year ended 30 June 2017.
*** includes provision for annual leave.
Andrew Bursill was appointed Company Secretary on 14 November 2016. The Company engaged Franks & Associates
Pty Ltd, a company associated with Andrew Bursill to provide company secretarial and accounting services. Total fees paid
(excluding GST) to Franks & Associates Pty Ltd in 2017 was $81,890.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
S. Crow
N. Lindsay
Executive Directors:
S. Promnitz
Fixed remuneration
2017
2018
At risk - STI
At risk - LTI
2018
2017
2018
2017
8%
12%
20%
-
31%
29%
-
-
-
-
-
-
92%
88%
80%
-
69%
71%
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
S. Promnitz
Managing Director
14 November 2016
Initial salary of $250,000 per annum, with a review point scheduled for 12 months
Incentive of
from commencement date, subject
7,500,000 performance rights as approved by shareholders on 4 October 2016. If
notice given by Company, the Company shall be liable to pay full compensation for a
six month notice period. If notice is given by Mr Promnitz, the notice period is three
months. Company shall have the right to choose whether Mr. Promnitz work his
notice or paid in lieu of notice.
to satisfactory performance.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
14 Lake Resources – Annual Report 2018
14
Lake Resources NLDirectors’ Report30 June 2018
Lake Resources NL
Directors' report
30 June 2018
Non-executive director arrangements
All non-executive directors enter into an agreement with the company in the form of a letter of appointment. The letter
summarises the board policies and terms, including remuneration, relevant to the office of director.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2018.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price at grant date
Fair value
per option
30 November 2017
30 November 2017
31 December 2020
$0.28
$0.138
Name
S. Promnitz
S. Crow
N. Lindsay
Number of
options
granted
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price at grant date
Fair value
per option
5,000,000 30 Nov 2017
3,000,000 30 Nov 2017
1,500,000 30 Nov 2017
30 Nov 2017
30 Nov 2017
30 Nov 2017
31 Dec 2020
31 Dec 2020
31 Dec 2020
$0.28
$0.28
$0.28
$0.138
$0.138
$0.138
Options granted carry no dividend or voting rights.
The number of options over ordinary shares granted to and vested by directors and other key management personnel as
part of compensation during the year ended 30 June 2018 are set out below:
Name
S Promnitz
S Crow
N Lindsay
Number of
Number of
Number of
Number of
options
granted
options
granted
options
vested
options
vested
during the
during the
during the
during the
year
2018
year
2017
year
2018
year
2017
5,000,000
3,000,000
1,500,000
5,004,064
1,250,000
-
7,502,032
3,625,000
1,500,000
2,502,032
625,000
-
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel
as part of compensation during the year ended 30 June 2018 are set out below:
Name
S Promnitz
S Crow
N Lindsay
Value of
options
granted
during the
Value of
options
exercised
during the
Value of
options
lapsed
during the
year
$
year
$
year
$
Remuneration
consisting of
options
for the
year
%
691,723
415,034
207,517
-
-
-
-
-
-
69%
92%
89%
15
Lake Resources – Annual Report 2018 15
Lake Resources NLDirectors’ Report30 June 2018
Lake Resources NL
Directors' report
30 June 2018
Performance rights
There were no performance rights over ordinary shares issued to directors and other key management personnel as part of
compensation during the year ended 30 June 2018.
The number of performance rights over ordinary shares granted to and vested by directors and other key management
personnel as part of compensation during the year ended 30 June 2018 are set out below:
Name
Stuart Crow
Steve Promnitz
Number of
Number of
Number of
Number of
rights
granted
rights
granted
rights
vested
rights
vested
during the
during the
during the
during the
year
2018
year
2017
year
2018
year
2017
-
-
1,000,000
7,500,000
1,000,000
5,000,000
-
-
Additional information
The earnings of the consolidated entity for the five years to 30 June 2018 are summarised below:
2014
$
2015
$
2016
$
2017
$
2018
$
Net Loss
Net Assets
Share Price at Year End (cent)
135,093
(57,397)
1
88,420
109,713
1
41,682
68,031
1
1,170,745
3,228,950
3
3,540,391
6,505,140
9
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at Received
as part of
the start of
the year
remuneration Additions
Disposals/
Other *
Balance at
the end of
the year
Ordinary shares
S. Crow
S. Promnitz
1,597,100
6,255,078
7,852,178
1,937,500
-
-
8,753,046
- 10,690,546
-
3,534,600
(1,000,000) 14,008,124
(1,000,000) 17,542,724
No other directors and key management personnel holds shares in the company,
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Options over ordinary shares
S. Crow
S. Promnitz
N. Lindsay (appointed 18 July 2018)*
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
937,500
3,753,048
-
4,690,548
3,000,000
5,000,000
1,500,000
9,500,000
(625,000)
(2,502,032)
-
(3,127,032)
-
(625,505)
-
3,312,500
5,625,511
1,500,000
(625,505) 10,438,011
*
Represents balance at date of appointment
No other directors and key management personnel holds options in the company,
16 Lake Resources – Annual Report 2018
16
Lake Resources NLDirectors’ Report30 June 2018
Lake Resources NL
Directors' report
30 June 2018
Performance rights holding
The number of performance rights over ordinary shares in the company held during the financial year by each director and
other members of key management personnel of the consolidated entity, including their personally related parties, is set
out below:
Performance rights over ordinary shares
S. Crow
S. Promnitz
Balance at
the start of Granted
Converted to
Expired/
forfeited/
Balance at
the end of
the year
as
remuneration
shares
other
the year
1,312,500
8,751,015
10,063,515
-
-
-
(1,312,500)
(6,251,015)
(7,563,515)
-
-
-
-
2,500,000
2,500,000
No other directors and key management personnel holds performance rights in the company,
There have been no other transactions involving equity instruments apart from those described in the tables relating to
options, right and shareholdings
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Lake Resources NL under option at the date of this report are as follows:
Grant date
14 November 2016
14 November 2016
27 February 2017
30 November 2017
15 June 2018
Expiry date
30 November 2018
21 October 2019
27 August 2018
31 December 2020
15 December 2018
Exercise
price
Number
under option
5,042,494
$0.05
$0.05
6,250,000
$0.10 19,200,000
9,500,000
$0.28
$0.20 42,816,667
82,809,161
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the company or of any other body corporate.
Shares under performance rights
Unissued ordinary shares of Lake Resources NL under performance rights at the date of this report are as follows:
Grant date
Expiry date
Exercise
price
Number
under rights
14 November 2016
14 November 2021
$0.00
2,500,000
No person entitled to exercise the performance rights had or has any right by virtue of the performance right to participate
in any share issue of the company or of any other body corporate.
Shares issued on the exercise of options
The following ordinary shares of Lake Resources NL were issued during the year ended 30 June 2018 and up to the date
of this report on the exercise of options granted:
Date options granted
27 February 2017
Exercise
price
Number of
shares issued
$0.10 18,189,914
17
Lake Resources – Annual Report 2018 17
Lake Resources NLDirectors’ Report30 June 2018
Lake Resources NL
Directors' report
30 June 2018
Shares issued on the conversion of performance rights
There were 18,500,000 ordinary shares of Lake Resources NL issued on the exercise of performance rights during the
year ended 30 June 2018 and up to the date of this report. These performance rights were granted on 4 October 2016 and
approved at a meeting of Shareholders.
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
There were no non-audit services provided during the financial year by the auditor.
Officers of the company who are former partners of Stanley & Williamson
There are no officers of the company who are former partners of Stanley & Williamson.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
Stanley & Williamson 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.
On behalf of the directors
___________________________
Steve Promnitz
Director
28 September 2018
18 Lake Resources – Annual Report 2018
18
Lake Resources NLDirectors’ Report30 June 2018
Lake Resources NL
Auditor’s independence declaration
30 June 2018
Auditor’s Independence Declaration
under Section 307C of the Corporations Act 2001
As lead auditor for the audit of Lake Resources N.L. for the year ended 30 June 2018, I declare that,
to the best of my knowledge and belief, there have been:
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Lake Resources N.L. and the entities it controlled during the year.
Kamal Thakkar
Partner
Stanley & Williamson
Sydney
28 September 2018
17
Lake Resources – Annual Report 2018 19
Lake Resources NL
Contents
Lake Resources NL
30 June 2018
Contents
30 June 2018
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of Lake Resources NL
Shareholder information
General information
21
22
23
24
25
50
51
55
The financial statements cover Lake Resources NL as a consolidated entity consisting of Lake Resources NL and the
entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is
Lake Resources NL's functional and presentation currency.
Lake Resources NL is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Suite 2, Level 10, 70 Phillip Street
SYDNEY NSW 2000
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 28 September 2018.
The directors have the power to amend and reissue the financial statements.
Corporate Governance Statement
The Company's Corporate Governance Statement can be found on the company's website : www.lakeresources.com.au
20 Lake Resources – Annual Report 2018
20
Lake Resources NL
Statement of profit or loss and other comprehensive income
Lake Resources NL
For the year ended 30 June 2018
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2018
Expenses
Depreciation and amortisation expense
Administrative expenses
Corporate expenses
Employee benefit expenses
Share based payments expense
Consultancy and legal costs
Loss before income tax expense
Income tax expense
Note
Consolidated
2018
$
2017
$
25
(135)
(52,074)
(718,575)
(395,952)
(1,314,274)
(310,975)
-
(25,210)
(323,245)
(185,097)
(467,500)
(169,693)
(2,791,985)
(1,170,745)
5
(748,406)
-
Loss after income tax expense for the year attributable to the owners of Lake
Resources NL
14
(3,540,391)
(1,170,745)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive income for the year attributable to the owners of Lake
Resources NL
Basic earnings per share
Diluted earnings per share
(3,540,391)
(1,170,745)
Cents
Cents
24
24
(1.43)
(1.43)
(0.72)
(0.72)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
21
Lake Resources – Annual Report 2018 21
Lake Resources NL
Statement of financial position
Lake Resources NL
30 June 2018
Statement of financial position
As at 30 June 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Investments accounted for using the equity method
Property, plant and equipment
Exploration and evaluation
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2018
$
2017
$
6
7
8
9
1,744,467
33,308
48,873
1,826,648
1,396,825
34
13,292
1,410,151
35
1,865
4,901,193
4,903,093
35
-
1,887,866
1,887,901
6,729,741
3,298,052
10
11
224,601
-
224,601
69,102
-
69,102
224,601
69,102
6,505,140
3,228,950
12
13
14
18,342,102 12,346,866
936,260
(10,054,176)
1,757,605
(13,594,567)
6,505,140
3,228,950
The above statement of financial position should be read in conjunction with the accompanying notes
22
22 Lake Resources – Annual Report 2018
Lake Resources NL
Statement of changes in equity
Lake Resources NL
30 June 2018
Statement of changes in equity
For the year ended 30 June 2018
Consolidated
Balance at 1 July 2016
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 12)
Share-based payment - options
Share-based payment - performance shares
Transfer to share capital
Issued
capital
$
Retained
Reserves
$
profits
$
Total equity
$
8,946,465
4,997
(8,883,431)
68,031
-
-
-
-
-
-
(1,170,745)
-
(1,170,745)
-
(1,170,745)
(1,170,745)
3,262,901
-
-
137,500
-
51,263
1,017,500
(137,500)
-
-
-
-
3,262,901
51,263
1,017,500
-
Balance at 30 June 2017
12,346,866
936,260
(10,054,176)
3,228,950
Consolidated
Balance at 1 July 2017
Issued
capital
$
Retained
Reserves
$
profits
$
Total equity
$
12,346,866
936,260
(10,054,176)
3,228,950
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
-
-
-
-
-
-
(3,540,391)
-
(3,540,391)
-
(3,540,391)
(3,540,391)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 12)
Share-based payments (note 25)
Transfer to share capital on conversion of performance rights
5,252,736
-
742,500
-
1,563,845
(742,500)
-
-
-
5,252,736
1,563,845
-
Balance at 30 June 2018
18,342,102
1,757,605
(13,594,567)
6,505,140
The above statement of changes in equity should be read in conjunction with the accompanying notes
23
Lake Resources – Annual Report 2018 23
Lake Resources NL
Statement of cash flows
Lake Resources NL
30 June 2018
Statement of cash flows
For the year ended 30 June 2018
Cash flows from operating activities
Payments to suppliers
Note
Consolidated
2018
$
2017
$
(1,480,128)
(646,044)
Net cash used in operating activities
23
(1,480,128)
(646,044)
Cash flows from investing activities
Net of cash acquired on acquisition of subsidiaries
Payments for property, plant and equipment
Payments for exploration and evaluation
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares, net of transaction costs
Proceeds from borrowings
Repayment of borrowings
Payment of interest on borrowings
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
-
(2,000)
(3,672,537)
2,535
-
(478,639)
(3,674,537)
(476,104)
12
11
11
4,044,239
1,665,000
(175,000)
(31,932)
2,600,763
-
(156,000)
-
5,502,307
2,444,763
347,642
1,396,825
1,322,615
74,210
Cash and cash equivalents at the end of the financial year
6
1,744,467
1,396,825
The above statement of cash flows should be read in conjunction with the accompanying notes
24
24 Lake Resources – Annual Report 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
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.
Going concern
The financial report has been prepared on a going concern basis, which assumes continuity of normal business activities
and the realisation of assets and the settlement of liabilities in the ordinary course of business. The consolidated entity has
incurred net losses after tax of $3,540,391 (2017: $1,170,745) and net cash outflows from operating and investing activities
of $5,154,665 (2017: $1,122,148) for the year ended 30 June 2018. For the reasons described below, conditions exist that
indicate there is a material uncertainty as to the consolidated entity’s ability to continue as a going concern.
The directors have prepared cash flow forecasts which indicate that the current cash resources will not be sufficient to fund
planned exploration expenditure, other principal activities and working capital requirements without the sale of non-core
assets and/or capital raising to fund its current operations through to 30 September 2019. The consolidated entity is
reviewing various capital raising opportunities to meet its capital requirements.
Based on the cash flow forecasts and achieving all or some funding, the directors are confident that the consolidated entity
will be able to continue as a going concern. The directors are confident in the consolidated entity’s ability to fund its
activities as mentioned based on past success in raising capital such as the capital raising completed in March 2018.
Should the consolidated entity be unable to raise capital or realise the sale of non-core assets, there is a material
uncertainty whether the consolidated entity will be able to continue as a going concern and therefore, whether it will be able
to realise its assets and discharge its liabilities in the normal course of business. The financial report does not include
adjustments relating to the recoverability and classification of recorded asset amounts, or to the amounts and classification
of liabilities that might be necessary should the consolidated entity not continue as a going concern.
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.
Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Lake Resources NL)
and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. A list of subsidiaries is provided in Note 21.
25
Lake Resources – Annual Report 2018 25
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 1. Significant accounting policies (continued)
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the group from the
date on which control is obtained by the group. The consolidation of a subsidiary is discontinued from the date that control
ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are
fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where
necessary to ensure uniformity of the accounting policies adopted by the group.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Lake Resources NL's functional and presentation
currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured
at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive
income, except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that
the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of
comprehensive.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the
instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale
of the asset (ie trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transactions costs, except where the instrument is classified
"at fair value through profit or loss", in which case transaction costs are expensed to profit and loss immediately.
26 Lake Resources – Annual Report 2018
26
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 1. Significant accounting policies (continued)
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised costs using the effective interest rate method, or
cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recogni tion
less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference
between the initial amount and the maturity amount calculated using the effective interest rate method.
The effective interest rate method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and
other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of the
financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future cash
flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or expense item
in profit or loss.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through
the amortisation process and when the financial asset is derecognised.
(ii) Financial liabilities
Non-derivative financial liabilities are subsequently measured at amortised cost. Gains or losses are recognised in profit or
loss through the amortisation process and when the financial liability is derecognised.
Impairment
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a "loss event") having occurred, which has an impact on the estimated future
cash flows of the financial asset(s).
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to
reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of
recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-
off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced directly if
no impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the
company recognises the impairment for such financial assets by taking into account the original terms as if the terms have
not been renegotiated so the loss events that have occurred are duly considered.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated
with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or
expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and
the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed is recognised in the
profit or loss.
27
Lake Resources – Annual Report 2018 27
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 1. Significant accounting policies (continued)
Income tax
The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense
(income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current tax
liabilities/(assets) are measured at the amounts expected to be paid to/(recovered from) the relevant tax authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year
as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to
items that are recognised outside profit or loss.
Deferred tax assets and liabilities are calculated at the rates that are expected to apply to the period when the asset is
realised or the liability is settled and their measurement also reflects the manner in which management expects to recover
or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets
and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it i s
intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
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.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less.
Trade and other receivables
Other receivables are recognised at amortised cost, less any provision for impairment.
28 Lake Resources – Annual Report 2018
28
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 1. Significant accounting policies (continued)
Interest in joint arrangements
Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous
decisions about relevant activities are required.
Separate joint venture entities providing joint venturers with an interest in net assets are classified as a joint venture and
accounted for using the equity method of accounting , whereby the investment is initially recognised at cost and adjusted
thereafter for the post-acquisition change in the Group's share of net assets of the joint venture.
Exploration and development expenditure
Exploration, evaluation and development expenditure incurred are capitalised in respect of each identifiable area of
interest. These costs are only capitalised to the extent that they are expected to be recovered through the successful
development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment
of the existence of economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in
relation to that area of interest.
Costs of site restoration are provided over the life of the project from when exploration commences and are included in the
costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building
structures, waste removal, and rehabilitation of the site in accordance with local laws and regulations and clauses of the
permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on
an undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and
future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within
one year of abandoning the site.
Impairment of assets
At each reporting date, the company assesses whether there is any indication that an set may be impaired. The
assessment will include the consideration of external and internal sources of information. If such an indication exists, an
impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the
asset's fair value less costs to sell and value in use, to the assets carrying amount. Any excess of the asset's carrying
amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued
amount in accordance with another Standard (eg in accordance with the revaluation model in AASB 116: Property, Plant
and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that
other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated 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.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
29
Lake Resources – Annual Report 2018 29
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 1. Significant accounting policies (continued)
Employee benefits
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of
cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlyi ng share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do
not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
30 Lake Resources – Annual Report 2018
30
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 1. Significant accounting policies (continued)
Fair Value of Assets and Liabilities
The company may measure some of its assets and liabilities at fair value on either a recurring or non-recurring basis after
initial recognition, depending in the requirements of the applicable Accounting Standard. Currently though there are no
assets or liabilities measured at fair value.
Fair value is the price the Company would receive to see an asset or would have to pay to transfer a liability in an orderly
(ie unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine
fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuations techniques maximise, to the extent possible, the use of observable market data.
For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the asset
in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
Provisions
Provisions are recognised when the company has a legal or constructive obligation, as a result of past events, for which it
is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting
period.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to
profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated
entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying
amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
31
Lake Resources – Annual Report 2018 31
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 1. Significant accounting policies (continued)
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement
period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all th e
information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Lake Resources NL, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is
not recoverable from the Australian Tax Office.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or
payments to suppliers.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts
from customers or payments to suppliers.
Equity Settled Compensation
The company makes equity-settled share-based payments to directors, employees and other parties for services provided.
The fair value of the equity is measured at grant date and recognised as an asset or as an expense over the vesting
period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
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 2018.
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.
32 Lake Resources – Annual Report 2018
32
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 1. Significant accounting policies (continued)
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall
be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets
are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on
initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive
income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the
entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge
accounting requirements are intended to more closely align the accounting treatment with the risk management activities of
the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance.
Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased
significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional
new disclosures. The consolidated entity adopted this standard from 1 July 2018 and its adoption will not have a material
impact on the consolidated entity.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a
single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or
implied) to be identified, together with the separate performance obligations within the contract; determine the transaction
price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate
performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation
approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied.
Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance
obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is
satisfied when the service has been provided, typically for promises to transfer services to customers. For performance
obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue
should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's
statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship
between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required
to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to
those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated
entity adopted this standard from 1 January 2018 and its adoption will not have a material impact on the consolidated
entity.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions,
a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the
unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit
or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or
dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the
leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance
costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when
compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit
or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into
both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting,
the standard does not substantially change how a lessor accounts for leases. The consolidated entity will adopt this
standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the consolidated entity.
33
Lake Resources – Annual Report 2018 33
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 2. 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.
Going concern
The most critical accounting estimate/judgment used in preparing the financial statements is the going concern basis - see
note 1 Basis of Preparation above.
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.
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the consolidated entity will commence commercial
production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources.
Key judgements are applied in considering costs to be capitalised which includes determining expenditures directly related
to these activities and allocating overheads between those that are expensed and capitalised. In addition, costs are only
capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest.
Factors that could impact the future commercial production at the mine include the level of reserves and resources, future
technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the
extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in which
this determination is made.
Note 3. Operating segments
Segment Information
The company currently operates entirely in the mineral exploration industry with interests in Argentina (previously Pakistan)
and corporate operations in Australia. Accordingly, the information provided to the Board of Directors is prepared using the
same measures used in preparing the financial statements.
Geographical information
Argentina
Pakistan
Sales to external customers
Geographical non-current
assets
2018
$
2017
$
2018
$
2017
$
-
-
-
-
-
-
5,674,457
35
1,887,866
35
5,674,492
1,887,901
34 Lake Resources – Annual Report 2018
34
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 4. Expenses
Loss before income tax includes the following specific expenses:
Net foreign exchange loss
Net foreign exchange loss
Superannuation expense
Defined contribution superannuation expense
Note 5. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 27.5%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
Future income tax benefit of tax losses not brought to account
Tax expense in relation VAT in Argentina - amount only recoverable when sales generated
Income tax expense
Consolidated
2018
$
2017
$
5,932
2,847
24,366
13,077
Consolidated
2018
$
2017
$
(2,791,985)
(1,170,745)
(767,796)
(321,955)
361,425
128,563
(406,371)
406,371
748,406
(193,392)
193,392
-
748,406
-
The Company has unrecouped, unconfirmed carry forward tax losses of approximately $11.7 million (2017: $10.3 million).
A deferred income tax asset arising from carry forward tax losses will only be recognised to the extent that:
(a) it is probable that the Company will derive future assessable income of a nature and of an amount sufficient to enable
the benefits from the deductions for the losses to be realised;
(b) the Company continues to comply with the conditions for deductibility imposed by the law; and
(c) no changes in tax legislation adversely affect the Company in realising the benefit from the losses.
Note 6. Current assets - cash and cash equivalents
Cash at bank and on hand
Note 7. Current assets - other current assets
Prepayments
Consolidated
2018
$
2017
$
1,744,467
1,396,825
Consolidated
2018
$
2017
$
48,873
13,292
35
Lake Resources – Annual Report 2018 35
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 8. Non-current assets - investments accounted for using the equity method
Lake Resources NL (the parent) holds a 27.5% interest through its subsidiary in Chagai Resources (Pvt) Ltd, a joint
arrangement between the group and two other parties. The principal place of business is Pakistan and the primary purpose
is mineral exploration. The exploration licences held have a three year term to June 2018 and are renewable for 2 further
periods of 3 years to June 2024. The Group's interest is equity accounted and the Group's investment represents its share
of net assets.
Equity accounted investment
Consolidated
2018
$
2017
$
35
35
The initial financial contribution to the entity will be a minimum of US$1.9 million by the major party, Colt Resources Middl e
East, to be expended on exploration of the licences by 2018. Through further contributions the major party's interest in the
project can increase, with Lake's ultimate interest settling at 15%. If the initial contribution is not made and/or Chagai
Resources fails to expend the contribution on exploration of the licence areas within
3 years, then the Group will resume 100% ownership of Chagai Resources.
During the year no significant exploration activities were undertaken.
Note 9. Non-current assets - exploration and evaluation
Exploration and evaluation assets - at cost
Consolidated
2018
$
2017
$
4,901,193
1,887,866
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2016
Additions - direct exploration costs
Additions through business combinations
Balance at 30 June 2017
Additions - direct exploration costs
Balance at 30 June 2018
Exploration
and
evaluation
assets
$
-
538,639
1,349,227
1,887,866
3,013,327
4,901,193
Exploration and evaluation costs are carried forward in the statement of financial position as detailed in accounting policy
note 1 Recoverability of the carrying amount of exploration assets is dependent on the successful exploration of minerals.
36 Lake Resources – Annual Report 2018
36
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 10. Current liabilities - trade and other payables
Sundry creditors and accrued expenses
Refer to note 16 for further information on financial instruments.
Note 11. Current liabilities - borrowings
Loan Notes
Consolidated
2018
$
2017
$
224,601
69,102
Consolidated
2018
$
2017
$
-
-
During the year, the Company announced the Company had raised $1.665 million the issue of 1,665,000 unsecured notes
(Notes) to sophisticated and professional investors. The Notes issued were debt securities and were not convertible into
ordinary shares.
A summary of the key terms of the Notes are set out below:
Denomination: The Notes were issued fully paid with a face value of $1.00 per Note.
Maturity Date: 23 March 2018 (Maturity Date).
Interest Rate: The Notes attract interest at 5.0% per annum, payable at maturity (or any earlier
redemption).
Status and Ranking: The Notes rank equally with all other direct, unsubordinated and unsecured obligations of
the Issuer.
In addition, subject to compliance with the Corporations Act , ASX Listing Rules and relevant regulations, during the 30
days prior to the Maturity Date (Election Period), a Holder may elect to apply for ten (10) options for every Note held
(Application), on the basis that such Notes are held through the Election Period and up until immediately prior to the
Maturity Date.
During the year, the Notes were repaid through a combination of a repayment in cash, offset against the issue of shares in
the Company's March 2018 share placement, and offset against the payment of the exercise price for $0.05 options as
outlined below:
Notes repaid through cash $ 175,000
Notes offset against issue of shares $ 240,000
Notes offset against exercise of options $ 1,250,000
Note 12. Equity - issued capital
Ordinary shares - fully paid
305,683,867 227,493,026 18,342,102 12,346,866
Consolidated
2018
Shares
2017
Shares
2018
$
2017
$
37
Lake Resources – Annual Report 2018 37
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 12. Equity - issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
$
Balance
Capital raising
Issue of shares - vendors of Lith NRG Pty Ltd
Issue of shares - loan providers of Lith NRG Pty Ltd
Capital raising
Capital raising
Issue of shares - share-based payment
Conversion of performance shares
Capital raising costs
1 July 2016
14 November 2016
14 November 2016
14 November 2016
21 December 2016
27 February 2017
27 February 2017
5 June 2017
Balance
Exercise of options
Conversion of performance shares
Issue of shares - placement
Issue of shares - conversion of notes
Exercise of options - cash payment
Conversion of performance shares
Exercise of options
Capital raising costs - cash
Capital raising costs - share based payments
30 June 2017
7 December 2017
8 December 2017
27 March 2018
27 March 2018
4 April 2018
24 April 2018
24 April 2018
95,876,034
25,000,000
50,000,000
2,000,000
16,116,992
24,000,000
2,000,000
12,500,000
-
8,946,465
500,000
550,000
40,000
1,047,604
1,200,000
110,000
137,500
(184,703)
227,493,026 12,346,866
15,000
330,000
3,916,500
583,500
1,250,000
412,500
60,375
(323,068)
(249,571)
150,000
6,000,000
29,011,110
4,322,225
25,000,000
12,500,000
1,207,506
-
-
Balance
30 June 2018
305,683,867 18,342,102
Performance rights (note that the valuation for the performance rights are recognised in performance rights reserve)
Details
Date
Performance
rights
$
Balance
Issue of performance rights - vendors of LithNRG
Issue of performance rights - LTI
Lapsed - Tranche 1 (issued to vendor of LithNRG)
Converted to share capital
1 July 2016
14 November 2016
14 November 2016
5 June 2017
5 June 2017
-
50,000,000
8,500,000
(25,000,000)
(12,500,000)
Balance
Conversion to share capital
Conversion to share capital
30 June 2017
8 December 2017
24 April 2018
21,000,000
(6,000,000)
(12,500,000)
-
550,000
467,500
-
(137,500)
880,000
(330,000)
(412,500)
Balance
30 June 2018
2,500,000
137,500
38 Lake Resources – Annual Report 2018
38
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 12. Equity - issued capital (continued)
Options (note that the valuation for the options are recognised in option reserve)
Details
Date
Options
$
Balance
Issued in relation to acquisition of LithNRG
Issued to brokers in relation to services for capital
raising
Issued to brokers in relation to services for capital
raising
Issued in relation to shares issued on capital raising
Lapsed of Class B options (relating to acquisition of
LithNRG)
1 July 2016
14 November 2016
-
50,000,000
-
1,401
21 December 2016
1,539,250
8,634
27 February 2017
27 February 2017
7,350,000
12,000,000
41,228
-
(12,500,000)
-
Balance
Issued to directors
Exercise of options
Exercise of options
Exercise of options
Issued to brokers in relation to services for capital
raising
Issued to shareholders in relation to capital raising
Options lapsed
30 June 2017
30 November 2017
7 December 2017
4 April 2018
24 April 2018
58,389,250
9,500,000
(150,000)
(25,000,000)
(1,207,506)
51,263
1,314,274
-
-
-
9 May 2018
15 June 2018
18 June 2018
9,500,000
33,316,667
(1,539,250)
249,571
-
-
Balance
30 June 2018
82,809,161
1,615,108
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
Exploration companies such as Lake Resources NL are funded primarily by share capital. The Company’s capital
comprises share capital supported by financial assets and financial liabilities.
Management controls the capital of the Company to ensure it can fund its operations and continue as a going concern.
Capital management policy is to fund exploration activities by way of equity. No dividend will be paid whilst the Company is
in its exploration stage. There are no externally imposed capital requirements.
Note 13. Equity - reserves
Capital profits reserve
Options reserve
Performance rights reserve
Consolidated
2018
$
2017
$
4,997
1,615,108
137,500
4,997
51,263
880,000
1,757,605
936,260
39
Lake Resources – Annual Report 2018 39
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 13. Equity - reserves (continued)
Capital profits reserve
The capital profits reserve records non-taxable profits on sale of investments.
Option reserve
The option reserve is to recognise the fair value of options issued for share based payment to employees and service
providers in relation to the supply of goods or services.
Performance rights reserve
The performance rights reserve is to recognise the fair value of performance rights issued to employees and vendors in
relation to the supply of goods or services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2016
Share-based payments - issue of options
Share-based payments - issued to vendors of Lith NRG
Share-based payments - issued as long term incentives
Transferred to share capital conversion
Balance at 30 June 2017
Share-based payments - issue of options to directors
Share-based payments - issued to brokers in relation to
capital raising
Transferred to share capital on conversion
Capital profit
reserve
$
Option
reserve
$
Performance
rights reserve
$
Total
$
4,997
-
-
-
-
-
51,263
-
-
-
-
-
550,000
467,500
(137,500)
4,997
51,263
550,000
467,500
(137,500)
4,997
-
51,263
1,314,274
880,000
-
936,260
1,314,274
-
-
249,571
-
-
(742,500)
249,571
(742,500)
Balance at 30 June 2018
4,997
1,615,108
137,500
1,757,605
Note 14. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Accumulated losses at the end of the financial year
Note 15. Equity - dividends
Consolidated
2018
$
2017
$
(10,054,176)
(3,540,391)
(8,883,431)
(1,170,745)
(13,594,567)
(10,054,176)
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 16. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price
risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is
exposed.
40 Lake Resources – Annual Report 2018
40
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 16. Financial instruments (continued)
Risk management is carried out by the Board of Directors ('the Board'). These policies include identification and analysis of
the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits.
Market risk
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.
In order to protect against adverse exchange rate movements, the consolidated entity has set up a foreign bank account
(USD) which is used to fund its exploration activities in Argentina.
The carrying amount of the consolidated entity's foreign currency denominated financial assets at the reporting date were
as follows:
Consolidated
US dollars
Assets
2018
$
2017
$
Liabilities
2018
$
2017
$
186,634
329,121
-
-
A sensitivity analysis of the movement in exchange rate (based on the closing balance of the asset) is presented below
Consolidated - 2018
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
USD assets
1%
1,866
1,866
1%
(1,866)
(1,866)
Consolidated - 2017
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
USD assets
1%
3,291
3,291
(1%)
(3,291)
(3,291)
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
Currently the consolidated entity does not have any external borrowings subject to variable rates and therefore has minimal
interest rate risk.
Credit risk
The consolidated entity deemed its credit risk to be minimal as its financial assets are mainly cash held at financial
institutions.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
41
Lake Resources – Annual Report 2018 41
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 16. Financial instruments (continued)
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
The consolidated entity only deposit its cash and cash equivalent with the major banks in Australia.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as
remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of
financial position.
Consolidated - 2018
Non-derivatives
Non-interest bearing
Cash and cash equivalent
Other payables
Total non-derivatives
Consolidated - 2017
Non-derivatives
Non-interest bearing
Cash and cash equivalent
Trade payables
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
1,744,467
(224,601)
1,519,866
-
-
-
-
-
-
-
-
-
1,744,467
(224,601)
1,519,866
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
1,392,285
(69,102)
1,323,183
-
-
-
-
-
-
-
-
-
1,392,285
(69,102)
1,323,183
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 17. Key management personnel disclosures
Directors
The following persons were directors of Lake Resources NL during the financial year:
S. Crow (Non-Executive Chairman)
S. Promnitz (Managing Director)
N. Lindsay (appointed 18 July 2017)
P.J. Gilchrist (resigned 18 July 2017)
42 Lake Resources – Annual Report 2018
42
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 17. Key management personnel disclosures (continued)
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 18. Remuneration of auditors
Consolidated
2018
$
2017
$
375,486
24,366
1,314,274
172,020
13,077
467,500
1,714,126
652,597
During the financial year the following fees were paid or payable for services provided by Stanley & Williamson, the auditor
of the company:
Audit services - Stanley & Williamson (2017: Nexia Brisbane Audit Pty Ltd)
Audit or review of the financial statements
Note 19. Related party transactions
Parent entity
Lake Resources NL is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 21.
Consolidated
2018
$
2017
$
22,000
23,000
Key management personnel
Disclosures relating to key management personnel are set out in note 17 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Payment for goods and services:
Company secretarial and accounting services paid to Franks & Associates Pty Ltd, a
company associated with Andrew Bursill (Company Secretary)
Consultancy services relating to capital raising paid to Salaris Consulting Pty Ltd, a company
associated with Stuart Crow (Director)
Other transactions:
Repayment of borrowings to the vendors of Lith NRG Pty Ltd
Consolidated
2018
$
2017
$
123,588
81,890
27,645
28,160
-
258,000
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
43
Lake Resources – Annual Report 2018 43
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 19. Related party transactions (continued)
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 20. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Capital profits reserve
Options reserve
Performance rights reserve
Accumulated losses
Total equity
Parent
2018
$
2017
$
(3,206,124)
(1,170,746)
(3,206,124)
(1,170,746)
Parent
2018
$
2017
$
1,678,519
1,405,610
7,064,006
3,298,052
224,599
69,102
224,599
69,102
18,342,102 12,346,866
4,997
51,263
880,000
(10,054,176)
4,997
1,615,108
137,500
(13,260,300)
6,839,407
3,228,950
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2018 and 30 June 2017
Contingent liabilities
The parent entity had no contingent liability as at 30 June 2018 and 30 June 2017
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2018 and 30 June 2017.
44 Lake Resources – Annual Report 2018
44
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 20. Parent entity information (continued)
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1,
except for the following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 21. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1:
Name
Lake Mining Pakistan (Pvt) Limited *
LithNRG Pty Ltd
Minerales Australes SA **
Morena del Valle Minerals SA **
Principal place of business /
Country of incorporation
Pakistan
Australia
Argentina
Argentina
Ownership interest
2017
2018
%
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
*
**
The subsidiary was incorporated on 4 December 2014. The subsidiary has share capital consisting solely of ordinary
shares which are held directly by the group. The proportion of ownership interests held equals the voting rights held
by the group. The subsidiary's principal place of business is also its country of incorporation.
Interest is held through LithNRG Pty Ltd
45
Lake Resources – Annual Report 2018 45
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 22. Events after the reporting period
Lake exercised an option agreement in September 2018 with Petra Energy SA over leases and applications over almost
72,000 hectares of outcropping pegmatites with lithium potential as spodumene within Catamarca Province, in NW
Argentina. A single tranche of 19 million ordinary LKE shares were issued to the vendors in late September 2018 to
acquire 100% of the local company and the project, of which 50% of the shares will be escrowed for 6 months. The
transaction was announced on 1 March 2017 and the first tranche of 1,000,000 LKE shares were issued.
Lake and Lilac Solutions, Inc. (“Lilac”) announced in September 2018 that the companies have entered into a partnership
to leverage Lilac’s proprietary ion exchange technology (the “Lilac Technology”) for the Kachi Lithium Brine with the goal of
establishing a rapid, robust, and low-cost process for producing lithium at Kachi. Lilac has initiated engineering work to
confirm low operating costs for direct production of lithium carbonate or lithium chloride at Kachi using the Lilac
Technology. Lilac deploys unique ion exchange media and related processes to extract lithium from a wide variety of brine
resources with high recoveries, minimal costs, and rapid processing times. Benchtop testing of other brines has indicated
recoveries over 95% in less than 2 hours versus 9-24 months in evaporation ponds. This approach eliminates the need for
evaporation ponds, which are expensive to build, slow to ramp up, and vulnerable to weather fluctuations.
Lake’s $0.10 listed LKEO options (expiry 27 August 2018) were almost all converted to LKE ordinary shares in
August/September 2018. The Company issued (in tranches) 17,915,783 new Ordinary Shares in LKE at $0.10 per share
following the conversion of LKEO options, with an exercise price of $0.10. Approximately $0.8 million were converted by
the holders and a further $1 million was subscribed by a New York based investor, Long State Investments.
Lake entered into a corporate advisory agreement with Long State Investments to assist in introducing Lake to Asian
based investors, potential offtakers and strategic investors. The Company further agreed to an equity participation
arrangement of $575,000 per quarter with Long State. The potential funding receivable by the Company under this
arrangement, which is based upon the performance of its Shares, has no upper limit. Under the arrangement, the
Company's participation will be determined and payable in 2 settlement tranches payable quarterly as measured against a
Benchmark Price of $0.115 per share. If the measured share price exceeds the Benchmark Price, for that quarter, the
Company will receive quarterly settlement on a pro rata basis, and vice versa should the measured share price be below
the Benchmark Price
On 31 July 2018, the Company entered into a Controlled Placement Agreement (CPA) with Acuity Capital. The CPA
provides LKE with up to $4.5 million of standby equity capital over the coming 29 month period. Importantly, LKE retains
full control of all aspects the placement process: having sole discretion as to whether or not to utilise the CPA, the quantum
of issued shares, the minimum issue price of shares and the timing of each placement tranche (if any). There are no
requirements on LKE to utilise the CPA and LKE may terminate the CPA at any time, without cost or penalty. Acuity Capital
and the CPA do not place any restrictions at any time on LKE raising capital through other methods. If LKE does decide to
utilise the CPA, LKE is able to set a floor price (at its sole discretion) and the final issue price will be calculated as the
greater of that floor price set by LKE and a 10% discount to a Volume Weighted Average Price (VWAP) over a period of
LKE's choosing (again at the sole discretion of LKE). As collateral for the CPA, LKE has agreed to place 15m shares from
its LR7.1 capacity, at nil consideration to Acuity Capital (Collateral Shares) but may, at any time, cancel the CPA and buy
back the Collateral Shares for no consideration (subject to shareholder approval).
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
46 Lake Resources – Annual Report 2018
46
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 23. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(3,540,391)
(1,170,745)
Consolidated
2018
$
2017
$
Adjustments for:
Depreciation and amortisation
Share-based payments
Tax expense for VAT not recoverable
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Increase in other current assets
Increase in trade and other payables
Net cash used in operating activities
Note 24. Earnings per share
135
1,314,274
748,406
-
467,500
-
(6,649)
(35,580)
39,677
13,905
(12,222)
55,518
(1,480,128)
(646,044)
Consolidated
2018
$
2017
$
Loss after income tax attributable to the owners of Lake Resources NL
(3,540,391)
(1,170,745)
Weighted average number of ordinary shares used in calculating basic earnings per share
248,295,795 162,386,890
Weighted average number of ordinary shares used in calculating diluted earnings per share 248,295,795 162,386,890
Number
Number
Basic earnings per share
Diluted earnings per share
Note 25. Share-based payments
Cents
Cents
(1.43)
(1.43)
(0.72)
(0.72)
On 30 November 2017, the Company granted 9,500,000 options to the directors of the company following the approval
from shareholders. These options are exercisable at $0.28 each, and expire on 31 December 2020. A total share-based
payment of $1,314,274 has been recognised as an expense in the profit or loss.
On 9 May 2018, the Company granted 9,500,000 options to brokers as part of the capital raising services. These options
are exercisable at $0.20 each and expire on 15 December 2018. A total share-based payments of $249,571 has been
recognised as part of the capital raising costs within the share capital / equity.
47
Lake Resources – Annual Report 2018 47
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 25. Share-based payments (continued)
Set out below are summaries of options granted under share-based payments arrangement:
2018
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
14/11/2016
14/11/2016
14/11/2016
21/12/2016
27/02/2017
30/11/2017
09/05/2018
04/04/2018
30/11/2018
21/10/2019
14/07/2018
27/08/2018
31/12/2020
15/12/2018
-
$0.05 25,000,000
-
6,250,000
$0.05
-
6,250,000
$0.05
-
1,539,250
$0.10
-
7,350,000
$0.10
9,500,000
-
$0.28
9,500,000
-
$0.20
46,389,250 19,000,000
-
(1,207,506)
-
-
-
-
-
(1,207,506)
(25,000,000)
-
-
-
-
-
-
-
5,042,494
6,250,000
1,539,250
7,350,000
9,500,000
9,500,000
(25,000,000) 39,181,744
Weighted average exercise price
$0.06
$0.24
$0.05
$0.05
$0.15
All options are vested and exercisable at the end of the year.
2017
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
14/11/2016
14/11/2016
14/11/2016
14/11/2016
21/12/2016
27/02/2017
04/04/2018
14/05/2018
30/11/2018
21/10/2019
14/07/2018
27/08/2018
$0.05
$0.05
$0.05
$0.05
$0.10
$0.10
- 25,000,000
- 12,500,000
6,250,000
-
6,250,000
-
1,539,250
-
-
7,350,000
- 58,889,250
-
-
-
-
-
-
-
(12,500,000)
-
-
-
-
- 25,000,000
-
6,250,000
6,250,000
1,539,250
7,350,000
(12,500,000) 46,389,250
Weighted average exercise price
$0.00
$0.06
$0.00
$0.05
$0.06
*
The option vest on the condition the exploration for 50% of Jujuy is approved. The option expires 18 months after the
condition has been met.
The weighted average exercise price during the financial year was $0.06.
The weighted average remaining contractual life of options outstanding at the end of the financial year was 1.0 years
(2017: 1.2 years)
Set out below are summaries of performance rights:
2018
Grant date
Expiry date
14/11/2016
14/11/2016
04/10/2021
14/11/2021
Balance at
the start of
the year
Granted
12,500,000
8,500,000
21,000,000
Converted to
shares
-
-
-
(12,500,000)
(6,000,000)
(18,500,000)
Expired/
forfeited/
other
Balance at
the end of
the year
-
-
-
-
2,500,000
2,500,000
None of the outstanding performance rights are exercisable / vested. There were no performance rights issued during the
year.
48 Lake Resources – Annual Report 2018
48
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Notes to the financial statements
30 June 2018
Note 25. Share-based payments (continued)
2017
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
14/11/2016
14/11/2016
14/11/2016
14/11/2016
06/04/2017
04/10/2021
04/10/2021
14/11/2021
$0.00
$0.00
$0.00
$0.00
- 25,000,000
- 12,500,000
- 12,500,000
-
8,500,000
- 58,500,000
-
(12,500,000)
-
-
(12,500,000)
-
(25,000,000)
-
-
- 12,500,000
8,500,000
-
(25,000,000) 21,000,000
The weighted average remaining contractual life of performance rights outstanding at the end of the financial year was 4.3
years.
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
30/11/2017
09/05/2018
31/12/2020
15/12/2018
$0.19
$0.11
$0.28
$0.20
136.00%
136.00%
-
-
2.15%
2.15%
$0.138
$0.026
49
Lake Resources – Annual Report 2018 49
Lake Resources NLNotes to the financial statements30 June 2018
Lake Resources NL
Directors’ declaration
Lake Resources NL
30 June 2018
Directors' declaration
30 June 2018
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as
at 30 June 2018 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Steve Promnitz
Director
28 September 2018
50 Lake Resources – Annual Report 2018
50
Lake Resources NL
Independent auditor’s report to the members of Lake Resources NL
30 June 2018
Independent Auditor’s Report
To the Members of Lake Resources N.L.
Report on the Audit of the Financial Report
Opinion
We have audited the accompanying financial report of Lake Resources N.L. (the Company) and its
controlled entities (the Consolidated Entity), which comprises the consolidated statement of financial
position as at 30 June 2018, the consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies and the directors’ declaration of the Company.
In our opinion, the accompanying financial report of the Consolidated Entity is in accordance with the
Corporations Act 2001 including:
i)
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2018
and of its financial performance for the year ended on that date; 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 Consolidated Entity in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We 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.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report which indicates that the Consolidated Entity has
incurred net losses after tax of $3,540,391 (2017: $1,170,745) and net cash outflows from operating
and investing activities of $5,177,658 (2017: $1,122,148) for the year ended 30 June 2018. These
conditions, along with other matters set forth in Note 1, indicate that a material uncertainty exists that
may cast significant doubt on the Consolidated Entity’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
In concluding there is a material uncertainty related to going concern we evaluated the extent of the
uncertainty regarding events or conditions casting significant doubt in the Consolidated Entity’s
assessment of going concern. This included:
49
Lake Resources – Annual Report 2018 51
Lake Resources NL
Independent auditor’s report to the members of Lake Resources NL
30 June 2018
analysing cash flow forecasts by evaluating the underlying data used to generate the
projections and assessing the planned level of cash outflows and inflows Consolidated
Entity’s past results, intentions and our understanding of business, industry and economic
conditions of the Consolidated Entity;
reviewing directors’ minutes and relevant correspondence with the Consolidated Entity’s
advisors to understand the Consolidated Entity’s ability to raise additional shareholder funds;
evaluating the Consolidated Entity’s going concern disclosure in the financial report and
comparing it to our understanding of the matter, the events and conditions incorporated into
the cash flow projection assessment, the Consolidated Entity’s plans to address those events
and the Accounting Standard requirements.
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 and why it was considered
to be a matter of most significance in the
audit
How the key audit matter was addressed in
the audit
Exploration and evaluation assets
As at 30 June 2018, the Consolidated Entity has
capitalised $4,901,193 of exploration and
evaluation expenditure as disclosed in Note 9.
Our procedures included, but were not limited
to:
Significant judgment is applied in determining
the treatment of exploration and evaluation
expense including:
whether the conditions for capitalisation are
satisfied;
which elements of exploration and
evaluation expenditures qualify for
recognition; and
whether the facts and circumstances
indicate that the exploration and
expenditure assets should be tested for
impairment.
As the carrying value of exploration and
evaluation assets represents a significant asset
of the Consolidated Entity, we considered it
necessary to assess whether facts and
circumstances exist to suggest that the carrying
amount of this asset may exceed its recoverable
amount.
obtaining a schedule of the areas of interest
held by the Consolidated Entity and
assessing whether the rights to tenure of
those areas of interest remained current at
balance date;
holding discussions with management as to
the status of ongoing exploration
programmes in the respective areas of
interest;
assessing whether any such areas of
interest reached a stage where a
reasonable assessment of recoverable
reserves existed; and
assessing whether any factors or
circumstances existed to suggest
impairment testing was required.
We also asses the appropriateness of the
disclosures included in Note 9 to the financial
statements.
50
52 Lake Resources – Annual Report 2018
Lake Resources NL
Independent auditor’s report to the members of Lake Resources NL
30 June 2018
Other information
Other information comprises financial and non-financial information included in the Consolidated
Entity’s annual report for the year ended 30 June 2018 which is provided in addition to the financial
report and the auditor’s report. The directors are responsible for the other information.
Our opinion on the financial report does not cover the other information and accordingly we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report.
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 there is a material misstatement of this other
information, we are required to report that fact and based on the other information that we obtained
prior to the date of this Auditor’s Report, we have nothing to report.
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 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
Consolidated Entity to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Consolidated Entity or 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Consolidated Entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
51
Lake Resources – Annual Report 2018 53
Lake Resources NL
Independent auditor’s report to the members of Lake Resources NL
30 June 2018
Conclude on the appropriateness of the management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Consolidated Entity’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Consolidated Entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Consolidated Entity to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of the
Consolidated Entity audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30
June 2018.
In our opinion the Remuneration Report of Lake Resources N.L for the year ended 30 June 2018
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.
Stanley & Williamson
Kamal Thakkar
Partner
Sydney
28 September 2018
52
54 Lake Resources – Annual Report 2018
Lake Resources NL
Shareholder information
Lake Resources NL
30 June 2018
Shareholder information
30 June 2018
The shareholder information set out below was applicable as at 19 September 2018.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Listed
Options
Exercise
price
$0.20,
Expiry
15/12/2018
Unlisted
Class C
Options
Exercise
price $0.05,
Expiry
30/11/2018
Unlisted
Class D
Options
Exercise
price $0.05,
Expiry
21/10/2019
Unlisted
Options
Exercise
price
$0.28,
Expiry
31/12/202
0
Perf.
Rights –
LTI Expiry
14/11/2021
Number of holders
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Ordinary
shares
45
300
381
991
335
-
1
-
50
67
2,052
118
Holding less than a marketable
parcel
373
8
1
-
-
1
11
13
1
1
-
-
1
11
13
1
-
-
-
-
3
3
-
-
-
-
-
2
2
-
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
MS JUSTINE MICHEL (LAMBRECHT INVESTMENT A/C)
ACUITY CAPITAL INESTMENT MANAGEMENT PTY LTD
MR STEPHEN PROMNITZ
202 LIMITED
OUTBACK FORMWORK PTY LTD (WILLATON SUPER FUND A/C)
WILLATON PROPERTIES PTY LTD
RAYMOND JAMES (JAMES SUPERANNUATION FUND)
FLUID INVESTMENTS PTY LTD
M & E EARTHMOVING PTY LTD
KEMKAY PTY LTD
MR ADAM FURST
MS AINSLEY RUTH WILLIAMS
BUSHFLY AIR CHARTER PTY LTD (JOHNSTON SUPER FUND A/C)
AJMVM PTY LTD
COVE STREET PTY LTD (THE COVE STREET A/C)
MR GEOFFREY STUART CROW
BENSONS OF BRISBANE PTY LTD (BENSONS JEWELLERY S/F A/C)
CITICORP NOMINEES PTY LIMITED
MR ANDREW STEPHEN WILLIAM BROWN & MR IAIN RAYMOND BROWN
MRS ELIZABETH MARGARET GILCHRIST
Ordinary shares
% of total
shares
issued
Number held
21,284,326
15,000,000
14,008,124
13,190,758
9,854,686
9,658,548
8,333,333
6,474,999
5,263,158
5,122,560
5,057,165
4,783,333
4,357,445
4,005,807
3,768,339
3,500,000
3,432,224
3,419,280
3,252,117
3,090,730
6.96
4.91
4.58
4.32
3.22
3.16
2.73
2.12
1.72
1.68
1.65
1.56
1.43
1.31
1.23
1.14
1.12
1.12
1.06
1.01
146,856,932
48.03
55
Lake Resources – Annual Report 2018 55
Lake Resources NL
Shareholder information
Lake Resources NL
30 June 2018
Schedule of tenements
30 June 2018
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
LKEOA Listed
Options
Number held
LKEOA Listed
Options
% of total
Listed
Options
issued
MELSHARE NOMINEES PTY LTD
LTL CAPITAL PTY LTD
WILLATON PROPERTIES PTY LTD
MR KERRY WILLIAM JOHN HARRIS
LAMBRECHT INVESTMENT
CS THIRD NOMINEES PTY LIMITED (HSBC CUST NOM AU LTD 13 A/C)
CHALLMAN INVESTMENTS PTYLTD CHALLMAN INVESTMENTS PTYLTD
MR ADAM FURST
JAMES SUPERANNUATION FUND
RAYMOND JAMES (JAMES SUPERANNUATION FUND)
AJMVM PTY LTD
MR RICHARD ARTHUR LOCKWOOD
FLUID INVESTMENTS PTY LTD
WHITE SWAN NOMINEES PTY LTD
MYOORA PTY LTD
MR GEOFFREY STUART CROW
MS JUSTINE MICHEL (LAMBRECHT INVESTMENT A/C)
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
OODACHI PTY LTD (P & M KERR FAMILY A/C)
QUEENSLAND M M PTY LTD (SUPERANNUATION A/C)
HARTNELL NOMINEES PTY LTD (PLACEMENT A/C)
BENSONS OF BRISBANE PTY LTD (BENSONS JEWELLERY S/F A/C)
CLELAND PROJECTS PTY LTD
MR BENJAMIN SKUBRIS
MRS NATALIE ROBERTS SKUBRIS
MR MARK JOHN BAHEN & MRS MARGARET PATRICIA BAHEN (SUPER ACCOUNT)
789 PTY LTD
Unquoted equity securities
$0.05 UNLISTED OPTIONS, EXPIRY 30/11/2018
$0.05 UNLISTED OPTIONS, EXPIRY 21/10/2019
$0.28 UNLISTED OPTIONS, EXPIRY 31/12/2020
PERFORMANCE RIGHTS – LTI (T1)
The following persons hold 20% or more of unquoted equity securities:
5,000,000
4,881,482
3,055,555
2,500,000
2,500,000
1,481,481
1,370,370
1,370,370
1,250,000
1,250,000
1,000,000
740,741
650,000
550,000
500,000
500,000
500,000
444,445
444,444
375,000
370,370
370,370
370,000
342,593
342,593
314,815
296,300
11.68
11.40
7.14
5.84
5.84
3.46
3.20
3.20
2.92
2.92
2.34
1.73
1.52
1.28
1.17
1.17
1.17
1.04
1.04
0.88
0.87
0.87
0.86
0.80
0.80
0.74
0.69
32,770,929
76.57
Number
on issue
5,042,494
6,250,000
9,500,000
2,500,000
Name
Class
Number held
GEOFFREY STUART CROW
STEPHEN PROMNITZ
STEPHEN PROMNITZ
$0.28 UNLISTED OPTIONS, EXPIRY 31/12/2020
$0.28 UNLISTED OPTIONS, EXPIRY 31/12/2020
PERFORMANCE RIGHTS – LTI
3,000,000
5,000,000
2,500,000
56 Lake Resources – Annual Report 2018
56
Lake Resources NL
Shareholder information
Lake Resources NL
30 June 2018
Schedule of tenements
30 June 2018
Substantial holders
Substantial holders in the company are set out below:
LAMBRECHT INVESTMENT TRUST
Ordinary shares
% of total
shares
issued
Number held
21,284,326
6.96
* based on substantial shareholder notices lodged with the ASX and the latest share register holder details.
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities holding voting rights.
57
Lake Resources – Annual Report 2018 57
Lake Resources NL
Schedule of tenements
30 June 2018
SCHEDULE OF TENEMENTS
TOTAL NUMBER TENEMENTS:
TOTAL AREA TENEMENTS:
51
101,790 Ha
79,500 Ha Optioned
REF
TENEMENT NAME
NUMBER
AREA Ha
INTEREST %
PROVINCE
STATUS
OLAROZ - CAUCHARI AREA
Cauchari Bajo I
Cauchari Bajo II
Cauchari Bajo III
Cauchari Bajo V
Cauchari West I
Olaroz Centro II
Olaroz East II
MASA 12
MASA 13
MASA 14
MASA 15
PASO AREA
Paso III
Paso VI
Paso X
MASA 9
MASA 16
MASA 17
MASA 18
MASA 19
MASA 20
MASA 21
MASA 22
MASA 23
2156-D-2016
2157-D-2016
2158-D-2016
2154-D-2016
2160-D-2016
2164-D-2016
2168-D-2016
2234-M-2016
2235-M-2016
2236-M-2016
2237-M-2016
2137-P-2016
2140-P-2016
2144-P-2016
2231-M-2016
2238-M-2016
2239-M-2016
2240-M-2016
2241-M-2016
2242-M-2016
2243-M-2016
2244-M-2016
2245-M-2016
354
354
122
946
1936
268
2072
2901
3000
3000
3000
2787
2208
1833
2978
2114
2891
3000
3000
3000
2815
1460
1540
23 Mining leases
47,579 Ha
KACHI AREA
Kachi Inca
Kachi Inca I
Kachi Inca II
Kachi Inca III
Kachi Inca IV
Kachi Inca V
Kachi Inca VI
Dona Amparo I
Dona Carmen
Debbie I
13-D-2016
16-D-2016
17-D-2016
47-M-2016
46-M-2016
45-M-2016
44-M-2016
22-D-2016
24-D-2016
21-D-2016
1273
2880
2823
3354
186
310
110
3000
873
1501
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
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Jujuy
Granted
Granted
Granted
Granted
Granted
Application
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Application
Application
Catamarca Granted
Catamarca
Application
Catamarca Granted
Catamarca Granted
Catamarca
Application
Catamarca
Application
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
58 Lake Resources – Annual Report 2018
Lake Resources NL
Schedule of tenements
30 June 2018
Divina Victoria I
Daniel Armando
Daniel Armando II
Maria Luz
Maria II
Maria III
Morena 1
Morena 2
Morena 3
Morena 6
Morena 7
Morena 8
Morena 12
Morena 13
Pampa I
Pampa II
Pampa III
Irene
28 Mining leases
51
25-D-2016
23-D-2016
97-M-2016
34-M-2017
14-D-2016
15-D-2016
72-M-2016
73-M-2016
74-M-2016
75-M-2016
76-M-2016
77-M-2016
78-M-2016
79-M-2016
129-S-2013
128-S-2013
130-S-2013
117-P-2008
CATAMARCA PEGMATITES OPTION
Petra I, II, III, IV
Petra V, VI, VII, VIII
Aguada I, II, III, IV
Cateos
Cateos
Minas
1265
2115
1387
2573
888
1395
3024
2989
3007
1606
2805
2961
2704
3024
2312
1119
477
2250
54,211 Ha
101790
40000
30000
9500
79,500 Ha
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca Granted
Catamarca
In Process
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
option
option
option
Catamarca Granted
Catamarca
Application
Catamarca
Application
Lake Resources – Annual Report 2018 59
LAKE RESOURCES
Level 5
126 Phillip Street,
Sydney NSW 2000
+61 2 9188 7864
www.lakeresources.com.au
twitter.com/Lake_Resources