Lake Resources NL
Annual Report 2022

Plain-text annual report

lakeresources.com.au LAKE RESOURCES ANNUAL REPORT 2022 b CORPORATE DIRECTORY DIRECTORS Stuart Crow Executive Chairman Nicholas Lindsay Executive Technical Director Robert Trzebski Non-Executive Director Amalia Saenz (appointed 28 July 2021) Non-Executive Director David Dickson (appointed 15 September 2022) Managing Director & CEO COMPANY SECRETARY Peter Neilsen PRINCIPAL REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS Level 5, 126 Phillip Street Sydney NSW 2000 Tel: +61 2 9299 9690 SOLICITORS HopgoodGanim Lawyers Level 8, Waterfront Place, 1 Eagle Street Brisbane Qld 4000 SHARE REGISTRY Automic Pty Ltd GPO Box 5193, Sydney, NSW, 2001 Tel: 1300 288 664 AUDITOR BDO Audit Pty Ltd Level 10, 12 Creek Street Brisbane Qld 4000 BANKERS National Australia Bank STOCK EXCHANGE LISTINGS Australian Securities Exchange (ASX code: LKE) OTCQB: LLKKF WEBSITE ADDRESS www.lakeresources.com.au 1 FY2022 HIGHLIGHTS Lake promoted to benchmark S&P/ASX200 index, reflecting substantial growth in market value ‘TARGET 100’ strategy initiated, targeting 100,000 tonnes per annum of battery- grade lithium production by 2030 Offtake and investment CFA’s signed with blue-chip companies spanning Asia, Europe and North America UK and Canadian export agencies indicate potential to provide 70% of Kachi funding requirements Shareholders back Lake with successful bonus option issues, delivering valuable funding for project expansion. 2 LAKE RESOURCES ANNUAL REPORT 2022CONTENTS Chairman’s Review Directors’ Report Auditor’s Independence Declaration Consolidated Statement of Profit or Loss and other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Directors’ Declaration Independent Auditor’s Report 2022 Corporate Governance Statement Additional ASX Information Mineral Resource Schedule of Tenements 5 8 45 46 47 48 49 50 100 101 104 114 118 119 3 LAKE RESOURCES – SUSTAINABLE, HIGH PURITY LITHIUM Lake Resources (ASX:LKE; OTC:LLKKF) is pursuing the production of sustainable, high purity lithium using ion exchange technology. Lake aims to deliver a high purity, battery-grade product with minimal environmental impact, offering substantial ESG benefits. Tier 1 EV and battery makers have been seeking more sustainable, responsibly sourced materials in their supply chain, and this is driving demand for Lake’s product. The Company is finalising a definitive feasibility study for the production of 50,000 tonnes per annum (tpa) LCE at its Kachi Lithium Project. Added to its other lithium projects of Cauchari, Olaroz and Paso, as part of ‘TARGET 100’ Lake is planning 100,000 tpa production by 2030 in Argentina’s ‘Lithium Triangle,’ where 40% of the world’s lithium is produced at the lowest cost. With analysts pointing to an increasing supply deficit for battery-quality lithium, Lake’s projects are in the right location at the right time as we look to start development towards production. “With analysts pointing to an increasing supply deficit for battery-quality lithium, Lake’s projects are in the right location at the right time as we look to start development towards production.” 4 LAKE RESOURCES ANNUAL REPORT 2022CHAIRMAN’S REVIEW To My Fellow Shareholders Export agency funding What a year it has been for Lake and the lithium sector. It gives me great pleasure to report on your Company’s progress in what has been a transformational year in Lake’s history. Lake’s inclusion in the benchmark S&P/ ASX200 index in June 2022 followed a year of substantial growth and a rerating by investors seeing potential in the Company’s assets as we rapidly move towards production. The growth in your Company’s valuation reflects not only an upturn in the lithium market, but tangible accomplishments by your Board and management that have positioned Lake well for further growth in the years ahead. I will now briefly review some of the year’s highlights for Lake. TARGET 100 initiated Lake aims to be one of the world’s significant producers of battery-grade, sustainably sourced lithium and that is exactly what ‘TARGET 100’ will deliver. Announced in February 2022, TARGET 100 has an aspirational goal of producing 100,000 tonnes per annum (tpa) of high purity lithium by 2030, by fast-tracking the Company’s portfolio of assets in Argentina into production to take advantage of the current and predicted deficit in supply over the next 10 or so years. Lake’s flagship Kachi Lithium Project has been the initial focus, with a definitive feasibility study (DFS) underway to produce 50,000 tpa of lithium carbonate. Concurrently, drilling at Kachi aims to support our planned production targets, with the aim of expanding and upgrading the resource to a higher category and scale. The DFS is expected around the end of calendar 2022 and I am confident of a positive result for shareholders even though slightly delayed by test work and disruptions through 2022. TARGET 100 also includes Lake’s other 100 per cent owned projects in Argentina’s Jujuy Province, comprising the Olaroz, Cauchari and Paso projects. Lake will bring forward development of these projects by accelerating drilling and testing programs leading into anticipated additional feasibility studies. Drilling commenced in February and is advancing at the Olaroz, Cauchari and Paso projects, with assay results pending. TARGET 100 is a statement of Lake’s ambition to become a significant player in the supply of sustainable, high purity lithium and we are well on track to achieve our targets. Securing low-cost funding for Lake’s project development is beneficial, particularly during a period of rising global inflation and interest rates. In August 2021, Lake secured indicative terms from UK Export Finance (UKEF), Britain’s official export credit agency, which signed an Expression of Interest (EOI) to fund 70 per cent of the capital expenditure (capex) to build the Kachi project. Whilst providing indicative support for Lake’s clean lithium project, the proposed project finance delivers a significantly lower cost of capital than traditional financing structures. The funding also reflects Kachi’s significant ESG benefits for stakeholders, amid the global drive towards net zero emissions. Just a month later, Canada’s export credit agency, Export Development Canada, provided a similar Letter of Interest to work alongside UKEF in providing the 70 per cent capex for Kachi’s project funding. The lower interest rates on offer and longer repayment terms associated with export credit agency funding further adds to its benefits for shareholders. Lake welcomes such backing from Britain and Canada as a sign of their confidence in our projects. The Board is working to convert these indicative offers into binding commercial agreements ahead of the start of production at Kachi. We anticipate a Final Investment Decision (FID) around the middle of 2023. Offtake, investment agreements Global demand for lithium continues to accelerate, with automakers looking to secure supply of key battery materials in order to achieve electric vehicle (EV) production targets. As a near term supplier of sustainably produced, battery quality lithium, Lake continues to receive numerous approaches from automakers, battery makers and others seeking to secure our ESG friendly product. The Board is focused on ensuring any such agreement maximises the benefits for shareholders, given the competition for our assets. Subsequent to financial year-end, in October 2022 Lake announced a conditional framework agreement (CFA) delivering strategic investments and offtake with Amsterdam-based WMC Energy, followed by a similar CFA with SK On, an affiliate of South Korea’s SK Group. These agreements cover up to 50,000 tpa of Kachi lithium production and provide in excess of A$350m of equity upon achieving a number of conditions precedent as we move towards FID, at which point your Company will be fully funded into production. 5 These agreements show the strength of global demand for Lake’s product, from blue-chip companies across Asia, Europe and North America. We welcome the interest from our new long-term partners, WMC Energy and SK On. stronger financial position. As at financial year-end, the Company had around A$175 million in cash, financing Lake through to Final Investment Decision (FID) and construction finance, including Kachi’s DFS. Lake will continue to update the market on the implementation of these agreements, which have positioned the Company favourably to scale up environmentally responsible production across all projects. Having such funding at hand is particularly significant given recent financial market conditions and puts your Company in a very strong position to grow shareholder value. Shareholder support Lake’s achievements would not have been possible without the support of our shareholders. A number of significant capital raisings were conducted during the financial year to sustain the development of our flagship Kachi project and I would like to thank investors for supporting Lake’s growth plans. Lake’s shareholders also responded strongly to the Company’s bonus option offer announced in July 2021. Some 78 per cent of these bonus options were converted, providing nearly A$30 million for the Company. Further bonus options added an extra A$64 million, meaning that shareholders provided nearly A$100 million in funding. Thank you for your ongoing support. This was a massive vote of confidence in Lake, enabling the Company to fund our development plans while protecting shareholder equity. Your Company has never been in a Board, management changes Lake strengthened our Board and management team during the past financial year, facilitating the Company’s move towards production. In July 2021, Peter Neilsen was appointed as Lake’s new Chief Financial Officer and Joint Company Secretary, with a key focus on driving Lake’s panel of international project financiers to successfully secure funding for Kachi’s development. In November 2021, Lake appointed Argentina-based Gautam Parimoo as Chief Operating Officer, tasked with ensuring a measured and collaborative approach to project development, including strong local engagement. Lake’s Argentina-based team continues to expand, and the Company further strengthened our Argentine representation with the July 2021 appointment of experienced Buenos Aires- based lawyer, Sra. Amalia Saenz as a Non-Executive Director. 6 LAKE RESOURCES ANNUAL REPORT 2022Subsequent to financial year-end, in August 2022 Lake further boosted our management team with the appointment of experienced senior mining executive, Sean Miller as Corporate Development Officer, tasked with fast- tracking exploration across Lake’s Jujuy brine projects. With Lake now aligning operations to serve the critical North American supply chain, we were delighted to recently appoint a new CEO and Managing Director, David Dickson, to drive Lake’s transition towards production. Mr Dickson has more than 30 years’ experience in engineering, construction and EPC cost management across the energy sector, with a proven track record in successfully delivering multi-billion dollar resource projects. His experience and track record will be crucial for Lake as we advance towards our next development milestones. Lake plans further new international appointments to the Board covering such areas as ESG, governance, finance and audit, as we strengthen our team for the next stage of development. I would also like to thank Lake’s staff, suppliers, project partners, contractors and everyone associated with the Company for your sterling efforts over the past year. It’s been a great year and has set Lake up for an even more exciting year ahead! Strong outlook Lithium prices have soared over the past year as supply remains constrained and demand accelerates. Demand for lithium-ion batteries is expected to grow 20-fold by 2050, according to Benchmark Mineral Intelligence (BMI). BMI also projects 74 new lithium mines with average production of 45,000 tonnes are needed by 2035 simply to meet existing demand. This reflects the global EV revolution, with EV sales expected to accelerate from around 9 per cent of the global car market in 2021 to almost 40 per cent by 2030. As a result, analysts point to a continued supply deficit for lithium, requiring new projects such as Lake’s. In this environment Lake is in an excellent position, particularly given our highly efficient and ESG friendly sustainable extraction process and the scale of our wholly owned projects. A number of milestones lie ahead for Lake in fiscal 2022, including first production from the demonstration plant at Kachi, the successful completion of the DFS, an Environmental and Social Impact Assessment (ESIA) and the delivery of our first ever Sustainability Report. Yet with supportive financiers and investors, an experienced team at the helm and very strong demand for our product, I have every confidence we have an outstanding year ahead. Thank you again for your ongoing support and I look forward to an exciting and remarkable year ahead as we move towards the commencement of the construction phase of the Kachi project. Yours sincerely Stu Crow Executive Chairman 7 Directors’ Report For the year ended 30 June 2022 Your Directors present their report on the Consolidated entity consisting of Lake Resources NL and the entities it controlled at the end of, or during, the year ended 30 June 2022. Directors and company secretary 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, Executive Chairman N. Lindsay, Executive Technical Director R. Trzebski, Non Executive Director S. Promnitz, Managing Director (resigned 17 June 2022) A. Saenz, Non Executive Director (appointed 28 July 2021) D.Dickson, Managing Director (appointed 15 September 2022) The company secretary and Chief Financial Officer is Mr Peter Neilsen. Mr Peter Neilsen was appointed to the position of company secretary and Chief Financial Officer in July 2021 after Mr Garry Gill resigned from the position on the 13 July 2021. Principal activities During the year the principal continuing activities of the Consolidated entity consisted of: (a) Exploration and development of lithium brine projects in Argentina. Dividends There were no dividends paid, recommended, or declared during the current or previous financial year. Review of operations The loss from ordinary activities after income tax amounted to $5,683,095 (2021 loss: $2,894,223). Corporate Strategy As a clean lithium developer Lake Resources NL (ASX: LKE; OTC:LLKKF) is bringing forward a US$15 million program across its three 100-percent owned projects - Olaroz, Cauchari and Paso - for drilling and brine testing to fast-track these projects into feasibility studies in the TARGET 100 Program. Lake has initiated an expansion and integration strategy to fast-track its portfolio of assets in Argentina to deliver the TARGET 100 Program - being the aspirational goal to produce annually 100,000 tonnes of high purity lithium to market by 2030. A separate exploration and testing team dedicated to rapid development across Lake’s three other brine projects in Argentina will be utilising the comprehensive data set developed during the Kachi project’s direct extraction processing test work. The drilling program has started with the first rotary well of a 4000m 10-hole program, in the northern areas of the Olaroz leases, which cover a 30km long area on the eastern side of established lithium producers. These projects are located in Jujuy province, in the north-west of Argentina, close to the Allkem (Orocobre) Olaroz operation and the Lithium Americas - Ganfeng JV Cauchari project. The drill wells are designed to quickly quantify brines identified, develop the aquifers, and conduct pumping tests and provide data for initial feasibility studies. Rotary wells will be followed later by diamond holes. Brines will be sampled and tested with environmentally friendly direct lithium extraction method, similar to previous work conducted on Kachi project lithium brines. 8 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Corporate Strategy (continued) Direct lithium extraction, to be used on Lake’s multiple lithium projects, can deliver scalable projects faster to market and supply rapidly increasing demand. Discussions with potential partners to assist the fast-tracking of these assets into production is underway as part of Lake’s ongoing discussions with battery metals customers and Lake’s desire to become an integrated and valuable part of the global supply chains. The four reasons in making the formal decision to expand the Kachi project has also given the company confidence to fast- track expansion and integration of Lake’s other assets in Argentina: 1. 2. the increasing demand by prospective offtake partners for a secure supply chain of environmentally friendly high purity lithium carbonate; the indicative support to fund new projects by Export Credit Agencies and the international bank panel. The UK and Canada Export Credit Agencies have already indicated a willingness to project debt finance around 70 percent of the Kachi project’s capital requirements (ASX announcement 11 Aug 2021); 3. the supportive investment policies of the Argentine Government who have announced a process to lower export taxes as part of the Strategic Plan for Mining Development; This, combined with increasing customer and consumer scrutiny around the environmental credentials of lithium production; and concerns about security of supply has given us the confidence to fast-track these developments. Operations Overview of Operations for the Year Kachi Lithium Brine Project - Catamarca Province, Argentina Lake’s 100%-owned Kachi Lithium Brine Project (Kachi) in Catamarca province, NW Argentina, covers an entire large lithium brine bearing basin with 39 mining leases (74,000 hectares). Lake aims to develop the project into production of 50,000 tpa battery quality lithium carbonate using the highly efficient ion exchange technology method from Lilac Solutions, as established in the Kachi Pre-Feasibility Study (PFS). Kachi has a large indicated and inferred resource of 4.4 million tonnes LCE (Indicated 1.0Mt, inferred 3.4Mt) (refer ASX announcement 27 November 2018). During the year ended 30 June 2022, Lake continued a Definitive Feasibility Study (DFS) with Hatch as lead consultant, the study is progressing with an expected release to market Q4 2022. The Environmental and Social Impact Study (ESIA) has continued in 2022 with Knight Piesold with a final study expected to be completed in Q4 2022. An expansion case to double production to 51,000 tpa LCE has been initiated due to increasing demand. Additional drilling has continued throughout 2022 at the Kachi Project to support the expansion of future production, targeting 50,000tpa LCE. A four well, 1,600m drill program aims to upgrade Kachi’s 4.4 Mt LCE Total Resource from M&I Resources to Reserves for Kachi’s DFS and for production expansion study (refer ASX announcements 7 July 2021 and 31 July 2021) is nearing completion. 99 Directors’ Report For the year ended 30 June 2022 Operations (continued) Overview of Operations for the Year (continued) An efficient, disruptive clean direct lithium extraction (DLE) technology, that can produce sustainable high purity lithium, with a smaller environmental footprint, has been developed by our technology partner, Lilac Solutions Inc, in California (Lilac). Lilac’s DLE process adapts a widely used water treatment process called ion exchange to produce lithium. This allows the return of virtually all water (brine) to its source without changing its chemistry, apart from lithium removal. The land use is significantly reduced due to the removal of evaporation ponds and the plan to use solar hybrid power ensures a low carbon footprint. Battery quality lithium carbonate (99.97% purity) has been produced from Kachi brine samples with very low impurities and high (80- 90%) lithium recoveries (refer ASX announcement 20 October 2020). Test results were incorporated into the PFS. The Lilac’s direct extraction pilot plant modules in California, using brines from Lake’s Kachi Lithium Brine Project, have produced lithium chloride for conversion into lithium carbonate. Hazen Research Inc, an independent assay laboratory, produced high purity battery quality lithium carbonate (99.97%). During the past year a demonstration plant was planned and construction initiated with demonstration modules shipped into Argentina in the final months of FY2021/22. The construction of the demonstration plant is now complete and is now in final stages of commissioning in preparation to test Kachi brines in October 2022. 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. The Cauchari Lithium Brine Project was drilled successfully in 2019, which demonstrated that the high-grade lithium brines in the adjoining world class project extended into Lake’s 100% owned leases, with multiple high-grade lithium brines zones over a 506m interval (102m to 608m depth). Results ranged from 421 to 540 mg/L lithium (493 mg/L average) in detailed sampling with higher-grade results that averaged 493 mg/L lithium over 343m (from 117m to 460m), up to 540 mg/L. This year saw increased exploration activity across these projects as part of the company’s aim of bringing all company projects rapidly towards development as the global lithium market moved into a deficit that many commentators believe will last well into the next decade as demand for lithium grows exponentially. Post year end the company employed Mr Sean Miller to oversee and coordinate the rapid advancement of exploration across these projects. Various lithium extraction methods will be tested on lithium brine samples from the Cauchari, Olaroz and Paso projects as drilling continues, this will then be followed by scoping studies for future production on all projects as they are upgraded towards development, including environmental impact studies and increased drilling for resource statement purposes. Corporate and Financial Advances are continuing towards future clean lithium production from Lake’s flagship Kachi Lithium Brine Project in Catamarca Province. Project Finance (Kachi) The UK Export Finance (UKEF), the Export Credit Agency (ECA) of the United Kingdom, provided a strong Expression of Interest to support approximately 70% of the total finance required for Lake’s Kachi Project, subject to standard project finance terms, including, among others, suitable structured offtake contracts, the successful completion of Kachi’s Definitive Feasibility Study (DFS), and an Environmental and Social Impact Assessment (ESIA) to Equator Principles (refer ASX announcement 11 August 2021). 10 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Operations (continued) Corporate and Financial (continued) The ECA led project finance will deliver a significantly lower cost of capital than traditional financing structures, with the principal repaid over an 8.5-year period post-construction. UKEF indicated that debt finance is available to support expanded production to 51,000 tpa of high purity lithium carbonate equivalent. UKEF’s Expression of Interest will encourage a UK-led sourcing strategy while allowing flexibility for other leading ECAs to participate. Canada’s Export Credit Agency, EDC, provided a Letter of Interest to potentially work alongside UKEF to support approximately 70% of the total finance required for Lake’s Kachi Project, subject to similar standard project finance terms as UKEF (refer ASX announcement 28 September 2021). EDC indicated the ability to provide direct lending to the project up to US$100 million, subject to sourcing requirements. Equity raising during the year Significant capital raisings and options conversions were conducted during the financial year to sustain the development of the Kachi Project. On the 28 July 2021 Lake announced a pro-rata non-renounceable issue to eligible shareholders of one free bonus option for every ten shares held on the record date of 24 August 2021 at the exercise price of $0.35 per bonus option (Bonus Option Offer), to be exercised before 5:00pm on the bonus option expiry date (15 October 2021). One further free additional option at the exercise price of $0.75 per additional option was to be provided for every bonus option exercised prior to the bonus option expiry date of 15 October 2021 (Additional Option Offer) to be exercised by the additional option expiry date (15 June 2022). On 30 August 2021 110,416,119 bonus options were issued at the exercise price of $0.35 per bonus option and an expiry date of 15 October 2021. In late October 2021, the conversion was completed of one free bonus option for every ten shares held on 24 August 2021 by eligible shareholders at the exercise price of $0.35 per bonus option, of which, approximately 78% were converted (86,096,394 new LKE shares), providing A$29,366,483 million to the cash position of the Company. Further 1-for-1 additional bonus options were issued (86,096,394 listed options; security code LKEOC), with an exercise price of A$0.75 and an expiry date of 15 June 2022. These additional options were listed and subsequently converted, adding a further A$64 million to cash reserves by the end of June 2022. Of the additional bonus options issued 3,251,249 were cancelled upon failure to exercise. On 11 March 2022 the company undertook the issue of 40,000,000 fully paid ordinary shares pursuant to its At-the-Market Subscription Agreement (“ATM”) with Acuity Capital. The Company previously entered into a Controlled Placement Agreement in August 2018 with Acuity Capital Pty Ltd, which was later extended until 31 January 2023. On 15 November 2021, the Company announced that the funding amount had been increased to A$80,000,000 to reflect the change in the Company’s market value. Cash position Lake held cash of A$175,444,065 as at 30 June 2022 (in AUD, USD and Argentine Pesos) with no debt. The Company is financed through to the Final Investment Decision (FID) and construction finance phase, including the Definitive Feasibility Study (DFS) for the Kachi project. 1111 Directors’ Report For the year ended 30 June 2022 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 2022, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation has improved in relation to restrictions on travel based on high vaccination rates achieved in Australia and Argentina. Corporate guidelines for employee travelling for business, are also documented per Lake Resources’ approved travel policy. Further information on the impact is detailed in Note 1(iv) of the financial statements. Significant changes in the state of affairs Significant changes in the state of affairs of the Consolidated entity during the financial year were as follows: Lake has strengthened its management team in Argentina with the appointment of Mr. Gautam Parimoo as Chief Operating Officer (COO) on the 25 October 2021. His immediate focus is to drive the Company’s Kachi Lithium Brine Project from feasibility through construction and commissioning into steady state production. Other appointments made during the financial year include the appointment of Peter Neilsen as Chief Financial Officer (CFO) on 11 July 2021. A key focus of the new CFO will be to guide a panel of international project financiers to successfully secure funding for Lake’s lithium production. His other key role will be to develop and assist Lake’s team in Argentina to organise development activities and lithium production. He will also serve as joint Company Secretary. Amalia Saenz was appointed to the board on 28 July 2021. She will assist Lake and its local team in Argentina in engaging with local stakeholders and preparing for the development of clean lithium production in Argentina. Matters subsequent to the end of the financial year On 14th July 2022, after a brief trading halt, the Company responded to an inaccurate report issued by J Capital (a short-seller) attacking Lake Resources over its’ new direct lithium extraction (DLE) technology, share trade disclosures, options to brokers, and Memoranda of Understandings signed to date. Lake reassured investors that the Lilac Solutions proprietary ion exchange technology to be used for DLE at the Kachi brine project in Argentina, will be practical, efficient, and environmentally sustainable. The Company also advised that non-disclosure of share trades by the former Managing Director (Stephen Promnitz), were unapproved due to failure by the Officer to notify the Company Secretary. Options issues to brokers as part of the fee arrangements were common practice in the industry, and that Memoranda of Understanding (MOU’s), while largely non- binding, had been entered into with globally recognised companies for the long-term supply of a material critical to their supply chains. Following the resignation of the former Managing Director on 17 June 2022, the Company announced on 16th August 2022 a notification of cessation of securities for 2,500,000 performance rights, due to conditions not being satisfied. On 19th August 2022 the Company appointed senior mining executive Mr Sean Miller as Corporate Development Officer to fast- track exploration across three Jujuy brine projects in Argentina - Cauchari, Olaroz and Paso projects. At the same time, it was also confirmed that the new CEO appointment process was nearing completion, and that Lake Resources was finalising the selection of new board members as part of the transition to a US corporate office to better align production and key customers and markets. 12 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Matters subsequent to the end of the financial year (continued) A six-month global search for a new CEO/MD culminated with an ASX announcement dated 7th September that Mr David Dickson would assume the role of CEO and Managing Director. Mr Dickson is an industry leader with over 30 years’ experience in engineering, construction, and EPC cost management, across the energy sector. He has a proven track record in successfully delivering multibillion dollar resource projects. On 14 September 2022 Lake Resources NL provided an update on the Kachi pilot plant in respect of progress under its Pilot Project Agreement (dated 21 September 2021) with technology partner, Lilac Solutions Inc (Lilac). Whilst work has continued on the Kachi project, a dispute has arisen between Lake and Lilac as to the date by which key performance milestones need to be achieved, with Lake considering milestones to be achieved by 30 September 2022 and Lilac considering it has until 30 November 2022 to do so. To resolve the dispute, Lake has exercised its rights to have the dispute resolved either by agreement of both Lake and Lilac or by arbitration. Pursuant to ASX announcement on 19 September, Lake confirmed that construction of the facility to house the Lilac demonstration plant was complete. Dry commissioning of the demonstration plant also commenced on Wednesday September 14, with expected wet commissioning of the plant to begin on September 22. Once wet commissioning is complete, Lilac expects to begin onsite processing of Kachi brines in the first week of October 2022. Whilst the test program is based on operating the demonstration plant for 1000 hours it is anticipated that the first 2000 litres of lithium concentrate produced from the demonstration plant will be sent for conversion into Lithium Carbonate once delivered. Lake proposes that this final Lithium product will then be qualified by a tier 1 battery maker to validate product specifications. Lake confirmed offtake discussions continue to advance and new appointments to the Lake board are in final stages of consideration. No other matter or circumstance has arisen since 30 June 2022 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 There has been a significant expansion in battery megafactories with 225 megafactories forecast to be in operation by 2030 These facilities prefer high quality lithium products, especially with the ESG benefit that Lake’s products will provide. A significant and growing supply deficit is forecast to develop in late 2021 through to 2022 which requires significant new scalable supply of lithium products. 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. A definitive feasibility study (DFS) is underway on the Kachi project together with an Environmental and Social Impact Assessment (ESIA). When the studies are completed, together with suitably structured offtake contracts, the Export Credit Agency (ECA) led project finance should be triggered facilitating the completion of approximately 70% of the total finance required for Lake’s Kachi Project. Lake formally partnered with Lilac for the technology and funding to develop the Kachi Project (refer ASX announcement 22 September 2021). Under the agreement, Lilac will contribute technology, engineering teams, and an on-site demonstration plant, earning in to a maximum 25% stake in Lake’s Kachi project based on performance-based milestones. It is anticipated that Lake will reduce its equity holding in the Kachi project as Lilac reaches these milestones. Offtake discussions will continue which should lead to suitably structured offtake contracts for all parties. 1313 Directors’ Report For the year ended 30 June 2022 Material Business Risks The Group’s exploration and mining operations will be subject to the normal risks of mining and any revenues will be subject to numerous factors beyond the Group’s control. The material business risks that may affect the Group are summarised below. Future Capital Raisings The Group’s ongoing activities may require substantial further financing in the future, in addition to amounts raised pursuant the capital raising completed by the year ended 30 June. The Group will require additional funding to bring the Kachi Project into commercial production. Any additional equity financing may be dilutive to shareholders, may be undertaken at lower prices than the current market price and debt financing, if available, may involve restrictive covenants which limit the Group’s operations and business strategy. Although the directors believe that additional capital can be obtained, no assurances can be made, especially given the impact of the COVID-19 pandemic, that appropriate capital or funding, if and when needed, will be available on terms favourable to the Company or at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce, delay or suspend its operations and this could have a material adverse effect on the Group’s activities and could affect the Group’s ability to continue as a going concern. Exploration Risk The success of the Group depends on the delineation of economically mineable reserves and resources, access to required development capital, movement in the price of commodities, securing and maintaining title to the Group’s exploration and mining tenements and obtaining all consents and approvals necessary for the conduct of its exploration activities. Exploration on the Group’s existing tenements may be unsuccessful, resulting in a reduction in the value of those tenements, diminution in the cash reserves of the Group and possible relinquishment of the tenements. The exploration costs of the Group are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and the underlying assumptions will be realised in practice, which may materially and adversely affect the Group’s viability. If the level of operating expenditure required is higher than expected, the financial position of the Group may be adversely affected. The Group may also experience unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment. Feasibility and Development Risks It may not always be possible for the Group to exploit successful discoveries which may be made in areas in which the Group has an interest. Such exploitation would involve obtaining the necessary licences or clearances from relevant authorities that may require conditions to be satisfied and/or the exercise of discretions by such authorities. It may or may not be possible for such conditions to be satisfied. Further, the decision to proceed to further exploitation may require participation of other companies whose interests and objectives may not be the same as the Group’s. There is a complex, multidisciplinary process underway to complete a feasibility study to support any development proposal. There is a risk that the feasibility study and associated technical works will not achieve the results expected. There is also a risk that, even if a positive feasibility study is produced, the project may not be successfully developed for commercial or financial reasons. 14 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Material Business Risks (continued) Regulatory Risk The Group’s operations are subject to various Commonwealth, State and Territory and local laws and plans, including those relating to mining, prospecting, development permit and licence requirements, industrial relations, environment, land use, royalties, water, native title and cultural heritage, mine safety and occupational health. Approvals, licences and permits required to comply with such rules are subject to the discretion of the applicable government officials. No assurance can be given that the Group will be successful in maintaining such authorisations in full force and effect without modification or revocation. To the extent such approvals are required and not retained or obtained in a timely manner or at all, the Group may be curtailed or prohibited from continuing or proceeding with production and exploration. The Group’s business and results of operations could be adversely affected if applications lodged for exploration licences are not granted. Mining and exploration tenements are subject to periodic renewal. The renewal of the term of a granted tenement is also subject to the discretion of the relevant Minister. Renewal conditions may include increased expenditure and work commitments or compulsory relinquishment of areas of the tenements comprising the Group’s projects. The imposition of new conditions or the inability to meet those conditions may adversely affect the operations, financial position and/or performance of the Group. Occupational Health and Safety Given the Group’s exploration activities (and especially if it achieves exploration success leading to mining activities), it will face the risk of workplace injuries which may result in workers’ compensation claims, related common law claims and potential occupational health and safety prosecutions. Further, the production processes used in conducting any future mining activities of the Group can be dangerous. The Group has, and intends to maintain, a range of workplace practices, procedures and policies which will seek to provide a safe and healthy working environment for its employees, visitors and the community. Of particular concern will be operating and managing health and safety in an environment where COVID-19 remains a major concern. Limited Operating History of the Group The Group has limited operating history on which it can base an evaluation of its future prospects. If the Group’s business model does not prove to be profitable, investors may lose their investment. The Group’s historical financial information is of limited value because of the Group’s lack of operating history and the emerging nature of its business. The prospects of the Group must be considered in the light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly in the mineral exploration sector, which has a high level of inherent uncertainty. Key Personnel In formulating its exploration programs, feasibility studies and development strategies, the Group relies to a significant extent upon the experience and expertise of the directors and management. A number of key personnel are important to attaining the business goals of the Group. One or more of these key employees could leave their employment, and this may adversely affect the ability of the Group to conduct its business and, accordingly, affect the financial performance of the Group and its share price. Recruiting and retaining qualified personnel is important to the Group’s success. The number of persons skilled in the exploration and development of mining properties is limited and competition for such persons is strong. 1515 Directors’ Report For the year ended 30 June 2022 Material Business Risks (continued) Resource Estimate Risk Resource estimates are expressions of judgement based on knowledge, experience and industry practice. These estimates were appropriate when made but may change significantly when new information becomes available. There are risks associated with such estimates. Resource estimates are necessarily imprecise and depend to some extent on interpretations, which may ultimately prove to be inaccurate and require adjustment. Adjustments to resource estimates could affect the Group’s future plans and ultimately its financial performance and value. Lithium price fluctuations, as well as increased production costs or reduced throughput and/or recovery rates, may render resources containing relatively lower grades uneconomic and may materially affect resource estimations. Environmental Risk The operations and activities of the Group are subject to the environmental laws and regulations of Australia. As with most exploration projects and mining operations, the Group’s operations and activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. The Group attempts to conduct its operations and activities to the highest standard of environmental obligation, including compliance with all environmental laws and regulations. The Group is unable to predict the effect of additional environmental laws and regulations which may be adopted in the future, including whether any such laws or regulations would materially increase the Group’s cost of doing business or affect its operations in any area. However, there can be no assurances that new environmental laws, regulations or stricter enforcement policies, once implemented, will not oblige the Group to incur significant expenses and undertake significant investments which could have a material adverse effect on the Group’s business, financial condition and performance. Availability of Equipment and Contractors Prior to the COVID-19 pandemic, appropriate equipment, including drill rigs, was in short supply. There was also high demand for contractors providing other services to the mining industry. The COVID-19 pandemic has only served to exacerbate these issues. Consequently, there is a risk that the Group may not be able to source all the equipment and contractors required to fulfil its proposed activities. There is also a risk that hired contractors may underperform or that equipment may malfunction, either of which may affect the progress of the Group’s activities. Climate Change Risk The operations and activities of the Group are subject to changes to local or international compliance regulations related to climate change mitigation efforts, specific taxation or penalties for carbon emissions or environmental damage, and other possible restraints on industry that may further impact the Group and its profitability. While the Group will endeavour to manage these risks and limit any consequential impacts, there can be no guarantee that the Group will not be impacted by these occurrences. Climate change may also cause certain physical and environmental risks that cannot be predicted by the Group, including events such as increased severity of weather patterns, incidence of extreme weather events and longer-term physical risks such as shifting climate patterns. All these risks associated with climate change may significantly change the industry in which the Group operates. Macro-Economic Risks In 2022, the world continues to recover from the COVID-19 pandemic, with global supply chains, labour and equipment shortages still being materially affected. 16 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Material Business Risks (continued) Hyperinflationary pressures in Argentina for appropriately skilled labour and capital items are being seen across many industries, including mining. Current domestic and international inflation is at levels not since the 1970’s and 1980’s, triggering rising interest rates globally; a situation that has been driven by post pandemic issues and by spiking energy prices, triggered by the recent conflict between Ukraine and Russia. The negative economic outlook has affected world capital markets, with major global indices reducing by up to 20% in the first half of 2022 (S&P 500: 20.6%). These conditions are expected to persist in the short term. Australia now has unrestricted international borders, however further disruptions may be experienced as the pandemic moves into the endemic phase, with waning vaccine effectiveness and possible new COVID-19 variants, which could cause subsequent disruptions to businesses nationwide. 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. Information on directors Name Title Experience and expertise Other current Directorships Former Directorships (last 3 years) Name Title Experience and expertise Stuart Crow Executive Chairman 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 in financial advisory for over 31 years. Senior Non Executive Director Atlantic Lithium Limited (AIM & ASX) Non Executive Chairman Ricca Resources Limited (unlisted) Non-executive Director Todd River Resources Ltd (ASX:TRT) Stephen Promnitz (resigned 17 June 2022) Managing Director and CEO Mr Promnitz led Lake since 2016, bringing natural resources and energy experience with a focus on South America and South-East Asia, and delivered the lithium project portfolio. Previously he was CEO of small/mid-tier companies or senior manager with global resource companies (Rio Tinto, WMC) together with holding senior corporate finance roles with Westpac and Citigroup. Other current Directorships Former Directorships (last 3 years) None None 1717 Directors’ Report For the year ended 30 June 2022 Information on directors (continued) Name Title Experience and expertise Dr Nicholas Lindsay Executive Technical Director Dr Lindsay is an experienced mining executive, with a BSc (Hons) degree in Geology, a PhD in process mineralogy (Metallurgy & Materials Engineering) as well as an MBA. He has a long association with South America, where he has successfully taken companies from inception to listing, development and subsequent acquisition such as Laguna Resources which he led as Managing Director. Other current Directorships Manuka Resources (ASX:MKR) Former Directorships (last 3 years) None Name Title Experience and expertise Dr Robert Trzebski Non-Executive Director 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) appointed on 10 April 2007 Former Directorships (last 3 years) None 18 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Information on directors (continued) Name Title Experience and expertise Amalia Saenz (appointed 28 July 2021) Non-Executive Director Ms. Amalia Sáenz was previously a partner at the legal firm, Zang, Bergel & Viñes, in Buenos Aires leading the Energy and Natural Resources practice. Sra. Sáenz joined the firm some years ago to meet increased demand from clients looking to invest in Argentina’s natural resources space. Prior to Zang, Bergel & Viñes Ms Sáenz was with respected legal firm Brons & Salas, in Buenos Aires, and her practice covered the full scope of natural resources and energy and oil and gas, with specific focus on tenders, acquisitions, financing, joint venture and operation agreements in Argentina. She is a leading member of the Association of International Petroleum Negotiators. Also, in the past, Ms. Sáenz was the Legal Manager with Bridas Corporation living in Central Asia -as well in United Kingdom- experiencing working in an exploration and production operations in a context of a mixture of cultures. Other current Directorships Former Directorships (last 3 years) None None Note • 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 Secretary in office until 13 July 2021 was Mr Garry Gill. Mr 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 Chief Financial Officer, 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, Chief Financial Officer or 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. Mr Peter Neilsen who was appointed on 11 July 2021, is a chartered accountant with more than 20 years’ experience in all facets of financial management, asset management and leadership. He has served in a range of positions including as Chief Financial Officer (CFO), company secretary, finance manager and other senior executive positions for a number of listed and unlisted companies in the energy and natural resources sector. These have included Barrick, Xstrata and Round Oak. Mr Neilsen has been involved in reducing operation expenses up to $100M through cost analysis, performance improvements and contract negotiations, acquisitions of up to $80M and managed revenues in excess of $5Bn. 1919 Directors’ Report For the year ended 30 June 2022 Directors’ Interests in the Consolidated entity At the date of this report or last date of employment, the interests of the Directors in the shares, options and performance rights of the Consolidated entity were: S. Crow (Executive Chairman) S. Promnitz (Managing Director) N. Lindsay (Executive Technical Director) R. Trzebski (Non Executive Director) A. Saenz (Non Executive Director) Ordinary Shares Options Performance Rights Performance Shares 17,919,367 10,206,150* 3,216,667 - - - - - - - 5,000,000 - - - 2,500,000 461,715 - - - - * Date refers to the 17th June as last day of employment as Director Meetings of directors The number of meetings of the Consolidated entity’s Board of Directors held during the year ended 30 June 2022, and the numbers of meetings attended by each Director were: S. Crow N. Lindsay R. Trzebski A. Saenz S. Promnitz Held Attended 10 10 10 9 10 10 10 9 6 9 “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. 20 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (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. During the current reporting period,the Company engaged Godfrey Remuneration Group to assist in development of short term and long-term incentives for its executives. 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 objective of the Consolidated entity’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors (‘the Board’) ensures that executive reward satisfies the following key criteria for good reward governance practices: • competitiveness and reasonableness, • acceptability to shareholders, • performance linkage/ alignment of executive compensation, • transparency The 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. 2121 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (a) Principles used to determine the nature and amount of remuneration (continued) 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 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 • long-term performance incentives • share-based payments, including options and performance rights • performance shares • relocation costs or allowances, as relevant for remote (close to site) based employees • fringe benefits including motor vehicles, residential accommodation costs, private health insurance and private education fees for KMP’s and their associates • other employer remuneration including compulsory superannuation, pension fund, annual and long service leave Elements of remuneration Fixed annual remuneration (FR) Fixed remuneration, consisting of base salary, superannuation, and non-monetary benefits, are generally 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, private residential housing) where it provides additional tax effective benefits and performance incentives to the executive. Short Term Variable Remuneration (STVR) Plan for Performance Rights The Consolidated entity has undertaken to implement entitlements to participate in performance based STVR incentive arrangements. The STVR will reflect generally the following elements: • maximum entitlement of approximately 20% of Base Pay and Benefits • the package to comprise half cash and half in a grant of performance shares The associated performance hurdles and weighting may include: • in respect of the cash component, the delivery of a definitive feasibility study (DFS) at the Company’s Kachi Lithium Brine Project (Project) and financing for the Project being approved • The hurdles and weighting for the performance shares are to be measured no later than 15 months after the executive’s Commencement Date. 22 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) Elements of remuneration (continued) Short Term Variable Remuneration (STVR) Plan for Performance Rights (continued) The grant of performance shares to Executive Directors is subject to shareholders’ approval. Performance Shares Pursuant to resolution 12 dated 25 January 2022 (and issued 24 February 2022), approval to issue Performance Shares was granted for the Chief Financial Officer (Peter Neilsen) and Executive Technical Director (Dr Nicholas Lindsay). Neilsen Performance Shares The purpose of the grant of the Neilsen Performance Shares is to provide Mr Neilsen with short and long-term variable remuneration as incentive to participate in the Company’s growth that is directly aligned with the creation of shareholder value. The Class A Performance Share is to be issued to Mr Neilsen is part of his short-term variable remuneration package. The Class B, C and D Performance Shares are to be issued to Mr Neilsen as part of his long-term variable remuneration package. Each Neilsen Performance Share entitles Mr Neilsen to receive up to a maximum of the following number of ordinary shares in the Company upon conversion of that Performance Share, subject to certain performance measures (set out below) (Neilsen Performance Measures) being met: Table 1 - Maximum number of ordinary shares to be issued Performance Share Maximum number of ordinary shares that the Neilsen Performance Share will convert into Class A Class B Class C Class D Total 123,809 139,285 167,142 250,714 680,950 The maximum number of ordinary shares assumes that the VWAP Price under the Neilsen Conversion Formula set out below is at least $0.35 being the market price of the Company’s shares as at 1 July 2021 (VWAP Floor Price). If the VWAP Price is lower than the VWAP Floor Price, no more than the maximum number of ordinary shares approved by Shareholders under Resolution. Conversion of Class A Neilsen Performance Share The number of Shares to be granted to Mr Neilsen upon conversion of the Class A Neilsen Performance Share will be calculated using the following formula (Short-term Neilsen Conversion Formula): 2323 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) Elements of remuneration (continued) Short Term Variable Remuneration (STVR) Plan for Performance Rights (continued) NS = (2/3 x $65,000) x P VWAP Price where: NS = Number of Shares to be issued on conversion of the relevant Neilsen Performance Share. P = Percentage assessed by the Company’s Remuneration Committee according to assessment of Mr Neilsen’s achievement of the relevant Neilsen Performance Measure over the Measurement Period up to the Maximum Weighting. The Maximum Weighting, Neilsen Performance Measures, Measurement Period and Expiry Date for the A Class Neilsen Performance Share are set out below. Class A Neilsen Performance Share Neilsen Performance Measure Maximum Weighting Measurement period Expiry Date Delivering comprehensive accounting information with quality timely information in Argentina and at head company levels 40% 12 July 2021 - 12 October 2022 12 December 2022 Closing the debt financing for the Company’s Kachi Project (60%) 60% Conversion of Class B, C and D Neilsen Performance Shares The number of Shares to be granted to Mr Neilsen upon conversion of the Class B, C and D Neilsen Performance Shares will be calculated using the following formula (Long-term Neilsen Conversion Formula): 24 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) Elements of remuneration (continued) Short Term Variable Remuneration (STVR) Plan for Performance Rights (continued) NS = (P% x $195,000) VWAP Price where: NS = Number of Shares to be issued on conversion of the relevant Neilsen Performance Share. P = Percentage assessed by the Company’s Remuneration Committee according to assessment of Mr Neilsen’s achievement of the relevant Neilsen Performance Measure over the Measurement Period up to the Maximum Weighting. VWAP Price = the volume weighted average price of the Company’s Shares traded on ASX during the 20 trading days prior to the date of conversion of the relevant Neilsen Performance Share. The Maximum Weighting, Neilsen Performance Measure, Measurement Period and Expiry Date for the Class B, C and D Neilsen Performance Shares are set out below. Performance Share Maximum Weighting Neilsen Performance Measure Class B Class C 25% 30% Delivering and operating a comprehensive reporting package for the debt financiers and potential JV partners post close of the Kachi Project finance Maintain and deliver accurate reporting across all facets of the business incorporating cash flows, pre- production and budgeting Preparation of financial documents to the satisfaction of financiers, project banking syndicates and export credit agencies Implementation and maintenance of acceptable budgetary and cash flow measures across Australia and Argentina Measurement period 12 July 2021 – 12 January 2023 Expiry Date 12 March 2023 12 July 2021 – 12 July 2023 12 September 2023 Class D 45% Delivery of the Kachi Project into production with appropriate reporting mechanisms in place 12 July 2021 – 12 July 2024 12 September 2024 The Company’s Remuneration Committee will assess whether the Neilsen Performance Measures for the Neilsen Performance Shares are satisfied by the Expiry Date. Lindsay Performance Shares The purpose of the grant of the Lindsay Performance Shares is to provide Dr Lindsay with short and long-term variable remuneration as incentives to participate in the Company’s growth that is directly aligned with the creation of shareholder value. 2525 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) Elements of remuneration (continued) Short Term Variable Remuneration (STVR) Plan for Performance Rights (continued) The Class E Performance Share is to be issued to Dr Lindsay as part of his short-term variable remuneration package. The Class F, G and H Performance Shares are to be issued to Dr Lindsay as part of his long-term variable remuneration package. Each Lindsay Performance Share entitles Dr Lindsay to receive up to a maximum of the following number of ordinary shares in the Company upon conversion of that Performance Share, subject to certain Performance Measures (set out below) being met: Table 1 - Maximum number of ordinary shares to be issued Performance Share Maximum number of ordinary shares that the Lindsay Performance Share will convert into Class E Class F Class G Class H Total 92,343 147,749 147,749 73,874 461,715 The maximum number of ordinary shares assumes that the VWAP Price under the Lindsay Conversion Formula set out below is $0.35 (VWAP Floor Price). If the VWAP Price is lower than the VWAP Floor Price, no more than the maximum number of ordinary shares approved by Shareholders under Resolution 13 will be issued. The number of Shares to be granted to Dr Lindsay upon conversion of the Lindsay Performance Shares will be calculated using the following formula (Lindsay Conversion Formula): NS = (P% x BP) VWAP Price where: NS = Number of Shares to be issued on conversion of the relevant Lindsay Performance Share. BP = means the base pay component being in respect of the Class D Performance Share, $32,320.20 and in respect of the Class E, Class F and Class G Performance Shares, $129,280.80. P = Percentage assessed by the Company’s Remuneration Committee according to assessment of relevant Performance Measure over the Measurement Period up to the Maximum Weighting. VWAP Price = the volume weighted average price of the Company’s Shares traded on ASX during the 20 trading days prior to the date of conversion of the relevant Lindsay Performance Share. The Maximum Weighting, Lindsay Performance Measures, Measurement Period and Expiry Date for the Lindsay 26 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) Elements of remuneration (continued) Short Term Variable Remuneration (STVR) Plan for Performance Rights (continued) Performance Shares are set out below Performance Share Maximum Weighting Class D 100% Lindsay Performance Measure Measurement period Expiry Date Commencement of exploration and testing of brines from at least one of the Company’s other projects 1 January 2021 – 1 April 2022 1 June 2022 Class E Class F Class G 40% 40% 20% The Company putting a project team in place to build the Project DFS and building the demonstration plant on site 1 January 2021 – 1 April 2022 1 June 2022 The Company closing the debt and equity financing for the Company’s Kachi Project on terms satisfactory to the Company 1 January 2021 – 1 January 2023 1 March 2023 The Company receiving approval for the financing of an expansion case being up to 50,000 tonnes per annum lithium carbonate equivalent total production at the Kachi Project 1 January 2021 – 1 January 2024 1 March 2024 The Company’s Remuneration Committee will assess whether the Lindsay Performance Measures are satisfied within the relevant assessment periods. The Performance Measures may only be amended with approval of Shareholders in General Meeting and a voting exclusion statement applies in relation to any holder of Performance Shares. Long-term incentives (LTI) Plan At the 2016 Annual General Meeting, the shareholders of the Consolidated entity approved the Long-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. 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). Long Term Variable Remuneration (LTVR) Plan for Performance rights The LTVR will be equal to 40% of the annual value of the executive’s Base Pay and Benefits as at the Commencement Date, comprised in performance shares granted in tranches over three years, subject to achievement of the following performance hurdles, weighted as indicated: 2727 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) Elements of remuneration (continued) Long Term Variable Remuneration (LTVR) Plan for Performance rights (continued) (1) for the first tranche, measured no later than 15 months after the Commencement Date - the Company putting a project team in place to build the Project DFS and building the demonstration plant on site (40%); (2) for the second tranche, measured at the end of the second year after the Commencement Date - closing the debt and equity financing for the Company’s Kachi Lithium Brine Project (Kachi Project) on terms satisfactory to the Company (40%); (3) for the third tranche, measured at the end of the third year after the Commencement Date - the Company receiving approval for the financing of an expansion case being up to 50,000 tonnes per annum lithium carbonate equivalent total production at the Kachi Project (20%). In each case the performance hurdles will be measured at the end of the indicated measurement periods to determine the actual entitlement for the relevant measurement period. The grant of performance shares to Executive Directors is subject to shareholders’ approval. (b) Details remuneration Amounts of remuneration Non-executive Executive KMP Date R. Trzebski A Saenz S. Crow N. Lindsay S. Promnitz from 2 December 2019 from 28 July 2021 from 20 June 2022 from 1 January 2021 until 17 June 2022 from 27 July 2021 from 25 October 2021 until 13 July 2021 P Neilsen G Parimoo G. Gill Name G Gill P. Neilsen G. Parimoo Position Date Chief Financial Officer and Joint Company Secretary until 13 July 2021 Chief Financial Officer and Joint Company Secretary from 11 July 2021 Chief Operating Officer from 25 October 2021 The following table shows details of the remuneration expense recognised for the Consolidated entity’s executive and key management personnel for the current and previous financial year measured in accordance with the requirements of the accounting standards. 28 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (b) Details remuneration (continued) Key Management Personnel 2022 Non-Executive Directors R. Trzebski A Saenz1 Executive Directors S. Crow2 S. Promnitz3 N. Lindsay Executive Management P Neilsen4 G. Parimoo5 G. Gill6 Total Directors’ Fees and/ or Salary $ Consulting Fees $ Annual leave $ Long Service Leave $ Post- Employment Benefits $ Share Based payments Other Benefits- Relocation Performance rights $ Options $ Total $ 23,000 1,545 7,200 64,800 141,000 - - 180,000 96,600 - - - - 355,679 - 155,679 14,164 300,000 186,593 15,419 1,880 - - 27,502 24,931 - - 273,125 (7,188) 251,379 96,545 141,000 549,725 545,836 780,202 335,258 249,362 - - 108,260 38,445 568 27,502 - - - - 100,000 - - 461,248 863,022 760,609 1,109,971 - 108,260 1,626,099 391,453 232,543 18,158 87,135 100,000 517,316 1,221,857 4,194,561 Directors’ Fees and/or Salary $ Consulting Fees $ Annual leave $ Long Service Leave $ Post- Employment Benefits $ Share Based Payments Performance rights $ Options $ Total $ Key Management Personnel 2021 Non-Executive directors S. Crow N. Lindsay R. Trzebski 140,000 120,000 61,000 Executive directors S. Promnitz 295,192 Executive Management 172,500 G. Gill Total 74,100 16,900 - - - - - - - - - - 5,792 65,912 27,998 28,043 - - - 788,692 91,000 65,912 27,998 33,835 1 A. Saenz became a Non-Executive Director on 28 July 2021 2 S. Crow became an Executive Director on 20 June 2022 3 S. Promnitz resigned as Managing Director on 17 June 2022 4 P Neilsen become Chief Financial Officer and Company Secretary on 11 July 2021 5 G. Parimoo became a Chief Operating Officer on 25 October 2021 6 G. Gill resigned as Chief Financial Officer and Company Secretary on 13 July 2021 - - - - - - - - - - - - 214,100 136,900 66,792 417,145 172,500 1,007,437 2929 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (b) Details remuneration (continued) Percentages of remuneration that are performance based: Name 2022 Non-Executive directors R. Tzrebski A.Saenz Executive directors S. Crow S. Promnitz N. Lindsay Executive Management P. Neilsen G. Parimoo G. Gill (c) Service Agreements Fixed remuneration At risk - STI At risk - LTI 2022 2021 2022 2021 2022 2021 100% 100% 50% 100% 51% 47% 31% 100% 100% 100% 100% 100% 100% 0% 0% 0% 0% 5% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 50% 0% 28% 53% 69% 0% 48% 54% 73% 0% Remuneration and other terms of employment for key management personnel are generally formalised in service agreements. Details of existing agreements are as follows: Name Title S Crow Executive Chairman Agreement commenced 2016 Term of agreement Nature of services provided - Chairman of the Lake Resources NL Board, in addition to external consultant for financing and marketing related services. Basis of engagement - Prior to being appointed as executive Chairman on 20 June 2022, Mr Crow provided services as Non-Executive Chairman for the Consolidated entity. As Non-Executive Chairman, Mr Crow received consulting fees for representation at conferences and road shows of A$6,500 per month plus expenses and earned an additional Directors fee of A$15,000 per month. During his appointment as Executive Chairman for an estimated 6 month period (from 20 June 2022), Mr Crow will receive director fees equivalent to A$1 million per annum. The revised remuneration was approved and later confirmed at a Board meeting on 9 August 2022. Mr Crow was granted 5,000,000 performance rights pursuant to approval at a shareholder meeting held on 15 August 2019, which are currently still held at the date of this report. There is a 1 week notice period required, in the event of termination of services. 30 LAKE RESOURCES ANNUAL REPORT 2022 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (c) Service Agreements (continued) Name Title D. Dickson Chief Executive Officer (from 15 September 2022) Agreement commenced 15 September 2022 Term of agreement Nature of services - New Chief Executive Officer The Consolidated entity entered into an agreement with David Dickson and his company to provide services as Chief Executive Officer. Mr Dickson’s employment contract contains agreed compensation being a base salary of US$1 million, and annual potential bonus pool of a maximum amount of 100% of base salary across short- and long-term performance incentives requirements. Name Title S. Promnitz Managing Director (until 17 June 2022) Agreement commenced 14 November 2016 Term of agreement Nature of services - Managing Director and Chief Executive Officer for Lake Resources NL Initial salary of $250,000 per annum, with a review point scheduled for 12 months from commencement date, subject to satisfactory performance. Effective from 1 January 2021 as an interim measure pending the negotiation of a new agreement, base salary was increased to $360,000 plus statutory superannuation. Short term and long-term variable remuneration incentives are to be determined in conjunction with recommendations of an external independent remuneration consultant. If termination 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. The consolidated entity shall have the right to choose whether Mr. Promnitz works his notice or paid in lieu of notice. Mr Promnitz resigned his position as Managing Director of the Consolidated entity on 17 June 2022, and did not work his notice period. Name Title Dr R Trzebski Non-Executive Director Agreement commenced 2 December 2019 Term of agreement Nature of services - Lake Resources NL Board member Not specified Remuneration: $6,000 per month plus superannuation. There is no notice period specified per arrangement. 3131 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (c) Service Agreements (continued) Name Title Dr N Lindsay Executive Technical Director Agreement commenced 1 January 2021 Term of agreement Nature of services - Executive technical director for Kachi project, with additional consulting during the year for professional geological and metallurgical engineering services. Basis of engagement - Prior to being appointed as an executive Director Dr Lindsay (while a non-executive Director) received consulting fees for work on the Kachi project and MS Project instalment at the daily rate of $1,300 plus GST plus expenses. Remuneration as full-time employee from 1 January 2021 - Annual Base Salary of $300,000.00 per annum exclusive of statutory superannuation contributions. Short term and long-term variable remuneration (STVR and LTVR) incentives are to be determined in conjunction with recommendations of an external independent remuneration consultant.Dr Lindsay was granted 2,500,000 performance rights pursuant to approval at a shareholder meeting held on 15 August 2019. An additional 461,715 performance shares were granted as compensation for services rendered during the year, and approved at meeting held 25 January 2022. If termination notice is 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 Dr Lindsay, the notice period is three months. The consolidated entity shall have the right to choose whether Dr Lindsay works his notice or paid in lieu of notice. STVR (Short term variable remuneration) - maximum entitlement to STVR will be approximately 20% of Base Pay and Benefits up to a maximum value of $60,000 in the first year of the Term. The STVR package will comprise half cash and half in a grant of performance shares. LTVR (Long term variable remuneration) - maximum entitlement to LTVR will be approximately 40% of the annual value of your Base Pay and Benefits as at the Commencement Date, comprised in performance shares granted in tranches over three years, subject to achievement of the following performance hurdles, weighted as indicated: (1) for the first tranche, measured no later than 15 months after the Commencement Date - the Company putting a project team in place to build the Project DFS and building the demonstration plant on site (40%); (2) for the second tranche, measured at the end of the second year after the Commencement Date - closing the debt and equity financing for the Company’s Kachi Lithium Brine Project (Kachi Project) on terms satisfactory to the Company (40%); (3) for the third tranche, measured at the end of the third year after the Commencement Date - the Company receiving approval for the financing of an expansion case being up to 50,000 tonnes per annum lithium carbonate equivalent total production at the Kachi Project (20%). 32 LAKE RESOURCES ANNUAL REPORT 2022 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (c) Service Agreements (continued) Name Title P Neilsen Chief Financial Officer (from13 July 2021) and Joint Company Secretary Agreement commenced 11 July 2021 Term of agreement Nature of services - Chief Financial Officer and Company Secretary Term - 3 years from date of appointment Remuneration: Commenced at $330,000 per annum inclusive of statutory superannuation. Mr Neilsen’s remuneration increased to $420,000 plus superannuation effective 1 January 2022. Sign on bonus - 2 million options with exercise price of 50% greater than market price at commencement date and expiry of 3 years from commencement date. Mr Neilsen’s remuneration package entitles him to participate in the performance based short term and long term variable remuneration plans of the Consolidated entity. STVR (Short term variable remuneration) - maximum entitlement to STVR will be approximately 20% of Base Pay and Benefits up to a maximum value of $65,000 in the first year of the Term. The STVR package will comprise one third in cash and two thirds in a grant of performance shares LTVR (Long term variable remuneration) - maximum entitlement to LTVR will be approximately 20% of Base Pay and Benefits, up to a maximum value of $195,000 per year for the three years after the Commencement Date. The LTVR package will comprise a grant of performance shares in tranches over three years. The associated performance hurdles and weighting will be: (1) for the first tranche, measured no later than 18 months after the Commencement Date - delivering and operating a comprehensive reporting package for the debt financiers and potential JV partners post Project finance close (25%); (2) for the second tranche, measured at the end of the second year after the Commencement Date - as agreed in consultation with you (or, failing agreement, as determined by us, acting reasonably) (30%); (3) for the third tranche, measured at the end of the third year after the Commencement Date - delivery of the Project into production with appropriate reporting mechanisms in place (45%). Mr Neilsen was granted 680,705 performance shares as compensation for services rendered during the year, and approved at meeting held 25 January 2022. 3333 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (c) Service Agreements (continued) Name Title commenced Term of agreement G. Gill Chief Financial Officer and Joint Company Secretary (resigned on 13 July 2021) Agreement 15 October 2019 Nature of services - Former Chief Financial Officer and Company Secretary, providing Company secretarial and financial consulting services post resignation date. The Consolidated entity entered into an agreement with Garry Gill and his company to provide services as Company Secretary and Chief Financial Officer. Services were provided on a part time basis at a rate of $15,000 per month plus GST plus expenses. In July the Company announced that Mr Peter Neilsen would replace Mr Gill as Chief Financial Officer and Company Secretary and that Mr Gill would continue for a transitionary period. Mr Gill continued to provide billable services up until May 2022. 34 LAKE RESOURCES ANNUAL REPORT 2022 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (c) Service Agreements (continued) Name Title G Parimoo Chief Operating Officer Agreement commenced 25 October 2021 Term of agreement Nature of services - Chief Operating Officer; Kachi project management Until terminated Remuneration: US$335,000 per year salary excluding superannuation. Mr Parimoo received a sign-on package of 2 million options immediately exercisable with a strike price at zero premium to the Lake Resources share price on the day, with a 3 year expiry. STVR (Short term variable remuneration) - maximum entitlement to 20% of Base Pay and Benefits up to a maximum value of $67,000 [United States dollars] in the first year of the Term. The STVR package will comprise half cash and half in a grant of performance shares. LTVR (Long term variable remuneration) - maximum entitlement to LTVR equal to 40% of the annual value of Base Pay and Benefits as at the Commencement Date, comprised in performance shares granted in tranches over three years, subject to achievement of the following performance hurdles, weighted as indicated: (1) for the first tranche, measured no later than 15 months after the Commencement Date - the Company putting a project team in place to build the Project (40%); (2) for the second tranche, measured at the end of the second year after the Commencement Date - closing the debt and equity financing for the Company’s Kachi Lithium Brine Project on terms satisfactory to the Company 20%); (3) for the third tranche, measured at the end of the third year after the Commencement Date - the successful commissioning of the project at 25,500 tonnes per annum lithium carbonate equivalent total production at the Kachi Project (40%). During secondment periods to Argentina, Mr Parimoo is provided with relocation, repatriation, housing, medical and educational allowance for himself and his family, and a company vehicle. Business return airfares himself and his family to Mr Parimoos’ home base once a year are also provided by the Consolidated entity. Notice period - If termination notice is given by Consolidated entity, the Consolidated entity shall be liable to pay full compensation for a three-month notice period. If notice is given by Mr Parimoo, the notice period is three months. Consolidated entity shall have the right to choose whether Mr. Parimoo work his notice or be paid in lieu of notice. Key management personnel have no entitlement to termination payments in the event of removal for misconduct. 3535 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (a) Share-based compensation (i) Terms and conditions of the share-based payment arrangements 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, prior or future reporting years are as follows: Grant date Vesting and exercise date Expiry date Exercise price 12-July-2021 14-Oct-2021 12-July-2021 12-July-2024 25-Oct-2021 25-Oct-2024 $0.55 $0.57 Value per option at grant date $0.231 $0.38 % Vested % Expired/ Exercised 100% 100% 0% 0% 4,000,000 options over ordinary shares were issued to key management personnel following approval at the shareholder meetings. 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 Number of Options granted Grant date Vesting and exercise date Expiry date Exercise price Fair value at grant date P Neilsen G Parimoo Total 2,000,000 2,000,000 4,000,000 12-July-2021 14-Oct-2021 12-July-2021 25-Oct-2021 12-July-2024 25-Oct-2024 $0.55 $0.57 $0.231 $0.380 Of the 4,000,000 options on issue at the exercise date, none have been exercised or expired. 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: Grant date Vesting date Value at Grant No. of Rights Granted Performance Hurdle Performance achieved No. vested and exercised No. vested during the year and not exercised Expired during the year 15-Aug-2019 15-Aug-24 $0.0575 5,000,000 PFS 15-Aug-2019 15-Aug-24 $0.0575 2,500,000 Pilot plants 15-Aug-2019 15-Aug-24 $0.0575 7,500,000 Investor 100% 100% 67% 5,000,000 - 2,500,000 - - 5,000,000 2,500,000 - - On 15 August 2019, 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 share were issued on 31 August 2020. 36 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (d) Share-based compensation (continued) (i) Terms and conditions of the share-based payment arrangements (continued) Name S. Crow S. Promnitz N. Lindsay Total Number of Rights granted Grant date Expiry date Fair value at grant date Vested and exercised in a prior year Expired during the year 5,000,000 15-Aug-2019 15-Aug-24 5,000,000 15-Aug-2019 15-Aug-24 5,000,000 15-Aug-2019 15-Aug-24 15,000,000 15-Aug-2019 15-Aug-24 $0.0575 $0.0575 $0.0575 $0.0575 - - 2,500,000 2,500,000 2,500,000 - 5,000,000 2,500,000 Performance rights outcomes are as follows: The Kachi Pre-Feasibility Study (PFS) completion resulted in 2,500,000 for Dr Lindsay and 2,500,000 for S Prominitz vested in the 2021 and converted into ordinary shares in 2022. Mr Crow’s 5 million performance rights vest dependent upon an investment partner signing an agreement to invest in the Kachi project in Catamarca (Investor). At 30 June 2020 the probability of obtaining an investment partner was assessed at 5%. It has been confirmed that the project will be funded 70% by international credit agencies sourced by SD Capital and GKB Ventures, with the remainder being provided by equity. It is now considered extremely likely that the vesting condition will be achieved, hence an increase to 100% probability was disclosed at 30 June 2022. Due to Promnitz’s resignation on the 17 June 2022, the unwinding of his remaining 2.5 million performance rights have taken place in the current financial year. During the current financial period, an agreement to develop the Pilot Plant was signed with Lilac Solutions, with works commencing on the Pilot Plant at site. It is considered that the probability of the performance hurdle being achieved is 100%, as at 30 June 2022. Dr Lindsay’s remaining 2.5 million performance rights has now vested as the Pilot Plant is established on-site at the Kachi project in Catamarca (Pilot Plant). Number of Rights granted Grant date Expiry date Converted to Shares/ Expired Fair value at grant date Expensed 2022 (i) Performance shares Name P. Neilsen N. Lindsay Total 1,142,665 123,809 22-Feb-2022 12-Dec-22 139,285 22-Feb-2022 12-Mar-23 167,142 22-Feb-2022 12-Sep-23 250,714 22-Feb-2022 12-Sep-24 92,343 22-Feb-2022 147,749 22-Feb-2022 1-Jun-22 1-Jun-22 147,749 22-Feb-2022 1-Mar-23 73,874 22-Feb-2022 1-Mar-24 $0.9000 $0.9000 $0.9000 $0.9000 $0.9000 $0.9000 $0.9000 $0.9000 - 35,911 143,645 - 71,823 251,379 3737 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (d) Share-based compensation (continued) (i) Terms and conditions of the share-based payment arrangements (continued) (i) Performance shares Directors exercised judgement in assessing the number of performance shares that are expected to vest. The vesting conditions and Directors assessment at 30 June 2022 are summarised below: Number of Rights granted 123,809 Name P. Neilsen Performance measure Measurement date Directors judgement at 30 June 2022 Delivering and operating a comprehensive reporting package for the debt financiers and potential JV partners post close of the Kachi Project finance and closing of debt financing for the Company’s Kachi Project (60%) 12-Oct-22 In the Directors judgement, this milestone will not be met by 12 October 2022. Nil expense recorded. 139,285 Delivering and operating a comprehensive reporting package for the debt financiers and potential JV partners post close of the Kachi Project finance 12-Jan-23 In the Directors judgement, this milestone will not be met by 12 January 2023. Nil expense recorded. 167,142 Maintain and deliver accurate reporting across all facets of the business incorporating cash flows, pre-production and budgeting. 12-Jul-23 In the Directors judgement, this milestone will not be met by 12 July 2023. Nil expense recorded. Preparation of financial documents to the satisfaction of financiers, project banking syndicates and export credit agencies Implementation and maintenance of acceptable budgetary and cash flow measures across Australia and Argentina 250,714 Delivery of the Kachi Project into production with appropriate reporting mechanisms in place 12-Jul-24 In the Directors judgement, this milestone will not be met by 12 July 2024. Nil expense recorded. 92,343 Commencement of exploration and testing of brines from at least one of the Company’s other projects 1-Apr-22 This tranche have vested. $35,911 expense recognised. N. Lindsay 147,749 147,749 73,874 The Company putting a project team in place to build the Project DFS and building the demonstration plant on site 1-Apr-22 This tranche have vested. $143,645 expense recognised. The Company closing the debt and equity financing for the Company’s Kachi Project on terms satisfactory to the Company 1-Jan-23 In the Directors judgement, this milestone will not be met by 1 January 2023. Nil expense recorded. The Company receiving approval for the financing of an expansion case being up to 50,000 tonnes per annum lithium carbonate equivalent total production at the Kachi Project 1-Jan-24 In the Directors judgement, financing approval is expected before 1 January 2024 therefore expected that all 73,874 performance shares will vest. $71,823 expense recognised. 38 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (d) Share-based compensation (continued) (i) Terms and conditions of the share-based payment arrangements (continued) (i) Performance shares (e) Link between remuneration and performance During the year, the Consolidated entity has generated losses from its principal activity of exploring and developing its suite of lithium projects. As the Consolidated entity is still growing the business, the link between remuneration, performance and shareholder wealth is difficult to define. Share prices are subject to the influence of fluctuation in the world market price for lithium and general market sentiment towards the sector, and, as such, increases or decreases may occur quite independently of Executive performance. Given the nature of the Consolidated entity’s activities and the consequential operating results, no dividends have been paid. There have been no returns of capital in the current or previous financial periods. The earnings of the Consolidated entity for the five years to 30 June 2022 and share price as at each year end are summarised below: Net Loss Net Assets 2022 $ 2021 $ 2020 $ 2019 $ 2018 $ 5,606,761 3,119,375 4,760,440 4,760,140 3,540,391 218,832,460 46,871,271 17,049,287 12,913,063 6,505,140 Share Price at year end (cents) 79.0 33.5 3.5 9.0 9.0 (f) Additional disclosures relating to key management personnel Share holdings 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: 2022 Name S. Crow S. Promnitz N. Lindsay G. Gill P Neilsen Total Balance at the start of the year Received as part of remuneration Additions Disposal / Other Balance at the end of the year 4,903,834 6,278,319 2,500,000 - - 13,682,153 - - - - - - 13,365,533 (350,000) 17,919,367 6,127,831 (12,406,150) - 4,650,000 (3,933,333) 3,216,667 32,282 37,850 (32,282) - - 37,850 24,213,496 (16,721,765) 21,173,884 3939 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) (f) Additional disclosures relating to key management personnel (continued) Options 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 the year Granted as remuneration Exercised Listed options received Expired / forfeit Balance end of year 5,000,000 5,000,000 5,000,000 - - - (7,227,588) 2,227,588 - (6,127,831) (4,650,000) 2,255,662 (1,127,831) 1,300,000 (1,650,000) - - - - - 2,000,000 2,000,000 - - - - - - 2,000,000 2,000,000 15,000,000 4,000,000 (18,005,419) 5,783,250 (2,777,831) 4,000,000 Name S. Crow S. Promnitz N Lindsay P Neilsen G Parimoo Total 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: Name S Crow S Promnitz N Lindsay Total Performance shares Balance at start of year Granted as remuneration Converted to shares Expired Balance at end of year 5,000,000 2,500,000 2,500,000 10,000,000 - - - - - - - - - 5,000,000 (2,500,000) - - 2,500,000 (2,500,000) 7,500,000 Movements in the number of performance shares 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, terms and conditions of these issuance are set out in section (b) Service Agreements in each respective party, are set out below: 40 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) Additional disclosures relating to key management personnel (continued) Performance shares (continued) 2022 Name N Lindsay P Neilsen Total Balance at the start of the year Granted as remuneration Converted to shares Expired Balance at end of year - - - 461,715 680,950 1,142,665 - - - - - - 461,715 680,950 1,142,665 Related party transactions (a) Transactions with other related parties The following transactions occurred with related parties: Payment for 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) Consultancy services provided by former CFO Garry Gill (Executive) Receivable from and (payable to) related parties Consultancy services and directors’ fees provided by an entity associated with Mr Stuart Crow Consultancy services provided by an entity associated with Dr Nicholas Lindsay (Director) Net advances to Mr Stephen Promnitz 2022 $ 2021 $ 96,600 186,593 108,260 391,453 74,100 16,900 - 91,000 - - 16,500 21,064 1,077,773 (142,249) 1,077,773 (104,685) Disclosures relating to the advance to Mr Promnitz: • The outstanding balance at 30 June 2022 was $1,077,773 (2021: $142,249) • The terms and conditions at June 2022 of the advances are unsecured and has no personal guarantees. • No provision for credit loss been recognised. End of Audited Remuneration Report 4141 Directors’ Report For the year ended 30 June 2022 Remuneration report (Audited) (continued) Shares under option Unissued ordinary shares Unissued ordinary shares of Lake Resources NL under option at the date of this report are as follows: Grant Date 09-Mar-2021 13-Jul-21 01-Aug-21 19-Jan-22 14-Oct-21 16-Mar-22 16-Mar-22 26-Apr-22 26-Apr-22 26-Aug-22 Total Expiry date 09-Mar-2023 12-Jul-24 1-Aug-24 19-Jan-25 25-Oct-24 01-Mar-23 15-Oct-22 26-Apr-22 26-Apr-22 26-Aug-22 Exercise price Number under option $0.30 $0.55 $0.50 $1.48 $0.57 $1.00 $0.75 $1.42 $1.42 $1.50 6,524,157 2,000,000 5,601,000 1,000,000 2,000,000 100,000 225,000 1,036,122 1,036,122 1,000,000 20,522,401 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 the 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). Grant Date 16-Sep-19 09-Mar-2021 09-Mar-2021 27-Jan-2021 24-Apr-21 28-Jul-21 28-Jul-21 28-Jul-21 28-Jul-21 01-Aug-21 30-Aug-21 24-Aug-21 15-Oct-21 19-Aug-19 Total 42 Expiry date Exercise price Number under option 31-Jul-21 09-Mar-23 09-Mar-23 09-Mar-23 24-May-23 31-Dec-24 31-Dec-24 31-Dec-24 31-Dec-24 01-Aug-24 15-Jun-22 15-Oct-22 15-Jun-22 15-Jun-21 $0.09 $0.30 $0.30 $0.30 $0.30 $0.55 $0.55 $0.55 $0.55 $0.50 $0.75 $0.35 $0.75 $0.10 14,000,000 55,874,040 11,351,803 1,000,000 1,500,000 10,000,000 10,000,000 10,000,000 5,000,000 179,000 4,000,000 86,094,394 82,895,145 75,000 291,969,382 LAKE RESOURCES ANNUAL REPORT 2022Directors’ Report For the year ended 30 June 2022 Shares under option (continued) Shares issued on the exercise of options (continued) Performance Rights At the date of this report there were 7,500,000 unissued ordinary shares of Lake Resources NL under performance rights. During the financial year ended 30 June 2022, 2,500,000 performance rights have expired in relation to Directors. No performance rights have been issued or converted to shares since 30 June 2022. Information on the issue of performance rights to Directors is provided in the remuneration report above or converted to shares. Performance Shares At the date of this report there were 1,142,665 unissued ordinary shares of Lake Resources NL under performance shares. During the financial year ended 30 June 2022, no performance shares have expired in relation to Directors. No performance shares have been issued since 30 June 2022. Information on the issue of performance shares to Directors is provided in the remuneration report above and none converted to shares. Indemnity and insurance of officers The Consolidated entity has given an indemnity or entered into an agreement to indemnify directors and officers of the Consolidated entity against liabilities for costs and expenses incurred in defending legal proceedings arising from conduct while acting in the capacity as a director or officer of the Consolidated Entity, other than conduct involving a willful breach. During the financial year, the Consolidated entity paid a premium in respect of a contract to insure the directors and officer 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. Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the 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 BDO provided non-audit services of $55,288 during the financial year ended 30 June 2022. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services did not compromise the auditor independence requirements of the Corporations Act 2001 because none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. 4343 Directors’ Report For the year ended 30 June 2022 Officers of the Consolidated entity who are former partners of BDO Audit Pty Ltd There are no officers of the Consolidated entity who are former partners of BDO Audit Pty Ltd. 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 on the following page. Auditor BDO Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001. Rounding of amounts The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the directors’ report. Amounts in the directors’ report have been rounded off in accordance with the instrument to the nearest dollar. This report is made in accordance with a resolution of Directors. Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia DECLARATION OF INDEPENDENCE BY R M SWABY TO THE DIRECTORS OF LAKE RESOURCES NL As lead auditor of Lake Resources NL for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Lake Resources NL and the entities it controlled during the year. S. Crow Executive Chairman 30 September 2022 44 R M Swaby Director BDO Audit Pty Ltd Brisbane, 30 September 2022 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. LAKE RESOURCES ANNUAL REPORT 2022Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia DECLARATION OF INDEPENDENCE BY R M SWABY TO THE DIRECTORS OF LAKE RESOURCES NL As lead auditor of Lake Resources NL for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Lake Resources NL and the entities it controlled during the year. R M Swaby Director BDO Audit Pty Ltd Brisbane, 30 September 2022 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 4545 Consolidated Statement of Profit or Loss and other Comprehensive Income For the year ended 30 June 2022 Depreciation and amortisation expense Administrative expenses Corporate expenses Employee benefits expense Share based payments expense Consultancy and legal costs Exploration expenditure impaired Foreign exchange gains and losses Operating loss Net Finance costs Loss before income tax Income tax expense Loss for the year Items that may be reclassified to profit or loss Foreign currency translation reserve Note 2022 $ 2021 $ 5 5 5 5 4 (51,298) (337) (868,985) (234,451) (3,416,414) (1,269,593) (1,835,589) (2,425,591) (727,810) (108,931) (3,374,051) (550,873) - (301,700) 6,952,373 299,472 (5,019,555) (2,894,223) 25,126 - (4,994,429) (2,894,223) 6 (688,666) - (5,683,095) (2,894,223) 9(b) 76,334 (225,152) Total comprehensive income for the year (5,606,761) (3,119,375) Loss for the year is attributable to: Owners of Lake Resources NL Total comprehensive income for the year is attributable to: Owners of Lake Resources NL Basic loss per share Diluted loss per share (5,683,095) (2,894,223) (5,606,761) (3,119,375) Cents Cents 19 19 (0.51) (0.51) (0.35) (0.35) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 46 LAKE RESOURCES ANNUAL REPORT 2022Consolidated Statement of Financial Position As at 30 June 2022 Assets Current assets Cash and cash equivalents Trade and other receivables Other current assets Total current assets Non-current assets Property, plant and equipment Right-of-use assets Exploration and evaluation, development and mine properties Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Lease liabilities Employee benefits Provisions Total current liabilities Non-current liabilities Lease liabilities Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Note 2022 $ 2021 $ 7(a) 7(b) 7(c) 8(a) 8(c) 8(b) 7(d) 8(c) 8(d) 8(d) 8(c) 8(d) 9(a) 9(b) 9(c) 175,444,065 25,657,074 5,734,693 286,267 278,079 166,996 181,465,025 26,102,149 640,623 229,692 41,549,942 42,420,257 223,885,282 4,515,149 80,235 169,661 85,947 4,850,992 197,622 4,208 201,830 5,052,822 218,832,460 79,941 - 21,736,854 21,816,795 47,918,944 790,551 - 75,235 153,889 1,019,675 - 27,998 27,998 1,047,673 46,871,271 231,179,318 65,748,642 9,508,419 3,364,591 (21,855,277) (22,241,962) 218,832,460 46,871,271 The above Consolidated statement of Financial Position should be read in conjunction with the accompanying notes. 4747 Consolidated Statement of Changes in Equity For the year ended 30 June 2022 Issued capital $ Reserves $ Accumulated Losses $ Total equity $ Note 35,433,060 3,343,899 (21,727,672) 17,049,287 - - - - (2,894,223) (2,894,223) (225,152) - (225,152) (225,152) (2,894,223) (3,119,375) Balance at 1 July 2020 Loss for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity Share issue costs Share based payment Issue of unlisted options to brokers Transfer from option reserve to accumulated losses on options expired/exercised 9(b) Balance at 30 June 2021 Loss for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners: Contributions of equity Share issue costs Share based payment Issue of performance rights Issue of unlisted options to brokers 9(b) Transfer from option reserve to accumulated losses on options expired/exercised 9(a) 34,343,799 (2,625,776) 108,931 - - - - - 2,625,776 - - - - 34,343,799 (2,625,776) 108,931 2,625,776 (2,379,932) 2,379,932 - 31,826,954 245,844 2,379,932 34,452,730 65,748,642 3,364,591 (22,241,962) 46,871,271 - - - - (5,683,095) (5,683,095) 76,334 - 76,334 76,334 (5,683,095) (5,606,761) 9(a) 175,575,639 (10,144,963) - - 1,800,461 625,129 9,711,684 - - - - - 175,575,639 (10,144,963) 1,800,461 625,129 9,711,684 (6,069,780) 6,069,780 - - - - - Balance at 30 June 2022 231,179,318 9,508,419 (21,855,277) 218,832,460 165,430,676 6,067,494 6,069,780 177,567,950 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 48 LAKE RESOURCES ANNUAL REPORT 2022Consolidated Statement of Cash Flows For the year ended 30 June 2022 Cash flows from operating activities Payments to suppliers Income tax paid Net cash (outflow) from operating activities Cash flows from investing activities Note 2022 $ 2021 $ (7,990,430) (2,432,98) (688,666) (2,432,983) (8,679,096) (2,432,983) Payments for property, plant and equipment 8(a) (615,061) (79,745) Payments for exploration and evaluation Loans to related parties Repayment of loans to related parties Net cash (outflow) from investing activities Cash flows from financing activities (23,596,548) (4,718,136) (1,626,762) 470,448 - - (25,367,923) (4,797,881) Proceeds from issue of shares, net of transaction costs 9(a) 174,193,136 32,799,927 Proceeds to/from borrowings Repayment of borrowings Principal payments of lease liabilities Lease liability on inception Interest charge Net Proceeds from foreign exchange contracts 18(b)(II) 18(b)(II) - - 200,000 (167,500) (19,440) 289,208 8,090 9,363,016 - - - - Net cash inflow from financing activities 183,834,010 32,832,427 Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 149,786,991 25,601,563 25,657,074 55,511 Cash and cash equivalents at end of year 7(a) 175,444,065 25,657,074 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 4949 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 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. (a) Basis of preparation These general purpose consolidated financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Lake Resources NL is a for-profit entity for the purpose of preparing the consolidated financial statements. Compliance with IFRS The consolidated financial statements of the Lake Resources NL and its subsidiaries (Consolidated entity) also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Historical cost convention The consolidated financial statements have been prepared under the historical cost convention. (i) New standards and interpretations not yet adopted Certain new accounting amendments to accounting standards and interpretations have been published that are not mandatory for 30 June 2022 reporting years and have not been early adopted by the Consolidated entity. The Consolidated entity’s assessment of the impact of these new standards and interpretations is set out below. These standards, amendments or interpretations are not expected to have a material impact on the Consolidated entity in the current or future reporting years and on foreseeable future transactions. (b) Critical accounting estimates The preparation of consolidated 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 consolidated financial statements, are disclosed in note 2. (b) 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. 50 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (c) Impact of Coronavirus (COVID-19) (continued) 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 Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the consolidated entity based on known information. The Consolidated entity has determined that its financial position and performance 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 Consolidated entity was successful in raising of equity in 2022 and experienced strong levels of exercise of its listed options by June 2022 raising an additional $175,575,639. The Consolidated entity announced the receipt of formal expressions of interest from UK Export Finance and Canada’s Export Credit Agency to work with the Consolidated entity to provide the project finance for the development at approximately 70% of the project cost. 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. 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. 5151 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (d) 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 $5,606,761 and net cash outflows from operating and investing activities of $30,528,461 for the year ended 30 June 2022. At 30 June 2022, the Company had net current assets of $176,614,032 including $175,444,065 in cash and cash equivalents. The Directors are satisfied with the ability of the Consolidated entity to continue as a going concern based on the following factors: • During the year ended 30 June 2022, unlisted Bonus Options were issued and exercised (86,094,394 options), with an exercise price of A$0.35 by the due date being 15 October 2021. This raised in excess of $30,133,038 capital for the Consolidated entity. A 1-for-1 Additional Bonus Options issue also commenced in October 2021, at an exercise price of A$0.75 and an expiry date of 15 June 2022. The company subsequently made application to the ASX to have these shares listed (LKEOC). The bonus options were mostly converted, with cancellation of 3,251,249 unexercised options. The bonus options issue raised a further A$62,171,359 to the Company’s cash reserves by June 2022, prior to the final investment decision on the Kachi Project. • In addition to the bonus options, the Consolidated entity has previously issued options to investors and others with exercise prices that are now less than the current share price. • The Directors have prepared cash forecasts which indicate that current funds are sufficient to meet the current year’s budgeted program of work including the DFS and associated drilling, and exploration work, and the required hydrological, environmental and technical studies planned for the forthcoming 12-month period • On 22 September 2021, Lake Resources NL (ASX: LKE; OTC: LLKKF) and Lilac Solutions, Inc. announced that after extensive successful test-work, they have entered into a partnership for technology and funding to develop Lake’s Kachi Lithium Brine Project (Kachi) in Argentina. Under the terms of the partnership earn-in, Lilac is able to achieve an equity stake in the Kachi project with certain corresponding project funding obligations, while providing its leading technology to advance the project. In accordance with the executed agreement Lilac agrees to: • Engage, at its Cost, in a demonstration of the efficacy of the Lilac Project Technology with Kachi Project Brines using pilot-scale module(s) at Lilac’s facility in Oakland, California, USA; and • Assist with the development of the Pilot Project, by: 1. funding, at its own Cost, the construction, deployment and operation by Lilac of an ion exchange lithium extraction plant based on the Lilac Project Technology at the Kachi Project (Lilac Pilot Unit); and 2. by completing the Testing. • On 7 March 2022 the company issued 40,000,000 fully paid ordinary shares at a price of $0.975 to raise $39,000,000 before costs. 52 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (d) Going concern (continued) Based on successful capital raising to date, and likely further capital raising in the US, the Directors are confident that the Consolidated entity is well funded for the current planned works, as budgeted, for at least the next twelve months from the date of this report. As such, the going concern basis of preparation for the financial report as at 30 June 2022 is deemed appropriate. (e) 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 15. (f) 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 16. 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 been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Consolidated entity. (g) Operating segment 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. (h) Foreign currency translation (i) Functional and presentation currency 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). (ii) 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 profit or loss and other comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge. 5353 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (h) Foreign currency translation (continued) (ii) Transactions and balances (continued) 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 profit or loss and other comprehensive income. (iii) 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. (i) 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. (i) Financial assets at amortised cost Financial assets at amortised cost are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. 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. (ii) Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. (iii) 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. 54 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (i) Financial instruments (continued) (iv) 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. (j) Income tax The income tax expense or credit for the year is the tax payable on the current year’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting year in the countries where the company and its subsidiaries operate and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Consolidated entity measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting year and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. The deferred tax liability in relation to investment property that is measured at fair value is determined assuming the property will be recovered entirely through sale. Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. 5555 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (j) Income tax (continued) Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. (k) Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the Consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. (l) Leases Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the following: • the amount of the initial measurement of lease liability • any lease payments made at or before the commencement date less any lease incentives received • any initial direct costs, and • restoration costs. Entity-specific details about the group’s leasing policy are provided in note 8(c). 56 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (m) 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. (n) Other receivables Other receivables are recognised at amortised cost, less any allowance for expected credit losses. (o) 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. (p) 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. (q) Impairment of non-financial assets At each reporting date, the Consolidated entity assesses whether there is any indication that a 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. 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. 5757 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (r) Property, plant and equipment The Consolidated entity’s accounting policy for land and buildings is explained in note 8(a). All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Consolidated entity and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting year in which they are incurred. The depreciation methods and years used by the Consolidated entity are disclosed in note 8(a). The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting year. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(q)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. When revalued assets are sold, it is Consolidated entity policy to transfer any amounts included in other reserves in respect of those assets to retained earnings. (s) Trade and other payables These amounts represent liabilities for goods and services provided to the Consolidated entity prior to the end of the financial year 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. (t) 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. (u) 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. Other borrowing costs are expensed in the year in which they are incurred. 58 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (v) 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. Other long-term employee benefit obligations The Consolidated entity also has liabilities for long service leave and annual leave that are not expected to be settled wholly within 12 months after the end of the year in which the employees render the related service. These obligations are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting year using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and years of service. Expected future payments are discounted using market yields at the end of the reporting year of high-quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least 12 months after the reporting year, regardless of when the actual settlement is expected to occur. Share-based payments Equity-settled and cash-settled share-based compensation benefits are provided to employees and consultants. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees and consultants 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: 5959 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (v) Employee benefits (continued) Share-based payments (continued) • during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the expired portion of the vesting period. • from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the reporting date. All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to settle the liability. Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the Consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. (w) 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 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 (i.e., 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. 60 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 1 Significant accounting policies (continued) (w) Fair Value of Assets and Liabilities (continued) Fair value hierarchy Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly Level 3: Unobservable inputs for the asset or liability Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Refer to Note 20 for the disclosures on inputs used in the fair value measurement of share based payments granted during the year. (x) Provisions Provisions for legal claims, service warranties and make good obligations are recognised when the Consolidated entity has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. (y) 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. (z) 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. 6161 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 Significant accounting policies (continued) (z) Earnings per share (continued) 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. (aa) 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. 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. (ab)Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. 62 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 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. (a) 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. Refer to Note 20 for the disclosures on inputs used in the fair value measurement of share based payments granted during the year. (b) 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. For the basis of determination the following was considered: (a) the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed - all leases were reviewed and are current with the intention to renew; (b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned - there is a budget for all project up until 2023; (c) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area - there is planned exploration for all current projects; (d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from the successful development or by sale - studies conducted indicate commercial viable qualities of mineral resources exist to the effect that the cost of the development including carrying amount to date will be recovered. 6363 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 2 Operating segments Segment information The Consolidated entity currently operates entirely in the mineral exploration industry with interests in Argentina and corporate operations in Australia. Accordingly, the information provided to the Board of Directors is prepared using the same measures used in preparing the financial statements. Geographical information Argentina Australia Total 2022 $ 2021 $ 2022 $ 2021 $ 2022 $ 2021 $ (Expenses)/Other income 4,139,744 Loss after income tax expense for the year attributable to the owners of Lake Resources NL 4,139,744 - - (9,822,839) (2,894,223) (5,683,095) (2,894,223) (9,822,839) (2,894,223) (5,683,095) (2,894,223) Additions during the year Exploration expenditure 20,139,126 4,911,133 3,636,585 Property, plant and equipment Right-of-Use Lease Asset 605,889 79,746 9,204 229,692 - - - - - - - - - 23,775,711 4,911,133 615,093 79,746 229,692 - - - Total segment assets 32,078,749 21,973,065 191,806,536 25,945,878 223,885,285 47,918,943 Total segment liabilities 3,351,977 350,185 1,700,847 697,488 5,052,824 1,047,673 3 Foreign exchange gains and losses Foreign exchange contracts (USD/ARS swaps) Realized gain or loss Unrealized gain or loss 64 2022 $ 2021 $ 9,363,016 16,434 (2,427,077) 6,952,373 - 303,778 (4,306) 299,472 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 4 Loss before income tax Loss before income tax includes the following specific expenses: Administrative expenses Entertainment - Tax - Deductable Fines & Penalties - Tax - Non-Deductible Other Corporate expenses Allowance for credit losses Travel Advertising Other Filing Fees - ASIC Investor Relations Share registry maintenance Investor Relations Share Registry Maintenance Marketing Expenses - Advertising Auditors fees Employee benefit expense Employee benefits expense Share based payment Share based payments expense Consultancy and legal costs Legal expenses Directors fees Other Consulting Fee Net Finance costs Finance income Interest and finance charges payable for lease liabilities Interest expense 2022 $ 2021 $ (21,285) (1,252) 891,522 868,985 130,682 - 103,769 234,451 - 146,352 570,872 - - - - - 1,345,086 710,659 299,837 489,960 21,772 10,475 105,855 9 588,347 326,198 - - - 70,585 3,416,414 1,269,593 1,835,589 727,810 2,425,591 108,931 669,050 244,143 481,171 1,979,687 3,374,051 (34,804) 8,090 1,588 76,041 74,100 188,714 212,018 550,873 - - - 6565 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 4 Loss before income tax (continued) Superannuation expense Defined contribution superannuation expense 131,026 28,995 2022 $ 2021 $ 5 Income tax expense (a) Reconciliation Current tax on profits for the year Deferred income tax benefit Aggregated Income tax expense/(benefit) (b) Numerical reconciliation of income tax expense (1,413,010) (733,543) 2,101,676 688,666 733,543 - The prima facie income tax on the profit/(loss) is reconciled to the income tax expense as follows: (4,994,429) (2,894,223) Prima facie tax benefit 30% (2021 - 26%) on loss before income tax (1,498,329) (752,498) Add tax effect of: Non deductible expenses Argentinian tax inflation adjustment Deferred tax asset not recognized Income tax expense 761,457 (676,138) 2,101,676 688,666 18,955 - 733,543 - The Consolidated entity has unrecouped, unconfirmed carry forward tax losses of approximately $46,204,476 million (2021: $26,463,170 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 66 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 5 Income tax expense (continued) (c) Deferred tax assets The balance comprises temporary differences attributable to: Accrued expenses Employee provisions Business related costs (s 40-880) Unrealised foreign exchange losses Carry forward losses Deferred tax assets not recognised in equity: Capital Raising Expenses Total deferred tax assets Set-off of deferred tax liabilities pursuant to set-off provisions Deferred tax assets not recognised Net deferred tax assets (d) Deferred tax liabilities The balance comprises temporary differences attributable to: Exploration Expenditure Foreign Exchange Gain/(losses) 2022 $ 2021 $ 398,668 38,646 74,618 728,123 13,861,343 15,101,398 8,969 55,047 63,872 - 6,615,792 6,743,680 1,551,720 16,653,118 956,243 7,699,923 (5,893,145) (2,367,829) (10,759,973) (5,332,094) - - 2022 $ 2021 $ (5,893,145) (2,321,076) - (46,753) (5,893,145) (2,367,829) Total deferred tax liabilities (5,893,145) (2,367,829) Set-off of deferred tax liabilities pursuant to set-off provisions Net deferred tax liabilities 5,893,145 2,367,829 - - 6767 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 6 Financial assets and financial liabilities (a) Cash and cash equivalents Current assets Cash at bank Deposits at call (b) Trade receivables Current assets Other receivables Provision for impairment Loan receivable 2022 $ 2021 $ 145,154,034 25,657,074 30,290,031 - 175,444,065 25,657,074 2022 $ 2021 $ 4,656,850 424,431 - (146,352) 1,077,773 - 5,734,693 278,079 Other receivables include amounts recoverable from Argentina tax authority in relation to VAT paid on purchases to suppliers to date. Majority of the suppliers paid is in relation to exploration and evaluation costs. It is highly likely that the VAT will be recoverable either before or after entering Production phase. During the 2022 financial year a short-term loan for $1,077,773 was drawn by Mr. S.Promnitz. Due to the short term nature of these receivables, their carrying value is assumed to approximate fair value. The maximum exposure to credit risk is the carrying value of receivables. Collateral is not held as security. While the Directors have made their best endeavours to quantify the balance of the loan owing, a number of transactions are disputed by Mr Promnitz and the Group awaits documentation from Mr Promnitz to support his position. The matter is ongoing but the Directors expect full recovery of the amounts owing. (c) Other current assets Prepayments Deposits 68 2022 $ 2021 $ 280,906 161,996 5,361 5,000 286,267 166,996 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 6 Financial assets and financial liabilities (continued) (d) Trade and other payables Current liabilities Trade payables Accrued expenses Payroll tax and other statutory liabilities (e) Current liabilities - borrowings Short term loans 2022 $ 2021 $ 3,020,513 1,328,895 165,741 4,515,149 637,163 35,875 117,513 790,551 During the 2021 financial year a short-term loan for $200,000 was drawn and repaid in cash and through an issue of shares (refer below). A loan service fee of $27,500 and $32,500 of principal was paid through an issue of shares (refer Note 20(d)). Advances from Director, Mr. S Promnitz Loan drawn Loan service fee Repayment by cash Repayment by share issue Closing balance 7 Non-financial assets and liabilities (a) Property, plant and equipment Plant and Equipment Cost Accumulated depreciation Total plant and equipment 2022 $ 2021 $ - - - - - 200,000 27,500 (167,500) (60,000) - Consolidated 30 June 2022 $ 30 June 2021 $ 54,128 (5,399) 48,729 16,790 (5,763) 11,027 6969 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 7 Non-financial assets and liabilities (continued) (a) Property, plant and equipment (continued) Furniture, fittings and equipment Cost Accumulated depreciation Total furniture, fittings and equipment Motor vehicles Cost Accumulated depreciation Total machinery and vehicles Building improvement Cost Accumulated depreciation Total building improvement Other property plant and equipment Cost Accumulated depreciation Total other property plant and equipment Total property, plant and equipment Consolidated 30 June 2022 $ 30 June 2021 $ 65,357 (3,810) 61,547 405,744 (47,316) 358,428 72,150 (3,038) 69,112 125,503 (22,696) 102,807 640,623 12,666 (3,118) 9,548 74,670 (17,254) 57,416 1,435 (553) 882 2,228 (1,160) 1,068 79,941 Furniture, fittings and equipment $ Machinery and vehicles $ Plant and equipment $ Building improvements $ Other property, plant and equipment $ Total $ 30 June 2022 Carrying amount at 1 July 2022 Additions Depreciation charge 11,027 37,338 364 9,548 52,691 57,416 331,075 (692) (30,063) Carrying amount at 30 June 2022 48,729 61,547 358,428 882 70,715 (2,485) 69,112 1,068 79,941 123,275 615,094 (21,536) (54,412) 102,807 640,623 70 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 7 Non-financial assets and liabilities (continued) (a) Property, plant and equipment (continued) 30 June 2021 Carrying amount at 1 July 2021 Additions Depreciation charge Carrying amount at 30 June 2021 - 16,790 (5,763) 11,027 532 12,134 (3,118) 9,548 - 74,670 (17,254) 57,416 - 1,435 (553) 882 - 2,228 (1,160) 1,068 532 107,257 (27,848) 79,941 (i) Carrying amounts that would have been recognised if land and buildings were stated at cost If freehold land and buildings were stated on the historical cost basis (ii) Revaluation, depreciation methods and useful lives Depreciation is calculated using the straight-line method to allocate the cost or revalued amounts of the assets, net of their residual values, over their estimated useful lives as follows: • Buildings • Machinery • Vehicles 25 - 40 years 10 - 20 years 3 - 5 years • Furniture, fittings and equipment 3 - 8 years Furniture, fittings and equipment include assets received in the form of free store fit outs which are recognised at their fair value. These assets and other leasehold improvements are depreciated over the shorter of their useful life or the lease term, unless the entity expects to use the assets beyond the lease term. All other property, plant and equipment is recognised at historical cost less depreciation. (b) Exploration and evaluation, development and mine properties Exploration and evaluation asset Cost Reconciliations 2022 $ 2021 $ 41,549,942 21,736,854 Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below: 7171 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 7 Non-financial assets and liabilities (continued) (b) Exploration and evaluation, development and mine properties (continued) At 1 July 2020 Cost Year ended 30 June 2021 Opening net book amount Additions - direct exploration costs Effect of foreign currency translation Impairment - Chile exploration expenditure Closing net book amount At 30 June 2021 Cost Year ended 30 June 2022 Opening net book amount Additions - direct exploration costs Effect of foreign currency translation VAT Receivable Closing net book amount At 30 June 2022 Cost Exploration and evaluation asset $ 17,352,504 17,352,504 4,911,133 (225,152) (301,631) 21,736,854 21,736,854 21,736,854 23,496,549 (2,738,531) (944,930) 41,549,942 41,549,942 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. Right-of-use assets Buildings 229,692 229,692 - - 72 LAKE RESOURCES ANNUAL REPORT 2022 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 7 Non-financial assets and liabilities (continued) (c) Leases (i) Amounts recognised in the statement of financial position The statement of financial position shows the following amounts relating to leases: Lease liabilities Current Non-current Additions to the right-of-use assets during the 2022 financial year were $258,111 (2021 - $nil) (ii) Amounts recognised in the statement of other comprehensive income Depreciation charge of right of use assets 2022 $ 2021 $ 80,235 197,622 277,857 28,419 28,419 - - - - - (iii) The Consolidated entity leasing activities and how these are accounted for Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Consolidated entity, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. To determine the incremental borrowing rate, the Consolidated entity: If a readily observable amortising loan rate is available to the individual lessee (through recent financing or market data) which has a similar payment profile to the lease, then the Consolidated entity uses that rate as a starting point to determine the incremental borrowing rate of 10%. The Consolidated entity is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Consolidated entity is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less without a purchase option. Low-value assets comprise IT equipment and small items of office furniture. 7373 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 7 Non-financial assets and liabilities (continued) (c) Leases (continued) (iv) Extension and termination options Extension and termination options are included in a number of property and equipment leases across the Consolidated entity. These are used to maximise operational flexibility in terms of managing the assets used in the Consolidated entity’s operations. The majority of extension and termination options held are exercisable only by the Consolidated entity and not by the respective lessor. Critical judgements in determining the lease term In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). (d) Employee benefit obligations 2022 Current $ Non- current $ 2021 Current $ Non- current $ Provisions: Annual Leave - Australia 85,947 - 153,889 - Provisions: Long service leave - Australia - 4,208 - 27,998 Employee Benefits: Leave and other benefits payable - Argentina 169,661 - 75,235 - Closing balance at 30 June 255,608 4,208 229,124 27,998 8 Equity (a) Issued capital Ordinary shares - fully paid 1,389,707,907 1,058,077,328 231,179,318 65,748,642 2022 Shares 2021 Shares 2022 $ 2021 $ 74 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 8 Equity (continued) (a) Issued capital (continued) (i) Movements in share capital: Details Opening balance 1 July 2020 Issue of shares - Placement Conversion of Performance rights Shares issued under CPA Shares issued under CPA Shares issued to expand CPA agreement Shares issued under CPA Shares issued under CPA Issue of shares - SBI options Issue of shares - Placement Issue of shares - Placement Issue of shares - Placement Issue of shares - Share Purchase Plan Listed options exercise Less: Transaction costs arising on share issue - as cash Less: Transaction cost arising on options issued - to brokers (20)b Balance 30 June 2021 Issue of shares - Director share options Issue of shares - Redcloud options Issue of shares - Roth SBP options Issue of shares - Lodge Partners options Issue of shares - Roth SBP options Issue of shares - Cannacord options Issue of shares - SD Capital/GKB options Issue of shares - Acuity Capital Holding Listed options exercised Listed options exercised Issue of shares - Lekir Holdings Less: Transaction costs arising on share issue - as cash Less: Transaction cost arising on options issued - to brokers (20)b Balance 30 June 2022 Ordinary shares Notes Number of shares Issue price $ $ 671,461,958 85,666,667 5,000,000 15,000,000 15,000,000 25,000,000 9,000,000 40,000,000 710,900 9,300,000 5,555,000 50,000 125,000,000 51,332,803 - - 1,058,077,328 14,000,000 1,500,000 67,124,040 4,000,000 1,000,000 - 35,433,060 0.033 2,570,000 - 0.033 0.060 - 0.046 0.084 0.084 0.046 0.080 0.165 0.165 0.100 - - - - 495,000 900,000 - 414,000 3,375,000 60,000 427,800 444,400 8,250 20,625,000 5,133,280 (1,511,372) 2,625,776 65,748,642 0.090 0.300 0.300 1,260,000 450,000 20,137,212 0.750 3,000,000 0.170 165,000 35,000,000 0.550 19,250,000 17,000 0.490 8,330 40,000,000 82,895,145 86,094,394 0.980 39,000,000 0.750 62,171,359 0.350 30,133,038 2,000 0.980 700 - - 1,389,709,907 - - - (433,279) (9,711,684) 231,179,318 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. 7575 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 8 Equity (continued) (a) Issued capital (continued) Ordinary shares (continued) Issue of shares net of issue costs Deduct shares in lieu of payments: Share based payments (Note 20) Equity settled loan repayments (Note 7(g)) Add back Options issues as issue costs (Note 20) Proceeds from issue of shares, net of transaction costs 2022 $ 2021 $ $ 186,330,411 $ 30,315,582 (2,425,591) (108,931) - (32,500) (9,711,684) 2,625,776 174,193,136 32,799,927 (ii) Share based payment transactions in share capital movements Issues of share capital and certain share issue cost during the year included the equity-settled share-based payment transactions for the payment for fees and of services as detailed in Note 20. (iii) Performance rights Movements in Performance Rights were as follows: 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 Expired during the year 2022 24-Feb-22 2021 12-Sep-24 10,000,000 (2,500,000) 7,500,000 7,500,000 2,500,000 15-Aug-2019 15-Aug-24 15,000,000 - (5,000,000) 10,000,000 - On 15 August 2019, 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. The terms and conditions of performance rights on issue at 30 June 2021 affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Grant date Expiry date No. of Rights granted Performance hurdle Performance achieved No. vested and exercised No. vested and not exercised No. expired during the year 15-Aug-2019 15-Aug-2019 5,000,000 PFS 15-Aug-2019 15-Aug-24 2,500,000 Pilot plants 15-Aug-2019 15-Aug-24 7,500,000 Investor 100% 100% 100% 5,000,000 2,500,000 5,000,000 2,500,000 Performance rights outcomes are as follows: The Kachi Pre-Feasibility Study (PFS) completion resulted in 2,500,000 for S.Crow and 2,500,000 for S Promnitz vested in 2021 and converted into ordinary shares in 2022. 76 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 9 Equity (continued) (a) Issued capital (continued) (iii) Performance rights (continued) Mr Crow’s 5 million performance rights vest dependent upon an investment partner signing an agreement to invest in the Kachi project in Catamarca (Investor). At 30 June 2020 the probability of obtaining an investment partner was assessed at 5%. It has been confirmed that the project will be funded 70% by international credit agencies sourced by SD Capital and GKB Ventures, with the remainder being provided by equity. It is now considered extremely likely that the vesting condition will be achieved, hence an increase to 100% probability was disclosed at 30 June 2022. Due to Mr Promnitz’ resignation on the 17 June 2022, the unwinding of his remaining 2.5 million performance rights have taken place in the current financial year. During the current financial period, an agreement to develop the Pilot Plant was signed with Lilac Solutions, with works commencing on the Pilot Plant at site. It is considered that the probability of the performance hurdle being achieved is 100%, as at 30 June 2022. Dr Lindsay’s remaining 2.5 million performance rights has now vested as the Pilot Plant is established on-site at the Kachi project in Catamarca (Pilot Plant). (iv) Performance shares Movements in Performance Shares were as follows: Grant date Expiry date Balance at the start of the year Granted Converted to Shares/ Expired Balance at the end of the year Vested during year but not converted 2022 24-Feb-22 24-Feb-22 24-Feb-22 24-Feb-22 24-Feb-22 24-Feb-22 24-Feb-22 2021 12-Mar-23 12-Sep-23 12-Sep-24 1-Jun-22 1-Jun-22 1-Mar-23 1-Mar-23 139,285 167,142 250,714 92,343 147,749 147,749 73,874 139,285 167,142 250,714 92,343 147,749 147,749 73,874 92,343 147,749 1,142,665 1,142,665 240,092 - - - - - 7777 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 8 Equity (continued) (a) Issued capital (continued) (v) Options Movements in options were as follows Grant / Vest Exercised Balance at 1 Expired date Expiry date price July 2021 Issued Unexercised Exercised Issue to SBI listed 16-Sep-19 31-July-21 $0.09 15,000,000 Roth fee options 09-Mar-21 09-Mar-23 $0.30 11,250,000 Roth SBP options 27-Jan-21 09-Mar-23 $0.30 1,000,000 Red Cloud 24-Apr-21 24-May-23 $0.30 1,500,000 - - - - Cannacord Tranch 28-Jul-21 31-Dec-24 Peter Neilsen (CFO) SD Capital / GKB 1-Aug-21 1-Aug-24 Lodge Partners 30-Aug-21 15-Jun-22 SLR Consulting 19-Jan-22 19-Jan-25 Gautam Parimoo (COO) 14-Oct-21 25-Oct-24 Corporate Connect 16-Mar-22 01-Mar-23 Simon Francis 16-Mar-22 15-Oct-22 SD Capital 26-April-22 26-April-25 GKB Ventures 26-April-22 26-April-25 $0.55 - $0.50 $0.75 $1.48 $0.57 $1.00 $0.75 $1.42 $1.42 - 35,000,000 - - - - - - - - - 2,000,000 5,780,000 4,000,000 1,000,000 2,000,000 100,000 225,000 1,036,122 1,036,122 Balance at 30 June 2022 - - - - - (1,000,000) (14,000,000) (11,250,000) (1,000,000) (1,500,000) (35,000,000) - - - - - - - - - - - - - - 2,000,000 (17,000) 5,763,000 (4,000,000) - - - - - - 1,000,000 2,000,000 100,000 225,000 1,036,122 - 1,036,122 28,750,000 52,177,244 (1,000,000) (66,767,000) 13,160,244 (vi) 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. (b) Other reserves Capital profits reserve Performance rights reserve Foreign currency translation reserve Option reserves Total equity reserves 78 2022 $ 2021 $ 4,997 4,997 970,130 465,152 345,000 388,818 8,068,140 2,625,776 9,508,419 3,364,591 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 8 Equity (continued) Other reserves (continued) (i) Capital profits reserve The capital profits reserve records non-taxable profits on sale of investments (ii) 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. Once options in a series have all been exercised or have expired, the reserve related to those options is transferred to accumulated losses. (iii) 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. Once all performance rights in the series have vested or have expired, the reserve related to those options is transferred to accumulated losses. (iv) Foreign currency translation The foreign currency translation reserve recognises exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. (v) Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Capital profit reserve $ Option reserve $ Performance Rights reserve $ Other Comprehensive Income $ Total other reserves $ At 1 July 2020 4,997 2,379,932 345,000 613,970 3,343,899 Issued to brokers - capital raising Transfer from option reserve to accumulated losses on broker options expiry/exercise Translation of foreign operations - - - 2,625,776 (2,379,932) - - - - - - 2,625,776 (2,379,932) (225,152) (225,152) At 30 June 2021 4,997 2,625,776 345,000 388,818 3,364,591 7979 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 8 Equity (continued) (b) Other reserves (continued) (V) Movements in reserves (continued) Capital profit reserve $ Option reserve $ Note Performance rights reserved $ Other Comprehensive Income $ Total other reserves $ At 1 July 2021 4,997 2,625,776 345,000 388,818 3,364,591 Issued to brokers - capital raising Transfer from option reserve to accumulated losses on broker options expiry/exercise Translation of foreign operations Share-based payment expenses 20 - - - - 9,711,684 (6,069,780) - - - - - - 9,711,684 (6,069,780) 76,334 76,334 1,800,461 625,129 - 2,425,590 At 30 June 2022 4,997 8,068,141 970,129 465,152 9,508,419 (c) Accumulated losses Balance 1 July Loss after income tax expense for the year Transfer from option reserve Balance 30 June 9 Dividends Note 2022 $ 2021 $ (22,241,962) (21,727,672) (5,683,095) (2,894,223) 9(b)(V) 6,069,780 2,379,933 (21,855,277) (22,241,962) There were no dividends paid, recommended or declared during the current or previous financial year.Financial instrument 10 Financial risk management 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. (a) 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. 80 LAKE RESOURCES ANNUAL REPORT 2022 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 10 Financial instrument (continued) (a) Foreign currency risk (continued) 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 instruments at the reporting date were as follows, expressed in AUD. US dollars Pound Sterling Canadian dollars Argentina pesos Total Assets Liabilities 2022 $ 2021 $ 2022 $ 2021 $ 10,236,259 7,790,842 266,365 - - - - 95,397 37,017 578,239 29,696 2,294,900 10,814,498 7,820,538 2,693,679 129,323 51,159 21,539 152,453 354,474 A sensitivity analysis of the movement in exchange rate (based on the closing balance of the asset) is presented below: 2022 USD assets USD liabilities GBP liabilities CAD liabilities ARS liabilities ARS assets Total 2021 USD assets USD liabilities GBP liabilities CAD liabilities ARS liabilities ARS assets Total AUD strengthen by 1% AUD weaken by 1% Impact on Impact on Profit before tax Equity Profit before tax $ $ $ Equity $ (101,349) 38,031 103,397 37,278 (2,637) (38,031) 2,691 (37,278) (945) (367) (22,722) (5,725) (25,772) (63,262) (11) 11 945 374 23,181 5,841 25,261 62,009 (11) 11 (133,745) (89,034) 136,429 87,270 77,908 (1,293) (512) (215) (1,525) 297 74,660) (127,789) (77,908) 125,258 127,789 66,668 196,067 44 (44) 1,293 (125,258) 512 215 1,525 (297) (65,348) (192,184) (43) 43 262,735 (74,660) (257,532) 8181 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 10 Financial instrument (continued) (b) Price risk The Consolidated entity is not exposed to any significant price risk. (c) Interest rate risk Currently the Consolidated entity does not have any external borrowings subject to variable rates and therefore has minimal interest rate risk. (d) Credit risk Generally, other 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 with credit risk ratings of Aa3 (Moody’s) and AA- (Standard and Poors). The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral. (e) Liquidity risk Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents) and available liabilities 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. (i) 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. 82 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 11 Financial instrument (continued) (e) Liquidity risk (continued) (i) Remaining contractual maturities (continued) Contractual maturities of financial liabilities 30 June 2022 Non-derivatives Trade and Other payables Lease liabilities Total non-derivatives 30 June 2021 Non-derivatives Trade and Other payables Lease liabilities Total non-derivatives Weighted average interest rate <1 year 1 - 2 years 2 - 5 years > 5 years Remaining contractual maturities % $ $ $ $ $ - - - - - - 4,515,151 80,235 4,595,386 790,552 - 790,552 - - - - - - - - - - - - - - - - - - 4,515,151 80,235 4,595,386 790,552 - 790,552 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. 11 Key management personnel disclosures Directors Fees and/or Salary Consulting Fees Annual Leave Other Benefits - relocation cost Total Short Term Benefits Post-employment benefits (superannuation) Long service leave Share-based payments Total Long Term Benefits Total Remuneration 2022 $ 2021 $ 1,626,099 788,692 391,453 232,543 100,000 91,000 65,912 - 2,350,095 945,604 87,135 18,158 1,739,173 33,835 27,998 - 1,844,466 61,833 4,194,561 1,007,437 8383 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 13 Remuneration of auditors During the financial year the following fees were paid or payable for services provided by BDO Audit Pty Ltd, the auditor of the Consolidated entity. (a) Audit Services Audit and review of financial statements BDO Audit Pty Ltd Other services Tax compliance services Non-audit services 2022 $ 2021 $ 489,960 70,585 55,288 - BDO provided non-audit services of $55,288 during the financial year ended 30 June 2021. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services did not compromise the auditor independence requirements of the Corporations Act 2001 because none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. 14 Related party transactions (a) Parent entities Lake Resources NL is the parent entity (b) Subsidiaries Interests in subsidiaries are set out in note 16. (c) Key management personnel Disclosures relating to key management personnel are set out in note 12 and the remuneration report included in the directors’ report. (d) Transactions with other related parties The following transactions occurred with related parties: 84 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 13 Related party transactions (continued) (d) Transactions with other related parties (continued) Payment for services Consultancy services provided by companies associated with Mr Stuart Crow (Director) 96,600 74,100 2022 $ 2021 $ Consultancy services provided by a Consolidated entity associated with Dr Nicholas Lindsay (Director) Consultancy services provided by former CFO Garry Gill (Executive) Receivable from and (payable to) related parties Consultancy services and directors’ fees provided by an entity associated with Mr Stuart Crow Consultancy services provided by an entity associated with Dr Nicholas Lindsay (Director) Net advances to Mr Stephen Promnitz 186,593 108,260 391,453 16,900 - 91,000 2022 $ 2021 $ - - 16,500 21,064 1,077,773 (142,249) 1,077,773 (104,685) (e) Terms and conditions Disclosures relating to the advance to Mr Promnitz: • The outstanding balance at 30 June 2022 was $1,077,773 (2021: $142,249) • The terms and conditions at June 2022 of the advances are unsecured and has no personal guarantees. • No provision for credit loss been recognised. 14 Parent entity financial information (a) Summary financial information Statement of financial position Current assets Total assets Current liabilities Total liabilities 2022 $ 2021 $ 197,851,828 25,772,480 219,285,920 47,567,734 1,812,505 1,816,713 668,465 696,463 8585 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 15 Parent entity financial information (continued) (a) Summary financial information (continued) Shareholders’ equity Issued capital Reserves Capital profits reserve Options reserve Performance rights reserve Accumulated losses Profit or loss for the year Total comprehensive income 2022 $ 2021 $ 231,179,318 65,748,642 4,997 4,997 8,068,140 2,625,776 970,130 345,000 (22,753,377) (217,469,208) 217,469,208) (54,683,987) (8,712,948) (7,056,369) (8,712,948) (7,056,369) (b) 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 2022 and 30 June 2021. (c) Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021. (d) Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021. (e) 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. 86 LAKE RESOURCES ANNUAL REPORT 2022 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 15 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: Principal place of business/ Country of incorporation Ownership interest held by the group Name of entity Lake Mining Pakistan (Pvt) Limited * LithNRG Pty Ltd Minerales Australes SA ** Morena del Valle Minerals SA ** Lake Resources CRN Pty Ltd *** Kachi Lithium Pty Ltd** Petra Energy SA**** Pakistan Australia Argentina Argentina Australia Australia Argentina 2022 % 2021 % 100 100 100 100 100 100 - 100 100 100 100 100 100 100 * ** *** **** The subsidiary was incorporated on 4 December 2014. The subsidiary has share capital consisting solely of ordinary shares which are held directly by the Lith NRG Pty Ltd. The proportion of ownership interests held equals the voting rights held by Lith NRG Pty Ltd. The subsidiary’s principal place of business is also its country of incorporation. The project is inactive and the company will be deregistered in the future. Interest is held through LithNRG Pty Ltd. LithNRG’ s interest in Morena del Valles will be transferred to KLPL following its incorporation (refer below). 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. No interest held in this entity by the Consolidated entity in 2022. Ownership interest in 2022 is restated to nil, formerly reported as 100% ownership interest held by the group as in 2021 it was assessed that the Parent entity has power and ability to direct the relevant activities over Petra Energy SA, but in 2022 the power and ability to direct relevant activities ceased. Kachi Lithium Pty Ltd (KLPL) was incorporated on 26 August 2021 as a wholly owned subsidiary of LithNRG Pty Ltd. KLPL will be the vehicle through which the Kachi Project will operate and will be the owner of the shares of Morena del Valle Minerals. Under the agreement with Lilac Solutions Inc, that company has the ability to earn up to 25% of the ownership of KLPL. 16 Events after the reporting period On 14th July 2022, after a brief trading halt, the Company responded to an inaccurate report issued by J Capital (a short-seller) attacking Lake Resources over its’ new direct lithium extraction (DLE) technology, share trade disclosures, options to brokers, and Memoranda of Understandings signed to date. Lake reassured investors that the Lilac Solutions proprietary ion exchange technology to be used for DLE at the Kachi brine project in Argentina, will be practical, efficient, and environmentally sustainable. The Company also advised that non-disclosure of share trades by the former Managing Director (Stephen Promnitz), were unapproved due to failure by the Officer to notify the Company Secretary. Options issues to brokers as part of the fee arrangements were common practice in the industry, and that Memoranda of Understanding (MOU’s), while largely non- binding, had been entered into with globally recognised companies for the long-term supply of a material critical to their supply chains. 8787 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 16 Events after the reporting period (continued) Following the resignation of the former Managing Director on 17 June 2022, the Company announced on 16th August 2022 a notification of cessation of securities for 2,500,000 performance rights, due to conditions not being satisfied. On 19th August 2022 the Company appointed senior mining executive Mr Sean Miller as Corporate Development Officer to fast- track exploration across three Jujuy brine projects in Argentina - Cauchari, Olaroz and Paso projects. At the same time, it was also confirmed that the new CEO appointment process was nearing completion, and that Lake Resources was finalising the selection of new board members as part of the transition to a US corporate office to better align production and key customers and markets. A six-month global search for a new CEO/MD culminated with an ASX announcement dated 7th September that Mr David Dickson would assume the role of CEO and Managing Director. Mr Dickson is an industry leader with over 30 years’ experience in engineering, construction, and EPC cost management, across the energy sector. He has a proven track record in successfully delivering multibillion dollar resource projects. On 14 September 2022 Lake Resources NL provided an update on the Kachi pilot plant in respect of progress under its Pilot Project Agreement (dated 21 September 2021) with technology partner, Lilac Solutions Inc (Lilac). Whilst work has continued on the Kachi project, a dispute has arisen between Lake and Lilac as to the date by which key performance milestones need to be achieved, with Lake considering milestones to be achieved by 30 September 2022 and Lilac considering it has until 30 November 2022 to do so. To resolve the dispute, Lake has exercised its rights to have the dispute resolved either by agreement of both Lake and Lilac or by arbitration. Pursuant to ASX announcement on 19 September, Lake confirmed that construction of the facility to house the Lilac demonstration plant was complete. Dry commissioning of the demonstration plant also commenced on Wednesday September 14, with expected wet commissioning of the plant to begin on September 22. Once wet commissioning is complete, Lilac expects to begin onsite processing of Kachi brines in the first week of October 2022. Whilst the test program is based on operating the demonstration plant for 1000 hours it is anticipated that the first 2000 litres of lithium concentrate produced from the demonstration plant will be sent for conversion into Lithium Carbonate once delivered. Lake proposes that this final Lithium product will then be qualified by a tier 1 battery maker to validate product specifications. Lake confirmed offtake discussions continue to advance and new appointments to the Lake board are in final stages of consideration. No other matter or circumstance has arisen since 30 June 2022 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. 88 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 17 Cash flow information (a) Reconciliation of loss after income tax to net cash used in operating activities (continued) Loss for the year Adjustments for: Depreciation and amortisation Exploration expenditure impaired Share-based payments (non cash) Financial asset impaired Unrealized gain or loss Realized gain or loss Note 5 2022 $ 2021 $ (5,683,095) (2,894,223) 51,297 - 2,425,591 337 301,700 108,931 - (146,352) (2,427,076) 16,433 - - Change in operating assets and liabilities, net of effects from purchase of controlled entity and sale of engineering division: (Increase)/decrease in trade and other receivables Increase/(decrease) in provisions Increase in other current assets Increase/(decrease) in trade and other payables Net cash outflow from operating activities (5,456,615) (91,732) 26,762 100,779 (119,271) (166,996) 2,605,372 236,079 (8,679,096) (2,432,983) (b) Non-cash investing and financing activities (i) During the year the Group entered into the following non-cash investing and financing transactions Share issue costs - to brokers Deduct shares in lieu of payments: Equity settled loan repayments (Note 7(e)) Proceeds from issue of shares, net of transaction costs 2022 $ 2021 $ (9,711,684) (2,625,776) - (32,500) (9,711,684) (2,658,276) 8989 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 18 Cash flow information (a) Reconciliation of loss after income tax to net cash used in operating activities (continued) Loss for the year Adjustments for: Depreciation and amortisation Exploration expenditure impaired Share-based payments (non cash) Financial asset impaired Unrealized gain or loss Realized gain or loss Change in operating assets and liabilities, net of effects from purchase of controlled entity and sale of engineering division: (Increase)/decrease in trade and other receivables Increase/(decrease) in provisions Increase in other current assets Increase/(decrease) in trade and other payables Net cash outflow from operating activities (b) Non-cash investing and financing activities (i) During the year the Group entered into the following non-cash investing and financing transactions Share issue costs - to brokers Deduct shares in lieu of payments: Equity settled loan repayments (Note 7(e)) Proceeds from issue of shares, net of transaction costs Note 5 2022 $ 2021 $ (5,683,095) (2,894,223) 51,297 - 2,425,591 337 301,700 108,931 - (146,352) (2,427,076) 16,433 (5,456,615) (91,732) (119,271) 2,605,372 - - 26,762 100,779 (166,996) 236,079 (8,679,096) (2,432,983) 2022 $ 2021 $ (9,711,684) (2,625,776) - (32,500) (9,711,684) (2,658,276) 90 LAKE RESOURCES ANNUAL REPORT 2022 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 17 Cash flow information (continued) (b) Non-cash investing and financing activities (continued) (ii) Reconciliation of net debt Opening balance Loan service fee, interest, discount Loan drawn Repayments by share issue/other Repayments - cash Lease liability on inception Interest charge Closing balance 18 Earnings per share Loss after income tax attributable to the owners of Lake Resources NL 2022 $ 2021 $ - - - - - 27,500 200,000 (60,000) (19,441) (167,500) 289,208 8,090 277,857 - - - 2022 $ 2021 $ (5,683,095) (2,894,223) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 1,120,917,048 821,977,574 Weighted average number of ordinary shares used in calculating diluted earnings per share 1,120,917,048 821,977,574 Basic loss per share Diluted loss per share Cents Cents (0.51) (0.51) (0.35) (0.35) Options over ordinary shares are considered potential ordinary shares. For the year ended 30 June 2022, their conversion to ordinary shares would have had the effect of reducing the loss per share. Accordingly, the options were not included in the determination of diluted earnings per share for the period. Details relating to options are set out at notes 9(b) and 20. Subsequent to the end of the financial year, the Consolidated entity issued 263,803 shares which would not 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 17 above. 9191 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 19 Share-based payments During the financial year the Company equity-settled share-based payment transactions for the acquisition of goods and services, from personnel and external suppliers were charged as follows: Expensed to profit or loss Capitalised as equity transaction cost Total Adjusted to equity Share capital Option Reserve Total (a) Expensed to Profit or Loss Note 20(a) 20(b) 2022 $ 2021 $ 2,425,591 108,931 9,711,684 2,625,776 12,137,275 2,734,707 2,425,591 108,931 9,711,684 2,625,776 12,137,275 2,734,707 During the year equity-settled share-based payment transactions for the payment for fees and services, expensed through profit or loss, occurred as follows: 2022 Options issued as payment for professional services - Mr. P Neilsen (CFO) Options issued as payment for professional services - Mr. G Parimoo (COO) Options issued as payment for professional services - Mr. S Robertson (SRL Consulting) Performance Shares issued as payment for professional services - Mr. N Lindsy Vesting of performance rights issued to directors Date Number Issued 13-July-21 2,000,000 14-Oct-2021 2,000,000 19-Jan-22 1,000,000 24-Feb-22 461,715 30-June-22 7,500,000 Total 12,961,715 Fair value per option/right $ Expensed $ 0.23 0.38 0.58 0.90 0.57 461,248 760,610 578,604 251,379 373,750 2,425,591 92 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 19 Share-based payments (continued) (a) Expensed to Profit or Loss (continued) 2021 Date Number issued Shares issued as payment for loan service fees - Mr. S Promnitz 31-Aug-20 916,667 Shares issued as payment for professional services - Acuity Capital Holdings Shares issued as payment for professional services - Supplier JCU Shares issued as payment for professional services - Mr. S Francis Total (i) Key Management Personnel and Suppliers options 1-Sep-20 381,033 1-Sep-20 333,334 20-Jan-21 710,900 2,341,934 Value per share $ Expensed $ 0.03 0.03 0.03 0.08 27,500 11,431 10,000 60,000 108,931 During the financial year, the following 4,000,000 options granted to the key management personnel and suppliers below have vested and are not exercised at year end are as follows: Name Number of Options granted Grant date Expiry date Exercise price Fair value at grant date Expensed 2022 P. Neilsen G. Parimoo S. Robertson Total 2,000,000 2,000,000 12-Jul-21 12-Jul-24 14-Oct-21 25-Oct-24 1,000,000 19-Jan-22 19-Jan-25 $0.55 $0.57 $1.48 $0.2310 461,248 $0.381 760,609 $0.5790 578,604 4,000,000 1,800,461 Grant date Vesting date Share Price at grant date Exercise (Strike) Price Time to Maturity (in years) Annual Risk-Free Rate Annualised Volatility P. Neilsen G. Parimoo S. Robertson 12-Jul-21 12-Jul-21 $0.39 $0.55 $3.00 0.16% 14-Oct-21 25-Oct-21 $0.57 $0.57 $3.00 0.66% 19-Jan-22 19-Jan-21 $0.985 $1.48 $3.00 1.23% $110.00 111.948% 108.767% The options did vest immediately, but was not exercised at year end. For the year ended 30 June 2022, $1,800,461 (2021: $nil) was recognised as an expense in the profit or loss. (ii) 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: 9393 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 19 Share-based payments (continued) (a) Expensed to Profit or Loss (continued) (ii) Performance rights issued to Directors (continued) Name Number of Rights granted Grant date Expiry date Converted to Shares/ Expired Fair value at grant date Expensed 2022 S. Crow S. Promnitz N. Lindsay Total 5,000,000 15-Aug-2019 15-Aug-24 - $0.0575 5,000,000 15-Aug-2019 15-Aug-24 (5,000,000) $0.0575 5,000,000 15-Aug-2019 15-Aug-24 (2,500,000 $0.0575 15,000,000 273,125 (7,188) 107,813 373,750 Directors exercised judgement in assessing that the likelihood of the remaining hurdles for the vesting of the performance rights has materially changed since the prior year. Accordingly for the year ended 30 June 2022, $373,750 (2021: $nil) was expensed in the profit or loss. The expense calculation recognises the probability of the performance hurdles being achieved. (i) Performance shares issued to Directors and other Key Management Personnel Name P. Neilsen P. Neilsen P. Neilsen P. Neilsen N. Lindsay N. Lindsay N. Lindsay N. Lindsay Total Number of Rights granted Grant date Expiry date Converted to Shares/ Expired Fair value at grant date Expensed 2022 123,809 22-Feb-2022 12-Dec-22 139,285 22-Feb-2022 12-Mar-23 167,142 22-Feb-2022 12-Sep-23 250,714 22-Feb-2022 12-Sep-24 92,343 22-Feb-2022 147,749 22-Feb-2022 147,749 22-Feb-2022 73,874 22-Feb-2022 1,142,665 1-Jun-22 1-Jun-22 1-Mar-23 1-Mar-24 $0.9000 $0.9000 $0.9000 $0.9000 $0.9000 $0.9000 $0.9000 $0.9000 - 35,911 143,645 - 71,823 251,379 Directors exercised judgement in assessing the number of performance shares that are expected to vest. The vesting conditions and Directors assessment at 30 June 2022 are summarised below: 94 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 19 Share-based payments (continued) (a) Expensed to Profit or Loss (continued) (iii) Performance rights issued to Directors (continued) Number of Rights granted Name P. Neilsen 123,809 Performance measure Measurement date Directors judgement at 30 June 2022 Delivering and operating a comprehensive reporting package for the debt financiers and potential JV partners post close of the Kachi Project finance and closing of debt financing for the Company’s Kachi Project (60%) 12-Oct-22 In the Directors judgement, this milestone will not be met by 12 October 2022. Nil expense recorded. 139,285 Delivering and operating a comprehensive reporting package for the debt financiers and potential JV partners post close of the Kachi Project finance 12-Jan-23 In the Directors judgement, this milestone will not be met by 12 January 2023. Nil expense recorded. 167,142 Maintain and deliver accurate reporting across all facets of the business incorporating cash flows, pre-production and budgeting. 12-Jul-23 In the Directors judgement, this milestone will not be met by 12 July 2023. Nil expense recorded. Preparation of financial documents to the satisfaction of financiers, project banking syndicates and export credit agencies Implementation and maintenance of acceptable budgetary and cash flow measures across Australia and Argentina 250,714 Delivery of the Kachi Project into production with appropriate reporting mechanisms in place 12-Jul-24 In the Directors judgement, this milestone will not be met by 12 July 2024. Nil expense recorded. N. Lindsay 92,343 147,749 147,749 73,874 Commencement of exploration and testing of brines from at least one of the Company’s other projects The Company putting a project team in place to build the Project DFS and building the demonstration plant on site 1-Apr-22 This tranche have vested. $35,911 expense recognised. 1-Apr-22 This tranche have vested. $143,645 expense recognised. The Company closing the debt and equity financing for the Company’s Kachi Project on terms satisfactory to the Company 1-Jan-23 In the Directors judgement, this milestone will not be met by 1 January 2023. Nil expense recorded. The Company receiving approval for the financing of an expansion case being up to 50,000 tonnes per annum lithium carbonate equivalent total production at the Kachi Project 1-Jan-24 In the Directors judgement, financing approval is expected before 1 January 2024 therefore expected that all 73,874 performance shares will vest. $71,823 expense recognised. 9595 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 19 Share-based payments (continued) (a) Expensed to Profit or Loss (continued) (iii) Performance shares issued to Directors and other Key Management Personnel (continued) Accordingly for the year ended 30 June 2022, $251,379 (2021: $nil) was expensed in the profit or loss. (b) Capitalised as equity transaction cost During the year 72,177,244 options were issued for services provided in raising capital for the Company. The expenses were charged to capital raising costs and were determined using the Black Scholes methodology utilising the following assumptions: Grant date Vesting date Share Price at grant date Exercise (Strike) Price Time to Maturity (in years) Annual Risk-Free Rate Annualised Volatility Grant date Vesting Date Share Price at grant date Exercise (Strike) Price Time to Maturity (in years) Annual Risk-Free Rate Annualised Volatility Lodge Partners Tranche 1 Tranche 2 Tranche 3 Tranche 4 30-Aug-21 30-Aug-21 $0.63 $0.75 $0.79 0.01% 127.61% 16-July-21 14-Mar-23 16-July-21 28-Sep-23 $0.385 $0.55 3 0.15% $0.385 $0.55 3 0.15% 16-July-21 21-Jan-24 $0.385 $0.55 3 0.15% 16-July-21 22-Jun-24 $0.385 $0.55 3 0.15% 109.817% 109.817% 109.817% 109.817% SD Capital / GKB Corporate Connect Simon Francis SD Capital GKB Ventures 01-Aug-21 01-Aug-21 $0.465 $0.49 3 0.02% 110.352% 16-Mar-22 16-Mar-22 19-Jan-22 26-April-22 26-April-22 16-Mar-22 26-April-22 26-April-22 $1.34 $1.00 1 1.77% $1.34 $0.75 1 1.77% $2.02 $1.42 3 2.65% $2.02 $1.42 3 2.65% 109.627% 109.627% 109.627% 109.627% Movement in options granted during the year for which expenses were charged to capital raising costs. Grant date FV price at grant date Expiry date Exercise price Granted Expired Unexercised Exercised Balance at the end of the year Charged to Equity 2022 28-Jul-2 28-Jul-2 28-Jul-2 28-Jul-2 1-Aug-2 30-Aug- 16-Mar- 16-Mar- 26-Apr- 26-Apr- Total 96 1 $0.24 31-Dec-24 $0.55 10,000,000 1 $0.24 31-Dec-24 $0.55 10,000,000 1 $0.24 31-Dec-24 $0.55 10,000,000 1 $0.24 31-Dec-24 $0.55 5,000,000 (10,000,000) (10,000,000) (10,000,000) (5,000,000) 1,375,472 1,045,190 925,926 395,552 1 $0.30 1-Aug-24 $0.50 5,780,000 (17,000) 5,763,000 1,752,203 21 $0.24 15-Jun-22 $0.75 4,000,000 (4,000,000) 22 $0.67 1-Mar-23 22 $0.71 15-Oct-22 22 $1.47 26-Apr-25 22 $1.47 26-Apr-25 $1.00 $0.75 $1.42 $1.42 100,000 225,000 1,036,122 1,036,122 100,000 225,000 945,592 66,700 158,850 1,036,122 1,523,099 1,036,122 1,523,099 92,857,244 - (10,119,000) 42,738,244 9,711,683 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 19 Share-based payments (continued) (b) Movements in Options, Performance Rights and Performance Shares Set out below are summaries of options and performance rights granted under share-based payments arrangement: Options Grant date Expiry date Exercise price Balance at the start of the year Granted Expired Unexercised Exercised Balance at the end of the year Vested and exercisable at the end of the year 2022 16-Sep-19 31-Jul-2021 09-Mar-21 09-Mar-23 27-Jan-21 24-Apr-21 28-Jul-21 28-Jul-21 28-Jul-21 28-Jul-21 13-Jul-21 1-Aug-21 30-Aug-21 19-Aug-21 19-Jan-22 14-Oct-21 16-Mar-22 16-Mar-22 26-Apr-22 26-Apr-22 Total 09-Mar-23 24-May-23 31-Dec-24 31-Dec-24 31-Dec-24 31-Dec-24 12-Jul-24 01-Aug-24 15-Jun-22 15-Jun-21 19-Jan-25 25-Oct-24 01-Mar-23 15-Oct-22 26-Apr-25 26-Apr-25 $0.09 $0.30 $0.30 $0.30 $0.55 $0.55 $0.55 $0.55 $0.55 $0.50 $0.75 $0.10 $1.48 $0.57 $1.00 $0.75 $1.42 $1.42 15,000,000 11,250,000 1,000,000 1,500,000 10,000,000 10,000,000 10,000,000 5,000,000 2,000,000 5,780,000 4,000,000 (1,000,000) (14,000,000) (11,250,000) (1,000,000) (1,500,000) (10,000,000) (10,000,000) (10,000,000) (5,000,000) - - - - - - - - 2,000,000 2,000,000 (17,000) 5,763,000 5,763,000 (4,000,000) 1,241,748 (1,166,748) (75,000) 1,000,000 2,000,000 100,000 225,000 1,036,122 1,036,122 - - 1,000,000 1,000,000 2,000,000 2,000,000 100,000 225,000 1,036,122 1,036,122 100,000 225,000 1,036,122 1,036,122 44,991,748 60,177,244 (2,166,748) (88,842,000) 13,160,244 13,160,244 Grant date Expiry date Exercise price 2021 30-Nov-17 31-Dec-20 8-Mar-19 28-Feb-22 16-Sep-19 31-Jul-21 28-Oct-19 28-Oct-22 09-Mar-21 09-Mar-23 27-Jan-21 09-Mar-23 24-Apr-21 24-May-23 $0.28 $0.08 $0.09 $0.05 $0.30 $0.30 $0.30 Balance at the start of the year 9,500,000 5,555,000 15,000,000 18,300,000 Granted Expired Unexercised Exercised Balance at the end of the year Vested and exercisable at the end of the year (9,500,000) (5,555,000) - - 11,250,000 1,000,000 1,500,000 15,000,000 15,000,000 (18,300,000) - 11,250,000 11,250,000 1,000,000 1,000,000 1,500,000 1,500,000 Total 48,355,000 13,750,000 (9,500,000) (23,855,000) 28,750,000 28,750,000 9797 Notes to the Consolidated Financial Statements For the year ended 30 June 2022 19 Share-based payments (continued) (c) Movements in Options, Performance Rights and Performance Shares (continued) Performance Rights Balance at the start of the year Converted to Shares/ Expired Balance at the end of the year Granted Vested during year but not converted Expired during the year 10,000,000 (2,500,000) 7,500,000 7,500,000 2,500,000 15,000,000 - (5,000,000) 10,000,000 - Grant date Expiry date 2022 15-Aug-2019 2021 15-Aug-2019 Performance Shares 12-Sep-24 15-Aug-24 Grant date Expiry date Balance at the start of the year Granted Converted to Shares/ Expired Balance at the end of the year Vested during year but not converted 2022 24-Feb-22 24-Feb-22 24-Feb-22 24-Feb-22 24-Feb-22 24-Feb-22 24-Feb-22 24-Feb-22 2021 12-Dec-22 12-Mar-23 12-Sep-23 12-Sep-24 1-Jun-22 1-Jun-22 1-Mar-23 1-Mar-23 - - - 123,809 139,285 167,142 250,714 92,343 147,749 147,749 73,874 1,142,665 - - - (c) Options as Share Based Payments - Numbers and Weighted Average Prices Outstanding at end of the period Granted during the period Forfeited during the period Expired during the period Exercised during the period Outstanding at end of the period Exercisable at the end of the period 98 123,809 139,285 167,142 250,714 92,343 147,749 147,749 73,874 92,343 147,749 1,142,665 240,092 - - Number Weighted Ave Exercise Price 92,491,748 52,177,244 (2,166,748) (122,716,040) 19,786,204 19,786,204 $0.30 $0.82 $0.10 $0.45 $0.97 $0.97 LAKE RESOURCES ANNUAL REPORT 2022Notes to the Consolidated Financial Statements For the year ended 30 June 2022 19 Share-based payments (continued) (c) Movements in Options, Performance Rights and Performance Shares (continued) 20 Commitments (a) Definitive Feasibility Study and Development Cost On 8 January 2021, the Consolidated entity announced that it had approved the preparation of a Definitive Feasibility Study (DFS) for the Kachi project. Work on the DFS is expected to be completed within 12 months of the date of this report with a further approximately USD34.5 million to be spent in that period. The company estimates the total development cost of the project at USD1 billion based on a plant capable of producing 50,000 tonnes of Lithium Carbonate per annum with the development cost to be incurred over a 3 year period. (b) Tenement Expenditure Commitments The Consolidated entity has no annual spending commitments required by Government or other bodies in order to maintain the standing of the tenements. Over the next 12 months the Consolidated entity expects to spend approximately USD112 million on exploration work at its Argentinian tenements. 21 Contingencies The Consolidated entity had no contingent liabilities at 30 June 2022 (2021: nil). 9999 Directors’ Declaration 30 June 2022 In the Directors’ opinion: (a) the consolidated financial statements and notes set out on pages 42 to 98 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and (ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 and of its performance for the financial year ended on that date, and (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations by the chief executive officer CEO and chief financial officer CFO required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Directors. S. Crow Executive Chairman 30 September 2022 100 LAKE RESOURCES ANNUAL REPORT 2022Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek Street Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia INDEPENDENT AUDITOR'S REPORT To the members of Lake Resources NL Report on the Audit of the Financial Report Opinion We have audited the financial report of Lake Resources NL (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2022, 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 report, including a summary of significant accounting policies and the directors’ declaration. In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: (i) Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial performance for the year ended on that date; and (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 95 101101 Carrying value of exploration and evaluation assets Key audit matter How the matter was addressed in our audit Refer to note 8 in the annual report. The Group carries exploration and evaluation assets as at 30 June 2022 in accordance with the Group’s accounting policy for exploration and evaluation assets. The recoverability of exploration and evaluation assets is a key audit matter due to the significance of the total balance and the level of procedures undertaken to evaluate management’s application of the requirements of AASB 6 Exploration for and Evaluation of Mineral Resources (‘AASB 6’) in light of any indicators of impairment that may be present. Our procedures included, but were not limited to the following: • Obtaining an understanding of the current status of the tenements/projects including key activities undertaken during the period; • Making enquiries of management with respect to whether any impairment indicators in accordance with AASB 6 have been identified across the Group’s exploration project; • Assessing management’s determination that exploration activities have not yet progressed to the point where the existence or otherwise of an economically recoverable mineral resource may be determined through discussions with management and review of ASX announcements and other relevant documentation; • Reviewing capitalised exploration expenditure during the period to ensure it meets the recognition criteria under AASB 6; and • Ensuring that the group has the rights to tenure and maintains the tenements in good standing. Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2022, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 96 102 LAKE RESOURCES ANNUAL REPORT 2022 Responsibilities of the directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://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 We have audited the Remuneration Report included in paragraphs a to b or pages 14 to 35 of the directors’ report for the year ended 30 June 2022. In our opinion, the Remuneration Report of Lake Resources NL, for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit Pty Ltd R M Swaby Director Brisbane, 30 September 2022 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 97 103103 2022 Corporate Governance Statement This corporate governance statement sets out the corporate governance policies and practices in place throughout the reporting period and/or which are current in accordance with 4th edition of the ASX Principles of Good Corporate Governance and Best Practice Recommendations. This corporate governance statement is current as at 14 October 2022 and has been approved by the Board. It is available on the Company’s website at www.lakeresources.com.au. ASX Principles and Recommendations Comply (Yes/No) Explanation 1. Lay solid foundations for management and oversight 1.1. A listed entity should have and disclose a board charter setting out: Yes (a) the respective roles and responsibilities of its board and management; and (b) those matters expressly reserved to the board and those delegated to management. The Company has adopted a Board Charter which sets out the roles and responsibilities of the Board, senior management and the Company Secretary. The Board Charter also sets out the matters expressly reserved to the board and those delegated to management. The Board is responsible for the performance and overall corporate governance of the Company including the strategic direction, selection of executive directors, establishing goals for management and monitoring the achievement of those goals and approval of budgets. Day to day management of the Company’s affairs and implementation of the corporate strategy are delegated by the Board to the managing director and senior management. A copy of the Board Charter is available on the Company’s website at http://www.lakeresources.com.au. 1.2. A listed entity should: Yes (a) (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election as a director; and provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re- elect a director. Appropriate background checks are carried out prior to the appointment of new directors in respect of checking qualifications and experience, and screening for bankruptcy or criminal convictions. The Notice of Meeting sent to all shareholders prior for the AGM includes all material information obtained by the Company to enable shareholders to make an informed decision in respect of the re-election of directors at the AGM. 1.3. A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. No During the reporting period the Company did not have a written agreement with Chairman Mr Stuart Crow. The Company currently has written agreements in place with all directors setting out the terms of their appointment. 1.4. The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. Yes The Board Charter provides for the Company Secretary to be accountable directly to the Board through the Chair. 104 LAKE RESOURCES ANNUAL REPORT 2022 The Company has adopted a Diversity Policy which is available in the corporate governance section of the Company’s website at http://www.lakeresources.com.au. The Board has not yet set measurable objectives for the Diversity Policy however as it entered the S&P/ASX 300 during the year ended 30 June 2022 it will set measurable objectives for achieving gender diversity in the composition of its board during the current period. The Group currently has 1 female board member (2021:1), no female senior executives (2021: Nil). The Company currently has 18 female employees representing 20% of the total number of employees including Directors. 1.5. A listed entity should: No (a) Have and disclose a diversity policy; (b) through its board or a committee of the board set measurable objectives for achieving gender diversity in the composition of its board, senior executive and workforce generally; and (c) disclose in relation to each reporting period: (1) the measurable objectives set for that period to achieve gender diversity (2) the entity’s progress towards achieving those objectives; and (3) either: (A) (B) the respective proportions of men and women on the board, in senior executive positions and across the whole workforce (including how the entity has defined “senior executive” for these purposes); or if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equity Indicators”, as defined in and published under that Act. If the entity was in the S&P/ASX 300 index at the commencement of the reporting period, the measurable objective for achieving gender diversity in the composition of its board should be to have not less than 30% of its directors of each gender within a specified period. 1.6. A listed entity should: No (a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and To date the Company has not established or disclosed a formal process for evaluation of the Board, Board Committees or individual directors. Due to the recent restructuring of the Board the Company will introduce a formal process for its evaluation together with its Board Committees and individual directors. (b) disclose, in relation to each reporting No evaluations were undertaken during the 2022 financial year. period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. 1.7. A listed entity should: No (a) have and disclose a process for evaluating the performance of its senior executives at least once every reporting period; and To date the Company has not established or disclosed a formal process for evaluation of senior executives. As the size of the executive team has grown during the current reporting period the Company will introduce a formal process for the evaluation of senior executives during the current reporting period. (b) disclose for each reporting period whether No evaluations were undertaken during the current reporting period. a performance evaluation has been undertaken in accordance with that process during or in respect of that period. 105 No The Company constituted a Nomination and Remuneration Committee in June 2022. Up until the constitution of the Nomination and Remuneration Committee the full Board considered Board composition and identifies and assesses candidates to fill any casual vacancy which may arise from time to time. The members of the Nomination and Remuneration Committee are: Stuart Crow – Chairman Robert Trzebski Amalia Saenz Robert Trzebski is considered an independent director. As he is currently Executive Chairman, Stuart Crow is not an independent director however the Board feel that at this time it is appropriate that he chairs the committee as the Company establishes a North American presence to serve our off-take customers, continue to work with our US-based technology partner and engage capital markets which is expected to include the appointment of new Directors. Amalia Saenz, in addition to her Directors duties, is engaged on an consultancy basis to provide services to the Company in Argentina and is not considered to be an independent Director by reason of this consultancy arrangement. Given the current composition of the Board the Directors feel that it is appropriate that Ms Saenz sits on this committee. The composition of this committee will be reviewed on the appointment of new Directors. The Charter of the Nomination and Remuneration Committee is available on the Company’s website at http://www.lakeresources. com.au. No formal meetings of the Nomination and Remuneration Committee were conducted in the reporting period. During the reporting period the Company did not have a formal board skills matrix. A skills matrix has been developed post the reporting period. On a collective basis the skills indicate the current Board has the mix of skills, experience and expertise that are considered necessary at Board level to further the development of the Company. The matrix reflects the Board’s objective to have an appropriate mix of specific industry and professional experience including skills such as mineral exploration, project development leadership, governance, strategy, finance, risk management, Government and community engagement and international business operations. 2. Structure the board to be effective and add value 2.1. The board of a listed entity should: (a) have a nomination committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. 2.2. A listed entity should have and disclose a board No skills matrix setting out the mix of skills that the board currently has or is looking to achieve in its membership. 106 LAKE RESOURCES ANNUAL REPORT 2022 2.3. A listed entity should disclose: Yes (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director. The Chair, Mr Stuart Crow was until 20 June 2022, a non-executive director and shareholder, yet is not a substantial security holder of the Company such that that it would breach the factors relevant to assessing the independence of a director per box 2.3. Mr Crow assumed the position of Executive Chairman on 20 June 2022 and as such is not considered and independent Director from that date. The Board, however, considers that Mr Crow has demonstrated the appropriate experience, skills and integrity to act independently and without compromise in the best interests of the company, its shareholders and the community. During the reporting period Mr Nicholas Lindsay was an executive of the Company and not considered independent. Dr Robert Trzebski and Ms Amalia Saenz are considered to be independent by the Board. Mr David Dickson was appointed Managing Director on 15 September 2022 and as an executive is not considered independent. 2.4. A majority of the board of a listed entity should No be independent directors. Until 20 June 2022 the Board had a majority of independent directors. 2.5. The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. 2.6. A listed entity should have a program for Yes inducting new directors and for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as directors effectively. With Mr Crow’s appointment as Executive Chairman on 20 June 2022 the Board does not have a majority of independent Directors. The Board is currently assessing the appointment of further independent Directors. No Until his appointment as Executive Chairman on 20 June 2022 the Chairman, Mr Stuart Crow was an independent non-executive Director. Until his resignation on 17 June 2022 Mr Promnitz is the CEO/ Managing Director. The Board considered at the time of Mr Promnitz’s resignation that it was appropriate for Mr Crow to become Executive Chairman as the search for a new Managing Director was concluded. Mr David Dickson was appointed Managing Director with effect from 15 September 2022. Mr Crow will remain as Executive Chairman for a short transitional period. Upon appointment to the Board new Directors are provided with access with Company policies and procedures and have access to senior executives and other members of the Board to discuss and gain an understanding of the Company’s operations and activities. Site visits to the Company’s operations will also be made available where appropriate. Directors are encouraged to attend seminars and industry conferences which enable them to maintain their understanding of relevant industry matters and technical advancements effecting the Company’s operations. 107 3. Instill a culture of acting lawfully, ethically and responsibly 3.1. A listed entity should articulate and disclose its values. Yes The Company’s Corporate Code of Conduct applies to all Directors, officers, contractors, senior executives and employees (Staff). Staff are under the obligation to ensure that the Code of Conduct is not breached. If any Staff notice any violations of the Conduct of Conduct, they must notify the Managing Director, the Chair of the Company or a supervisor (if applicable). The Directors must ensure that reports of any breach of the Code of Conduct undergoes thorough investigations and that appropriate action is taken by the Company. A copy of the Company’s Code of Conduct is available on the Company’s website http://www.lakeresources.com.au. 3.2. A listed entity should: (a) have and disclose a code of conduct for its directors, senior executives and employees; and (b) ensure that the board or a committee of the board is informed of any material breaches of that code. 3.3. A listed entity should: (a) have and disclose a whistleblower policy: and (b) ensure that the board or a committee of the board is informed of any material incident reported under that policy. 3.4. A listed entity should: (a) have and disclose an anti-bribery and corruption policy; and (b) ensure that the board or a committee of the board is informed of any material breaches of that policy. Yes The Company has a code of conduct for its directors, senior executives and employees and is published on the Company’s website at http://www.lakeresources.com.au. No The Company adopted a formal Whislteblower Policy in June 2022 which is published on the Company’s website at http://www. lakeresources.com.au. The Whislteblower Policy provides a procedure for the Board to be informed of any material incident reported under the policy. Prior to the adoption of the policy the Company’s Code of Conduct applied. No The Company has adopted a formal Anti-bribery and Corruption Policy during the current reporting period which is published on the Company’s website at http://www.lakeresources.com.au. The Anti-bribery and Corruption Policy provides a procedure for the Board to be informed of any material incident reported under the policy. Prior to the adoption of the policy the Company’s Code of Conduct applied. 108 LAKE RESOURCES ANNUAL REPORT 2022 4. Safeguard the integrity of corporate reports 4.1. The board of a listed entity should: No The Company constituted an Audit Committee in June 2022. Up until the constitution of the Audit Committee the full Board carried out the duties that would ordinarily be carried out by the Audit and Risk Committee to verify and safeguard the integrity of its financial reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. The members of the Audit Committee are: Robert Trzebski – Chairman Stuart Crow Amalia Saenz Robert Trzebski is considered to be an independent director. As he is currently Executive Chairman, Stuart Crow is not an independent. Amalia Saenz, in addition to her Directors duties, is engaged on an consultancy basis to provide services to the Company in Argentina and is not considered to be an independent Director by reason of this consultancy arrangement. Given the current composition of the Board the Directors feel that it is appropriate that Mr Crow and Ms Saenz sit on this committee. The composition of this committee will be reviewed on the appointment of new Directors. The Charter of the Audit Committee is available on the Company’s website at http://www.lakeresources.com.au. No formal meetings of the Audit Committee were conducted in the reporting period. (a) have an audit committee which: (1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) (5) the relevant qualifications and experience of the members of the committee; and in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. 4.2. The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. Yes Prior to approving the Company’s financial statements for financial periods ended 31 December 2021 and 30 June 2022, the Managing Director/Executive Chairman and CFO provide a declaration to the Board that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. The Board has formed the view that, given the size and nature of the business of the Company during the reporting period, such a process was not required in relation to the Company’s quarterly cash flow reports. Commencing in the current reporting period the declaration will be provided for the quarterly cashflow reports. 4.3. A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor. No Major periodic corporate reports that are not audited or reviewed by an external auditor are reviewed by the Board before release and reports on exploration and drilling activities are signed by a competent person as set out in the JORC code 2012 . 109 5. Make timely and balanced disclosure 5.1. A listed entity should have and disclose Yes (a) a written policy for complying with its continuous disclosure obligations under listing rule 3.1. 5.2. A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made. 5.3. A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation. Yes Yes 6. Respect the rights of security holders During the reporting period the Company adopted a Continuous Disclosure Policy which is available on the Company’s website at http://www.lakeresources.com.au. Prior to the adoption of the formal policy the Board took ultimate responsibility for continuous disclosure requirements and did not consider adoption and disclosure of a formal disclosure policy outside of its corporate governance statement appropriate. Copies of all market announcements are circulated promptly after they are made to the Board. Any new and substantive presentations made by the Company are released to the ASX Market Announcements Platform ahead of the presentation, a copy of which is available on the Company’s website, http://www.lakeresources.com.au. when released. 6.1. A listed entity should provide information about itself and its governance to investors via its website. Yes The Company maintains a website containing comprehensive information on the Company including a company profile, corporate strategy, policy statements including corporate governance, Board of Directors, newsflashes and contact information. 6.2. A listed entity should have an investor relations program that facilitates effective two-way communication with investors Yes All the Company’s quarterly, half year and annual reports and other disclosures are available on the Company website: http://www. lakeresources.com.au. The Company’s Executive Chairman and Managing Director are currently the Company’s contact for investors and potential investors and makes themselves available to discuss the Company’s activities when requested. Where appropriate Directors provide assistance to the Executive Chairman and Managing Director in dealing with investor relations The Company communicates with shareholders via releases to the market on the ASX platform, through the Company’s website, by information provided directly to shareholders at briefing meetings open to all shareholders and the public and at general meetings. 6.3. A listed entity should disclose how it facilitates Yes and encourages participation at meetings of security holders. The Company encourages shareholders to attend and participate in general meetings. If a shareholder wishes to provide a comment or question prior to the meeting for consideration at the meeting, a process is provided for this prior to each meeting. 6.4. A listed entity should ensure that all Yes All resolutions at general meetings are decided by a poll. substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands. 6.5. A listed entity should give security holders the Yes option to receive communications from, and send communications to, the entity and its security registry electronically. Security holders are given the option to receive communications electronically 110 LAKE RESOURCES ANNUAL REPORT 2022 7. Recognise and manage risk 7.1. The Board of a listed entity should: No (a) have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. 7.2. The board or a committee of the board should: Yes (a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and that the entity is operating with due regard to the risk appetite set by the board; and (b) disclose in relation to each reporting period, whether such a review has taken place. 7.3. A listed entity should disclose: Yes (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. The Company does not currently have a risk committee. At this stage, the Board is responsible for the identification and management of risks the Company may be exposed to. As the Company progresses to the development stage the Company will consider constituting a risk committee. During the reporting period the Company undertook a comprehensive review of its risk management practices and implemented a comprehensive Risk Management System adopting policies and procedures to the identification, a management and reporting of risk. The Company did not have an internal audit function during the reporting period. The Board is responsible for the identification and management of risks the Company may be exposed to. During the reporting period the Company undertook a comprehensive review of its risk management practices and implemented a comprehensive Risk Management System adopting policies and procedures to the identification, a management and reporting of risk. 111 7.4. A listed entity should disclose whether it has Yes any material exposure to environmental or social risks and, if it does, how it manages or intends to manage those risks. Environmental: The operations and proposed activities of the Company are subject to laws and regulations in the jurisdictions in which it operates concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment. The Company’s conducts its activities to the highest standard of environmental obligation, including compliance with all environmental laws. Social: The Board recognises that a failure to manage community and stakeholder expectations may lead to disruption to the Company’s operations. The Company’s Corporate Code of Conduct outlines the Company’s commitment to integrity and fair dealing in its business affairs and to a duty of care to all employees, clients and stakeholders. The code sets out the principles covering appropriate conduct in a variety of contexts and outlines the minimum standard of behavior expected from employees when dealing with stakeholders. 8. Remunerate fairly and responsibly 8.1. The Board of a listed entity should: (a) have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. No The Company constituted a Nomination and Remuneration Committee in June 2022. Up until the constitution of the Nomination and Remuneration Committee the full Board considered remuneration policy and other remuneration related matters. The members of the Nomination and Remuneration Committee are: Stuart Crow – Chairman Robert Trzebski Amalia Saenz Robert Trzebski and Amalia Saenz are considered independent directors. As he is currently Executive Chairman, Stuart Crow is not an independent director however the Board feel that at this time it is appropriate that he chairs the committee as the Company establishes a North American presence to serve our off- take customers, continue to work with our US-based technology partner and engage capital markets which is expected to include the appointment of new Directors. The Charter of the Nomination and Remuneration Committee is available on the Company’s website at http://www.lakeresources. com.au. No formal meetings of the Nomination and Remuneration Committee were conducted in the reporting period. 8.2. A listed entity should separately disclose Yes its policies and practices regarding the remuneration of non- executive directors and the remuneration of executive directors and other senior executives. The Company provides disclosure of its remuneration policies and practices regarding the remuneration of non- executive directors and the remuneration of executive directors and other senior executives in the Remuneration Report which forms part of its Annual Financial Statements. 112 LAKE RESOURCES ANNUAL REPORT 2022 8.3. A listed entity which has an equity- based Yes remuneration scheme should: (a) have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and (b) disclose that policy or a summary of it. The Company’s trading policy states that Key Management Personnel of the Company and their closely related parties should enter into hedging transactions to limit their exposure in respect of any unvested entitlement to securities they receive under any equity-based remuneration scheme of the Company 9. Additional recommendations that apply only in certain cases 9.1. A listed entity with a director who does not speak the language in which board or security holder meetings are held or key corporate documents are written should disclose the processes it has in place to ensure the director understands and can contribute to the discussions at those meetings and understands and can discharge their obligations in relation to those documents. 9.2. A listed entity established outside Australia should ensure that meetings of security holders are held at a reasonable place and time. 9.3. A listed entity established outside Australia and an externally managed listed entity that has an AGM, should ensure that is external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. N/A N/A N/A 113 ADDITIONAL ASX INFORMATION Top holders grouped report Lake Resources N.L. Security class: As at date: LKE - Ordinary Shares 17-Oct-2022 Position Holder Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 CITICORP NOMINEES PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED BNP PARIBAS NOMS PTY LTD MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED ACUITY CAPITAL INVESTMENT MANAGEMENT PTY LTD US REGISTER CONTROL A/C J P MORGAN NOMINEES AUSTRALIA PTY LIMITED BNP PARIBAS NOMINEES PTY LTD NATIONAL NOMINEES LIMITED SYDNEY BUSINESS ADVISERS PTY LTD BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM SBL POSITIONS MR DANIEL RUBEN BONAFEDE MR SIMON JAMES KALINOWSKI MS AINSLEY RUTH WILLIAMS MR ANDREW ROBERT POWELL HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 LEIGH MARTIN MARINE PTY LTD 202 LIMITED SUPERHERO SECURITIES LIMITED Total Total issued capital - selected security class(es) Holding 159,635,574 62,834,792 49,741,973 46,863,068 41,400,000 39,366,573 38,648,563 18,295,355 15,888,798 15,850,000 9,517,443 9,052,672 8,284,634 8,020,000 7,365,533 7,127,600 6,983,016 6,300,000 5,701,454 5,667,224 % IC 11.48% 4.52% 3.58% 3.37% 2.98% 2.83% 2.78% 1.32% 1.14% 1.14% 0.68% 0.65% 0.60% 0.58% 0.53% 0.51% 0.50% 0.45% 0.41% 0.41% 562,544,272 1,389,973,709 40.47% 100.00% 114 LAKE RESOURCES ANNUAL REPORT 2022 Holdings Range Report Lake Resources N.L. Security Class: As at Date: Price per security: $0.990 LKE - Ordinary Shares 17-Oct-2022 Holding Ranges Holders Total Units % Issued Share Capital above 0 up to and including 1,000 above 1,000 up to and including 5,000 above 5,000 up to and including 10,000 above 10,000 up to and including 100,000 above 100,000 Totals 8,461 14,638 5,662 8,384 1,272 38,417 5,330,919 38,847,761 43,445,898 250,941,861 1,051,407,270 1,389,973,709 0.38% 2.79% 3.13% 18.05% 75.64% 100.00% Based on the price per security, number of holders with an unmarketable holding: 3158, with total 1,110,965, amounting to 0.08% of Issued Capital Class of shares and voting rights At meetings of members or classes of members each member entitled to vote may vote in person or by proxy or attorney; and on a show of hands every person present who is a member has one vote, and on a poll every person present in person or by proxy or attorney has one vote for each ordinary share held. On-market buy-back There is no current on-market buy-back. 115 Unlisted Securities As at 17 October 2022 Options at $0.30 Exp 09/03/2023 Options @ $0.55 EXP 12/07/24 Options @ $0.49 EXP 01/08/24 Options @ $1.48 EXP 19/01/25 PERFORMANCE SHARES Options @ $0.565 EXP 25/10/24 Options @ $1.00 EXP 01/03/2023 Options @ $0.75 2019 PERFORMANCE EXP 15/10/2022 RIGHTS Options @ $1.42 EXP 26/04/2025 Options @ $1.50 EXP 22/08/2025 Options @ $0.75 EXP 15/06/2025 Options @ $1.13 EXP 15/09/2027 Restricted Stock Units Holders Total Units Holders Total Units Holders Total Units Holders Total Units Holders Total Units Holders Total Units Holders Holders Holders Holders Total Units Holders Holders Total Units Holders Total Units Holders Total Units Total Units Total Units - - 1 5 6 - - 128,125 6,396,032 - - - 1 - - - 2000,000 6,524,157 1 2,000,000 - - - 2 2 - - - 5,601,000 - - - 1 - - - 1,000,000 3 - - - 11 - - - - - - 1 - - - 2,000,000 5,601,000 1 1,000,000 3 11 1 2,000,000 1 100,000 1 225,000 7,500,000 1 1,000,000 7,000,000 1 4,000,000 1 1,000,000 Total Units 100,000 - - - - - - 1 - 1 - - - - - - - - - - - - - - 225,000 2 2 2,072,244 2,072,244 2 2 - - - - - - 1 - - - - - - 3 3 - - - - - - 1 7,500,000 1,000,000 7,000,000 4,000,000 1,000,000 Total Units - - - - - - - - - 1 Range Less than 1,000 Above 1,000 up to and including 100,000 above 10,000 up to and including 100,000 above 100,000 Totals 2,000,000 2,890,000 2,711,000 1,000,000 4 4 3 2,000,000 100,000 225,000 1,036,122 1,036,122 5,000,000 2,500,000 1,000,000 5,460,000 4,000,000 1,000,000 Holsers with > 20% EMPERY ASSET MASTER ROTH CAPITAL PARTNERS LLC 2,027,496 3,000,000 PETER NEILSEN GKB VENTURES LTD SD CAPITAL ADVISORY ROBWARD PTY LTD NICK LINDSAY PETER NEILSEN SEAN MILLER GAUTAM PARIMOO CORPORATE CONNECT RESEARCH PTY SIMON RUSSELL FRANCIS GKB VENTURES LTD SD CAPITAL ADVISORY MR GEOFFREY STUART CROW NICK LINDSAY SEAN MILLER DDIE SUGAR DAVID DICKSON 116 LAKE RESOURCES ANNUAL REPORT 2022 Unlisted Securities As at 17 October 2022 Range Less than 1,000 Above 1,000 up to and including 100,000 above 10,000 up to and including 100,000 above 100,000 Totals - - 128,125 - - - 1 - - 1 5 6 - - - - - - 2 2 Holsers with > 20% EMPERY ASSET MASTER ROTH CAPITAL PARTNERS LLC 2,027,496 3,000,000 2,000,000 2,890,000 2,711,000 1,000,000 11 - - - 4 4 3 PETER NEILSEN GKB VENTURES LTD SD CAPITAL ADVISORY ROBWARD PTY LTD NICK LINDSAY PETER NEILSEN SEAN MILLER GAUTAM PARIMOO CORPORATE CONNECT RESEARCH PTY SIMON RUSSELL FRANCIS GKB VENTURES LTD SD CAPITAL ADVISORY MR GEOFFREY STUART CROW NICK LINDSAY SEAN MILLER DDIE SUGAR DAVID DICKSON Options at $0.30 Exp 09/03/2023 Options @ $0.55 Options @ $0.49 Options @ $1.48 PERFORMANCE Options @ $0.565 EXP 12/07/24 EXP 01/08/24 EXP 19/01/25 SHARES EXP 25/10/24 Options @ $1.00 EXP 01/03/2023 Options @ $0.75 EXP 15/10/2022 2019 PERFORMANCE RIGHTS Options @ $1.42 EXP 26/04/2025 Options @ $1.50 EXP 22/08/2025 Options @ $0.75 EXP 15/06/2025 Options @ $1.13 EXP 15/09/2027 Restricted Stock Units Holders Total Units Holders Total Units Holders Holders Holders Holders Total Units Holders Total Units Total Units Total Units - - - - - - 1 - - - 3 - - - - - - 1 - - - - 1 - - 6,396,032 2000,000 5,601,000 1,000,000 2,000,000 Total Units - 100,000 - - - - - 1 Holders Total Units Holders Total Units Holders Total Units Holders Total Units Holders Total Units Holders Total Units Holders - - - - - - - - - - - - 225,000 2 2 2,072,244 2,072,244 2 2 - - - 7,500,000 - - - 1 - - - 1,000,000 7,500,000 1 1,000,000 - - - 3 3 - - - 7,000,000 - - - 1 - - - 4,000,000 - - - 1 Total Units - - - 1,000,000 6,524,157 1 2,000,000 5,601,000 1 1,000,000 3 11 1 2,000,000 1 100,000 1 225,000 7,000,000 1 4,000,000 1 1,000,000 2,000,000 100,000 225,000 1,036,122 1,036,122 5,000,000 2,500,000 1,000,000 5,460,000 4,000,000 1,000,000 117 Mineral Resource as at 30 June 2022 Kachi Mineral Resource Estimate - November 2018 (JORC Code 2012 Edition) Area km2 Aquifer volume km3 Brine volume km3 Mean drainable porosity % (Specific yield) Element Weighted mean concentration mg/L Resource tonnes Lithium Carbonate Equivalent tonnes Potassium Chloride tonnes RESOURCE ESTIMATE KACHI 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 289 5,880 Li 209 K 4,180 Li 211 K 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 The Company engaged an independent consultant to prepare Mineral Resource estimates, in the course of doing so the consultant has: • Reviewed the 3D geological models that represent the interpreted geology, hydrogeology and groundwater profiles, based on drilling and geological information supplied by Lake Resources NL. • Completed statistical analysis and variography for economic elements. • Estimated grades of economic elements using ordinary kriging and completed model validity checks. • Classified the Mineral Reserve and Resource estimate in accordance with the JORC Code. • Reported the estimates and compiled supporting documentation in accordance with JORC Code guidelines. The information in this annual report that relates to the estimation and reporting of the Kachi Mineral Resource Estimate is extracted from the ASX announcement dated 27 November 2018 which is available to be viewed at www.lakeresources.com. au and www.asx.com.au. The Company confirms that it is not aware of any new information or data that materially affects the information included in the announcement and that all material assumptions and technical parameters underpinning the Mineral Resource estimate continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from announcement. There was no change in the Kachi Mineral Resource Estimate between 30 June 2022 and 30 June 2021. 118 LAKE RESOURCES ANNUAL REPORT 2022SCHEDULE OF TENEMENTS TOTAL NUMBER OF TENEMENTS: 115 TOTAL AREA TENEMENTS: 308,550 Ha REF TENEMENT NAME NUMBER AREA HECTARE INTEREST PROVINCE STATUS CATAMARCA KACHI AREA MARIA I MARIA II MARIA III EX - 2021 - 00362285 - CAT (140/2018) EX - 2021 - 00373528 - CAT (14/2016) EX - 2021 - 00293511 – CAT (15/2016) KACHI INCA EX - 2021 - 00361579 - CAT (13/2016) KACHI INCA I EX - 2021 - 00432837 – CAT (16/2016) KACHI INCA II EX - 2021 - 00221521 – CAT (17/2016) KACHI INCA III EX - 2121 - 00321200 – CAT (47/2016) KACHI INCA V EX - 2021 - 00208240 – CAT (45/2016) KACHI INCA VI EX - 2021 - 00294250 – CAT (44/2016) DANIEL ARMANDO EX - 2021 - 00208733 - CAT (23/2016) DANIEL ARMANDO II EX - 2021 - 00331263 – CAT (97/2016) MORENA 1 EX - 2021 - 00328638 – CAT (72/2016) MORENA 2 EX - 2021 - 00390312 – CAT (73/2016) MORENA 3 EX - 2021 - 00361695 – CAT (74/2016) MORENA 4 EX - 2021 - 00293790 – CAT (29/2019) MORENA 5 EX - 2021 - 00221381 – CAT (97/2017) MORENA 6 EX - 2021 - 00208283 – CAT (75/2016) MORENA 7 EX - 2021 - 00259078 – CAT (76/2016) 1260 547 835 858 2880 2823 3355 305 110 3122 1590 3024 2989 3007 2968 1416 1606 2805 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED 119 REF TENEMENT NAME NUMBER AREA HECTARE INTEREST PROVINCE STATUS MORENA 8 EX - 2021 - 00294310 - CAT (77/2016) MORENA 9 EX - 2021 - 00368898 – CAT (30/2019) 2961 2822 MORENA 10 EX - 2022 - 00508476 - CAT 2713 MORENA 12 EX - 2021 - 00259022 – CAT (78/2016) MORENA 13 EX - 2021 - 00258895 – CAT (79/2016) MORENA 15 EX - 2021 - 00360876 – CAT (162/2017) PAMPA I PAMPA II PAMPA 11 EX - 2021 - 00233741 – CAT (129/2013) EX - 2021 - 00430058 -CAT (128/2013) EX - 2021 - 00372498 – CAT (201/2018) PAMPA IV EX - 2021 - 00322433 – CAT (78/2017) IRENE EX - 2021 - 00212993 – CAT (28/2018) PARAPETO 1 EX - 2021 - 01648141 – CAT (133/2018) PARAPETO 2 EX - 2021 - 00235750 – CAT (134/2018) PARAPETO 3 EX - 2121 - 00261195 – CAT (132/2018) 2704 3024 2559 690 1053 815 2569 2052 2281 1730 1892 PARAPETO III EX - 2021 - 00854749 – CAT 1949 PARAPETO 4 EX - 2021 - 01651926 – CAT 1949 GOLD SAND I EX - 2021 - 00376209 – CAT (238/2018) TORNADO VII EX - 2021 - 00208328 – CAT (48/2016) DEBBIE I EX - 2021 - 00196977 – CAT (21/2016) DOÑA CARMEN EX - 2021 - 00321876 – CAT (24/2016) DIVINA VICTORIA I EX - 2021 - 00368383 – CAT (25/2016) DOÑA AMPARO I EX - 2021 - 00294138 – CAT (22/2016) 854 6629 1743 873 2420 2695 120 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED LAKE RESOURCES ANNUAL REPORT 2022REF TENEMENT NAME NUMBER AREA HECTARE INTEREST PROVINCE STATUS ESCONDIDITA EX - 2021 - 00143141 – CAT (131/2018) GALAN OESTE EX - 2021 - 00153718 – CAT (43/2016) MARIA LUZ EX - 2021 - 00153678 – CAT (34/2017) NINA EX - 2021 - 00360751 – CAT (106/2020) PADRE JOSE MARIA I EX - 2021 - 00432843 – CAT (95/2012) PADRE JOSE MARIA II EX - 2021 - 00432950 -CAT (96/2012) PADRE JOSE MARIA III EX - 2021 - 00433095 – CAT (94/2012) PADRE JOSE MARIA IV EX - 2021 - 00433149 – CAT (93/2012) PADRE JOSE MARIA V EX - 2021 - 00647090 – CAT (92/2012) PADRE JOSE MARIA VI EX - 2021 - 00647273 – CAT (91/2012) PADRE JOSE MARIA VII EX - 2021 - 00647377 – CAT (90/2012) PADRE JOSE MARIA VIII EX - 2021 - 00647631 – CAT (89/2012) 373 3167 2425 3125 650 1523 1523 1529 1584 1507 1500 515 52 Mining leases 103898 Ha 100 100 100 100 100 100 100 100 100 100 100 100 CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED CATAMARCA GRANTED 121 REF TENEMENT NAME NUMBER AREA HECTARE INTEREST PROVINCE STATUS CATAMARCA PEGMATITES PETRA I PETRA II PETRA III PETRA IV CATEO 1 CATEO 2 CATEO 3 CATEO 4 LA AGUADA 1 LA AGUADA 2 LA AGUADA 3 LA AGUADA 4 LA AGUADA 5 LA AGUADA 6 LA AGUADA 7 LA AGUADA 8 8 Mining leases 8 Exploration leases EX - 2021 - 01020531 - CAT (52/2016) EX - 2021 - 00145689 - CAT (51/2016) EX - 2021 - 00145810 - CAT (49/2016) EX - 2021 - 00145665 - CAT (50/2016) EX - 2021 - 01349707 - CAT (93/2016) EX - 2021 - 00145782 - CAT (94/2016) EX - 2021 - 00147744 - CAT (95/2016) EX - 2021 - 00145516 - CAT (98/2016) EX - 2021 - 00145356 - CAT (116/2016) EX - 2021 - 00145468 - CAT (117/2016) EX - 2021 - 00229232 - CAT (99/2016) EX - 2021 - 00145863 - CAT (173/2016) EX - 2021 - 00145839 - CAT (172/2016) EX - 2021 - 00145928 - CAT (174/2016) EX - 2021 - 00169048 - CAT (137/2016) EX - 2021 - 00168791 - CAT (139/2016) 10000 9524 9528 8939 10000 8475 10000 10000 2499 2950 1559 2929 2866 2999 2919 1587 96773 Ha 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 CATAMARCA CATEO GRANTED CATAMARCA CATEO GRANTED CATAMARCA CATEO GRANTED CATAMARCA CATEO GRANTED CATAMARCA CATEO GRANTER CATAMARCA CATEO GRANTED CATAMARCA CATEO GRANTED CATAMARCA CATEO GRANTED CATAMARCA MINE GRANTED CATAMARCA MINE GRANTED CATAMARCA MINE GRANTED CATAMARCA MINE GRANTED CATAMARCA MINE GRANTED CATAMARCA MINE GRANTED CATAMARCA MINE GRANTED CATAMARCA MINE GRANTED 122 LAKE RESOURCES ANNUAL REPORT 2022REF TENEMENT NAME NUMBER AREA HECTARE INTEREST PROVINCE STATUS JUJUY - OLAROZ OLAROZ EAST II 2168-D-2016 MASA 12 MASA 13 MASA 14 MASA 15 MASA 24 MASA 25 MASA 26 MASA 27 MASA 28 MASA 29 2234-M-2016 2235-M-2016 2236-M-2016 2237-M-2016 2743-M-2021 2820-M-2021 2815-M-2021 2819-M-2021 2818-M-2021 2822-M-2021 MASA 30 2821-M-2021 2816-M-2021 2821-M-2021 2824-M-2021 2814-M-2021 2825-M-2021 2826-M-2021 2827-M-2021 2817-M-2021 MASA 31 MASA 32 MASA 33 MASA 34 MASA 35 MASA 36 MASA 37 MASA 38 1 Mining lease 19 Exploration leases 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 2072 3000 3000 3000 3000 900 122 2169 2894 2410 2376 2391 2262 2261 2277 2234 2259 2261 2261 2261 45410 Ha JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY APPLICATION APPLICATION APPLICATION APPLICATION GRANTED APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION 123 REF TENEMENT NAME NUMBER AREA HECTARE INTEREST PROVINCE STATUS JUJUY - CAUCHARI CAUCHARI BAJO I 2156-D-2016 CAUCHARI BAJO II 2157-D-2016 CAUCHARI BAJO III 2158-D-2016 CAUCHARI BAJO V 2154-D-2016 CAUCHARI WEST I 2160-D-2016 MASA 39 2828-M-2021 1 Mining lease 5 Exploration leases 375 363 125 952 1938 1749 5502 Ha 100 100 100 100 100 100 JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY APPLICATION APPLICATION APPLICATION APPLICATION GRANTED APPLICATION REF TENEMENT NAME NUMBER AREA HECTARE INTEREST PROVINCE STATUS JUJUY - PASO MASA 9 MASA 16 MASA 17 MASA 18 MASA 19 MASA 20 MASA 21 MASA 22 MASA 23 MASA 40 MASA 41 MASA 42 MASA 43 MASA 44 MASA 45 MASA 46 MASA 47 MASA 48 PASO III PASOVI PASO X 2231-M-2016 2238-M-2016 2239-M-2016 2240-M-2016 2241-M-2016 2242-M-2016 2243-M-2016 2244-M-2016 2245-M-2016 2911-M-2022 2912-M-2022 2913-M-2022 2914-M-2022 2915-M-2022 2916-M-2022 2917-M-2022 2918-M-2022 No Number 2137-P-2016 2140-P-2016 2144-P-2016 3 Mining lease 18 Exploration leases 124 2986 3000 3000 3000 3000 3000 3000 2548 2406 2999 2999 2999 2849 2493 2976 2965 2783 892 2950 2210 1913 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY JUJUY APPLICATION GRANTED APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION GRANTED GRANTED APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION APPLICATION 56967 Ha 100 JUJUY APPLICATION LAKE RESOURCES ANNUAL REPORT 2022LAKE RESOURCES ANNUAL REPORT 2022 125 LAKE RESOURCES N.L. Level 5, 126 Phillip Street Sydney NSW 2000 T: +61 2 9299 9690 E: hello@lakeresources.com.au lakeresources.com.au 

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