More annual reports from Lake Resources NL:
2023 ReportANNUAL
REPORT
20
CORPORATE DIRECTORY
for the year ended 30 June 2020
Directors
Stuart Crow - Non-executive Chairman
Steve Promnitz - Managing Director
Dr. Nicholas Lindsay - Non-executive Director
Dr. Robert Trzebski – Non-executive Director (Appointed 10 Dec 2019)
Company Secretary-
Joint
Sinead Teague (Appointed 2 July 2019);
Garry Gill (Appointed 15 Oct 2019)
Registered office and
Principal Place of
Business
Level 5, 126 Phillip Street,
Sydney, NSW 2000, Australia
Tel: +61 2 9299 9690
Share Register
Auditor
Solicitors
Automic Registry (Commenced 23 Sept 2019)
Level 5, 126 Phillip Street
Sydney, NSW 2000
Tel: 1300 288 664
Stanley & Williamson
Level 1, 34 Burton Street, Kirribilli, NSW 2061
HopgoodGanim Lawyers
Level 8, Waterfront Place, 1 Eagle Street, Brisbane Qld 4000
Bankers
National Australia Bank
Stock Exchange Listings
Australian Securities Exchange (ASX code: LKE)
OTC QB: LLKKF
Website
www.lakeresources.com.au
CONTENTS
Chairman’s Letter
Managing Director’s Report
Directors Report
Auditor’s Independence Declaration
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
Shareholder information
Tenement Schedule
1
3
5
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24
25
26
27
29
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66
68
LAKE RESOURCES NL
Chairman’s Report
30 June 2020
Dear Fellow Shareholder,
It gives me great pleasure to report to you on the progress made in the past year by your
company.
Whilst not without challenges bought on by the global pandemic, restricted access to site
and lack of ability to travel, the outcomes achieved have been remarkable as we
transitioned from an exploration company into a company on the road to production.
This year saw our decision to partner with Lilac Solutions and pursue direct lithium
extraction methods at our flagship project Kachi validated by some of the world’s most
successful technology investors with the investment in Lilac by Breakthrough Energy
Ventures, MIT’s The Engine fund and Grantham Funds in February.
The completion of the Pre Feasibility Study(PFS) in April demonstrated the efficiency of
direct extraction and gave your board confidence in the decision to challenge conventional
wisdom and look to deliver a sustainable and disruptive method of producing a high purity
product to satisfy the ever growing demand for battery quality lithium. The PFS
demonstrated clearly that the Kachi project is deliverable and cost competitive and will
deliver a high purity product that satisfies the growing need for sustainably produced
lithium.
Our pilot plant was constructed and operated in California at a scale up in excess of 1000
times bench scale testing with outstanding success. The Lithium Chloride concentrate
produced was of high quality containing minimal impurities giving your board the proof of
concept required to be confident commercial scale production is achievable with only a
further small increase in module size required.
Production of a 99.97% purity Lithium Carbonate in October this year by a highly regarded
third party, Hazen Research Inc., showed the potential of your company on the global stage.
Lithium Carbonate of this quality will be keenly sought and trades at a significant premium
to the prices used in our PFS earlier in the year. The impact of this result will deliver
significant benefits to our company as we progress toward completion of our Definitive
Feasibility Study in the year ahead and continue discussions with development partners and
off-takers seeking a high purity product for use in high performance batteries.
We are now entering a period of considerable opportunity in the Lithium sector as global
demand grows exponentially as increased penetration of Electric Vehicles occurs across
China, Europe, Asia and North America increases the need for more batteries to be
produced and the rollout of renewable energy storage continues to expand rapidly adding
further demand. The industry is struggling to deliver enough supply with bottlenecks
appearing in conversion of hard rock into chemical in China combined with problems of
maintaining product quality on those projects that have increased production. The need for
a scalable, highly efficient and cost competitive solution that consistently delivers high
1
LAKE RESOURCES NL
Chairman’s Report
30 June 2020
purity product is high and your company has the ability to deliver into that growing demand
in the years ahead.
In conclusion, I would like to thank our employees, consultants and partners who have all
contributed in extremely challenging times to deliver a transformational year for our
company. Their persistence and commitment to delivering the outcomes throughout the
year has delivered a remarkable opportunity for all shareholders and I would like to thank
everyone of our team for their efforts this year.
I would also like to thank my other board members for their commitment, contribution and
efforts throughout the year, as a small team the results achieved are excellent and have set
the company up for an extremely exciting year ahead.
I would like to take the opportunity to welcome Robert Trzebski to the Board and thank him
for his contribution to the Company since accepting the role.
Most importantly I would like to thank all of our shareholders for their patience through an
extremely challenging year and for their continued support. I look forward to what I believe
will be a very exciting and rewarding year ahead.
Yours Faithfully,
Stuart Crow
Non Executive Chairman
Lake Resources NL
2 LAKE RESOURCES NL
Managing Director’s Report
30 June 2020
Managing Director’s and CEO’s Report
Lake Resources has achieved major milestones this last year towards production of high purity lithium
at scale using sustainable direct lithium extraction.
Three major milestones reached included:
1. Demonstrating that Lilac Solutions’ direct lithium extraction (DLE) operates successfully using
Lake’s Kachi Project brines, producing high quality lithium chloride at pilot module scale;
2. Delivering high purity lithium carbonate samples at both lab scale and pilot module scale (post
year-end) from high quality lithium chloride produced at pilot module scale from Kachi brines;
3. Exhibiting the cost competitive nature of Lilac’s DLE at the Kachi Project with a high value,
high margin Pre-Feasibility Study (PFS) using conservative commodity prices.
Lake has a major expandable resource at the Kachi project and has been working with Lilac and their
DLE process for over two years as a way of efficiently developing the project. The benefit of Lilac’s DLE
process, an adaptation of known water treatment called ion exchange,. is that there is no mining, just
efficient, rapid, extraction of lithium from lithium bearing salty brines at the Kachi project in hours
instead of months or years. Further, the process returns virtually all the brine back to its source
without changing the chemistry, except for the removal of lithium, which produces a high purity
product. This is a more sustainable, responsibly sourced method than conventional evaporation with
a smaller environmental footprint.
Lake is leading the sector with Lilac in demonstrating this clean technology is a solution for the future
delivery of high purity lithium into the battery materials supply chain.
Lilac operated laboratory tests for over a year on Kachi brines, followed by the successful operation
of a DLE pilot module in California, producing high quality lithium chloride in liquid form (eluate). This
demonstrates that the scale up from lab scale to pilot scale was successful and only a limited further
scale up is required to production scale, as production simply requires more modules. Lilac received
financial support in 2020 from the Bill Gates-led Breakthrough Energy fund, and this was solid third
party support for Lake partnering with Lilac.
High purity lithium carbonate was produced, initially at lab scale with 99.9% purity and later at pilot
module scale, with 99.97% purity lithium carbonate (produced post year-end). This product has
substantially less impurities than so-called “battery grade” with 99.5% purity. Processing from lithium
chloride into lithium carbonate was conducted by an independent processing laboratory, Hazen
Research Inc. Testing showed a simple flowsheet to produce a high purity battery quality product after
testing a number of approaches. A premium price is anticipated for this product.
A PFS was completed on the Kachi Project showing a high value, high margin project using a
conservative commodity price of US$11,000/t LCE, with a US$748 million NPV8 and an annual EBITDA
of US$155 million, with operating costs of US$4178/t. Hatch, a tier 1 engineering firm, wrapped
detailed engineering around Lilac’s new technology to demonstrate a robust project at Kachi.
Lake’s Kachi Project is now positioned for detailed studies to allow for production finance. Lilac’s DLE
and the PFS has also demonstrated how the grade of the project is not the important determinate but
rather a high quality product, produced consistently at scale.
3
LAKE RESOURCES NL
Managing Director’s Report
30 June 2020
Lake has a number of other projects apart from its flagship Kachi Project, which include the Cauchari
project. Lake’s Cauchari have high grade lithium brines in drilling results released early in the fiscal
year, which showed an extension from the adjoining lithium projects in development. Its notable that
the adjoining project to Lake’s Cauchari Project (previously held by Advantage Lithium) was acquired
in 2020 at a value approximating 16% of NPV8 which indicates the value in other Lake projects.
During 2020, the COVID-19 pandemic slowed progress, but the Company was fortunate to manage
the situation well on the ground with a solid team and significant controls and this trained team in
Argentina will continue to serve the Company well.
Looking forward, Lake is well positioned in the coming year aiming to deliver high purity battery quality
lithium carbonate to off-takers and to Novonix, for testing in batteries, together with advancing
detailed studies including the Definitive Feasibility Study (DFS), production well pump testing,
environmental studies, a DLE pilot/demonstration plant on site. The intention is to be negotiating
construction finance this time next year with production in 2023.
Lake is focused on providing a 21st century solution to the growing need for high quality, scalable,
sustainable battery materials.
Steve Promnitz
Managing Director
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
The Directors present their report, together with the financial statements, on the Consolidated entity
(referred to hereafter as ‘Lake’ or 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 2020.
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)
R. Trzebski (Non- Executive Director appointed 10 December 2019)
Principal activities
During the financial year the principal activities of the Consolidated entity consisted of:
Exploration and development of lithium brine projects in Argentina.
Exploration for minerals.
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 $4,902,896, (2019:
$3,530,935).
Corporate Strategy
Lake Resources NL (“Lake” or the “Consolidated entity”) is a clean lithium developer utilising direct
extraction technology for the development of sustainable, high purity lithium from its flagship Kachi
Project, as well as three other lithium brine projects in Argentina. The projects are in a prime location
within the Lithium Triangle, where 40% of the world’s lithium is produced at the lowest cost.
This method will enable Lake to be an efficient, responsibly sourced, environmentally friendly and
cost competitive supplier of high-purity lithium, a product in demand from Tier 1 electric vehicle
makers and battery makers.
Operations
Overview of Operations for the Year
During the year ended 30 June 2020, Lake released a compelling pre-feasibility study (PFS) over
the Kachi Project, produced together with a tier 1 engineering firm, which shows a large, long-life
potential operation with cost-competitive production at the lower end of the cost curve similar to
current lithium brine producers (refer ASX announcement 28 April 2020). The 25-year modelled
production at 25,500 tonnes per annum Lithium Carbonate Equivalent (LCE) utilises about 20% of
the large JORC Mineral Resource (Indicated and Inferred) of 4.4 million tonnes LCE (refer ASX
announcement 27 November 2018).
An efficient, disruptive clean technology, based on a well-used ion exchange water treatment
method, to produce sustainable high purity lithium, with a smaller environmental footprint, has been
developed by our technology partner, Lilac Solutions Inc, in California, who have received the
backing of the Bill Gates-led Breakthrough energy fund and MIT’s The Engine fund. Battery quality
lithium carbonate (99.9% purity) has been produced from Kachi brine samples with very low
impurities and high (80-90%) lithium recoveries (refer ASX announcement 9 January 2020). Test
results were incorporated into the PFS.
The Lilac Solution’s direct extraction pilot plant module in California has produced the first samples
of lithium chloride successfully (refer ASX announcement 3 July 2020), supporting the scale-up from
5
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
previously successful lab-scale work. Hazen Research Inc, an independent assay laboratory, is well
advanced in producing initial larger samples of battery quality lithium carbonate from the pilot plant
lithium chloride samples which will be available for downstream supply chain participants and off-
takers. The first larger samples will be despatched to Novonix Battery Technology Solutions, an
independent testing and development laboratory used by recognised battery makers, to produce
NMC622-based lithium-ion battery test cells using Lake’s battery quality lithium carbonate. A pilot
plant on site is planned to produce larger lithium samples. Discussions are advanced with
downstream entities, as well as financiers, to develop the project.
The Cauchari Lithium Brine Project was successfully drilled early in the fiscal year, which
demonstrated that the high-grade lithium brines in the adjoining world class project extended into
Lake’s 100% owned leases. Drilling at the Olaroz project is planned when drilling is permitted. The
Catamarca Pegmatite project will be progressed after the other projects.
Corporate acquisitions support the underlying valuation of Lake’s projects. The Cauchari project of
Advantage Lithium/ Orocobre was acquired 100% by Orocobre in March 2020 at a project value of
Ã$119 million adjoining Lake’s leases.
Corporate and Financial
A major advance was made during the financial year towards the Consolidated entity becoming a
clean lithium producer from its flagship Kachi Lithium Brine Project in Catamarca Province by the
completion of a high margin, long life pre-feasibility study (PFS). The Kachi JORC resource of 4.4
million tonnes lithium carbonate (LCE) within consolidated mining leases of 70,000 hectares covers
almost an entire salt lake. The PFS utilised the results of testwork on Lilac Solution’s direct extraction
technology for the development of sustainable, high purity lithium. Battery quality lithium carbonate
(99.9% purity) has been produced from Kachi brines. Lilac Solution’s pilot plant module produced
samples of lithium chloride similar to previously successful lab-scale work. These samples are being
converted into larger samples of battery quality lithium carbonate for testing by downstream off-
takers. The first larger battery quality lithium carbonate samples will be used to produce NMC622-
based lithium-ion battery test cells by Novonix Battery Technology Solutions, an independent testing
and development laboratory used by recognised battery makers.
Lake continues to be one of the largest lease holders (~200,000 hectares) of lithium brine and hard
rock projects in Argentina of any listed entity within the heart of South America’s Lithium Triangle
which produces ~40% of the worlds lithium at the lowest cost. Despite short term lower prices, there
has been a significant expansion in battery megafactories which prefer battery quality lithium
products, especially if the battery materials are more sustainable and responsibly sourced, as Lake’s
products will be. A growing supply deficit around 2023 requires new investment for consistent
scalable supply of low impurity lithium products.
The Cauchari Lithium Brine Project in Jujuy Province was drilled for the first time at the start of the
fiscal year and has demonstrated extensions of lithium brine bearing aquifers with similar high grades
into Lake’s properties from the adjoining major resource progressing rapidly into production in 2021
at the Ganfeng/Lithium Americas project.
The Consolidated entity had 671,461,957 shares on issue at 30 June 2020, with 52,512,693 listed
LKEOB options at $0.10 (expiry 15 June 2021) and unlisted options which include18,300,000 options
with an exercise price of $0.046 (expiry October 2022), 5,555,000 options with an exercise price of
$0.08 (expiry Feb 2022), 15,000,000 options with an exercise price of $0.09 (expiry July 2021) and
9,500,000 unlisted options with an exercise price of $0.28 (expiry 31 December 2020), plus
15,000,000 LTI performance rights to board/management with various hurdles were approved by
shareholders in August 2019 of which 5,000,000 vested on 30 April 2020.
Equity capital raisings and an SPP were conducted during the financial year to sustain the
development of the Kachi Project. In September 2019, A$2 million, before costs, was raised in a
private placement to sophisticated and professional investors. Under the placement, the
Consolidated entity issued approximately 45,000,000 new ordinary LKE shares at $0.045 cents per
share using placement capacity under ASX Listing Rules 7.1A. An equity private placement was
6
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
conducted in February 2020 under a prospectus which was lodged 10 February 2020 with a
supplementary and 2nd supplementary prospectus on 28 February and 10 March 2020 respectively.
Shares were issued at an offer price of $0.04 per share, for approximately 91 million new ordinary
shares, to sophisticated and professional investors for approximately $3.6 million. A Share Purchase
Plan Offer (SPP) was made to eligible shareholders under the prospectuses. Eligible Shareholders
could subscribe for up to $30,000 worth of new Shares at an issue price of $0.04 per Share. The
SPP was significantly oversubscribed which led the Consolidated entity to upsize the offer to a
maximum of $2.5 million. The COVID-19 pandemic adversely impacted the markets during March
which led to significant withdrawals. $1.55 million was raised from the SPP and 38,975,000 shares
were issued. Lake announced in February 2019 that it had secured a two-tranche funding facility to
provide bridging capital for project development and exploration activities. The Consolidated entity
entered into a formal agreement with SBI Investments (PR), LLC (SBI), for the early close out of the
Convertible Securities funding facility, through a combination of both a cash payment and the issue
of shares to SBI (which included an equity based fee in consideration for the facility’s early
termination). The Consolidated entity made a cash payment of A$1,959,615 and issued SBI with
11,558,021 ordinary shares in February 2020.
Lake has held discussions with potential development partners and off-takers, and discussions are
underway to secure debt funding of US$10 to US$15 million for pre-production, definitive feasibility
studies (DFS) and initial production of lithium products to develop the Kachi Project (refer ASX
announcement 9 October 2019).
Lake Resources gained a secondary compliance listing on the OTC QB market with the ticker code
LLKKF in December 2019. Compliance requirements are essentially the same as the requirements
on the ASX and disclosure are automatically uploaded onto the OTC platform. The Consolidated
entity is working to establish a DTC to allow real time electronic trading.
Argentina
Kachi Lithium Brine Project - Catamarca Province, Argentina
Lake’s 100%-owned Kachi Lithium Brine Project in Catamarca province, NW Argentina, covers 37
mining leases (70,400 hectares), centred around a previously undrilled salt lake within a large lithium
brine-bearing basin, located at ~3000m altitude, south of Livent’s lithium operation in Argentina with
a large indicated and inferred resource of 4.4 Mt LCE (Indicated 1.0Mt, Inferred 3.4Mt) (refer ASX
announcement 27 November 2018). Kachi is one of the few salt lakes in Argentina with substantial
identified lithium brines fully controlled by a single owner.
A robust and compelling pre-feasibility study (PFS) by a tier 1 engineering firm was delivered over
the Kachi Project (refer ASX announcement 30 April 2020). A long-life (25 years), low cost potential
operation was demonstrated with annual production target of 25,500 tpa of battery quality lithium
carbonate by direct extraction using Lilac’s technology, based on the Indicated Resource of 1.0
million tonnes LCE at 290 mg/L lithium (22% of current total resource). The PFS showed the
technology is cost competitive with other lithium brine projects but also showed the advantage of
producing a premium product generating high operating (EBITDA) margins using conservative price
forecasts.
A post-tax NPV8 of US$748 million (A$1,180m) and IRR of 22% was generated in the PFS. A high
margin operation was shown with an EBITDA of US$155 million (A$245m) in first full year of
production, and an operating margin of 62%, using forecast of US$11,000/t Li2CO3 CIF Asia. A
competitive capital cost (capex) estimate of US$544 million was estimated, including contingency,
and operating cost (opex) of US$4178/tonne Li2CO3.
The PFS only consumes 20% of the total JORC mineral resource over 25 years of operation.
Substantial upside exists to extend the resource at depth and laterally with further drilling (refer ASX
announcement with resource statement 27 November 2018).
Lake aims to bring the project towards production by using the efficient, disruptive and low-cost
direct extraction technology from our technology partner, Lilac Solutions, in California. This will
enable Lake Resources to be an efficient, responsibly-sourced, environmentally friendly and cost
7
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
competitive supplier of high-purity lithium carbonate. High purity sustainable lithium is in demand by
Tier 1 electric vehicle makers and battery makers. Lilac Solutions technology gained the investment
support of major investors in February 2020. The environmental footprint of Lilac’s DLE is far smaller
than conventional brine evaporation processes or hard rock mining. By using an adaptation of a
known, benign water treatment process to produce lithium, Lake avoids any mining and returns
virtually all water (brine) to its source without changing its chemistry, apart from lithium removal. This
is a better outcome for local communities and for the environment.
High purity battery quality lithium carbonate (99.9% purity) with very low impurities has been
produced from lithium brines from Lake’s Kachi project (refer ASX announcement 9 January 2020).
The growth of higher density batteries to drive the latest electric vehicles has significantly increased
demand for a high purity product with low impurities, and the Lilac DLE process delivers this
consistently which will command a premium price. The Lilac Solution’s direct extraction pilot plant
module in California has produced the first samples of lithium chloride successfully (refer ASX
announcement 3 July 2020), supporting the scale-up from previously successful lab-scale work.
Hazen Research Inc, an independent assay laboratory, is well advanced in producing initial larger
samples of battery quality lithium carbonate from the pilot plant lithium chloride samples which will
be available for downstream supply chain participants and off-takers. The first larger samples will be
despatched to Novonix Battery Technology Solutions, an independent testing and development
laboratory used by recognised battery makers, to produce NMC622-based lithium-ion battery test
cells using Lake’s battery quality lithium carbonate. A pilot plant on site is planned to produce larger
lithium samples.
Lake has held discussions with potential development partners and off-takers, and discussions are
underway to secure debt funding of US$10 to US$15 million for pre-production, definitive feasibility
studies (DFS) and initial production of lithium products to develop the Kachi Project (refer ASX
announcement 9 October 2019).
The table below (Table 1) outline the resource reported on 27 November 2018 in accordance with
the JORC Code (2012) and estimated by a Competent Person as defined by the JORC Code. The
resource estimate has not changed materially from November 2018 to 30 June 2020.
Table 1: Kachi Mineral Resource Estimate - November 2018 (JORC Code 2012 Ed.)
RESOURCE ESTIMATE KACHI
Area km2
Aquifer volume km3
Brine volume km3
Mean drainable porosity %
(Specific yield)
Element
Weighted
concentration mg/L
mean
Resource tonnes
Lithium Carbonate
Equivalent tonnes
Potassium Chloride tonnes
Indicated
17.10
6
0.65
10.9
Inferred
158.30
41
3.2
7.5
Total Resource
175.40
47
3.8
7.9
Li
K
Li
K
Li
K
289
5,880
209
4,180
211
4380
188,000
3,500,000
638,000
12,500,000
826,000
16,000,000
1,005,000
6,705,000
3,394,000
24,000,000
4,400,000
30,700,000
Lithium is converted to lithium carbonate (Li2CO3) with a conversion factor of 5.32
Potassium is converted to potassium chloride (KCl) with a conversion factor of 1.91
Mg/Li ratio averages 4.7
8
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Competent Person’s Statement – Kachi Lithium Brine Project
The information contained in this report relating to Exploration Results has been compiled by Mr Andrew Fulton.
Mr Fulton is a Hydrogeologist and a Member of the Australian Institute of Geoscientists and the Association of
Hydrogeologists. Mr Fulton has sufficient experience that is relevant to the style of mineralisation and type of
deposit under consideration and to the activity being undertaken to qualify as a competent person as defined in
the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves.
Andrew Fulton is an employee of Groundwater Exploration Services Pty Ltd and an independent consultant to
Lake Resources NL. Mr Fulton consents to the inclusion in this announcement of this information in the form
and context in which it appears. The information is repeated in an ASX announcement of 20 November 2018
by Lake Resources and is an accurate representation of the available data from initial exploration at the Kachi
project
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 and Cauchari Lithium Brine Projects and the Paso Lithium Brine Project, 100% owned
by Lake. First drilling occurred in early 2019 at Lake’s 100% owned Cauchari Lithium Brine Project.
Confirmation of multiple high-grade lithium brines over 506m interval (102m to 608m depth) was
demonstrated in results returned in late August 2019. Results ranged from 421 to 540 mg/L lithium
(493 mg/L average) in detailed sampling with low Mg/Li ratios of 2.7. The high-grade results averaged
493 mg/L lithium over 343m (from 117m to 460m), up to 540 mg/L, with a Li/Mg ratio of 2.9
This drilling confirmed similar grades and lithium brines extending into Lake’s properties from the
adjoining world-class major project (500m away) of Ganfeng Lithium/Lithium Americas (NYSE:LAC)
where the average resource grade is 581 mg/L lithium and is rapidly progressing to production in
2021 at 40,000tpa LCE. This enhances the potential for future production on Lake’s leases.
At Olaroz, which is north of Cauchari, Lake’s leases extend 30 km north-south of the adjoining
Orocobre’s Olaroz lithium production leases to the east. Drilling is anticipated when all planned holes
are approved.
Significant corporate transactions continue in the adjacent Cauchari leases. In February/April 2020,
Orocobre acquired the 65.3% of Advantage Lithium that it did not already own in an all-share deal
which valued Advantage Lithium at ~A$119m on a 100% basis, at that time. Advantage Lithium
owned 75% of the Cauchari lithium project, with Orocobre owning the remaining 25% In April 2019,
Advantage Lithium announced a resource of 6.3m tonnes LCE (on a 100% basis). In October 2019,
the Consolidated entity published a PFS with a post-tax NPV8 of US$671m, initial capex of US$446m
(including a 20% contingency), and an IRR of 20.9%. On these figures, and based on US$:C$1.33,
Orocobre paid ~16% of post-tax NPV8.
Impact of COVID-19 on Operations
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially
neutral for the Consolidated entity up to 30 June 2020, it is not practicable to estimate the potential
impact, positive or negative, after the reporting date. The situation is rapidly developing and is
dependent on measures imposed by the Australian Government, the Argentine Government, and
other countries, such as maintaining social distancing requirements, quarantine, travel restrictions
and any economic stimulus that may be provided. Further information on the impact is detailed in
Note 1(iv) of the financial statements.
Significant changes in the state of affairs
Equity capital raisings and an SPP were conducted during the financial year to sustain the
development of the Kachi Project. In August 2019, 52,512,693 unlisted options became listed
LKEOB options at $0.10 (expiry 15 June 2021). In September 2019, A$2 million, before costs, was
raised in a private placement to sophisticated and professional investors. Under the placement, the
Consolidated entity issued approximately 45,000,000 new ordinary LKE shares at $0.045 cents per
share using placement capacity under ASX Listing Rules 7.1A. An equity private placement was
9
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
conducted in February 2020 under a prospectus which was lodged 10 February 2020 with a
supplementary and 2nd supplementary prospectus lodged on 28 February and 10 March 2020
respectively. Shares were issued at an offer price of $0.04 per share, for approximately 91 million
new ordinary shares, to sophisticated and professional investors for approximately $3.6 million. A
Share Purchase Plan Offer (SPP) was made to eligible shareholders under the prospectuses. Eligible
Shareholders could subscribe for up to $30,000 worth of new Shares at an issue price of $0.04 per
Share. The SPP was significantly oversubscribed which led the Consolidated entity to upsize the
offer to a maximum of $2.5 million. The COVID-19 pandemic adversely impacted the markets during
March which led to significant withdrawals. $1.55 million was raised from the SPP and 38,975,000
shares were issued. Lake announced in February 2019 that it had secured a two-tranche funding
facility to provide bridging capital for project development and exploration activities. The
Consolidated entity entered into a formal agreement with SBI Investments (PR), LLC, for the early
close out of the Convertible Securities funding facility, through a combination of both a cash payment
and the issue of shares to SBI (which included an equity based fee in consideration for the facility’s
early termination). The Consolidated entity made a cash payment of A$1,959,615 and issued SBI
with 11,558,021 ordinary shares in February 2020.
There were no other significant changes in the state of affairs of the Consolidated entity during the
financial year.
Matters subsequent to the end of the financial year
Subsequent to the end of the financial year, the Consolidated entity raised a further $3.95 million
before costs, conducted through an oversubscribed and partially underwritten private placement of
85,666,667 shares at an offer price of $0.03 to raise $2.57 million before costs and through a
Controlled Placement Agreement, an issue of 15 million shares at $0.033 per share for $495,000
and an issue of 15 million shares at $0.06 per ordinary share to raise $900,000. A $200,000 short
term loan taken out after year end was retired with interest in September 2020 so that no loans are
outstanding.
No other matter or circumstance has arisen since 30 June 2020 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 Consolidated entity is to be a clean lithium developer utilising direct extraction
technology for the development of sustainable, high purity lithium from its flagship Kachi Project.
Near-term pre-production of battery quality lithium carbonate from the pilot plant modules operating
on Kachi brines will be distributed to downstream supply chain participants and off-takers. The first
larger samples will be dispatched to Novonix Battery Technology Solutions to produce NMC622-
based lithium-ion battery test cells using Lake’s battery quality lithium carbonate. A definitive
feasibility study (DFS) will be initiated on the Kachi project with the plan for a pilot plant operating on
site, and to advance discussions to finance the Kachi project.
Environmental regulation
The Consolidated entity is subject to and compliant with all aspects of environmental regulation of its
exploration and mining activities. The Directors are not aware of any environmental law that is not
being complied with.
10
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Information on Directors
Name
Title
Stuart Crow
Non-Executive Chairman
Experience and expertise
Mr Crow has global experience in financial services, corporate
finance, investor relations, international markets, and stock broking.
Stuart is passionate about assisting emerging listed companies to
attract investors and capital and has owned and operated his own
businesses.
Other current Directorships
Non-Executive Director Todd River Resources Ltd (ASX: TRT)
Non-Executive Director Ironridge Resources Limited (AIM: IRR)
Former Directorships (last 3
years)
None
Name
Title
Stephen Promnitz
Managing Director
Experience and expertise
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).
Other current Directorships
None
Former Directorships (last 3
years)
None
Name
Title
Dr Nicholas Lindsay
Non-Executive Director
Experience and expertise
Dr Lindsay has extensive 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. Dr
Lindsay has an BSc (Hons) in Geology, a PhD in Metallurgy as
well as an MBA. A fluent Spanish speaker, Dr Lindsay 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. Dr Lindsay is
currently CEO of Valor Resources, and previously held the
position of President – Chilean Operations for Kingsgate
Consolidated Ltd and is a member of the AusIMM and the AIG.
Other current Directorships
None
Former Directorships (last 3
years)
Valor Resources (to October 2020)
11
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Name
Title
Dr Robert Trzebski (appointed 10 December 2019)
Non-Executive Director
Experience and expertise
Dr. Trzebski is currently Chief Operating Officer of Austmine Ltd and
holds a degree in Geology, PhD in Geophysics, Masters in Project
Management and has over 30 years professional experience in
project management and mining services.
He has considerable operating and commercial experience in
Argentina and Chile, as a Non-Executive Director of Austral Gold
since 2007, listed on the ASX and TSX-V and is Chairman of the
Audit and Risk Committee. His role with Austmine has allowed him
to develop considerable contacts across the operating and
technology space of the global resources industry. Dr. Trzebski is
also a fellow of the Australian Institute of Mining and Metallurgy and
is fluent in Spanish and German as well as English.
Other current Directorships
Austral Gold (ASX: AGD)
Former Directorships (last 3
years)
None
Notes:
Other current Directorships quoted above are current Directorships for listed entities only and excludes
Directorships of all other types of entities, unless otherwise stated.
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 Secretaries
The Company Secretaries in office at the end of the financial year were as follows:
Mr Garry Gill is a chartered accountant with more than 30 years’ experience in all facets of corporate,
financial and administrative functions, Mr Gill has served in a range of positions including as CFO,
company secretary and other senior executive positions for a number of listed and unlisted public
companies. These have included serving as finance director and company secretary of Jupiters
Limited, CFO/Corporate Services Manager of South Bank Corporation in Brisbane, before forming a
consultancy service for small cap ASX companies over the last decade. He has delivered improved
strategic analysis and financial management, streamlined budgets, refinancing, and stakeholder
management of small/mid cap resource companies.
Ms Sinead Teague has over 10 years’ experience within company secretarial roles in Australia and
Ireland. Ms Teague works with a varied portfolio of ASX listed companies across technology, mining,
financial and communications industries as well as providing company secretarial services for other
large public unlisted, private and not-for-profit entities. Ms Teague holds a Masters’ in Management
and Corporate Governance and a degree in Law with Government and is an associate member of
the Governance Institute having qualified as a Chartered Company Secretary through the ISCA (now
Governance Institute).
Directors’ Interests in the Consolidated entity
At the date of this report, the interests of the Directors in the shares and options of the Consolidated
entity were:
12
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
S Crow (Non-Executive Chairman)
S Promnitz (Managing Director)
N Lindsay (Non-Executive Director)
R Tzrebski (Non-Executive Director)
Meetings of Directors
Ordinary
Shares
Options
Performance
Rights
4,358,964
8,544,870
14,813,111 12,447,661
6,500,000
-
2,500,000
-
5,000,000
2,500,000
2,500,000
-
The number of meetings of the Consolidated entity's Board of Directors held during the year ended
30 June 2020 and the number of meetings attended by each Director were:
S Crow
S Promnitz
N Lindsay
R Trzebski (appointed 10 December 2019)
Held
8
8
8
6
Attended
8
8
8
6
“Held” represents the number of meetings held during the time the Director held office and was eligible to
attend.
Remuneration Report (Audited)
The remuneration report outlines the Director and executive remuneration arrangements for the
Consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its
Regulations For the purposes of this report, Key Management Personnel (KMP) are those persons
having authority and responsibility for planning, directing and controlling the activities of the entity,
directly or indirectly, including all Directors.
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.
a)
Principles used to determine the nature and amount of remuneration
The Board’s policy is to remunerate KMP at market rates for time, commitment, responsibilities and
overall performance. The Board determines payments to the KMP and reviews their remuneration
annually, based on market practice, duties and accountability. Independent external advice is sought
when required. The Board aims to remunerate at a level that will attract and retain high-calibre
directors, officers and employees. KMP are remunerated to a level consistent with the size of the
Consolidated entity.
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 Consolidated entity. The Consolidated
entity did not utilise the services of a remuneration consultant for the year.
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:
13
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
competitiveness and reasonableness,
acceptability to shareholders,
performance linkage / alignment of executive compensation,
transparency
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.
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 performance 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 seeks 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 comprises four components:
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration including 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 remuneration. 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 Consolidated entity approved the Long-
14
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Term Incentive (LTI) Plan ('Plan'). The Plan was updated and extended at an Extraordinary General
Meeting (EGM) of the Shareholders on 15 August 2019 at which approval was granted to issue up
to 25,000,000 performance rights under the 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 Consolidated entity aligning the interest of both employees and shareholders and for the
Consolidated entity to reward eligible employees for their effort. The Plan contemplates the issue to
eligible employees of performance rights which may have milestones.
During the financial year ended 30 June 2020, 5,000,000 performance rights were issued to each of
Messrs. Crow and Promnitz and to Dr Lindsay. Of these, 2.500,000 performance rights for each of
Mr Promnitz and Dr Lindsay vested on the completion of the Pre-Feasibility Study (PFS) for the Kachi
project in Catamarca. The shares were issued on 31 August 2020. A share-based payment expense
of $345,000 was recognised for the performance rights during the 2020 financial year.
Mr Promnitz’ remaining 2.5 million performance rights and Mr Crow's 5 million performance rights will
vest once an investment partner signs an agreement to invest in the Kachi project in Catamarca
(Investor). Dr Lindsay’s remaining 2.5 million performance rights will vest when a Pilot Plant is
established on-site at the Kachi project in Catamarca (Pilot Plant).
Voting and comments made at the Consolidated entity's 2019 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 2019. The Consolidated entity did not receive any specific feedback regarding its
remuneration practices at the AGM.
b)
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 KMP 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)
R Trzebski (Non-Executive Director)
And the following executive:
G Gill (Chief Financial Officer and joint Company Secretary)
Key Management
Personnel
Directors’
Fees and/or
Salary
Consulting
Fees
Annual
Leave
$
$
$
Post-
Employment
Benefits
Super -
annuation
$
Share Based
Payments –
Performance
rights and
options
$
Total
$
2020
Non-Executive Directors
S Crow
N Lindsay
R Tzrebski1
Executive Director
S Promnitz
Executive
G Gill2
100,000
60,000
27,823
93,600
65,000
-
-
-
-
-
-
2,643
176,325 369,925
341,638 466,638
30,466
-
230,384
-
17,722
21,887
312,888 582,881
67,500
-
-
-
-
67,500
Totals
485,707
158,600
17,722
24,530
830,851 1,517,410
1 Appointed 10 December 2019
2 Appointed 15 October 2019
15
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Key Management
Personnel
Directors’
Fees and/or
Salary
Consulting
Fees
Annual
Leave
$
$
$
Post-
Employment
Benefits
Super -
annuation
$
Share Based
Payments –
Performance
rights and
options
$
Total
$
2019
Non-Executive Directors
S Crow
N Lindsay
Executive Director
S Promnitz
Totals
100,000
60,000
146,000
-
-
-
230,384
-
390,384
146,000
20,676
20,676
-
-
21,130
21,130
-
-
-
-
246,000
60,000
272,190
578,190
Percentages of remuneration that are performance based:
Name
Non-Executive
Directors
S Crow
N Lindsay
R Tzrebski
Executive Director
S Promnitz
Executive
G Gill
Fixed
remuneration
2019
2020
At risk - STI At risk - LTI
2020
2019 2020 2019
52%
27%
100%
100%
100%
n/a
0%
0%
0%
0% 48%
0% 73%
0%
n/a
0%
0%
n/a
46%
100%
0%
0% 54%
0%
100%
n/a
0%
n/a
0%
n/a
c)
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 from commencement date, subject to satisfactory
performance.
Incentive of 5,000,000 performance rights as
approved by shareholders on 4 October 2016. If notice given by
Consolidated entity, the Consolidated entity 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. Consolidated entity
shall have the right to choose whether Mr. Promnitz work his notice
or paid in lieu of notice
16
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Name
Title
Agreement
commenced
Term of
agreement
G. Gill
Chief Financial Officer and co- Company Secretary
15 October 2019
The Consolidated entity has entered into an agreement with Garry
Gill and his Consolidated entity to provide services as Consolidated
entity Secretary and Chief Financial Officer. Services are to be
provided on a part time basis and at a rate of $5,000 per month plus
GST plus expenses which may be amended as required. The
agreement may be terminated by either party on 1 months’ notice.
Key management personnel have no entitlement to termination payments in the event of removal for
misconduct
Non-executive director arrangements
All non-executive directors enter into an agreement with the Consolidated entity 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 2020.
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 and
exercisable
date
Expiry date
Exercise
Price
30-Nov-2017
15-Aug-2019
30-Nov-2017
15-Aug-2019
31-Dec-2020
31-July-2021
$0.28
$0.09
Fair value
at grant
date
$0.140
$0.032
Vested
100%
100%
During the year 15,000,000 options over ordinary shares were issued to Directors following approval
at the shareholder meeting of 15 August 2019. 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:
Name
S. Crow
S. Promnitz
N. Lindsay
Total
Number of
Options
granted
5,000,000
5,000,000
5,000,000
Grant date
Vesting
and
exercisable
date
Expiry
date
Exercise
Price
Fair value
at grant
date
15-Aug-19
15-Aug-19
15-Aug-19
15-Aug-19 31-Jul-21
15-Aug-19 31-Jul-21
15-Aug-19 31-Jul-21
15,000,000
15-Aug-19
15-Aug-19 31-Jul-21
$0.09
$0.09
$0.09
$0.09
$0.032
$0.032
$0.032
$0.032
Performance Rights
The terms and conditions of performance rights affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
17
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Grant Date
15-Aug-2019
15-Aug-2019
15-Aug-2019
Total
Expiry
date
15-Aug-24
15-Aug-24
15-Aug-24
Value
at
Grant
$0.058
$0.058
$0.058
No of
Rights
5,000,000
2,500,000
7,500,000
15,000,000
Performance
Hurdle
PFS
Pilot plant
Investor
Performance
achieved
No.
vested
100%
25%
5%
5,000,000
-
-
5,000,000
During the year 15,000,000 Performance rights were issued to Directors following approval at the
shareholder meeting of 15 August 2019. Of the performance rights granted to Mr Promnitz and Dr
Lindsay 5 million rights vested on 30 April 2020 and were issued on 31 August 2020.
Name
S. Promnitz
S. Crow
N. Lindsay
Number of
Rights
granted
5,000,000
5,000,000
5,000,000
Grant date
Expiry
date
Fair value
at grant
date
Vested
during the
year
15-Aug-19
15-Aug-19
15-Aug-19
15-Aug-24
15-Aug-24
15-Aug-24
$0.0575
$0.0575
$0.0575
Total
15,000,000
15-Aug-19
15-Aug-24
$0.0575
2,500,000
-
2,500,000
5,000,000
Performance rights issued as part of remuneration were issued following shareholder approval at a
meeting held on 15 August 2019. On 30 April 2020, 2,500,000 rights granted to each of Mr Promnitz
and Dr Lindsay vested following the completion and announcement of the pre-feasibility study. The
shares were issued on 31 August 2020.
Additional information
The earnings of the Consolidated entity for the five years to 30 June 2020 are summarised below:
Net Loss
Net Assets
Share Price at year
end (cents)
2020
$
4,902,896
17,049,287
2019
$
3,530,935
12,913,063
2018
$
3,373,168
6,672,363
2017
$
2016
$
1,170,745
3,228,950
41,682
68,031
3.5
9
9
3
1
d)
Additional disclosures relating to key management personnel
Shareholding
Movements in the number of shares in the Consolidated entity held during the financial year by each
director and other members of key management personnel of the Consolidated entity, including their
personally related parties, are set out below:
18
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Balance at
start of year
Received as
part of
remuneration
Additions Disposals /
Other
Balance at
end of year
S. Crow
S Promnitz
N Lindsay
R Tzrebski
G Gill
4,358,964
15,381,293
-
-
-
Total
19,740,257
Options
-
-
-
-
-
-
-
-
-
-
-
-
(1,250,000)
4,358,964
14,131,293
-
-
-
-
-
-
-
(1,250,000)
18,490,257
Movements in the number of options over ordinary shares in the Consolidated entity held during
the financial year by each director and other members of key management personnel of the
Consolidated entity, including their personally related parties, are set out below:
Balance at
start of year
Granted as
remuneration
Exercised
S. Crow
S Promnitz
N Lindsay
R Tzrebski
G Gill
3,156,250
5,625,511
1,500,000
-
-
5,000,000
5,000,000
5,000,000
-
-
-
-
-
-
-
Listed
options
Received
544,870
2,447,661
-
-
-
Expired /
forfeit
Balance at
end of year
(156,250)
(625,511)
-
-
-
8,544,870
12,447,661
6,500,000
-
-
Total
10,281,761
15,000,000
- 2,992,531
(781,761)
27,492,531
Performance rights
Movements in the number of performance rights over ordinary shares in the Consolidated entity held
during the financial year by each director and other members of key management personnel of the
Consolidated entity, including their personally related parties, are set out below.
S. Crow
S Promnitz
N Lindsay
R Tzrebski
G Gill
Balance
at start
of year
Granted as
remuneration
Converted
to shares
Expired
Balance at
end of year
-
-
-
-
-
5,000,000
5,000,000
5,000,000
-
-
-
15,000,000
-
-
-
-
-
-
-
-
-
-
-
5,000,000
5,000,000
5,000,000
-
-
-
15,000,000
Performance rights issued as part of remuneration were issued following shareholder approval at a
meeting held on 15 August 2019. On 30 April 2020, 2,500,000 rights granted to each of Mr Promnitz
and Dr Lindsay vested following the completion and announcement of the pre-feasibility study. The
shares were issued on 31 August 2020.
End of Audited Remuneration Report
19
LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Share Options
Shares under option
Unissued ordinary shares of Lake Resources NL under option at the date of this report are as follows:
Grant Date
Expiry date
Exercise price
30-November-2017
08-March-2019
19-August-2019
16-September-2019
28-October-2019
Total
31-December-2020
28-February-2022
15-June-2021
31-July-2021
28-October-2022
$0.28
$0.08
$0.10
$0.09
$0.046
Number under
option
9,500,000
5,555,000
52,512,693
15,000,000
18,300,000
100,867,693
Each option is convertible to one ordinary share. Option holders do not have the right to participate
in any other share issue of the Consolidated entity or of any other entity. For details of options issued
to directors and other key management personnel as remuneration, refer to the remuneration report.
Shares issued on exercise of options
During or since the end of the financial year, the Consolidated entity issued ordinary shares of the
Consolidated entity as a result of the exercise of options as follows (there are no amounts unpaid on
the shares issued).
Date options
granted
Expiry date
Exercise price
14-November-2016
21-October-2019
$0.05
Number of
shares issued
43,569
Performance Rights
At the date of this report there were 10,000,000 unissued ordinary shares of Lake Resources NL
under performance rights (15,000,000 at 30 June 2020 and nil at 30 June 2019). During the financial
year ended 30 June 2020, no performance shares were issued. Between the end of the financial
year and the date of this report, 5,000,000 performance shares were issued to Directors. These
performance rights were granted on 15 August 2019 following approval at a meeting of Shareholders.
Information on the issue of performance shares to Directors is provided in the remuneration report
above.
Indemnity and insurance of officers
The Consolidated entity has indemnified the directors and executives of the Consolidated entity 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 Consolidated entity paid a premium in respect of a contract to insure
the directors and executives of the Consolidated entity 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 Consolidated entity has not, during or since the end of the financial year, indemnified or agreed
to indemnify the auditor of the Consolidated entity or any related entity against a liability incurred by
the auditor.
During the financial year, the Consolidated entity has not paid a premium in respect of a contract to
insure the auditor of the Consolidated entity or any related entity.
20 LAKE RESOURCES NL
DIRECTORS REPORT
for the year ended 30 June 2020
Proceedings on behalf of the Consolidated entity
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Consolidated entity, or to intervene in any proceedings to which the
Consolidated entity is a party for the purpose of taking responsibility on behalf of the Consolidated
entity 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 Consolidated entity who are former partners of Stanley & Williamson
There are no officers of the Consolidated entity 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
27 October 2020
21 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 2020, 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
27 October 2020
22
FINANCIAL STATEMENTS
for the year ended 30 June 2020
Contents
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
24
25
26
27
29
61
62
General information
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:
Level 5, 126 Phillip Street
SYDNEY NSW 2000
Corporate Governance Statement
The Company’s Corporate Governance Statement can be found on the Company’s website:
www.lakeresources.com.au
LAKE RESOURCES NL
Statement of Profit and Loss and Other Comprehensive Income
for the year ended 30 June 2020
Expenses
Depreciation and amortisation expense
Administrative expenses
Corporate expenses
Employee benefit expenses
Share based payments expense
Consultancy and legal costs
Finance costs
Loss before income tax expense
Income tax expense
Consolidated
Note
2020
$
2019
(restated)
$
(881)
(125,080)
(1,348,818)
(519,818)
(1,850,492)
(548,002)
(465,783)
(4,858,875)
(667)
(82,001)
(1,178,593)
(473,455)
(239,049)
(810,200)
(391,046)
(3,175,011)
4
27
4
4
5
(44,021)
(355,924)
Loss after income tax expense for the year attributable
to the owners of Lake Resources NL
16
(4,902,896)
(3,530,935)
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
142,756
303,991
(4,902,896)
(3,226,944)
Cents
Cents
26
26
(0.87)
(0.97)
(0.87)
(0.97)
The above statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes
24
LAKE RESOURCES NL
Statement of Financial Position
As at 30 June 2020
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
Employee benefits
Borrowings
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Note
2020
2019
(restated)
$
$
6
7
8
9
10
11
13
12
55,511
304,841
-
1,725,366
151,679
54,687
360,352
1,931,732
35
532
35
1,198
17,352,504
13,783,872
17,353,070
13,785,105
17,713,422
15,716,837
583,027
1,320,203
81,108
-
55,492
1,428,079
664,135
2,803,774
664,135
2,803,774
17,049,287
12,913,063
14
15
16
35,433,060
3,343,899
(21,727,672)
27,758,605
1,979,234
(16,824,776)
17,049,287
12,913,063
The above statement of financial position should be read in conjunction with the accompanying notes
25
LAKE RESOURCES NL
Statement of Changes in Equity
for the year ended 30 June 2020
Balance at 1 July 2019
Prior period adjustment
Restated balance at 1 July 2019
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
Issue of share capital on conversion of options
Issue of share capital on conversion of
convertible notes
Issue of share capital on close out of
convertible notes
Issue of unlisted options to financier SBI
Share based payments
Issue of options to Directors
Issue of performance rights to Directors
Note
Issued
Capital
$
Reserves Accumulated
$
Losses
$
Total
Equity
$
1(xxx)
27,758,605
-
27,758,605
-
1,508,020
471,214
1,979,234
-
(16,824,776) 12,448,849
471,214
-
(16,824,776) 12,913,063
(4,902,896)
(4,902,896)
-
142,756
- 142,756
-
142,756
(4,902,896)
(4,760,140)
14(a)
14(a)
6,032,043
1,743
-
-
- 6,032,043
- 1,743
14(a)
549,764
-
-
549,764
14(a)
14(e)
14(b)
14(e)
14(d)
462,321
-
628,584
-
-
-
391,058
-
485,851
345,000
- 462,321
- 391,058
- 628,584
- 485,851
- 345,000
Balance at 30 June 2020
35,433,060
3,343,899
(21,727,672) 17,049,287
Balance at 1 July 2018
Prior period adjustment
Restated balance at 1 July 2018
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
Share-based payments
Conversion of performance rights to issued
capital
Transfer from option reserve to accumulated
losses on options expired/ exercised
1(xxx)
18,342,102
-
18,342,102
-
167,223
1,757,665 (13,594,567)
-
1,924,828 (13,594,567)
(3,530,935)
-
6,505,140
167,223
6,672,363
(3,530,935)
-
303,991 -
303,991
-
303,991 (3,530,935)
(3,226,944)
14(a)
14(b)(e)
7,512,003
1,767,000
-
188,641
14(c),15(d)
137,500
(137,500)
-
-
-
7,512,003
1,955,641
-
15(d)
- (300,726)
300,726
-
Balance at 30 June 2019
27,758,605
1,979,234
(16,824,776) 12,913,063
The above statement of changes in equity should be read in conjunction with the accompanying notes
26
LAKE RESOURCES NL
Statement of cash flows
for the year ended 30 June 2020
Cash flows from operating activities
Payments to suppliers
Consolidated
2020
$
2019
$
(2,488,298)
(3,182,586)
Net cash used in operating activities
25
(2,488,298)
(3,182,586)
Cash flows from investing activities
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 and fees on borrowings
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the
financial year
Cash and cash equivalents at the end of the financial
year
(4,220,576)
(5,127,571)
(4,220,576)
(5,127,571)
6,129,377
2,270,000
(2,894,575)
(465,783)
5,039,020
6,436,389
2,347,211
(439,750)
(52,794)
8,291,056
(1,669,855)
(19,101)
1,725,366
1,744,467
6
55,511
1,725,366
The above statement of cash flows should be read in conjunction with the accompanying notes
27
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
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.
i.
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 financial assets and liabilities at fair value through profit or loss,
financial assets at fair value through other comprehensive income, 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.
ii.
New or amended Accounting Standards and Interpretations adopted
The Consolidated entity has adopted all of the new or amended Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for
the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted. The adoption of these Accounting Standards and Interpretations did not have
any significant impact on the financial performance or position of the Consolidated entity.
iii.
Change in Accounting Policy
Leases - Adoption of AASB 16
The Company has adopted AASB 16 Leases using the modified retrospective (cumulative catch-up)
method from 1 July 2019 and therefore the comparative information for the year ended 30 June 2019
has not been restated and has been prepared in accordance with AASB 117 Leases and associated
Accounting Interpretations.
Impact of adoption of AASB 16
The impact of adopting AASB 16 is described below:
Under AASB 117, the Company assessed whether leases were operating or finance leases based on
its assessment of whether the significant risks and rewards of ownership had been transferred to the
Company or remained with the lessor. Under AASB 16, there is no differentiation between finance and
operating leases for the lessee and therefore all leases which meet the definition of a lease are
recognised on the statement of financial position (except for short-term leases and leases of low value
assets).
The Company has elected to use the exception to lease accounting for short-term leases and leases of
low value assets, and the lease expense relating to these leases are recognised in the statement of
profit or loss on a straight line basis. With the Consolidated entity's leases all being short term leases
or leases of low value assets, the aggregate effect of the change in accounting policy on the financial
statements for the year ended 30 June 2020 was not material and therefore did not result in any
changes to the opening balance sheet on 1 July 2019.
28
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
iv.
Impact of Coronavirus (COVID-19)
Background
The spread of novel coronavirus (COVID-19), a respiratory illness caused by a new virus, was declared
a public health emergency by the World Health Organisation in January 2020 and upgraded to a global
pandemic in March 2020. This pandemic has severely impacted many local economies around the
globe. In many countries, businesses are being forced to cease or limit operations for long or indefinite
periods of time. Measures taken to contain the spread of the virus, including travel bans, quarantines,
social distancing, and closures of non-essential services have triggered significant disruptions to
businesses worldwide, resulting in an economic slowdown. Global stock markets have also experienced
great volatility and a significant weakening.
Governments and central banks have responded with monetary and fiscal interventions to stabilise
economic conditions.
The Consolidated entity has considered the effects of these events based on the information at the date
of issuing this financial report and potential effects of business and other market volatility in preparing
its financial statements.
Impact and considerations for the financial statements / report of the Consolidated entity
The Consolidated entity has determined that the financial position and performance of the Consolidated
entity will not be significantly or materially impacted by COVID-19 when considering the nature of the
Company’s operations, supplier base, and levels of activity to date. In particular, the Directors have
assessed the potential impact on
the Consolidated entity’s ability to raise capital and loan funds.
conducting day to day exploration and development activities at its flagship Kachi Lithium Brine
Project in Catamarca Province and its Cauchari Lithium Brine Project in Jujuy Province and
the activities of the Consolidated entity’s technology partner, Lilac Solutions Inc (Lilac), in California.
The Company was successful in raising equity in February / March 2020 and August / September 2020.
In February / March 2020, the Company raised $3.4 million from placements compared to the original
expectation of $2 million. The Company’s Share Purchase Plan which was originally expected to raise
$1.5 million was expanded twice to accommodate shareholder demand with the second expansion
coinciding with the Covid inspired share market fall resulting in a final take up of $1.559 million, 4%
above the initial expectation. The Company has also received interest from potential funders for the
Definitive Feasibility Study (DFS) and development stages of the project and remains in discussion with
these parties.
On 24 March 2020, the Company announced to the ASX that while lockdowns and travel restrictions in
Argentina had resulted in some minor delays, the impact of the restrictions on the operations had been
limited. The overall impact has been to defer some work on site rather than cause permanent changes
to operations.
The Company has continued to work with its technology partner Lilac with the result that the Company
announced its prefeasibility study (PFS) in April 2020. Lilac’s direct extraction pilot plant module in
California produced the first samples of lithium chloride in June / July 2020. Hazen Research Inc, an
independent assay laboratory, is well advanced in producing initial larger samples of battery quality
lithium carbonate from the pilot plant lithium chloride samples which will be available for downstream
supply chain participants and off-takers.
Given the dynamic and evolving nature of COVID-19, limited recent experience of the economic and
financial impacts of such a pandemic, it is not practicable to estimate the potential impact, positive or
negative, after the reporting date. The situation is rapidly developing and is dependent on measures
imposed by the Australian Government, the Argentine Government, and other countries, such as
maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus
that may be provided. The Company will continue to monitor events as they occur to ensure that the
potential impacts of the pandemic are minimised whilst ensuring safe working conditions for staff and
contractors.
29
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Other than adjusting events that provide evidence of conditions that existed at the end of the reporting
period, the impact of events that arise after the reporting period will be accounted for in future reporting
periods.
v.
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 $4,902,896 (2019:
$3,530,935) and net cash outflows from operating and investing activities of $6,821,866 (2019:
$8,310,157) for the year ended 30 June 2020. At 30 June 2020, the Company had net current
liabilities of $303,783 (2019: $872,042). The Directors note the following with regards to the ability of
the Consolidated entity to continue as a going concern:
a. Subsequent to the end of the financial year, the Consolidated entity issued 115,666,667
shares to raise $3.95 million before costs.
b. The Directors expect that while current funds would be sufficient to meet a minimum program
of exploration and development, an expanded program would require additional funds. The
Consolidated entity has previously raised funds through share placements, short term loans
and capital raisings from new and existing shareholders.
c.
In addition to the above, the Directors have been reviewing various funding opportunities for
an expanded program and are in advanced discussions with potential cornerstone investors,
other investors and development funding partners to meet ongoing needs and to position the
Consolidated entity to secure funding for the first phase of potential staged production.
d. The Directors have the ability to schedule activities and hence expenditure in accordance with
the availability of funds and their cash forecasts.
Based on their previous experience and success in raising capital and loan funds, the Directors are
confident, these additional funds can be obtained for an expanded program.
Whilst the events and conditions noted above indicate the existence of a material uncertainty related
to going concern, the Directors are confident that they will be able to secure the additional funds if
required, and that the going concern basis of preparation for the financial report is appropriate. If for
any reason the Consolidated entity is unable to continue as a going concern, it would impact on the
Consolidated entity’s ability to realise assets at their recognised values and to extinguish liabilities in
the normal course of business at the amounts stated in the consolidated financial statements.
The financial report does not include any adjustments relating to the amounts or classification of
recorded assets or liabilities that might be necessary if the Consolidated entity does not continue as a
going concern.
vi.
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 22.
vii.
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 23.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial
statements of the Consolidated entity from the date on which control is obtained by the Consolidated
entity. The consolidation of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses on transactions between
consolidated entities are fully eliminated on consolidation. Accounting policies of subsidiaries have
30
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
been changed and adjustments made where necessary to ensure uniformity of the accounting policies
adopted by the Consolidated entity.
viii.
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.
ix.
Foreign currency translation
The consolidated financial statements are presented in Australian dollars.
The functional currency of each of the entities in the Consolidated entity is measured using the currency
of the primary economic environment in which the entity operates. The Consolidated entity’s financial
statements are presented in Australian dollars which is the functional and presentation currency of Lake
Resources N.L. (the parent and reporting entity).
Transactions 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 functional currency of the Consolidated entity’s foreign operations in Argentina is US Dollars (USD).
From 1 July 2018, Argentina was declared a hyperinflationary economy due to the significant
devaluation of the Argentine Peso (ARS). However, as the functional currency of the Argentine
subsidiaries is USD, there was no material impact arising from the hyperinflationary effects of the ARS
to the Consolidated entity’s consolidated financial report.
The assets and liabilities of foreign operations are translated into Australian dollars (the presentation
currency) 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.
x.
Financial Instruments
Investments and other financial assets are initially measured at fair value. Transaction costs are included
as part of the initial measurement, except for financial assets at fair value through profit or loss. Such
assets are subsequently measured at either amortised cost or fair value depending on their
classification. Classification is determined based on both the business model within which such assets
are held and the contractual cash flow characteristics of the financial asset unless, an accounting
mismatch is being avoided.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
31
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
are not quoted in an active market. They are carried at amortised cost using the effective interest
rate method. Gains and losses are recognised in profit or loss when the asset is derecognised or
impaired.
Financial assets at amortised cost
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are carried at amortised cost using the effective interest rate
method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired.
Financial assets at fair value through profit and loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income
are classified as financial assets at fair value through profit or loss. Typically, such financial assets will
be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with
an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where
permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which
the Consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify
them as such upon initial recognition.
Impairment of financial assets
The Consolidated entity recognises a loss allowance for expected credit losses on financial assets
which are either measured at amortised cost or fair value through other comprehensive income. The
measurement of the loss allowance depends upon the Consolidated entity's assessment at the end of
each reporting period as to whether the financial instrument's credit risk has increased significantly
since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-
month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The
amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective
interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in
profit or loss
Financial assets at fair value through comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which
the Consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify
them as such upon initial recognition.
Impairment of financial assets
The Consolidated entity recognises a loss allowance for expected credit losses on financial assets
which are either measured at amortised cost or fair value through other comprehensive income. The
measurement of the loss allowance depends upon the Consolidated entity's assessment at the end of
each reporting period as to whether the financial instrument's credit risk has increased significantly
since initial recognition, based on reasonable and supportable information that is available, without
undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-
month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
32
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has
increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The
amount of expected credit loss recognised is measured on the basis of the probability weighted present
value of anticipated cash shortfalls over the life of the instrument discounted at the original effective
interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in
profit or loss.
xi.
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 is 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.
xii.
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
33
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
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.
xiii.
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.
xiv.
Trade and other receivables
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
xv.
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 Consolidated
entity's share of net assets of the joint venture.
xvi.
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.
xvii.
Impairment of assets
At each reporting date, the Consolidated entity 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 Consolidated
entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.
xviii.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Consolidated entity prior to
34
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
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.
xix.
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.
xx.
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.
xxi.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service
leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts
expected to be paid when the liabilities are settled.
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 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 underlying 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.
35
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
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.
xxii.
Fair Value of Assets and Liabilities
The Consolidated entity 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 Consolidated entity 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.
xxiii. Provisions
Provisions are recognised when the Consolidated entity 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.
xxiv.
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.
xxv.
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
36
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
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.
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 the information possible to
determine fair value.
xxvi. 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.
xxvii. 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.
37
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Value Added Tax (VAT) in Argentina is assessable on the sale value of goods and services. To the
extent that VAT credits on purchased goods and services cannot be claimed as refunds, the amount
is recognised in income tax expense.
xxviii. Equity Settled Compensation
The Consolidated entity 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.
xxix. Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
xxx.
Prior Period Adjustment
During the year the Consolidated entity identified as part of the accounting and consolidation of its
foreign operations in Argentina that the functional currency that reflects the primary economic
environment in which those entities operate is US Dollars in accordance with the requirements of AASB
121 The Effects of Changes in Foreign Exchange Rates. This determination was as a result of the
commencement of significant exploration activities, denominated mainly in US dollars in the foreign
operations which commenced from 1 July 2018.
The Consolidated entity therefore determined that its accounting policy relating to Foreign Currency
Translation was not applied accurately and resulted in a misstatement arising as a result of foreign
exchange movements not being recognised in accordance with the policy which led to an
understatement of its Exploration and evaluation expenditure and the foreign currency translation
reserve. This misstatement has been corrected as follows:
Impact on Statement of Financial Position
30 June 2018
As previously
reported
Adjustments
As restated
Exploration and evaluation
Total assets
Total liabilities
Net assets
Equity
Reserves
Total equity
30 June 2019
Exploration and evaluation
Total assets
Total liabilities
Net assets
Equity
Reserves
Total equity
$
4,901,193
6,729,741
224,601
6,505,140
$
167,223
167,223
-
167,223
$
5,068,416
6,896,964
224,601
6,672,363
1,757,605
6,505,140
167,223
167,223
1,924,828
6,672,363
As previously
reported
Adjustments
As restated
$
13,312,658
15,245,623
2,803,774
12,441,849
$
471,214
471,214
-
471,214
$
13,783,872
15,716,837
2,803,774
12,913,063
1,508,020
12,441,849
471,214
471,214
1,979,234
12,913,063
38
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Impact on Statement of Profit or loss and other comprehensive income
30 June 2018
to
Loss after income tax for the
the
year attributable
owners of Lake Resources
N.L.
Other comprehensive income
for the year
Total comprehensive income
for the year
30 June 2019
to
Loss after income tax for the
year attributable
the
owners of Lake Resources
N.L.
Other comprehensive income
for the year
Total comprehensive income
for the year
As previously
reported
$
Adjustments
As restated
$
$
(3,540,391)
-
(3,540,391)
-
167,223
167,223
(3,540,391)
167,223
(3,373,168)
As previously
reported
$
Adjustments
As restated
$
$
(3,530,935)
-
(3,530,935)
-
303,991
303,991
(3,530,935)
303,991
(3,226,944)
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(v)- “Going Concern” above.
Impact of Covid 19
The impact of Covid 19 on the Consolidated entity’s operation is discussed at note 1(iv) “Impact of
Coronavirus” 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.
39
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 2. Critical accounting judgements, estimates and assumptions (continued)
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 Consolidated entity 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
Income statement
Expenses
Tax
Loss after income tax expense for the year
attributable to the owners of Lake Resources NL
Assets
Exploration expenditure
Other assets
Total assets
Liabilities
Net Assets
Notes:
Argentina
Australia
2020
$
2019
$
2020
$
2019
$
-
(44,021)
- (4,858,875)
(355,924)
-
(3,175,009)
-
(44,021)
(355,924)
(4,858,875)
(3,175,009)
17,352,504
-
-
13,783,872
- 360,884
-
1,932,930
17,352,504
13,783,872
360,884
1,932,930
205,862
1,000,562
458,274
1,803,210
17,146,642
12,783,310 (97,390)
129,720
1. Assets in Pakistan total $35 and have been excluded from the above analysis
2. All operating expenses excluding tax in Argentina are incurred in Australia and are detailed in the income statement
and accompanying notes.
40
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 4. Expenses
Loss before income tax includes the following specific expenses:
Corporate expenses
Filing fees - ASIC
Advertising
Audit fees
General expenses
Travel expenses
Consulting - Director
Share registry maintenance
Investor relations
Total corporate expenses
Consultancy and legal costs
Consulting and accounting
Legal expenses
Total consultancy and legal costs
Finance costs
Interest and finance charges paid/payable
Net foreign exchange loss
Net foreign exchange loss
Superannuation expense
Defined contribution superannuation expense
Note 5. Income tax expense
Consolidated
2020
$
2019
$
10,762
32,430
58,754
-
164,388
93,600
150,371
838,513
10,277
82,185
34,787
271,234
237,695
95,592
166,584
280,239
1,348,818 1,178,593
490,468
57,534
548,002
634,348
175,852
810,200
465,783
391,046
13,887
13,430
28,995
24,636
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
Other non-deductible / (allowable) expenses
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
(4,858,875)
(1,336,191)
(3,175,011)
(873,128)
336,025
4,081
(996,085)
(996,085)
239,049
-
(634,079)
634,079
44,021
355,924
44,021
355,924
41 LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 5. Income tax expense (continued)
The Consolidated entity has unrecouped, unconfirmed carry forward tax losses of approximately $16.41
million (2019: $13.2 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 Consolidated entity 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 Consolidated entity continues to comply with the conditions for deductibility imposed by the law;
and
(c) no changes in tax legislation adversely affect the Consolidated entity 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 - trade and other receivables
Other receivables
Total trade and other receivables
Note 8. Current assets - other current assets
Prepayments
Consolidated
2020
$
55,511
2019
$
1,725,366
304,841
151,679
304,841
151,679
Consolidated
2020
$
2019
$
-
54,687
-
54,687
Note 9. 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 Consolidated entity and two other parties. The principal
place of business is Pakistan and the primary purpose is mineral exploration. The exploration licences
are in a stage of renewal.
Equity accounted investment
Consolidated
2020
$
2019
$
35
35
Colt Resources Middle East were to have expended a minimum of US$1.9 million on exploration of the
licences by 2018 but access to the areas proved challenging. The Consolidated entity may resume
100% ownership of Chagai Resources if the areas are renewed.
During the year no significant exploration activities were undertaken.
42
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 10. Non-current assets - exploration and evaluation
Consolidated
2020
$
2019
$
Exploration and evaluation assets - at cost
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous
financial year are set out below:
Opening balance at 1 July
Prior period adjustment
Restated opening balance at 1 July
Additions - direct exploration costs
Foreign currency movement
13,312,658
471,214
13,783,872
3,425,876
142,756
4,901,193
167,223
5,068,416
8,411,465
303,991
17,352,504 13,783,872
Balance at 30 June
17,352,504 13,783,872
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.
Note 11. Current liabilities - trade and other payables
Trade payables
Sundry creditors and accrued expenses
Balance at 30 June
Refer to note 17 for further information on financial instruments.
Note 12. Current liabilities – borrowings
Unsecured notes
SBI convertible notes
Total
Movements in notes were as follows
2019
Unsecured Notes
Issue of notes
Interest accrued
Redeemed for cash
Redeemed for shares
Consolidated
2020
$
2019
$
557,612
25,415
1,099,014
221,189
583,027
1,320,203
Consolidated
2020
$
-
-
-
2019
$
472,504
955,575
1,428,079
Consolidated
Notes
$
9,900,000
-
(1,237,500)
(4,262,500)
990,796
50,796
(134,542)
(433,750)
4,400,000
472,504
43 LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 12. Current liabilities – borrowings (continued)
2019 (continued)
SBI Convertible Notes
Issue of notes
Redeemed for shares
Total
2020
Unsecured Notes
Opening balance
Interest accrued
Redeemed for cash
Total
SBI Convertible Notes
Opening balance
Issue of notes
Redeemed for shares
Discount and early close out fee
Early close out cash repayment
Early close out share repayment
Total
Unsecured Notes
Consolidated
Notes
$
1,820,500
(720,500)
1,655,000
(699,425)
1,100,000
955,575
4,400,000
-
(4,400,000)
472,502
6,903
(478,595)
-
-
1,100,000
1,650,000
(550,000)
-
(1,950,000)
(250,000)
955,575
1,500,000
(549,764)
523,272
(1,966,762)
(462,321)
-
-
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 $0.10 per Note.
Maturity Date: 18 months from the date of issue.
Interest Rate: The Notes attract interest at 15% per annum, payable quarterly in arrears in cash or fully
paid ordinary shares issued at 95% VWAP of the shares for the 10 trading day period ending on the
relevant interest payment date.
Status and Ranking: The Notes rank equally with all other direct, unsubordinated and unsecured
obligations of the Issuer.
Conversion: The Notes convert into fully paid ordinary shares at 80% VWAP of the shares for the
10-trading day period ending on the date of the conversion notice or maturity date.
SBI Convertible notes - early close out
During the period the Consolidated entity entered into a formal agreement with SBI Investments (PR),
LLC (“SBI”), for the early close out of the Convertible Securities funding facility, through a combination
of both a cash payment and the issue of shares to SBI (which included an equity based fee in
consideration for the facility’s early termination). Under the agreement, the Consolidated entity made
a cash payment of A$1,966,762 and issued SBI with 11,558,021 ordinary shares on 11 February 2020.
A summary of the key terms of the Notes is set out below:
Denomination: The 1,820,00 Notes (first instalment) and the 1,650,000 Notes (second instalment) were
issued fully paid with a face value of $0.909 per Note.
44
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 12. Current liabilities – borrowings (continued)
Maturity Date: 18 months from the date of issue of the first investment amount and 12 months from the
date of issue of the second investment amount.
Interest Rate: The Consolidated entity authorised the investor to deduct from the first investment
amount the interest payable for the initial first investment securities interest period at the rate of 15%
per annum, being an amount equal to $248,250 (first year interest amount). The Consolidated entity
authorised the investor to deduct from the second investment amount the interest payable for the first
three months interest period at the rate of 12% per annum, being an amount equal to $45,000 (first
quarter interest amount).
Conversion:
a) The number of shares to which the Investor is entitled upon conversion of the relevant convertible
security is determined by the following formula:
Number of shares = ARA / Conversion Price, where:
ARA: means the aggregate of the repayment amount of the Convertible Security being converted by
the Investor, plus any accrued (but unpaid) interest which is due and payable on the Conversion Date.
Conversion Price: means the Conversion Price (as defined) per Convertible Security, which may be
subsequently adjusted under this clause.
b) Where the number of shares to be issued to the Investor under this clause (above) includes a fraction,
that fraction will be rounded to the nearest whole number.
Note 13. Current liabilities - employee benefits
Annual leave
Note 14. Equity - issued capital
Ordinary shares - fully paid
Ordinary shares comprise:
Ordinary share capital
Treasury shares
Consolidated
2020
$
81,108
2019
$
55,492
Consolidated
2020
Shares
671,461,957
2019
Shares
472,296,192
2020
$
2019
$
35,433,060 27,758,605
656,461,957
15,000,000
457,296,192 35,433,060
-
15,000,000
27,758,605
-
671,461,957
472,296,192 35,433,060
27,758,605
45
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 14. Equity - issued capital (continued)
a) Movements in share capital:
Ordinary share capital
Details
Date
Ordinary
shares
$
2019
Opening balance
Issue of shares - CPA with Acuity Capital *
Transferred to treasury shares
Issue of shares - exercise of listed options
Issue of shares - exercise of listed options
Issue of shares - exercise of listed options
01-Jul-18
02-Aug-18
02-Aug-18
20-Aug-18
23-Aug-18
24-Aug-18
305,683,867
15,000,000
(15,000,000)
504,000
2,575,869
65,235
18,342,102
-
-
50,400
257,587
6,524
Issue of shares - exercise of listed options
27-Aug-18
4,770,679
Issue of shares - Petra Energy **
Issue of shares - exercise of listed options
Issue of shares - conversion of performance
rights
Issue of shares - exercise of unlisted options
Issue of shares - exercise of unlisted options
Issue of shares - Exercise of convertible
notes
Issue of shares - Placement
Issue of shares - Exercise of convertible
notes SBI Agreement
Issue of shares - Exercise of convertible
notes and bonus of options
Issue of shares - Exercise of convertible
notes and bonus of options
Issue of shares - Placement and Exercise of
bonus options
Issue of shares - Exercise of convertible
notes and bonus of options
Issue of shares - Placement and Exercise of
bonus options
Capital raising costs - cash
13-Sep-18
25-Sep-18
19,000,000
10,124,131
477,068
1,767,000
584,785
10-Oct-18
2,500,000
137,500
30-Nov-18
17-Dec-18
5,420,085
497,917
271,004
24,896
11-Mar-19
835,020
41,250
11-Apr-19
21,350,000
1,067,480
06-May-19
1,149,425
49,425
24-May-19
2,611,174
107,381
05-Jun-19
11,198,584
457,240
13-Jun-19
38,245,614
3,020,042
17-Jun-19
24,245,917
978,319
24-Jun-19
6,518,675
254,953
-
(136,351)
Balance 30 June 2019
457,296,192
27,758,605
* These shares were entered under a Controlled Placement Agreement with Acuity Capital
** Refer to note 14(b) for further details
46
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 14. Equity - issued capital (continued)
a) Movements in share capital (continued)
Details
Date
Ordinary
shares
$
2020
Opening balance
Issue of shares - exercise of unlisted
options
Issue of shares - exercise of unlisted
options
Issue of shares - Exercise of convertible
notes SBI Agreement
Issue of shares - Placement
Issue of shares - Exercise of convertible
notes SBI Agreement
Issue of shares - Exercise of convertible
notes SBI Agreement
Issue of shares - redemption of SBI
convertible notes
Issue of shares - Placement
Issue of shares - Placement
Issue of shares - Placement
Issue of shares - Share Purchase Plan
Refund of application for exercise of
unlisted options received prior year
Capital raising costs
01-Jul-19
457,296,192
27,758,605
2-Jul-19
39,998
1,600
3-Jul-19
3,571
143
16-Jul-19
5,898,214
349,764
6-Sep-19
45,319,508
2,039,378
11-Oct-19
2,757,100
100,000
18-Nov-19
3,217,503
100,000
11-Feb-20
11,558,021
462,321
14-Feb-20
27-Feb-20
13-Mar-20
07-Apr-20
36,521,850
47,875,000
7,000,000
38,975,000
1,460,874
1,915,000
280,000
1,559,000
-
-
(6,299)
(587,326)
Balance 30 June 2020
656,461,957
35,433,060
b) Share based payment transactions in share capital movements
Issues of share capital during the year included the equity-settled share-based payment transactions
for the payment for fees and of services as detailed in Note 27.
c) Treasury shares
Details
Date
Treasury
shares
$
2019
Opening balance
Transfer from ordinary share capital
02-Aug-18*
Closing balance
2020
Opening balance
Movement
Closing balance
-
15,000,000
15,000,000
15,000,000
-
15,000,000
-
-
-
-
-
-
* These shares were entered under a Controlled Placement Agreement with Acuity Capital.
47
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 14. Equity - issued capital (continued)
d) Performance rights
The valuations of the performance rights are recognised in performance rights reserve (note 15)
$
Performance Rights
Details
Date
2020
Opening balance
Performance rights granted pursuant to
shareholder approval
Conversion to share capital
15-Aug-19
Closing balance
e)
Options
-
15,000,000
-
345,000
-
15,000,000
345,000
The valuations of the options are recognised in options reserve (refer note 15). All options are vested
and exercisable at the end of the year.
Movements in options were as follows
Details
Date
Options
$
2019
Opening balance
Exercise of listed options
Exercise of listed options
Exercise of listed options
Exercise of listed options
Expiry of options
Exercise of listed options
Exercise of options C
Expiry of options
Expiry of options
Exercise of options D
Issue of unlisted options
Issue of bonus of options
Exercise of bonus options
Exercise of bonus options
Exercise of bonus options
Exercise of bonus options
Exercise of bonus options
Exercise of bonus options
Closing balance 2019
2020
Opening balance
Exercise of unlisted options
Options granted to Directors
Issue of listed options
Options granted to SBI
Expiry of unlisted options
Closing balance 2020
20-Aug-18
23-Aug-18
24-Aug-18
27-Aug-18
27-Aug-18
25-Sep-18
30-Nov-18
30-Nov-18
15-Dec-18
17-Dec-18
08-Mar-19
12-Apr-19
24-May-19
05-Jun-19
13-Jun-19
17-Jun-16
24-Jun-19
24-Jun-19
01-Jul-19
03-Jul-19
15-Aug-19
19-Aug-19
18-Oct-19
21-Oct-19
82,809,161
(504,000)
(2,575,869)
(65,235)
(4,770,679)
(1,160,086)
(10,124,131)
(5,420,085)
(322,409)
(42,816,667)
(497,917)
5,555,000
52,045,081
(1,453,767)
(5,250,452)
(8,469,169)
(15,918,532)
(6,459,275)
(14,493,886)
20,107,083
1,615,108
-
-
-
-
(51,155)
-
(249,571)
-
-
-
188,641
-
-
-
-
-
-
-
1,503,023
20,107,083 1,503,023
(43,569)
-
15,000,000 485,851
-
52,512,693
391,058
18,300,000
-
(5,008,514)
2,379,932
100,867,693
48
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 14. Equity - issued capital (continued)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the
Consolidated entity in proportion to the number of and amounts paid on the shares held. The fully paid
ordinary shares have no par value and the Consolidated entity 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
Consolidated entity’s capital comprises share capital supported by financial assets and financial
liabilities.
Management controls the capital of the Consolidated entity 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 Consolidated entity is in its exploration stage. There are no
externally imposed capital requirements.
Note 15. Equity - reserves
Capital profits reserve
Options reserve
Performance rights reserve
Foreign currency translation reserve
Total equity reserves
a) Capital profits reserve
Consolidated
2020
$
4,997
2,379,932
345,000
2019
$
4,997
1,503,023
-
613,970
471,214
3,343,899
1,979,234
The capital profits reserve records non-taxable profits on sale of investments
b) 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.
c) 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.
d) Foreign currency translation reserve
The foreign currency translation reserve recognises exchange differences arising from the
translation of the financial statements of foreign operations to Australian dollars.
e) Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
49 LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 15. Equity – reserves (continued)
Balance at 30 June 2018
Share-based payments - issued to
brokers in relation to capital raising
Conversion of performance rights to
issued capital
Transfer from option reserve to
accumulated losses on broker options
expired /exercised
Translation of foreign operations
Capital
profit
reserve
Option
reserve
Performance
rights reserve
Total
Foreign
currency
translation
reserve
$
4,997
$
1,615,108
$
$
137,500
167,223
-
-
188,641
-
-
(137,500)
-
-
$
1,924,828
188,641
(137,500)
-
(300,726)
-
-
(300,726)
-
-
- 303,991
303,991
Balance at 30 June 2019
4,997
1,503,023
-
471,214
1,979,234
Balance at 30 June 2019
Share-based payments - issued to lenders
Share-based payments - Director options
Share-based payments - Director
performance rights
Translation of foreign operations
4,997
-
-
1,503,023
391,058
485,851
-
-
-
471,214
-
-
1,979,234
391,058
485,851
-
-
345,000
-
345,000
-
-
-
142,756
142,756
Balance at 30 June 2020
4,997
2,379,932
345,000
613,970
3,343,899
Note 16. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Transfer from options reserve
Consolidated
2020
$
(16,824,776)
(4,902,896)
2019
$
(13,594,567)
(3,530,935)
- 300,726
Accumulated losses at the end of the financial year
(21,727,672)
(16,824,776)
Note 17. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 18. 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.
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.
50
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 18. Financial Instruments (continued)
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 foreign
bank accounts in USD and ARS which are 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, expressed in AUD
US dollars
Euros
Pound Sterling
Canadian dollars
Argentinian pesos
Total
Assets
Liabilities
2020
2019
$
$
4,165
48,521
-
-
-
-
-
-
192 30,642
2020
$
2019
$
42,288
-
53,723
-
205,862
272,445
450
2,900
6,000
636,179
4,357
79,163
301,873
917,179
A sensitivity analysis of the movement in exchange rate (based on the closing balance of the asset) is
presented below:
Consolidated 2020
USD assets
USD liabilities
EUR liabilities
GBP liabilities
CAD liabilities
ARS liabilities
ARS assets
Consolidated 2019
USD assets
USD liabilities
EUR liabilities
GBP liabilities
CAD liabilities
ARS liabilities
ARS assets
Price risk
AUD strengthen by 1%
Impact on
AUD weaken by 1%
Impact on
Profit
before tax
42
(423)
-
(537)
-
(2,059)
2
(2,975)
Equity
-
-
-
-
-
-
-
-
Profit
before tax
(42)
423
-
537
-
2,059
(3)
2,975
Equity
-
-
-
-
-
-
-
808
(3,840)
(7)
(52)
(65)
(6,292)
816
(8,632)
-
-
-
-
-
-
-
-
(808)
3,840
7
52
65
6,292
(816)
8,632
-
-
-
-
-
-
-
-
The Consolidated entity is not exposed to any significant price risk.
51
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 18. Financial Instruments (continued)
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 has adopted a lifetime expected loss allowance in estimating expected credit
losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss
provisioning. These provisions are considered representative across all customers of the Consolidated
entity based on recent sales experience, historical collection rates and forward-looking information that
is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery.
Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement
activity and a failure to make contractual payments for a period greater than 1 year.
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.
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.
Weighted
average
interest
rate
%
<1 year
1 - 2
years
2 - 5
years
> 5
years
Remaining
contractual
maturities
$
$
$
$
$
-
-
-
-
55,511
(664,135)
-
(608,624)
-
-
-
-
-
-
-
-
55,511
-
- (664,135)
-
-
- (608,624)
Consolidated - 2020
Non-derivatives
Non-interest bearing
Cash and cash equivalent
Other payables
Other loans
Total non-derivatives
52
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 18. Financial Instruments (continued)
Consolidated - 2019
Non-derivatives
Non-interest bearing
Cash and cash equivalent
Other payables
Other loans
Total non-derivatives
Weighted
average
interest
rate
<1 year
1 - 2
years
2 - 5
years
> 5
years
Remaining
contractual
maturities
-
-
-
-
1,725,366
(1,375,696)
(1,428,079)
(1,078,409)
-
-
-
-
-
-
-
-
-
1,725,366
- (1,375,696)
- (1,428,079)
- (1,078,409)
Remaining contractual maturities (continued)
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 19. Key management personnel disclosures
Directors
The following persons were KMP of Lake Resources NL during the financial year:
S. Crow (Non-Executive Chairman)
S. Promnitz (Managing Director)
N. Lindsay (Non-Executive Director)
R. Trzebski (Non-Executive Director) – appointed 10 December 2019
G. Gill (CFO and joint Company Secretary) – appointed 15 October 2019
Compensation
The aggregate compensation made to directors and other members of key management
personnel of the Consolidated entity is set out below
Short term benefits
Post-employment benefits
Share-based payments
Total
Note 20. Remuneration of auditors
Consolidated
2020
$
662,029
24,530
830,851
2019
$
557,060
21,130
-
1,517,410
578,190
During the financial year the following fees were paid or payable for services provided by Stanley &
Williamson, the auditor of the Consolidated entity
Audit Services - Stanley & Williamson
Audit or review of the financial statements
Consolidated
2020
$
2019
$
43,100
29,000
53 LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 21. Related party transactions
Parent entity
Lake Resources NL is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 22.
Key management personnel
Disclosures relating to key management personnel are set out in note 18 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
Consultancy services provided by companies associated with Mr
Stuart Crow (Director)
Consultancy services provided by a Consolidated entity
associated with Dr Nicholas Lindsay (Director)
(Receivable from) and payable to related parties
Consultancy services and directors’ fees provided by a
Consolidated entity associated with Mr Stuart Crow
Consultancy services provided by a Consolidated entity
associated with Dr Nicholas Lindsay (Director)
Net advances to Mr Stephen Promnitz
Consolidated
2020
$
2019
$
93,600
146,000
52,350
-
145,950
146,000
30,433
-
12,650
-
(72,038)
(31,275)
(28,955)
(31,275)
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
54
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 22. 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
2020
$
2019
$
(4,771,463)
(2,820,935)
(4,628,707)
(2,516,944)
Parent
2020
$
280,768
18,817,694
458,273
458,273
2019
$
1,839,422
16,009,518
1,774,998
1,774,998
35,433,060
4,997
2,379,932
345,000
(19,803,568)
27,758,605
4,997
1,503,023
-
(15,032,105)
18,359,421
14,234,520
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 2020 and
30 June 2019.
Contingent liabilities
The parent entity had no contingent liability as at 30 June 2020 and 30 June 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and
30 June 2019.
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.
55
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 23. 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
Principal place of
business / Country of
incorporation
Ownership Interest
Lake Mining Pakistan (Pvt) Limited *
LithNRG Pty Ltd
Minerales Australes SA **
Morena del Valle Minerals SA **
Lake Resources CRN Pty Ltd ***
Petra Energy SA
Pakistan
Australia
Argentina
Argentina
Australia
Argentina
The subsidiary was incorporated on 4 December 2014. The subsidiary has share capital consisting solely
of ordinary shares which are held directly by the Consolidated entity. The proportion of ownership interests
held equals the voting rights held by the Consolidated entity. The subsidiary's principal place of business
is also its country of incorporation.
Interest is held through LithNRG Pty Ltd.
Entity created solely as the holder of the Consolidated entity issued Convertible Notes in December 2018,
and since then, all Notes have been repaid. The entity is dormant at present.
*
**
***
2020
%
100%
100%
100%
100%
100%
100%
2019
%
100%
100%
100%
100%
100%
100%
Note 24. Events after the reporting period
Subsequent to the end of the financial year, the Consolidated entity raised a further $3.95 million before
costs, conducted through an oversubscribed and partially underwritten private placement of 85,666,667
shares at an offer price of $0.03 to raise $2.57 million before costs and through a Controlled Placement
Agreement, an issue of 15 million shares at $0.033 per share for $495,000 and an issue of 15 million
shares at $0.06 per ordinary share to raise $900,000. A $200,000 short term loan taken out after year
end was retired with interest in September 2020 so that no loans are outstanding.
No other matter or circumstance has arisen since 30 June 2020 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.
Note 25. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Share-based payments
Financing expenses
Tax expense for VAT not recoverable
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in other current assets
Increase/(decrease) in trade and other payables
Net cash used in operating activities
Consolidated
2020
$
(4,902,896)
2019
$
(3,530,935)
881
1,850,492
465,783
44,021
667
239,049
-
355,924
-
(50,669)
54,687 (5,814)
49,403 (241,477)
(2,488,298)
(3,182,586)
56
LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 26. Earnings per share
Consolidated
2020
$
2019
$
Loss after income tax attributable to the owners of Lake Resources NL
(4,902,896)
(3,530,935)
Number
Number
Weighted average number of ordinary shares used in calculating basic
earnings per share
564,279,901 363,393,218
Weighted average number of ordinary shares used in calculating diluted
earnings per share
564,279,901 363,393,218
Basic earnings per share
Diluted earnings per share
Cents
(0.87)
(0.87)
Cents
(0.97)
(0.97)
Performance rights which are vested but not issued and options over ordinary shares are considered
potential ordinary shares. For the year ended 30 June 2020, their conversion to ordinary shares would
have had the effect of reducing the loss per share from continuing operations. Accordingly, the
performance rights and options were not included in the determination of diluted earnings per share for
the period. Details relating to performance rights and options are set out at notes 15 and 27. Subsequent
to the end of the financial year, the Consolidated entity issued 105,666,667 shares which would have
significantly changed the number of ordinary shares or potential ordinary shares outstanding at the end
of the year if those transactions had occurred before the end of the year. Earnings per share for the
year are not adjusted for transactions occurring after the end of the year as the transactions do not
affect the amount of capital used to produce profit or loss for the year. Details of the share issues
conducted after the reporting period are included in Note 24 above.
Note 27. Share-based payments
During the financial year the Company equity-settled share-based payment transactions for the
acquisition of goods and services, from Directors, loan providers and external suppliers.
a) Director options
On 15 August 2019, following the approval from the shareholders at the Company’s EGM, the Company
granted 15,000,000 options over ordinary shares to the then Directors as follows:
Name
Number of
Options
granted
Grant date
Vesting
and
exercisable
date
Expiry
date
Exercise
Price
S. Promnitz
S. Crow
N. Lindsay
5,000,000
5,000,000
5,000,000
15-Aug-19
15-Aug-19
15-Aug-19
15-Aug-19 31-Jul-21
15-Aug-19 31-Jul-21
15-Aug-19 31-Jul-21
$0.09
$0.09
$0.09
Total
15,000,000
Fair
value at
grant
date
$0.0324
$0.0324
$0.0324
Expensed
161,950
161,950
161,951
- 485,851
For the year ended 30 June 2020, $485,851 was recognised as an expense in the statement of profit
and loss.
57 LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 27. Share-based payments (continued)
b) Options issued to SBI Investments (PR), LLC (SBI)
On 18 October 2019, 18,300,000 unlisted share options were granted to SBI for capital raising services.
The options have an exercise price of 4.6 cents and an expiry date of 28 October 2022. The options
vested immediately on issue, and there were no other vesting conditions attached to the options. These
options were recognised immediately in the statement of profit and loss with a total valuation of
$391,058.
c) Performance rights issued to Directors
On 15 August 2019 following the approval from the shareholders at the Company’s EGM, the
Consolidated entity granted 15,000,000 performance rights to the then Directors as follows:
Number
granted
Grant date
Expiry
date
Vested
during
year
S. Crow
S Promnitz
N Lindsay
5,000,000 15-Aug-19
5,000,000 15-Aug-19
5,000,000 15-Aug-19
15-Aug-24
15-Aug-24
15-Aug-24
-
(2,500,000)
(2,500,000)
Converted
to Shares
Fair
value
at
grant
date
- $0.058
- $0.058
- $0.058
15,000,000
(5,000,000)
-
Expensed
14,375
150,938
179,687
345,000
For the year ended 30 June 2020, $345,000 was recognised as an expense in the statement of profit
and loss. The expense calculation recognises the probability of the performance hurdles being
achieved. Performance shares which vested during the year were issued on 31 August 2020.
The expense for the Director options, SBI options and performance rights were determined using the
Black Scholes methodology utilising the following assumptions:
Director
Options
SBI Options
Performance
Rights
Grant date
15-Aug-19
18-Oct-19
15-Aug-19
Share Price at grant date
Exercise (Strike) Price
Time to Maturity (in years)
Annual Risk-Free Rate
Annualised Volatility
$0.06
$0.09
2
0.90%
100%
$0.036
$0.046
3
0.90%
100%
d) Equity settled payments for fees and services
$0.06
nil
5
0.90%
100%
During the year equity-settled share-based payment transactions for the payment for fees and services
occurred as follows:
58 LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 27. Share-based payments (continued)
2020
Share based payment transactions
Redemption of SBI convertible notes*
Share based payments issued as part of
placement for loan establishment fees
Share based payments issued as part of
placement for professional services
Share based payments issued as part of
placement for professional services
Date
11-Feb-20
Number
Issued
11,558,021
Value per
share
Expensed
$0.018
208,584
13-Feb-20
3,000,000
$0.04
120,000
27-Feb-20
500,000
$0.04
20,000
13-Mar-20
7,000,000
$0.04
280,000
22,058,021
628,584
*The value of the shares issued to redeem the SBI convertible notes ($462,321) was allocated between
the redemption of the notes ($253,737 or $0.022) and costs associated with the early close out of the
notes ($208,584 or $0.018) (refer also Note 27(d)).
2019
On 13 September 2018, following the approval from the shareholders at the Company's EGM, the
Company issued 19,000,000 fully paid ordinary shares to Petra Energy SA to meet the terms of the
option agreement, being a right of exploration and in order to maintain the right to purchase a large
block of approximately 72,000 Ha of exploration and some mining leases and applications over potential
lithium bearing pegmatites and pegmatite swarms. These shares were valued at market prices and a
share-based payment of $1,767,000 has been recognised in the financial statements as part of the
exploration and evaluation assets
Options and Performance Rights
Set out below are summaries of options and performance rights granted under share-based payments
arrangement:
Options
Grant date
2020
14-Nov-16
30-Nov-17
08-Mar-19
15-Aug-19
16-Sep-19
Expiry
date
Exercise
price
Balance at the
start of the
year
Granted
Exercised
Expired /
forfeited /
other
Balance at
the end of
the year
21-Oct-19
31-Dec-20
28-Feb-22
28-Feb-22
28-Oct-22
$0.05
$0.28
$0.08
$0.09
$0.046
5,052,083
9,500,000
5,555,000
-
-
-
- 15,000,000
- 18,300,000
-
-
-
-
-
(5,052,083)
-
- 9,500,000
- 5,555,000
- 15,000,000
- 18,300,000
20,107,083 33,300,000
-
(5,052,083) 48,355,000
2019
14-Nov-16 30-Nov-18
14-Nov-16 21-Oct-19
21-Dec-16 14-Jul-18
27-Feb-17 27-Aug-18
30-Nov-17 31-Dec-20
09-May-18 15-Dec-18
08-Mar-19 28-Feb-22
$0.05
$0.05
$0.10
$0.10
$0.28
$0.20
$0.08
5,042,494
6,250,000
1,539,250
7,350,000
9,500,000
9,500,000
-
-
-
-
- 5,555,000
(4,720,085)
(1,197,917)
(322,409)
-
- (1,539,250)
- (7,350,000)
-
-
- (9,500,000)
-
-
5,052,083
-
-
9,500,000
-
5,555,000
39,181,744
5,555,000 (5,918,002)
(18,711,659) 20,107,083
59 LAKE RESOURCES NL
Notes to the financial statements
for the year ended 30 June 2020
Note 27. Share-based payments (continued)
Performance Rights
Grant date
Expiry
date
Balance at
the start of
the year
Granted
Converted
to Shares
Balance at
the end of
the year
Vested
during year
but not
converted
2020
15-Aug-19
15-Aug-24
-
15,000,000
-
15,000,000
(5,000,000)
2019
14-Nov-16
14-Nov-21
2,500,000
(2,500,000)
-
-
60
LAKE RESOURCES NL
Directors’ declaration
for the year ended 30 June 2020
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 2020 and of its performance for the financial year
ended on that date; and
there are reasonable grounds to believe that the Consolidated entity 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
Stephen Promnitz
Director
27 October 2020
61 Independent Auditor’s Report
To the Members of Lake Resources N.L.
Report on the Audit of the Financial Report
Opinion
Basis for opinion
We have audited the accompanying financial
report of Lake Resources N.L. (the Company)
and its controlled entities (collectively the
Consolidated Entity), which comprises the
consolidated statement of financial position as
at 30 June 2020, the consolidated statement
of profit or loss and other comprehensive
income, the consolidated statement of
changes in equity and the consolidated
statement of cash flows for the year then
ended, and notes to the financial statements,
including a summary of significant accounting
policies and the directors’ declaration.
In our opinion, the accompanying financial
report of the Consolidated Entity is in
accordance with the Corporations Act 2001
including:
giving a true and fair view of the
Consolidated Entity’s financial position as
at 30 June 2020 and of its financial
performance for the year ended on that
date; and
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 (including Independence
Standards) (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.
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
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(v) in the financial report where it is disclosed that the Consolidated Entity
has incurred net losses after tax of $4,902,896 (2019: $3,530,935) and net cash outflows from
operating and investing activities of $6,821,266 (2019: $8,310,157) for the year ended 30 June 2020.
At 30 June 2020, the Consolidated Entity had net current liabilities of $303,783 (2019: $872,042).
These conditions, along with other matters set forth in Note 1(v), 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.
62
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.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we
have determined the matters described below to be the key audit matter to be communicated in our
report.
Key audit matter
How the matter was addressed in the audit
Exploration and evaluation assets
As at 30 June 2020, the Consolidated Entity has
capitalised $17,352,504 of exploration and evaluation
expenditure (“E&E”) as disclosed in Note 10 to the
Financial Statements.
As the carrying value of exploration and evaluation
assets represents a significant proportion of the
Consolidated Entity’s total assets, 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.
Significant judgment is applied in determining the
treatment of exploration and evaluation expenditure
in accordance with Australian Accounting Standard
AASB 6 Exploration for and Evaluation of Mineral
Resources including in particular:
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.
Share based payments
The Consolidated Entity makes share-based
payments to directors and other parties for services
provided. During the year ended 30 June 2020, the
Consolidated Entity incurred share-based payments
expense of $1,850,492.
Share-based payments are considered to be a key
audit matter due to:
the value of the transactions;
Our procedures included, but were not limited to:
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;
evaluating the Consolidated Entity’s accounting
policy to recognise exploration and evaluation
assets using the criteria in the accounting
standard;
testing the Consolidated Entity’s additions to
E&E for the period by evaluating a sample of
recorded expenditure for consistency to
underlying records, the capitalisation
requirements of the accounting policy and the
requirements of the accounting standard;
considering the status of the ongoing exploration
programmes in the respective areas of interest
by holding discussions with management, and
reviewing the Consolidated Entity’s exploration
budgets, ASX announcements and directors’
minutes;
considering whether any facts or circumstances
existed to suggest impairment testing was
required; and
assessing the adequacy of the related
disclosures in Note 10 to the Financial
Statements.
Our procedures amongst others included:
Analysing agreements to identify the key terms
and conditions of share-based payments issued
and relevant vesting conditions in accordance
with AASB 2 Share Based Payments;
Evaluating Management’s valuation models and
assessing the assumptions and inputs used;
63
Key audit matter
How the matter was addressed in the audit
the complexities involved in the recognition and
measurement of these instruments; and
Assessing the amount recognised during the
year in accordance with the vesting conditions of
the agreements;
the judgement involved in determining the inputs
used in the valuations.
Refer to Notes 1, 2 and Note 27 of the financial
statements for details the share-based payment
transactions including the Consolidated Entity’s
accounting policy, key judgements, and inputs in their
calculations.
Prior period adjustment relating to the
foreign currency translation of the
Consolidated Entity’s Argentinian operations
Evaluating Management’s assessment for the
achievement of relevant milestones; and
Evaluating the adequacy of the disclosures
included in Note 27 to the financial statements
and disclosures comprising key management
personnel remuneration.
As described in Note 1(xxx) of the financial
statements, the Consolidated Entity has brought to
account a prior period adjustment relating to the
recognition of the foreign currency translation of its
operations in Argentina.
This was further to the evaluation that that the
functional currency of the Argentinian operations is
US Dollars in accordance with the Consolidated
Entity’s accounting policy in Note 1(ix).
To determine that the prior period adjustment had
been accounted for appropriately, we undertook the
following audit procedures amongst others:
Evaluated Management’s assessment of the
functional currency of the Consolidated Entity’s
Argentinian operations in accordance with the
requirements of the Accounting Standard AASB
121 The Effects of Changes in Foreign
Exchange Rates;
We considered this to be a key audit matter as it gave
rise to a material cumulative impact, increasing the
carrying value of Exploration and evaluation
expenditure and recognising corresponding
movements in the Foreign currency translation
reserve.
Obtained Management’s calculations and
updated consolidation workings in respect of the
restated balances and assessed whether they
reflected our understanding of the revised
treatment and the application of the Accounting
Standard, AASB 121;
Refer to Note 1(xxx) for further details.
Evaluated Management’s adjustments for
accuracy;
Evaluated the adequacy and disclosure of the
correction of prior period balances in the financial
statements for compliance with the requirements
of AASB 108 Accounting Policies, Changes in
Accounting Estimates and Errors.
Information other than the financial report and the Auditor’s Report thereon
Other information comprises financial and non-financial information included in the Consolidated
Entity’s annual report for the year ended 30 June 2020 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.
64
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. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that 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.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website (https://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
Responsibilities
We have audited the Remuneration Report
included in the directors’ report for the year
ended 30 June 2020.
In our opinion the Remuneration Report of
Lake Resources N.L for the year ended 30
June 2020 complies with section 300A of the
Corporations Act 2001.
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
27 October 2020
65
LAKE RESOURCES NL
Shareholder Information
30 June 2020
The shareholder information set out below was applicable as at 27 October 2020.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Ordinary
shares
Listed
options
Unlisted options
Ex price
$0.28
Expiry
31/12/2020
Ex price
$0.09
Expiry
Ex price $0.08
31/7/2021 Expiry28/2/2022
Ex price
$0.046
Expiry
28/10/2022
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Totals
Holdings less
marketable parcel
74
244
639
2,250
961
4,168
609
22
90
75
201
103
491
284
-
-
-
-
3
3
-
-
-
-
-
3
3
-
-
-
-
-
1
1
-
-
-
-
1
1
-
Equity security holders
Twenty largest quoted equity security holders - ordinary shares
The names of the twenty largest security holders of quoted equity securities - ordinary shares are
listed below:
No. Holder Name
1
2
3
MR SIMON JAMES KALINOWSKI
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
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