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2017
Annual Report
CORPORATE
DIRECTORY
DIRECTORS
Gary Johnson (Non-Executive Chairman)
Julian (Joe) Walsh (Managing Director)
Tom Dukovcic (Director Exploration)
Mark Rodda (Non-Executive Director)
JOINT COMPANY SECRETARIES
Alex Neuling
Shontel Norgate
REGISTERED OFFICE
Level 1, 254 Railway Parade
West Leederville, WA, Australia, 6007
Telephone: (08) 9363 7800
Facsimile: (08) 9363 7801
Email:
info@lepidico.com
PRINCIPAL PLACES OF BUSINESS
Level 1, 254 Railway Parade
West Leederville, WA, Australia, 6007
PO Box 1245 West Leederville WA 6901
Level 1, 286 Ann Street
Fortitude Valley, QLD, Australia, 4006
Website: www.lepidico.com
COUNTRY OF INCORPORATION
Australia
AUDITORS
Moore Stephens Chartered Accountants
Level 15, Exchange Tower
2 The Esplanade
PERTH WA 6000
Telephone: (08) 9225 5355
(08) 9225 6181
Facsimile:
SHARE REGISTRY
Security Transfer Australia Pty Ltd
Suite 913, Exchange Tower
530 Little Collins Street
MELBOURNE VIC 3000
PO Box 52 Collins Street West VIC 8007
Telephone: 1300 992 916
Facsimile:
Email:
(08) 9315 2233
registrar@securitytransfer.com.au
HOME EXCHANGE
Australian Securities Exchange Limited
Exchange Plaza
2 The Esplanade
PERTH WA 6000
ASX CODE: LPD
CONTENTS
CHAIRMAN’S AND MANAGING DIRECTOR’S LETTER
LITHIUM INDUSTRY AND MARKET
BUSINESS OVERVIEW/STRATEGY
L-MAX TECHNOLOGY AND DEVELOPMENT
PROJECT OVERVIEW
EXPLORATION OVERVIEW
BOARD OF DIRECTORS
FINANCIAL REPORT
DIRECTORS’ REPORT
INDEPENDENT AUDITOR’S REPORT
CORPORATE GOVERNANCE
2
4
6
8
12
14
16
19
20
34
72
2017 LEPIDICO ANNUAL REPORT
1
CHAIRMAN’S
AND
MANAGING
DIRECTOR’S
LETTER
2
In fiscal year 2017 our company delivered on the annual critical tasks identified
in the five-year strategic plan established in July 2016, despite volatile markets
for lithium companies and challenging corporate conditions. During such times
of uncertainty, it is vital that long-term goals prevail.
We have put together a small but highly skilled team, who along with a strong
network of advisors, have enabled us to address our objectives in a professional
and timely manner. Our achievements since Lepidico and our L-Max®
technology have been listed have been considerable.
Lepidico’s overarching objective is to become a competitive lithium chemical
producer by the end of this decade, while adhering to core values and a
sustainable business model. To this end, we completed a pre-feasibility study
during the year on a Phase 1 L-Max® Plant, based on a successful mini-plant
campaign in Perth. The scale of our Phase 1 L-Max® plant is large enough to
provide an attractive economic return, yet small enough for an emerging
company to deliver upon. The results of this study were compelling and
provided the confidence to commit to a full feasibility study, the engineering for
which is on schedule for completion later in the 2017 calendar.
Another critical task is to secure concentrate feed for the Phase 1 Plant Project.
Earlier this year three separate agreements were entered into, over three lithium
mica rich deposits and prospects that individually have the potential to provide
sufficient feed for the Phase 1 Plant, and collectively feed for a much larger
scale, 15,000t-25,000t per year full scale L-Max® Plant, which remains a longer-
term objective of the company.
At the time of writing we are on the cusp of delineating our first JORC Code
compliant lithium mica Mineral Resource estimate at the Alvarroes Lepidolite
Mine in Portugal, in collaboration with the owner Grupo Mota. Meanwhile,
Avalon Advanced Materials Inc. is close to completing a revised NI43-101
compliant Mineral Resource for its Separation Rapids deposit. Both these
Mineral Resource estimates specifically delineate different lithium minerals
including lithium micas, to ensure the greatest understanding and certainty for
the recoverable lithium content of each deposit.
2017 LEPIDICO ANNUAL REPORT
Furthermore, farm-in agreements were entered into over the Peg 9 Prospect at
Pioneer Resources’ Pioneer Dome Project in Western Australia and subsequent
to year-end the Moriarty Lithium Project owned by Maximus Resources. These
two lithium prospects complement the arrangements Lepidico has in Canada
and Portugal and will be evaluated in 2018 for their lithium mica potential, not
just to support the Phase 1 Plant but also as a mineral inventory for a larger full
scale plant development.
Looking forward, new sources of sustainable lithium production are required by
a market which is in a dramatic growth phase due to accelerating demand for
lithium-ion batteries. Abundant mica minerals have historically been overlooked
as a source of lithium supply, as prior to the advent of L-Max® there was no
commercially viable process to treat them.
L-Max® treats concentrated lithium-mica minerals to produce lithium chemicals,
allowing the operator participation throughout the value chain at competitive
capital intensity and moderate operating cost, in part due to the production
of valuable by-products that include SOP fertilizer and sodium silicate. This
patent registered process technology utilises industry standard equipment and
mainstream, low cost chemicals via an innovative flowsheet to produce high
quality lithium chemicals, essential for the fabrication of lithium-ion batteries
used in electric vehicles and energy storage units.
Lepidico is committed to the commercialisation of L-Max® through the
development of its Phase 1 Plant Project, planned to be located in Eastern
Canada. This plant is designed to produce approximately 3,000 tonnes per year
of lithium carbonate equivalent. Permitting remains on the critical path for an
investment decision. To expedite this work-stream Lepidico has established a
presence in the city of Toronto from which it will build as the business’s center
of gravity grows in the region.
Differentiation is all important in the lithium space where there is no shortage
of junior companies; a “red ocean” strategically speaking where competition
is extremely high. L-Max® creates a new market space for lithium chemical
production based on in ground resources for which there is only limited
competition. Lithium mica deposits have never-before been the focus of
systematic exploration, as there hasn’t been a viable, sustainable process for the
extraction of valuable products. L-Max® changes this. It also suggests that the
highest quality lithium-mica deposits are certainly yet to be developed and even
yet to be discovered.
Lepidico provides exposure to the relatively uncontested space for high-
quality, accessible lithium mica minerals and the ability to process these into
ecologically friendly, high-specification, products; a “blue ocean” in which the
Company can grow rapidly. Lepidico is developing a clean-tech business that is
synonymous with quality, from the material that it plans to mine to the highest
possible value products that it will sell to its valued customers. As described, our
strategy is clear and we extend our sincere gratitude to all stakeholders that are
supporting the company on this exciting journey to becoming a new low cost
producer of lithium chemicals.
Yours Faithfully
Gary Johnson, Chairman and Joe Walsh Managing Director
NEW SOURCES OF
SUSTAINABLE LITHIUM
PRODUCTION ARE
REQUIRED BY A MARKET
WHICH IS IN A DRAMATIC
GROWTH PHASE DUE TO
ACCELERATING DEMAND
FOR LITHIUM-ION
BATTERIES
3
2017 LEPIDICO ANNUAL REPORT LITHIUM
INDUSTRY
AND MARKET
Lithium-ion batteries are
lighter and can store three
times more energy than
nickel-hydride and lead-acid
batteries.
4
The lithium industry continues to be a particularly vibrant market segment
and this is expected to continue well into the next decade as the clean energy
revolution establishes itself globally. It is lithium’s unique properties which make
it a crucial element in high-performance rechargeable batteries that is creating
such strong future demand growth projections from industry commentators,
which in turn is supporting an attractive market outlook for future suppliers.
Lithium and its uses
Lithium is a chemical element with the symbol Li, and atomic number 3 in
the Periodic Table of Elements. It is the lightest solid element at ambient
temperature, indeed the lightest metal.
Lithium has numerous uses including in medical applications, ceramics, glass,
lubricants and nuclear technology. Most importantly it is the key component
of long life, rechargeable lithium-ion batteries, used to power mobile devices
(phones, laptops and other consumer electronics). However, in more recent
times battery manufacture has been accelerating due to the burgeoning
demand in automotive applications (electric vehicles - EVs), and also energy
storage systems (ESS) to better utilise renewable energy supply (solar and wind
generated power).
Lithium-ion batteries are lighter and can store three times more energy
than nickel-hydride and lead-acid batteries. Their unit cost continues
to fall with technological improvements, adding further to demand and
improving competitiveness.
Supply
Nearly all the world’s lithium is produced from two sources, brine deposits
(mostly in South America) and spodumene (hard rock) mines. Brine production
has the advantage of comparatively low operating costs, but long development
and ramp-up lead times and comparatively high capital costs to establish
a project.
2017 LEPIDICO ANNUAL REPORT“ Hard rock spodumene projects can generally be developed in a shorter
timeframe than brine projects and tend to have a more competitive capital
cost to produce a spodumene concentrate. However, the concentrate requires
downstream processing including roasting and as a result, attracts a relative
high operating cost.
Lepidico aims to introduce a new third major supply source, from previously
ignored mica deposits, thanks to its proprietary L-Max® technology.
L-Max® is a clean-tech process with competitive capital intensity and low
operating costs after eco-friendly by-product credits.
Demand
Global lithium carbonate consumption in 2016 was 197,000 tonnes per annum
(Roskill, August 2017). Of this more than 56,000 tonnes was consumed in
lithium-ion batteries (LIBs) and a further 18,000 tonnes was converted into
lithium hydroxide, mainly for use in LIBs.
Whilst other lithium applications grow at a slow but steady rate, projected
demand growth in batteries, especially for use in EVs is much higher, in large
part because of significantly improved cost efficiencies in LIB manufacturing
- “the cost per kilowatt-hour has fallen from US$1,000 in 2010, to $130-
200 today” (The Economist, 12 Aug 2017 – “The Death of the Internal
Combustion Engine”)
It’s all about the batteries…
• ~700kg LCE is required per GWh of LIB.
• Roskill foresee possible 1,000GWh of batteries being required in the next 10
years just for EVs, up from an estimated ~90GWh in 2016.
• Hence 1Mtpa of LCE would be required by 2026, a mighty 25% compound
annual growth rate.
• Lepidico sees the opportunity for it to enter the lithium market as a new low
cost producer with attractive margins throughout the commodity price cycle.
• The lithium market is relatively opaque when compared to those for many
other metals. This however, is likely to change as demand increases, with for
example the London Metals Exchange considering its involvement (Mining
Journal 31 August 2017), via the introduction of contract arrangements to
better manage the market and provide greater price transparency.
Clean technology revolution
The move towards EV adoption and thereby lithium-ion battery manufacture
is accelerating as testified by recent announcements from major conventional
car manufacturers.
• Volkswagen CEO Matthius Muller announced plans, on 28th April 2017, that
would see VW build 2-3 million EVs per annum by 2025;
• on 5th July 2017, Volvo’s Chief Executive Hakan Samuellson announced that
from 2019 all new Volvo cars will have electric or hybrid engines; and
• France’s Ecology Minister Nicolas Hulot announced that France will end sales
of petrol and diesel vehicles by 2040.
Environmental drivers
It is not just the political necessity of dealing with climate change that has led
to the clean technology revolution but the requirement to better address public
health and air pollution concerns in many heavily populated parts of the world
such as China. EVs and ESS linked to renewable energy will reduce particulate
emissions and noxious gases in the atmosphere, leading to a cleaner, greener
world for all. Lithium has a vital role to play in this regard.
Lepidico sees the
opportunity for it to
enter the lithium market
as a new low cost
producer with attractive
margins throughout the
commodity price cycle.
5
2017 LEPIDICO ANNUAL REPORT“ Lepidico has a clearly defined strategy to leverage its registered L-Max®
technology to process high-quality lithium mica resources via high-return,
strategically located development projects that produce quality lithium
chemicals and a suite of valuable by-products. Regions where there is abundant
supply of competitively priced process consumables coupled with a depth of
market for all products represent optimal locations for L-Max® facilities. These
include the Great Lakes region of North America, continental Europe and select
parts of Asia.
The Company’s immediate strategic imperative is to scale up the L-Max® process
to approximately 3.6 tonnes per hour in a Phase 1 Plant to demonstrate its
commercial viability. This Project is currently the subject of a Feasibility Study
and planned to be in production by the end of 2019.
In parallel with the planned Phase 1 Plant development the Company is
committed to developing its lithium mica Resource base to support a Feasibility
Study for a larger full scale L-Max® Plant Project, capable of producing between
15,000t and 25,000t per annum of lithium carbonate equivalent (LCE).
Lepidico’s flexible business model accommodates both Company owned and
third party feed sources to its planned L-Max® facilities.
BUSINESS
STRATEGY
ASSETS MAP
Alvarrões Lepidolite Mine
Ore offtake agreement
with Grupo Mota
Phase 1
L-Max® Lithium
Chemical Plant
in FS Study
Eastern Canada
Separation Rapids
Lithium deposit
Lepidolite offtake
LOI with Avalon
Advanced Materials
Moriarty JV
LPD Farm-in up to
100% Lepidolite
Target Drill Ready
Pioneer Dome JV
LPD 75% Earn-in
Lepidolite Target
Drill Ready
6
2017 LEPIDICO ANNUAL REPORT LEPIDICO’S BUSINESS MODEL
OPERATING BUSINESS
ROYALTY BUSINESS
L-MAX®
PROCESS PLANT
(WHOLLY OWNED/JV)
INTEGRATED WITH
CONCENTATOR
THIRD-PARTY
CONCENTRATE FEED
L-MAX®
THIRD PARTY
LICENCES
AND MINES
THIRD-PARTY
MINE ORE FEED
Phase 1
L-Max® Lithium
Chemical Plant
in FS Study
Eastern Canada
Integration
Lepidico’s favoured strategy is to leverage its technology to acquire control
of quality lithium mica assets to become an integrated lithium producer,
participating in the value chain from mine to production of battery grade
lithium chemical. Lepidico has agreements over a number of prospective
lithium mica deposits and exploration assets which have the potential to
support the Phase 1 Plant Project for approximately 10 years.
Licensing
In addition to owning and controlling its own lithium mica assets Lepidico is
also able to licence its technology to other third parties and derive a royalty
income from the use of its technology.
Lepidico’s strategy is
to leverage its L-Max®
technology to process high-
quality lithium mica Resources
via high-return, strategically
located development projects
7
2017 LEPIDICO ANNUAL REPORT“
MILLED
MICA
SULFURIC
ACID
ACID LEACH
RESIDUE
RESIDUE
ACID
LEACH
FILTER
CAUSTIC
LEACH
FILTER
FILTER
INTERMEDIATE
FILTER
CRYSTALLISATION
FILTER
FILTER
PRECIPITATION
REAGENT
GYPSUM
PRECIPITATION
FILTER
FILTER
SODIUM
SILICATE
TO CAESIUM/
POTASH
RECOVERY
GYPSUM
PRODUCT
PRECIPITATION
REAGENT
IMPURITY
REMOVAL
FILTER
FILTER
The L-Max® process allows the extraction and recovery of battery grade lithium
chemicals such as lithium carbonate and lithium hydroxide from lithium bearing
micas that include lepidolite and zinnwaldite. Such micas have until now been
largely overlooked as sources of lithium as they were considered uneconomic,
when compared to conventional hard rock spodumene or brine deposits. The
successful development of L-Max® changes this dynamic.
The patent registered L-Max® technology is owned 100% by Lepidico’s
subsidiary Li-Technology Pty Ltd. It is protected by the International Patent
Application PCT/AU2015/000608 and a granted Certification Report of
Innovation Patent (2016101526) in Australia. The Company is currently in the
national and region phase of the patent applications in jurisdictions where
L-Max® may be optimally and strategically deployed. Not only do the patents
protect the novel L-Max® technology, but it provides the Company with a
tremendous opportunity to establish lithium rich micas as a third major source
of lithium that to date has not been available.
In addition, it provides the Company with a significant first-mover exploration
opportunity as lithium mica rich pegmatites have typically been of purely
academic interest to geologists.
At existing pegmatite mining operations, lithium micas generally report
to tailings. These sources of lithium may be able to be unlocked with the
commercialisation of L-Max® allowing Mineral Resource potential to be
maximised and provide Lepidico with potential licensing opportunities with
incumbent lithium companies.
STRATEGIC
ADVANTAGE
OF L-MAX®
THE COMMERCIALISATION
OF THE L-MAX®
TECHNOLOGY HAS THE
POTENTIAL TO ALTER THE
MARKET DYNAMICS FOR THE
PRODUCTION OF LITHIUM
VIA THE INTRODUCTION OF
NEW LOW COST SOURCES
OF SUPPLY.
8
RESIDUE
TO TSF
PRECIPITATION
REAGENT
CALCIUM
REMOVAL
FILTER
FILTER
RESIDUE TO
IMPURITY
REMOVAL
PRECIPITATION
REAGENT
LITHIUM
CARBONATE
FILTER
FILTER
SODIUM
SULFATE
LITHIUM
CARBONATE
PRODUCT
SODIUM SULPHATE
CRYSTALLISATION
FILTER
2017 LEPIDICO ANNUAL REPORT
MILLED
MICA
SULFURIC
ACID
ACID LEACH
RESIDUE
RESIDUE
ACID
LEACH
FILTER
CAUSTIC
LEACH
FILTER
FILTER
INTERMEDIATE
FILTER
CRYSTALLISATION
FILTER
FILTER
PRECIPITATION
REAGENT
GYPSUM
PRECIPITATION
FILTER
FILTER
SODIUM
SILICATE
TO CAESIUM/
POTASH
RECOVERY
GYPSUM
PRODUCT
PRECIPITATION
REAGENT
How does L-Max® work?
L-Max® is a low energy consumption hydrometallurgical process which employs
low cost, conventional reagents along with industry standard equipment.
The process involves the saturation acid leach of a lithium mica slurry at
atmospheric pressure and modest temperature, followed by a series of
impurity removal steps at progressively higher pH levels and the subsequent
precipitation of lithium carbonate. The process bears no resemblance to the
energy intensive processing of spodumene concentrates, which requires high
temperature decrepitation and sulphate roasting prior to lithium recovery.
IMPURITY
REMOVAL
FILTER
FILTER
RESIDUE
TO TSF
PRECIPITATION
REAGENT
CALCIUM
REMOVAL
FILTER
FILTER
RESIDUE TO
IMPURITY
REMOVAL
PRECIPITATION
REAGENT
LITHIUM
CARBONATE
PRODUCT
LITHIUM
CARBONATE
FILTER
FILTER
SODIUM
SULFATE
SODIUM SULPHATE
FILTER
CRYSTALLISATION
Lepidico successfully completed its second L-Max® mini-plant trial in early
2017. The mini-plant ran continuously and stably for 193 hours, processing a
lepidolite concentrate with an average grade of 3.0% Li2O to produce a high-
specification battery grade lithium carbonate. Recoveries of more than 94%
were achieved from the leach liquor. Overall lithium recovery from concentrate
was approximately 89%. The mini-plant circuit operated stably, with minimal
downtime and demonstrated that the process is extremely robust. Importantly,
the circuit was fully integrated with all process loops closed, as in a commercial
plant, to ensure the viability of continuous operation.
Lithium carbonate grading 99.5% or more was consistently produced during the
continuous operations phase of the trial. A final re-precipitation was employed
to further clean the product and resulted in the production of 99.9% purity
lithium carbonate with very low levels of critical impurities.
9
2017 LEPIDICO ANNUAL REPORT
Key conclusions from the mini-plant campaign were:
• Continuous operation has successfully demonstrated the process chemistry
to be robust
• Lithium extraction and filtration characteristics in the leach are dependent on
particle size with an optimal grind of approximately 30ųm
• Very low lithium losses (<3%) to the impurity removal residues were achieved
• Lithium recovery of 90% from leach feed to final product is estimated for the
Phase 1 Plant
• Re-precipitated lithium carbonate was produced grading 99.9% with very
low critical impurities
• High recoveries of caesium and rubidium to intermediate products were
achieved, providing potential for an additional revenue stream
• Potential to recover tantalum from the L-Max® leach residue represents a
further opportunity
• Further improvements in lithium recovery will be evaluated in Feasibility
Study by the addition of a simple reprocessing stage of the leach residue
STRATEGIC
ADVANTAGE
OF L-MAX®
continued
Lepidico has undertaken initial investigative work to confirm the efficacy of
its lithium chemical products. Preliminary electrochemical characterisation of
Lithium Iron Phosphate samples (LiFePO4 or “LFP”) prepared from Lithium
Carbonate (Li2CO3) produced in the mini-plant runs was performed by QUT
(Queensland University of Technology) with respect to lithium-ion battery
suitability. Coin-cells were prepared and tested with satisfactory discharge rates
and cyclability (charging / discharging) performance. There will now be an
opportunity to make numerous 18650 LFP batteries in QUT’s newly constructed
battery pilot plant at Banyo, Queensland for further evaluation.
10
2017 LEPIDICO ANNUAL REPORT By-Products and Uses
The by-products provide an important, valuable source of revenue as well
as reducing the amount of waste material generated, making L-Max® an
extremely efficient process.
L-Max® can recover potassium sulphate and sodium silicate. Further
by-product potential will be evaluated in Feasibility Study for caesium,
tantalum, high purity gypsum and potentially sodium sulphate The
production of ecologically friendly by-products further differentiates
L-Max® from other hard rock lithium metallurgical processes.
Potassium sulphate is a premium fertilizer commonly known as sulphate of
potash (SOP), which is used extensively in the agricultural sector.
Sodium silicate has a wide variety of applications which include: a bulking
agent in liquid detergents, a paint additive, adhesives such as wallpaper
paste and in the manufacture of corrugated cardboard, fillers, a fire
retardant and as an intermediate product in the production of precipitated
silica used in tyres.
PRODUCTION OF
LITHIUM CARBONATE
WITH A PURITY
GREATER THAN
99.5%
11
2017 LEPIDICO ANNUAL REPORT“ PROJECT
OVERVIEW
FLOTATION OF THE
SAMPLE FROM
SEPARATION RAPIDS
ACHIEVED A LITHIUM
RECOVERY TO
CONCENTRATE OF
96%
L-Max® Pre-Feasibility Study (PFS)
During the year, Lepidico announced the results of the Phase 1 plant PFS from
lead consultant MinMet Services Pty Ltd. The study confirmed the viability of
constructing a strategically located Phase 1 L-Max® plant in Eastern Canada via
processing lithium-mica concentrates purchased from third-party suppliers.
The study was based on a small scale, commercial L-Max® plant processing a
lithium-mica concentrate feed at a rate of 3.6 tonnes per hour (tph) to produce
approximately 3,000 tonnes per annum of battery grade lithium carbonate and
a suite of commercially important by-products.
As part of the PFS, a lepidolite sample containing approximately 40% mica and
2.2% Li2O was subjected to a series of batch tests to assess the amenability of
the run of mine mineralisation for lithium extraction and recovery by L-Max®.
The sample processed was from the Separation Rapids project, owned by
Avalon Advanced Materials Ltd, with whom Lepidico has a Letter of Intent to
acquire lithium concentrate.
Flotation of the sample from Separation Rapids achieved a lithium recovery to
concentrate of 96% and produced a high-grade mica concentrate containing
4.5% Li2O that was used as feed for the L-Max® process test-work. Ultimately,
Li2CO3 of 99.88% purity was produced. Individual metallurgical recoveries by
compound are outlined in the table below.
Element
Lithium
Potassium
Silica
Caesium
Tantalum
L-Max® feed grade (%)
Recovery to product (%)
2.10
94
6.77
85
23.10
85
0.05
81
0.03
70
12
2017 LEPIDICO ANNUAL REPORT“ The PFS test-work produced consistent results and coupled with a compelling
economic assessment provided the confidence for Lepidico to commit to
undertaking a feasibility study.
Equipment selection for the Phase 1 Plant represents a smaller version of the
equipment required for a larger full scale plant, with anticipated production
capacity of 15,000- 25,000 tonnes per annum of lithium carbonate. This is
intended to minimise the scale-up risk at larger throughputs. The path from
PFS batch test-work to full scale commercial operation incorporates several
development milestones. The continuous operation of a mini-plant followed
by construction of a commercially viable small scale plant prior to a full scale
commercial operation are critical steps in reducing project risk and optimising
the process for continuous operation.
Plant location
A key requirement of the PFS was not only to minimise the cost of consumables
(including logistics), but also to maximise the value of by-products. A series of
logistics trade-off studies revealed that the optimal location for an L-Max® plant
is in close proximity to an abundant source of sulfuric acid, such as produced by
base metal smelters, and deep markets for manufacturing, that utilise industrial
chemicals such as sodium silicate. These studies identified the Great Lakes
region of North America, continental Europe and select parts of Asia as key
locations for siting L-Max®.
Site visits to Separation Rapids, Kenora and Sudbury all in Ontario, Canada
as well as Winnipeg in Maniboa were conducted to evaluate prospective
locations for the Phase 1 Plant. Trade off studies between remaining sites in
Eastern Canada were undertaken. Suitable enclosed facilities close to sources
of sulphuric acid, serviced by power, gas and road within established industrial
parks adjacent to the rail network have been identified for lease in several
locations. This level of existing infrastructure will provide considerable benefit
to the project.
Feasibility study (FS)
The Feasibility Study commenced in May 2017, and will be conducted to a
Class 3 level of cost estimate accuracy. In contrast to the PFS, the FS is based on
a vertically integrated model from mine and concentrator to L-Max® plant, which
will receive mica concentrates of a suitable lithium grade and quality from both
mines that Lepidico operates and third-party sources that perform the mining
and concentration operations on a commercial, arm’s length basis. Although, the
L-Max® plant could process concentrate from one source, it is likely that multiple
sources will be contemplated in the study to provide flexibility and security
of feed.
Four sources of additional value will also be investigated in the FS:
• conversion of lithium carbonate to lithium hydroxide;
• the potential value of producing caesium in formate brine;
• recovery and sale of sodium sulphate; and
• production of gypsum as saleable by-product.
Permitting and logistics studies commenced soon after fiscal year end, and final
process design data is expected to be completed by end December 2017. The
integrated FS is scheduled to be completed and reported upon in mid-2018.
A positive outcome should see project implementation commencing in the
second half of calendar year 2018 for first production in late 2019.
LEPIDICO IS COMMITTED TO
THE COMMERCIALISATION
OF L-MAX® THROUGH THE
DEVELOPMENT OF ITS PHASE
1 PLANT PROJECT.
L-Max®
13
2017 LEPIDICO ANNUAL REPORT SIGNIFICANT PROGRESS
WAS MADE IN FISCAL
YEAR 2017 IN SECURING
QUALITY LITHIUM MICA
ASSETS, THE AIM OF
WHICH IS TO BUILD A
MINERAL RESOURCE
INVENTORY, INITIALLY TO
SUPPLY CONCENTRATE
FEED TO THE PROPOSED
PHASE 1 L-MAX® PLANT
BUT ALSO TO ENVISAGED
SUBSEQUENT LARGER
DEVELOPMENTS.
EXPLORATION
OVERVIEW
The information in this report that
relates to Exploration Results is based
on information compiled by Mr Tom
Dukovcic, who is an employee of
the Company and a member of the
Australian Institute of Geoscientists and
who has sufficient experience relevant
to the styles of mineralisation and the
types of deposit under consideration,
and to the activity that has been
undertaken, to qualify as a Competent
Person as defined in the 2012 edition of
the “Australasian Code for Reporting of
Exploration Results, Mineral Resources
and Ore Reserves.” Mr Dukovcic
consents to the inclusion in this report of
information compiled by him in the form
and context in which it appears.
14
Alvarrões Lepidolite Project
The Alvarrões Lepidolite Project is located 10km south of the city of Guarda in
NE Portugal. The Project comprises an extensive system of flat-lying lepidolite-
bearing pegmatite sills intruded into a granite host over an 8km x 2km corridor.
Most of this area is contained within Mineral Claim MNC000008, owned by
Felmica Minerais Industrias SA, which mines lepidolite ores and after processing
supplies a lithium mica concentrate to the ceramics industry. Lepidico has
an ore access agreement with Grupo Mota, the 75% owner of Felmica, under
which Lepidico is required to spend €250,000 on exploration to gain access to
lepidolite ore.
Lepidico has met this expenditure commitment by completing an initial
diamond drilling program at Alvarrões totalling 19 holes for 1,240m of HQ core.
Most of this work was concentrated at the Block 1 area in order to derive a
maiden JORC Code compliant Mineral Resource estimate.
So far thirteen stacked lepidolite-bearing pegmatite sills have been identified
at Alvarrões, ranging in thickness from 0.5m to 4m and averaging 15% to 30%
lepidolite content. At Block 1, continuity of the pegmatite system has been
shown to extend at least 400m along strike and 350m down dip, suggesting an
exploration target of 1.5 Mt to 2.0 Mt of lepidolite-bearing pegmatite within the
target horizon. If confirmed by resource modelling, Block 1 could readily provide
sufficient feed to a Phase 1 L-Max® Plant for in excess of ten years.
A maiden Mineral Resource estimate for Block 1 at Alvarrões is expected to be
available early in the December 2017 quarter.
Separation Rapids
Separation Rapids is a large LCT-type (Lithium, Caesium and Tantalum)
complex pegmatite deposit located in northwest Ontario, Canada and owned
by Avalon Advanced Materials Inc (TSX-V:AVL).
As at October 2016 the total Mineral Resource estimate (NI43-101 compliant) at
Separation Rapids was 9.63 Mt @ 1.31% Li2O. Lithium mineralisation consists of
petalite, lepidolite and lithium-rich muscovite.
2017 LEPIDICO ANNUAL REPORT Under a Letter of Intent, announced on 6 February 2017, it is envisaged that
Avalon will produce 15,000 tonnes per annum of lepidolite concentrate for feed
to Lepidico’s proposed Phase 1 L-Max® Plant to be built in Eastern Canada.
Bench-scale testwork showed that Separation Rapids material is ideally suited to
the L-Max® process, producing battery grade lithium carbonate of 99.88% purity.
The association with Avalon represents an opportunity to provide a long-life
source of lithium-mica feedstock for processing by L-Max®, to generate lithium
chemicals to the global market.
The Peg 9 Prospect
Lepidico is earning a 75% interest in the Peg 9 lepidolite prospect through a
farm-in agreement with Pioneer Resources Limited (ASX:PIO), as announced on
23 February 2017. Peg 9 occurs in a cluster of thirteen pegmatites defined along
a 20km trend that flanks an Archaean granite intrusive located 35km north of
Norseman in Western Australia. The Peg 9 farm-in area covers approximately
2.5km of strike within exploration licence E63/1669.
Detailed mapping has identified outcropping and sub-cropping lepidolite
bearing pegmatites over a 400m x 200m area. Rock chip samples returned up
to 3.94% Li2O from a lepidolite-rich sample.
A pronounced soil geochemical anomaly (Li, Rb, Cs, Ta, Nb) confirms the LCT-
type characteristics of Peg 9 and its prospectivity for lepidolite mineralisation.
Lepidico expects to commence work at Peg 9 in the December quarter, upon
receiving final permitting approval.
Moriarty Lithium Project
The Moriarty Lithium Project covers some 70km2 of mafic-ultramafic rocks of
the Norseman-Wiluna greenstone belt, situated 20km south of the Mt Marion
lithium mine and 20km SW of the mining town of Kambalda in Western
Australia. As announced on 21 August 2017, under a Binding Term Sheet agreed
with Maximus Resources Limited (ASX:MXR) Lepidico can earn up to 100%
interest in the lithium rights within the project area.
Moriarty includes lepidolite bearing pegmatites at the Lefroy prospect from
where rock chips from a 200m long pegmatite averaged 3.55% Li2O. Other
lithium occurrences within the project area are reported at the Landor and
Larkinville prospects.
Field work at Moriarty commenced in September 2017, with the aim of
delineating targets for drill testing thereafter.
Lemare Lithium (Spodumene) Project
The Lemare Spodumene Project, owned by Critical Elements Corporation (TSX-
V:CRE), covers an area of 74km2 in the James Bay region of Quebec, Canada.
Lepidico can acquire up to 75% of the Project through a series of exploration
expenditure commitments and cash and share payments to Critical Elements.
Lepidico funded two phases of diamond drilling at the project during the past
year, totalling 31 holes for 3,315m of NQ core. Lepidico has now met its initial
C$800,000 exploration expenditure commitment.
Better intercepts include:
LEMARE SECTOR:
21.0m @ 1.75% Li2O,
from 38.8m, in hole LE-16-03
28.5m @ 2.15% Li2O,
from 5.50m, in hole LE-16-13
24.0 m @ 1.87% Li2O,
from 13.5m, in hole LE-16-14
SW EXTENSION SECTOR:
33.7m @ 0.94% Li2O,
from 9.60m, in hole LE-17-29
The Lemare spodumene pegmatite has now been drill defined over at least an
800m strike. The pegmatite typically pinches and swells along strike and down
dip, and remains open in all directions.
18.0m @ 2.00% Li2O, from 6.80m,
in hole LE-17-30
15
2017 LEPIDICO ANNUAL REPORT Mr Gary Johnson
Chairman (Non-executive)
Qualifications - MAusIMM, MTMS, MAICD
Mr Johnson has over 30 years’ experience in the mining industry
as a metallurgist, manager, owner, director and managing director
possessing broad technical and practical experience of the workings
and strategies required by successful mining companies. Gary operates
his own consulting business, Strategic Metallurgy Pty Ltd, specialising
in high-level metallurgical and strategic consulting. He has been a
Director of the Company since 9 June 2016.
Special responsibilities:
Member of Audit and Risk Committee
Chair of the Remuneration and Nomination Committee
Other Current Directorships of listed public companies:
Director of Antipa Minerals Ltd
Director of St-Georges Platinum and Base Metals Ltd
(TSX listed Company)
Former Directorships of listed public companies in the last 3 years:
Potash West NL (resigned 26 September 2014)
Hard Creek Nickel Corporation (TSX listed) (resigned 30 June 2015)
Mr Julian “Joe” Walsh
Managing Director (Executive)
Qualifications - BEng, MSc
Mr Walsh is a resources industry executive, mining engineer and
geophysicist with over 25 years’ experience working for mining
companies and investment banks in mining related roles. Joe was
the General Manager Corporate Development with PanAust and was
instrumental in the evolution of PanAust from an explorer in 2004 to a
US$2+billion, ASX 100 multi-mine copper and gold company. Joe also
has extensive equity capital market experience and has been involved
with the technical and economic evaluation of many mining assets and
companies around the world.
Other Current Directorships of listed public companies:
None
Former Directorships of listed public companies in the last 3 years:
None
Mr Mark Rodda
Non-Executive Director
Qualifications - BA, LLB
Mr Rodda is a lawyer with 20 years’ private practice, in-house legal,
company secretarial and corporate consultancy experience. Mr Rodda
has considerable practical experience in the management of local
and international mergers and acquisitions, divestments, exploration
and project joint ventures, strategic alliances, corporate and project
financing transactions and corporate restructuring initiatives. Mark
currently manages Napier Capital Pty Ltd, a business established
in 2008 to provide clients with specialist corporate services and
assistance with transactional or strategic projects. Prior to its 2007
takeover by Norilsk Nickel, Mark held the position of General Counsel
and Corporate Secretary for LionOre International, a company with
operations in Australia and Africa and listings on the Toronto Stock
Exchange (TSX), London Stock Exchange and ASX.
BOARD OF
DIRECTORS
MR GARY JOHNSON
MR JOE WALSH
MR MARK RODDA
16
2017 LEPIDICO ANNUAL REPORT
Mr Tom Dukovcic
Director Exploration (Executive)
Qualifications - BSc(Hons), MAIG, MAICD
Mr Dukovcic is a geologist with over 28 years’ experience
in exploration and development. He has worked on a range
of commodities in diverse regions throughout Australia
and internationally and has been directly involved with the
management of gold discoveries in Australia and Brazil.
Mr Dukovcic is a Member of the Australian Institute of
Geoscientists and a Member of the Australian Institute of
Company Directors. He has been a Director of the Company since
22 April 1999 and brings valuable geological expertise, exploration
knowledge and management experience to the Board.
Other Current Directorships of listed public companies:
None
Former Directorships of listed public companies in the last 3 years:
None
MR TOM DUKOVCIC
CHIEF FINANCIAL OFFICER AND
JOINT COMPANY SECRETARY
Ms Shontel Norgate
Appointed 14 November 2016
Qualifications: CA, AGIA ACIS
Ms Norgate is a Chartered Accountant with over 20 years’
experience in the resources industry including debt and equity
finance, financial reporting, project management, corporate
governance, commercial negotiations and business analysis
experience in finance and administration. Prior to joining Lepidico
Shontel was CFO for ten years with TSX-listed resources company,
Nautilus Minerals Inc. Prior to her appointment at Nautilus Minerals,
Ms Norgate was Financial Controller with Macarthur Coal Ltd
and Southern Pacific Petroleum NL, both listed on the ASX and
commenced her career as an auditor with Price Waterhouse (now
PricewaterhouseCoopers)
JOINT COMPANY SECRETARY
Mr Alex Neuling
Appointed 30 September 2016
Qualifications: BSc, FCA (ICAEW), ACIS
Mr Neuling has extensive corporate and financial experience
including as director, chief financial officer and/or company
secretary of various ASX-listed companies in the mineral
exploration, mining, oil and gas and other sectors. Alex is principal
of Erasmus Consulting, which provides company secretarial
and financial management consultancy services to ASX-listed
companies. In addition to his professional qualifications, Alex also
holds a degree in Chemistry from the University of Leeds in the
United Kingdom.
MS SHONTEL NORGATE
MR ALEX NEULING
17
2017 LEPIDICO ANNUAL REPORT Mr Gavin Becker
General Manager – Business Development
ARSM, BSc(Eng), MBA, CP(Met), FAusIMM, GAICD
Gavin is a metallurgist with 40 years industry experience. During that
time he has worked in senior operational, R&D, feasibility study and
consulting roles on gold, uranium, base (copper, nickel, cobalt) and
specialty (scandium, lithium) metal projects and/or operations.
He holds a Bachelor of Science (Eng) degree from Imperial College,
London and completed his MBA at Bond University. Gavin is a Fellow
of the Australasian Institute of Mining and Metallurgy and is an
Associate of the Royal School of Mines (UK).
Mr Peter Walker
General Manager
Peter Walker is a metallurgist with more than 30 years’ experience in
the design, commissioning and operation of processing plants and
general management of operations, with experience in Europe, Africa,
Asia, Australasia, and South America.
Peter has managed several feasibility studies encompassing a range of
commodities and countries. In recent years Peter has been responsible
for the feasibility and development of green and brown field projects
in Thailand, Laos, and Chile.
Peter has worked for a number of engineering groups as well major
and mid-tier operating companies. Commodities include lead/zinc,
uranium, coal, nickel, copper, lithium, and precious metals.
MANAGEMENT
TEAM
18
2017 LEPIDICO ANNUAL REPORT
FINANCIAL REPORT
TABLE OF CONTENTS
CORPORATE DIRECTORY
DIRECTORS’ REPORT
AUDITORS INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOW
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
CORPORATE GOVERNANCE STATEMENT
TENEMENT INFORMATION
ICB
20
34
35
36
37
38
39
65
66
72
78
MS SHONTEL NORGATE
19
2017 LEPIDICO ANNUAL REPORT
The Directors of Lepidico Ltd (“Directors”) present their report on the
Consolidated Entity consisting of Lepidico Ltd (“the Company” or “Lepidico”)
and the entities it controlled at the end of, or during, the year ended 30 June
2017 (“Consolidated Entity” or “Group”).
The names of the Directors in office and at any time during, or since the end of,
the year are:
Mr Gary Johnson Non-executive Chairman
Mr Joe Walsh
Mr Tom Dukovcic Director Exploration
Mr Mark Rodda
Non-executive Director
Mr Rocco Tassone Non-executive Director
Managing Director
(appointed 22 September 2016)
(appointed 24 August 2016)
(resigned 1 September 2016)
Directors have been in office since the start of the financial year to the date of
this report unless otherwise stated.
PRINCIPAL ACTIVITIES
The principal activity of the Consolidated Entity during the financial year
was mineral exploration and the development and licensing of the
L-Max® Technology.
DIVIDENDS PAID OR RECOMMENDED
The Directors recommend that no dividend be paid for the year ended 30 June
2017, nor have any amounts been paid or declared by way of dividend since the
end of the previous financial year.
SUMMARY REVIEW OF OPERATIONS
For the financial year ending 30 June 2017 the Group recorded a net loss
of $5,357,243 (2016: $2,263,225) and a net cash outflow from operations of
$2,669,730 (2016: $773,503).
The net assets of the Group decreased to $20,629,913 at 30 June 2017
(2016: $20,812,028).
OPERATIONS
L-Max® Patents
Lepidico currently holds International Patent Application PCT/AU2015/000608
and a granted Australian Innovation Patent (2016101526) in relation to the
L-Max® Process.
Lepidico submitted an international patent application for the L-Max® Process
under the Patent Cooperation Treaty administered by the World Intellectual
Property Organisation in October 2015. Australian Innovation Patent 2016101526
was filed as a divisional application of the international patent application for
the L-Max® process. This process includes a rigorous ‘preliminary’ examination
of the process described and claimed, based on internationally accepted
criteria for patentability (the examination being conducted in this case by the
Australian Patent Office as an International Searching & Examining Authority).
Following this examination, it was acknowledged in the International Preliminary
Report on Patentability that the L-Max® process as described and claimed
in the international application was “novel, inventive, industry applicable
and patentable.”
On 8 February 2017, the L-Max® process (the subject of International Patent
Application PCT/AU2015/000608), was granted a Certification Report of
Innovation Patent (number 2016101526) in Australia. The conclusions of
the International Preliminary Report on Patentability represent a guide for
Patent Offices from which national and/or regional phase patent applications
may proceed.
DIRECTORS’
REPORT
20
2017 LEPIDICO ANNUAL REPORT
In April 2017, the Company proceeded with the national and region phase of patent applications in several jurisdictions in
which L-Max® may operate in the future.
Pre-Feasibility Study – Phase 1 L-Max® Plant
During the year, Lepidico completed a Pre-Feasibility Study (“PFS”) on a Phase 1 L-Max® Plant, conducted by lead
consultant MinMet Services Pty Ltd. The Study was based on a small scale commercial L-Max® Plant (“Phase 1 Plant”)
processing a lithium-mica concentrate feed at a rate of 3.6 tonnes per hour (tph) to produce approximately 3,000 tonnes
per annum of battery grade lithium carbonate and a suite of valuable by-products.
The PFS highlighted the considerable economic benefits of a Phase 1 L-Max® Plant strategically located in Ontario,
Canada, close to sources of bulk consumables, established infrastructure and markets for bulk by-products, rather than
close to sources of lithium-mica concentrate feedstock.
Strategic positioning for the Phase 1 Plant means consumable and labour related costs are minimised and by-product
potential is maximised, allowing lithium-mica concentrates to be shipped over considerable distances and potentially half-
way around the world for high quality feed.
An assumed concentrate feedstock price of approximately US$350/t was used for the PFS, based on a quoted supplier
price, inclusive of feed preparation and shipment costs. This figure also reconciles well with the prevailing spodumene
market price, as adjusted for the lower lithium content of lepidolite concentrate.
Feasibility Study – Phase 1 L-Max® Plant
Work on all near critical path activities for the Phase 1 L-Max® Plant Feasibility Study commenced in May 2017, including:
L-Max® and concentrator process design; Mineral Resource definition programs; mine planning at Alvarrões; logistics
trade-off studies to finalise plant site selection; and permitting.
Site visits to Separation Rapids, Kenora and Sudbury all in Ontario, Canada, were conducted to further evaluate
prospective locations for the Phase 1 Plant, along with associated permitting and logistics requirements. A trade-off study
between Kenora and Sudbury was completed subsequent to year end with Sudbury the favoured location as it provides
for substantial operating cost savings, and greater access to mining and processing services. Suitable enclosed facilities
serviced by power, gas and road within established industrial parks close to the rail network have been identified for
lease in Sudbury. This level of existing infrastructure will provide considerable benefit to the project. Knight Piésold Ltd, a
Canadian based consulting firm was appointed on 9 August to provide permitting and TSF engineering services.
On 3 August 2017 the Company appointed Lycopodium Minerals Pty Ltd a subsidiary of Lycopodium Limited (ASX:LYL)
for the provision of engineering services for the Feasibility Study. (Refer Note 25(a))
Final process design data is expected to be completed by end December 2017.
Project design parameters have been reviewed with a process throughput rate of 3.6 tonnes per hour locked down.
Feasibility Study planning parameters are as outlined below.
Key Metrics for Feasibility Study planning parameters
• Plant throughput rate of approximately 3.6 tph of lithium-mica concentrate, 29,000 tonnes per annum (tpa)*;
•
Battery grade lithium carbonate equivalent (LCE) production of approximately 2,500 to 3,000 tpa at concentrate
feed grades of 3.9% to 4.5% Li2O*;
• Average targeted C1 Costs of nil or negative after by-product credits*;
•
•
•
Average targeted C3 Costs in the US$1,000 to US$2,000/t range after by-product credits and amortisation of
expected development and sustaining capital*;
Estimated study costs of US$5 million and Development Capital Expenditure of US$35-40 million, including
20% contingency;
By-products include sulphate of potash (SOP) and sodium silicate, and depending on the feed source also caesium
and/or tantalum concentrate.
* The assumptions set out above contain reference to broad indicative plant operating parameters (Parameters) for the Feasibility Study
which have been developed through scoping level work and subsequent PFS work. For the avoidance of doubt, investors are advised
that the Parameters expected to be adopted for the Feasibility Study do not constitute a production forecast or target in relation to
mineral resources associated with any project owned by the Company. The Company wishes to expressly clarify that any references in
either this announcement or the PFS to annual production rates relate to scoping and planning parameters, and are not a production
target. The Company cautions investors against using any statements made in either this Directors’ Report or the PFS which may
indicate or amount to the reporting of a production target or forecast financial information, as a basis for making any investment
decisions about shares in the Company. The primary purpose of disclosing the Feasibility Study Parameters is to inform on the scope
of work for the study and provide an estimate of the intended scale and nature of a potential future Phase 1 L-Max® Plant.
21
2017 LEPIDICO ANNUAL REPORT
The Feasibility Study is planned to be completed in mid-2018, with project implementation commencing thereafter and first
production in late 2019.
Lithium alliance with Avalon Advanced Materials Inc. (Separation Rapids Lithium Project)
In February 2017 Lepidico entered into a Letter of Intent (LOI) with Avalon Advanced Materials Inc. (“Avalon”), a TSX listed
company, for an integrated lepidolite mining and lithium carbonate production partnership in Canada.
Avalon owns the Separation Rapids lithium deposit situated approximately 70km by road north of Kenora, Ontario. Samples
from outcropping lepidolite-rich sub-zones to the east of the main Separation Rapids petalite resource were evaluated using
L-Max® as part of the Phase 1 Plant PFS. Excellent results were achieved including the production of battery grade lithium
carbonate of 99.88% purity.
The LOI contemplates that Avalon will sell a minimum of 15,000 tonnes per annum of lithium-mica concentrate produced
from its planned demonstration-scale plant that is intended to be located in Kenora, to Lepidico for processing at the planned
Phase 1 Plant.
In April 2017 Avalon undertook a 2,000 metre drilling program at Separation Rapids.
As at the date of this Report an updated Mineral Resource estimate was in the process of being estimated, which is planned
for the first time to quantify grade according to lithium mineral type for each of the Resource domains.
Alvarrões Lepidolite Project ore access agreement
In March 2017, Lepidico signed a binding term sheet with Grupo Mota, owner and operator of the Alvarrões lepidolite mine,
located near the city of Guarda in northeast Portugal.
Under the agreement Lepidico will spend a minimum of €250,000 on exploration and drilling over an 18-month exclusive
period. Alvarrões represents a drill ready target with open pit mining of lepidolite bearing pegmatite having occurred over a
strike length of more than 1km.
Drilling commenced at the Alvarrões project in May 2017. A planned 25 hole diamond drilling program is being implemented
as the first stage of a resource definition program aimed at delineating an initial JORC Code compliant Mineral
Resource estimate.
Lepidico is focusing its drilling program on a 1.5km long strike corridor, down dip from the two operating open pits of the
Gonçalo Lepidolite Mine. The mineralisation occurs in a series of flat-lying pegmatite sills, up to three metres in thickness,
hosted in the Guarda granite.
Following completion of the drilling program Lepidico aims to define an inaugural JORC Code compliant Mineral Resource
estimate for Alvarrões. The results are expected to be incorporated as part of the Company’s current Feasibility Study into a
Phase 1 L-Max® Plant. Assuming continued positive results a follow up infill and extensional drill program will be required.
Metallurgical testwork on a 10kg sample of Alvarrões lepidolite pegmatite produced further excellent results, confirming the
material’s amenability to the L-Max® process. A lithium recovery of 94% was achieved for a concentrate grade of 3.70% Li2O,
suitable for feed to the planned Phase 1 Plant.
Pioneer Dome, PEG009 farm-in agreement (earning up to 75%)
In February 2017 Lepidico signed a farm-in agreement with Pioneer Resources Limited (“Pioneer”), an ASX listed company,
for Lepidico to earn a 75% interest in the ‘PEG009’ lepidolite prospect located within Pioneer’s Pioneer Dome project near
Norseman in Western Australia.
Lepidico plans to farm into PEG009 via a drilling program to evaluate its lithium-mica resource potential, with the objective of
delineating more than 500,000t grading at least 1.2% Li2O.
Detailed mapping of the PEG009 area on a 1:100 scale was completed during June 2017. This work shows sub-cropping
lepidolite pegmatite extending over a 400m x200m zone, significantly extending the previous strike estimate of
approximately 200m.
This information will be used to optimise hole locations for the proposed maiden drilling program at the prospect, scheduled
to commence later in the September 2017 quarter following receipt of the required permits. A drilling contractor has
been engaged.
22
2017 LEPIDICO ANNUAL REPORT A Conservation Management Plan (CMP) for the PEG009 area has been submitted for regulatory approval which will
culminate in the Department of Mines, Industry Regulation and Safety (DMIRS) being able to approve the Program of
works application
Stage 1 farm-in: By 22 February 2018, Lepidico would commit to undertaking such work as to enable the delineation
of a lepidolite-rich JORC Code-compliant Inferred Resource of at least 500,000t grading at least 1.2% Li2O based on
lepidolite content.
Stage 2 farm-in: By 22 February 2019, Lepidico is to delineate a lepidolite-rich JORC Code-compliant Indicated Resource of at
least 500,000t grading at least 1.2% Li2O based on lepidolite content to earn a 75% equity interest in the PEG009 Area.
If Lepidico fails to meet either the Stage 1 or Stage 2 requirements the agreement will terminate and Lepidico will not retain
any rights in the PEG009 Area.
Pioneer Free-carried: On Lepidico earning a 75% interest by satisfying the Stage 2 requirements, Pioneer’s 25% interest will be
free-carried by Lepidico through to completion of a feasibility study resulting in a Decision to Mine.
Lemare Project, Quebec, Canada (earning up to 75%)
During the year the Group completed its first exploration program at the Lemare Project which comprises 158 claims
encompassing 74km2 in the Abitibi greenstone belt in the James Bay region of Quebec, Canada. Lemare is located
approximately 60km east of the town of Nemaska and sits 30km east of the Whabouchi spodumene deposit owned
by Nemaska Lithium. The program comprised 16 diamond drill holes, totalling 1,788m of NQ core, drilled into the Lemare
pegmatite along 8 lines spaced a nominal 50m apart. The drilling confirmed the presence of a high-grade spodumene
pegmatite that was initially identified by a series of channel samples. This pegmatite extends at least 300m along strike and
remains open to the NE and down dip. It is up to 20m in true width and pinches and swells both along strike and down dip.
The pegmatite is closed off to the SW where it approaches a lake.
Rock chip sampling along the projected extension of the pegmatite beyond the lake to the SW led to the discovery of a new
zone of spodumene mineralisation over a 600m strike length. This zone, named Lemare West, remains open to the SW.
Grades of between 2% and 3% Li2O (average of 10 samples is 2.3% Li2O) were recorded from this new zone.
The second stage of drilling was completed in June 2017. This phase of exploration was confined to testing of the SW
Extension, a 600m long prospective corridor of spodumene-bearing pegmatite. A total of 15 holes, for 1,527m of NQ core,
were drilled on nominal 50m sections.
Multiple wide intercepts were returned from the SW Extension, confirming Lemare as a significant spodumene
deposit, including:
33.7m @ 0.94% Li2O, from 9.60m, in hole LE-17-29
18.0m @ 2.00% Li2O, from 6.80m, in hole LE-17-30
Under the terms of the Lemare Option Agreement, the Company is earning up to a 75% interest in the Lemare project.
To maintain its position, the Company had an initial requirement to spend C$800,000 on exploration by 31 August 2017
(extended from 31 December 2016 by agreement with CRE). With completion of the Stage 2 drilling program Lepidico has
met this requirement.
To complete the earn-in to an initial 50% interest in the project, the Company is to fund a further C$1.2M of exploration and
delineate a JORC Code compliant Minerals Resource by 31 August 2018. The Company can earn a further 25% interest by
completing a feasibility study and an environmental study on Lemare by 30 June 2020 and by making a payment of C$2.5M
(in cash or shares) to Critical Elements Corporation.
The next phase of work for the Lemare Spodumene Project will be developed following completion of a geological
reinterpretation of the SW Extension in September 2017.
East Pilbara Polymetallic Project, WA (E45/3326; 51%) (“Gobbos”)
The Company is actively seeking potential purchasers for the Gobbos Project, which is no longer a strategic fit for Lepidico, in
light of its commitment to the development of its lithium assets Company.
23
2017 LEPIDICO ANNUAL REPORT CORPORATE ACTIVITIES
Following the development of the Company’s strategy to become a lithium producer by the end of 2019 through the
commercialisation of the Company’s proprietary L-Max® technology the Company changed its name from Platypus
Minerals Ltd to Lepidico Ltd following the Company’s 2016 AGM.
In addition, the Company strengthened its Board and Management team. Mr Mark Rodda was appointed to the Board
as a non-executive director on 24 August 2016. On 22 September 2016, the Company appointed Mr Julian (Joe) Walsh
as Managing Director and Mr Tom Dukovcic as Exploration Director. On 30 September 2016, Mr Alex Neuling, principal of
Erasmus Consulting, was appointed Joint Company Secretary and on 14 November 2016, Ms Shontel Norgate was appointed
as Chief Financial Officer.
With the Company’s change of direction Mr Rocco Tassone resigned as a Director on 1 September 2016.
Given the increasing global footprint of the Company and the selection of Sudbury as the preferred location of the Phase
1 L-Max® Plant, Mr Walsh relocated to Toronto during the year to establish a North American presence in Canada. An office
will be established in Toronto and recruitment of key positions will commence during the current financial year to take the
Company through the Feasibility Study, development and into operations.
During the year, the Company raised $3.7 million from its Entitlement Offer through participation in the pro-rata issue and
unsolicited interest from existing shareholders to participate in a shortfall placement. The first phase of the Company’s capital
raising was a non-underwritten, non-renounceable 1 for 4 Entitlement Offer which raised $3.1 million at an issue price of
1.3 cents per share and closed on 12 April 2017. The second phase of the capital raising was the shortfall offer which raised
a further $0.6million and closed on 14 May 2017.
During the year, Lithium Australia NL (LIT) lodged an Application with the Supreme Court of Western Australia (the
“Proceedings”) seeking declarations that:
• LIT’s rights under certain agreements with Lepidico Ltd’s (formerly Platypus Minerals Ltd) subsidiary, Li-Technology Pty Ltd,
remain valid; and
• LIT has the ability to exploit its SiLeach™ process in light of those agreements.
• the Company subsequently lodged its Defence and a Counterclaim in relation to the Proceedings alleging that:
• the SiLeach™ process was developed, without authorisation, using the Group’s intellectual property in the L-Max®
technology and/or L-Max® confidential information disclosed to LIT; and
• that LIT has breached a number of clauses under a Licence Agreement entered into with a Lepidico subsidiary.
On 27 February 2017 Lepidico announced that in the best interests of its shareholders it had agreed to the declarations being
sought by LIT in the Supreme Court action as the discovery process had provided the Company with the understanding it
was seeking; namely, that Lepidico’s L-Max® Intellectual Property rights did not appear to have been compromised.
On 2 March 2017 Lepidico received a Bidder’s Statement from Lithium Australia NL (“LIT”) outlining an unsolicited offer
from LIT to acquire all the outstanding shares in Lepidico for 1 LIT share for every 13.25 Lepidico shares held. BDO Corporate
Finance (WA) Pty Ltd were engaged as an Independent Expert and concluded that the takeover offer was neither fair nor
reasonable to Lepidico shareholders and the Lepidico Directors unanimously recommended that shareholders REJECT
the offer in its Target’s Statement of 28 March 2017. The offer closed at midnight (AWST) on Monday, 19 June 2017 with
acceptances for approximately 0.6% of Lepidico shares excluding the pre-bid agreement acceptances.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as mentioned in the Review of Operations, no significant changes in the state of affairs of the Consolidated Entity
occurred during the financial year.
SUBSEQUENT EVENTS
• On 3 August 2017 the Company confirmed the appointment of Lycopodium Minerals Pty Ltd (“Lycopodium”) for the
provision of engineering services for the Company’s Phase 1 L-Max® Plant Feasibility Study (the “Study”). Lycopodium
elected to receive payment for its engineering services in Lepidico shares. The Company issued 45,000,000 new fully paid
ordinary shares to Lycopodium. (Refer Note 25(a))
• On 18 August 2017 the Company signed a Binding Term Sheet with Maximus Resources Limited (“Maximus”) under which
Lepidico can earn a 75% interest in Maximus’ lithium rights in the Spargoville Project (“Moriarty Lithium Project”). The
Company issued 6,333,432 fully paid ordinary shares to Maximus as the initial payment (Refer Note 25(b))
24
2017 LEPIDICO ANNUAL REPORT • On 5 September 2017 the Company issued 52,195,175 fully paid ordinary shares to Bacchus Capital Advisors at an issue
price of $0.0143 per share for the corporate advice provided during the Company’s takeover defence which under the
terms of the engagement Bachhus Capital elected to receive the majority of its fee in Lepidico shares. (Refer Note 25(c))
Other than the matters discussed above there are no other matters or circumstances which have arisen since 30 June 2017
that have significantly affected or may significantly affect:
(a)
(b)
(c)
the Consolidated Entity’s operations in future years, or
the results of those operations in future financial years, or
the Consolidated Entity’s state of affairs in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS ON OPERATIONS
The Company plans to continue to implement its strategy of becoming a lithium producer by the end of 2019 through the
commercialisation of its proprietary L-Max® technology and the ongoing growth, exploration and development of its portfolio
of lithium interests.
The nature of the Company’s business remains speculative and the Board considers that comments on expected results or
success of this strategy are not considered appropriate or in the best interests of the Company.
INFORMATION ON DIRECTORS’ INTERESTS IN SECURITIES OF LEPIDICO
As at the date of this report, the notifiable interests held directly and through related bodies corporate or associates of the
Directors in shares and options of Lepidico are:
Mr Gary Johnson
Mr Joe Walsh
Mr Tom Dukovcic
Mr Mark Rodda
Number of fully paid ordinary shares
Number of options
349,680,293
7,500,000
3,951,668
-
361,131,961
12,500,000
52,500,000
23,500,000
12,500,000
101,000,000
REMUNERATION REPORT (AUDITED)
This remuneration report is set out under the following main headings:
A.
B.
C.
D.
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service Agreements
Share Based Compensation
This remuneration report outlines the Director and Executive remuneration arrangements for the Company and Group in
accordance with the requirements of the Corporations Act 2001 (Cth) and its Regulations. For this report, key management
personnel (“KMP”) of the Group are defined as those persons having authority and responsibility for planning, directing and
controlling the major activities of the Company and Group, directly or indirectly, including any director (whether executive or
otherwise) of the Parent Company, and includes the highest paid executives of the Company and Group.
The information provided in this remuneration report has been audited as required by section 308(3c) of the Corporations
Act 2001.
A.
Principles Used To Determine The Nature And Amount Of Remuneration
The Company’s remuneration policy is designed to align director and executive objectives with shareholder and business
objectives by providing a fixed remuneration component and offering incentives based on the Group’s financial results. A
Remuneration Committee has been established which makes recommendations to the Board which aims to attract and retain
appropriate executives and directors to run and manage the Group, as well as create goal congruence between directors,
executives and shareholders.
The Remuneration Committee considers remuneration of Directors and the Executive and makes recommendations to the
Board. Remuneration is considered annually or otherwise as required.
The nature and amount of remuneration for an executive and non-executive director depends on the nature of the role and
market rates for the position, which are determined with the assistance of external advisors (where necessary), surveys and
reports, taking into account the experience and qualifications of each individual. The Board ensures that the remuneration
paid to KMP is competitive and reasonable.
25
2017 LEPIDICO ANNUAL REPORT
The following were KMP of the Group during the financial year and unless otherwise indicated were KMP for the entire
financial year:
Non-Executive Directors
Mr Gary Johnson
Mr Mark Rodda
Non-executive Chairman
Non-executive Director (appointed 24 August 2016)
Executive Directors
Mr Joe Walsh
Mr Tom Dukovcic
Executives
Ms Shontel Norgate
Managing Director (appointed 22 September 2016)
Director Exploration
Chief Financial Officer (appointed 14 November 2016)
Mr Alex Neuling, Joint Company Secretary, is not employed or remunerated directly by Lepidico Ltd. Eramus Consulting, a
controlled body corporate received fees of $57,542 (2016: Nil)
No remuneration was paid to Directors of the Group by Group companies other than Lepidico Ltd, accordingly remuneration
paid to key management personnel of the Group is the same as that paid to key management personnel of the Company.
In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is
separate and distinct.
Non-Executive Director Remuneration
The Directors have resolved that cash based directors’ fees for Non-Executive Directors are $60,000 - $80,000 per annum
for each Non-Executive Director. The Company’s policy is to remunerate Non-Executive Directors at market rates (for
comparable companies) which reflect the demands made and the responsibilities placed on the Non-Executive Directors.
Fees for Non-Executive Directors are not linked to the performance of the Company however, to align Directors’ interests with
shareholders’ interests are encouraged to hold equity securities in the Company. Non-executive Directors are also entitled to
participate in the Company long term incentive plan (refer “Long Term Incentives (“LTIs”) below).
In addition to Directors’ fees, Non-Executive Directors are entitled to additional remuneration as compensation for additional
specialised services performed at the request of the Board and reimbursed for reasonable expense incurred by directors on
Company business. Non-Executive Directors’ fees and payments are reviewed annually by the Board.
Retirement benefits
No retirement benefits or allowances are paid or payable to Non-Executive Directors of the Company other than
superannuation benefits.
Other benefits
No motor vehicle, health insurance or other similar allowances are made available to Non-Executive Directors.
Executive Director and Executive Remuneration
The objective of the Company’s remuneration framework is to ensure reward for performance is competitive and appropriate
for the results delivered. The remuneration framework aligns executive reward with the achievement of strategic and
operational objectives and the creation of wealth for shareholders. The Board ensures that the executive reward framework
satisfies the following key criteria in line with appropriate governance practices:
• attract, retain, motivate and reward executives;
•
•
reward executives for Company and individual performance against pre-determined targets/benchmarks;
link rewards with the strategic goals and performance of the Company;
• provide competitive remuneration arrangements by market standards (for comparable companies);
• align executive interests with those of the Company’s shareholders; and
• comply with applicable legal requirements and appropriate standards of governance.
The Company has structured an executive remuneration framework that is market competitive and complementary to the
reward strategy of the organisation. Executive remuneration packages may comprise a mix of the following
Fixed remuneration
Fixed remuneration comprises base salary and employer superannuation contributions. Salaries are reviewed on an annual
basis to ensure competitive remuneration is paid to executives with reference to their role, responsibility, experience
and performance. Salaries are reviewed on an annual basis. There are no guaranteed base pay increases included in any
executive contracts.
26
2017 LEPIDICO ANNUAL REPORT Short-term incentives (“STIs”)
STIs comprise cash bonuses. The STIs are structured to provide remuneration for the achievement of individual and Company
performance targets linked to the Company’s strategic objectives across four areas of focus: Development, Exploration,
Financing/Shareholder Value and Governance. At the beginning of each year, performance targets are set by the Board.
Where possible, the performance targets are specific and measurable. At the end of each year the Company’s performance
against the KPIs are assessed by the CEO and presented to the N&R Committee and approved by the Board. STIs may be
adjusted up or down in line with under or over achievement relative to target performance levels at the discretion of the
Remuneration Committee.
During the year the Company achieved significant milestones with the completion of the Pre-Feasibility Study for the Phase 1
L-Max® Plant and securing feedstock sources through its arrangements with Avalon Advanced Materials, Pioneer Resources
and the Alvarroes Ore Access Agreement. The Company successfully raised $3.7 million through an Entitlement Offer and
implemented appropriate governance policies which are available on the Company’s website. The Company’s takeover
response was effectively managed.
For the year ended 30 June 2017, $121,723 (inclusive of superannuation) were paid or payable to KMP of the Company or
Group (2016: Nil)
Long term incentives (“LTIs”)
LTIs comprise options granted at the recommendation of the Remuneration Committee in order to align the objective of
Directors and Executives with shareholders and the Company (refer section D for further information). The issue of options to
Directors (Non-Executive and Executive) requires shareholder approval.
The grant of share options has not been directly linked to previously determined performance milestones or hurdles as the
current stage of the Group’s activities makes it difficult to determine effective and appropriate key performance indicators
and milestones.
Persons granted options are not permitted to enter into transactions (whether through the use of derivatives or otherwise)
that limit his or her exposure to the economic risk in relation to the securities.
Consequences of Performance on Shareholder Wealth
Executive remuneration is aimed at aligning the strategic and business objectives with the creation of shareholder wealth.
The table below shows measures of the Group’s financial performance over the last 5 years as required by the Corporations
Act 2001. However, these are not necessarily consistent with the measures used in determining the variable amounts of
remuneration to be awarded to KMP. Consequently, there may not always be a direct correlation between the statutory key
performance measures and the variable remuneration awarded.
2013
$
2014
$
2015
$
2016
$
2017
$
Net Profit/(Loss)
(2,418,120)
(3,615,617)
(1,044,346)
(2,263,225)
(5,357,243)
EPS
Share price at 30 June
(0.002)
0.002
(0.001)
0.001
(0.006)
0.010
(0.005)
0.017
(0.003)
0.013
27
2017 LEPIDICO ANNUAL REPORT
B.
Details Of Remuneration
Amounts of remuneration
Details of the remuneration of the directors and Key Management Personnel of the Group are set out in the following tables:
Short-term Benefits
Post-
employment
benefits
Share-based
payments
Equity Options
Total
Cash Salary
and Fees
$
Other
$
Superannuation
Benefits
$
Vested
$
$
81,410
3,462
51,154
-
-
124,275
-
43,800
-
-
-
-
-
-
-
-
170,285
54,144
-
157,534
151,107
-
31,963
-
126,666
25,055
-
587,049
322,644
-
111,162
-
7,734
328
4,860
-
-
712
-
-
21,321
-
18,003
14,355
14,413
-
66,331
15,395
112,500
201,644
-
112,500
-
-
3,790
168,514
-
-
20,000
144,987
-
-
100,000
143,800
112,500
358,250
-
112,500
20,000
-
320,000
185,462
75,000
241,134
-
-
525,000
1,289,542
140,000
478,039
Non-Executive Directors
Mr Gary Johnson(1)
Mr Mark Rodda(2)
Mr Laurie Ziatas(3)
Mr Rocco Tassone(4)
Executive Directors
Mr Joe Walsh(5)
Mr Tom Dukovcic
Executives
Ms Shontel Norgate(6)
Total Directors’ and
KMP remuneration
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
(1) Mr Gary Johnson was appointed Chairman 9 June 2016
(2) Mr Rodda was appointed on 24 August 2016
(3) Mr Lauri Ziatas resigned on 9 June 2016
(4) Mr Rocco Tassone resigned on 1 September 2016 but received no remuneration for the financial year ended 30 June 2017
(5) Mr Joe Walsh was appointed Managing Director on 22 September 2016
(6) Ms Shontel Norgate was appointed CFO on 14 November 2016
Loans to Key Management Personnel
There were no loans made to Directors or other KMP of the Group (or their personally related entities) during the current
financial period.
28
2017 LEPIDICO ANNUAL REPORT Other Transactions with Key Management Personnel
Payments to director-related entities(1)
2017
$
2016
$
1,072,521
92,062
(1) Payments were made to Strategic Metallurgy Pty Ltd, a company of which Mr Gary Johnson is a director and beneficial
shareholder. The payments were for development of L-Max® technology on an arm’s length basis. As at 30 June 2017
invoices totalling $108,044 are payable.
During the year 40,000,000 options were issued to Alchemy Advisors Pty Ltd, an entity controlled by Mr Joe Walsh in
satisfaction of consulting services provided. Neither Alchemy Advisors Pty Ltd, nor Mr Joe Walsh was a related party of the
Company at the time the options were issued.
C.
Service Agreements
The remuneration and other terms of agreement for the Company’s Managing Director and other KMP are formalised in
employment contracts, as set out below.
Mr Joe Walsh, Managing Director (“MD”) has an employment agreement effective from 22 September 2016 with the
Company. The agreement specifies duties and obligations to be fulfilled as MD and provides for an annual review of base
remuneration taking into account performance. Mr Walsh’s remuneration includes a salary of $240,000 per annum inclusive
of superannuation. Mr Walsh did not receive an increase to base salary during the reporting period. A monetary bonus of
$59,288 (inclusive of superannuation) has been awarded.
Termination of the employment agreement requires 6 months written notice. Upon termination, the MD is entitled to receive
from the Company all payments owed to him under the employment agreement up to and including the date of termination
and any payments due to him pursuant to any relevant legislation by way of accrued annual leave and long service leave. If
the Company terminates the agreement for any reason other than for cause the MD will receive 1 month’s salary at the time
of termination for every year of employment with the Company to a maximum of 6 months’ payment (extendable up to 12
months under certain prescribed events).
Mr Tom Dukovcic, Director Exploration (“DE”) has an employment agreement effective from 22 September 2016 with the
Company. The agreement specifies duties and obligations to be fulfilled as DE and provides for an annual review of base
remuneration taking into account performance. Mr Dukovcic’s remuneration includes a salary of $175,000 per annum inclusive
of superannuation. The DE received an increase to base salary of $43,600 inclusive of superannuation during the reporting
period to reflect the increased level of complexity within the Company following the acquisition of the L-Max® technology. A
monetary bonus of $35,000 (inclusive of superannuation) has been awarded.
Termination of the employment agreement requires 6 months written notice. Upon termination, the DE is entitled to receive
from the Company all payments owed to him under the employment agreement up to and including the date of termination
and any payments due to him pursuant to any relevant legislation by way of accrued annual leave and long service leave. If
the Company terminates the agreement for any reason other than for cause the DE will receive 1 month’s salary at the time
of termination for every year of employment with the Company to a maximum of 6 months’ payment (extendable up to 12
months under certain prescribed events).
Ms Shontel Norgate, Chief Financial Officer (“CFO”) has an employment agreement effective from 14 November 2016 with
the Company. The agreement specifies duties and obligations to be fulfilled as CFO and provides for an annual review of base
remuneration taking into account performance. Ms Norgate’s remuneration includes a salary of $219,000 per annum inclusive
of superannuation. Ms Norgate did not receive an increase to base salary during the reporting period. A monetary bonus of
$27,435 (inclusive of superannuation) has been awarded.
Termination of the employment agreement requires 3 months written notice. Upon termination, the CFO is entitled to receive
from the Company all payments owed to her under the employment agreement up to and including the date of termination
and any payments due to her pursuant to any relevant legislation by way of accrued annual leave and long service leave. If
the Company terminates the agreement for any reason other than for cause the CFO will receive 1 month’s salary at the time
of termination for every year of employment with the Company to a maximum of 6 months’ payment (extendable up to 12
months under certain prescribed events).
29
2017 LEPIDICO ANNUAL REPORT D.
Share Based Compensation
Share Holdings
The number of shares and options over ordinary shares in the Group held during the financial period by each director of
Lepidico Ltd and other KMP of the Group, including their personally related parties, are set out below:
2017
Non-Executive Directors
Mr Gary Johnson
Mr Mark Rodda
Executive Directors
Mr Joe Walsh
Mr Tom Dukovcic
Executives
Ms Shontel Norgate
Balance at
start of year
Purchased/
Exercised
Options
Net Other
Change
Balance at end
of year
253,526,448
46,153,845
(1) 50,000,000
349,680,293
-
-
3,161,334
-
7,500,000
790,334
-
-
-
-
-
-
-
7,500,000
3,951,668
-
Total
256,687,782
54,444,179
50,000,000
361,131,961
1 Shares controlled by Strategic Metallurgy under a voting agreement dated 15 March 2017.
Option Holdings
2017
Non-Executive Directors
Mr Gary Johnson
Mr Mark Rodda
Executive Directors
Mr Joe Walsh
Balance
at start of
year
Granted
during the
year as
remuneration
Exercised/
Expired
during
year
Net other
change
Balance at
end of year
* Vested and
exercisable at
end of year
-
-
-
12,500,000
12,500,000
12,500,000
-
-
-
Mr Tom Dukovcic
11,077,500
12,500,000
(77,500)
Executives
Ms Shontel Norgate
-
12,500,000
-
-
-
12,500,000
12,500,000
12,500,000
12,500,000
(1)40,000,000
52,500,000
52,500,000
-
-
23,500,000
23,500,000
12,500,000
6,250,000
Total
11,077,501
62,500,000
(77,500)
40,000,000
113,500,000
107,250,000
1 40,000,000 options issued as compensation for consultancy work completed prior to becoming an Executive Director
Details of the share options granted during the year as remuneration are disclosed in Note 16(c) as approved by shareholders
at the Company’s Annual General Meeting in November 2016.
30
2017 LEPIDICO ANNUAL REPORT MEETINGS OF DIRECTORS
The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2017,
and the number of meetings attended by each director.
Full Board Meetings
Audit & Risk
Committee Meetings
Nomination & Remuneration
Committee Meetings
No. eligible
to attend
No. attended
No. eligible to
attend
No. attended
No. eligible
to attend
No. attended
Mr Gary Johnson
Mr Joe Walsh
Mr Tom Dukovcic
Mr Mark Rodda
Mr Rocco Tassone
10
6
10
7
3
10
6
10
7
3
1
-
-
1
-
1
-
-
1
-
1
-
-
1
-
1
-
-
1
-
INSURANCE AND INDEMNITY OF OFFICERS AND AUDITORS
During the year, the Company paid a premium in respect of a contract insuring the directors of the Company (named
above) and the Company Secretaries against liabilities incurred as such a director, secretary or executive officer to the extent
permitted by the Corporations Act 2001 (Cth). The contact of insurance prohibits disclosure of the nature of the liability and
the amount of the premium. The Company has not otherwise, during or since the financial year, indemnified or agreed to
indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer
or auditor.
OPTIONS
At the date of this report, the Company has the following options on issue:
Number
27,750,000
40,000,000
9,000,000
50,000,000
25,000,000
151,750,000
Exercise Price
Grant
Expiry
$0.03000
$0.01815
$0.01000
$0.02500
$0.02500
5 December 2014
30 September 2017
25 July 2016
3 August 2018
7 December 2015
31 December 2018
25 November 2016
31 December 2019
30 November 2016
31 December 2019
AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001(Cth) for the year
ended 30 June 2017 is included on page 20 of the Directors’ Report.
The Auditor did not provide any non-audit services for the year ended 30 June 2017 (2016: $6,000)
This report is made in accordance with a resolution of the directors made pursuant to section 298(2) of the
Corporations Act 2001.
Joe Walsh
Managing Director
Dated this 18th day of September 2017
31
2017 LEPIDICO ANNUAL REPORT AUDITORS INDEPENDENCE DECLARATION UNDER SECTION
307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS
OF LEPIDICO LIMITED
I declare that to the best of my knowledge and belief, for the year ended 30 June 2017 there has been:
• no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
• no contraventions of any applicable code of professional conduct in relation to the audit.
Suan-Lee Tan
Partner
Moore Stephens
chartered accountants
Signed at Perth this 18th day of September 2017
Liability limited by a scheme approved under Professional Standards Legislation. Moore Stephens - ABN 16 874 357 907. An independent
member of Moore Stephens International Limited - members in principal cities throughout the world. The Perth Moore Stephens firm is not a
partner or agent of any other Moore Stephens firm.
32
2017 LEPIDICO ANNUAL REPORT CONSOLIDATED STATEMENT OF PROFIT AND LOSS
AND OTHER COMPREHENSIVE INCOME
as at 30 June 2017
Revenue
Other income
Business development expenses
Administrative expenses
Employment benefits
Depreciation
Share based payments
Exploration and evaluation expenditure expensed
Impairment of Available for Sale asset
Loss before income tax
Income tax expense
Note
3
3
4
5
2017
$
126,548
127,573
2016
$
115,836
8,041
254,121
123,877
(325,214)
(21,500)
(1,753,598)
(678,885)
(912,444)
(338,039)
(6,098)
(6,161)
(1,736,391)
(40,000)
(877,619)
(415,004)
-
(887,513)
(5,357,243)
(2,263,225)
-
-
Loss from continuing operations
(5,357,243)
(2,263,225)
Other comprehensive income
-
-
Total comprehensive loss for the year attributable to owners of the Group
(5,357,243)
(2,263,225)
Loss per share for the year attributable to the members of Lepidico Ltd
Basic and diluted loss per share
7
(0.003)
(0.005)
The accompanying notes form part of these financial statements.
33
2017 LEPIDICO ANNUAL REPORT Note
2017
$
2016
$
8
9
9
10
11
12
13
14
15
16
17
3,307,337
619,497
650,260
3,870,273
3,926,834
4,520,533
86,003
7,732
1,619,842
16,698,154
-
16,003
3,743
614,797
16,203,762
100,000
18,411,731
16,938,305
22,338,565
21,458,838
1,662,855
45,797
624,516
22,294
1,708,652
646,810
1,708,652
646,810
20,629,913
20,812,028
31,491,798
1,513,250
27,274,170
555,750
(12,375,135)
(7,017,892)
20,629,913
20,812,028
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2017
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
Exploration and evaluation expenditure
Intangible asset
Available for sale financial assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Short-term provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
34
2017 LEPIDICO ANNUAL REPORT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the Year ended 30 June 2017
Issued Capital
Number of
shares
Amount
Accumulated
Losses
Options
Reserve
$
$
$
Total
$
Balance at 30 June 2015
205,674,301
5,630,642
(4,754,667)
415,750
1,291,725
Loss for the year
Options issued during the year
-
-
-
-
Shares issued during the year
1,523,769,472
21,643,528
(2,263,225)
-
(2,263,225)
-
-
140,000
140,000
-
21,643,528
Balance at 30 June 2016
1,729,443,773
27,274,170
(7,017,892)
555,750
20,812,028
Loss for the year
Options issued during the year
Transfer of value on exercise of options
-
-
-
-
-
32,500
Shares issued during the year
306,534,292
4,185,128
(5,357,243)
-
(5,357,243)
-
-
-
990,000
990,000
(32,500)
-
-
4,185,128
Balance at 30 June 2017
2,035,978,065
31,491,798
(12,375,135)
1,513,250
20,629,913
The accompanying notes form part of these financial statements.
35
2017 LEPIDICO ANNUAL REPORT CONSOLIDATED STATEMENT OF CASH FLOW
For the Year ended 30 June 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from external parties
Payments to suppliers and employees
Interest received
Note
2017
$
2016
$
130,234
19,649
(2,837,046)
(801,193)
37,082
8,041
Net cash used in operating activities
21
(2,669,730)
(773,503)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation activities
Payments for research and development activities
Proceeds from research and development tax credit
Payments for property, plant and equipment
Payments for available for sale assets
Proceeds from sale of available for sale assets
Net cash on acquisition of Lepidico Ltd
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares (net of costs)
Proceeds from exercise of options
Proceeds of borrowings
Repayment of borrowings
(974,145)
(259,684)
(1,204,339)
(62,025)
353,506
(10,088)
-
(1,000)
-
(80,000)
122,286
-
-
31,581
(1,712,780)
(371,128)
7,011,826
1,872,079
27,761
-
-
-
55,000
(169,657)
Net cash provided by financing activities
7,039,587
1,757,422
Net increase in cash held
Cash at beginning of financial year
2,657,077
612,791
650,260
37,469
Cash at end of financial year
8
3,307,337
650,260
36
2017 LEPIDICO ANNUAL REPORT THE ACCOMPANYING NOTES FORM PART OF THESE FINANCIAL STATEMENTS.
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting
Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001.
The financial report covers Lepidico Ltd and its controlled entities (“the Group”or “Consolidated Entity” or “Economic Entity”).
Lepidico Ltd is a listed public company, incorporated and domiciled in Australia. The financial report of the Group complies
with all Australian equivalents to International Financial Reporting Standards (AIFRS) in their entirety.
The following is a summary of the material accounting policies adopted by the Consolidated Entity in the preparation of the
financial report. The accounting policies have been consistently applied, unless otherwise stated.
Basis of Preparation
Reporting Basis and Conventions
The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation
of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has
been applied.
The financial statements were authorised for issue on 18 September 2017 by the Directors of the Company. The Directors have
the power to amend and re-issue the financial report. The Group is a for-profit entity for financial reporting purposes under
Australian Accounting Standards.
Accounting Policies
(a)
Going Concern
The financial statements have been prepared on the going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.
The Group incurred a net loss of $5,357,243 for the year to 30 June 2017 and had a net cash outflow from operations
of $2,669,730 for the year. Notwithstanding this, the financial report has been prepared on a going concern basis
which the Directors consider to be appropriate based upon the available net current assets of $2,218,182 as at
30 June 2017 and the matters described below.
The ability of the Group to continue as a going concern is dependent on the Group being able to raise additional
funds as required to meet ongoing exploration and development programs and for working capital. The Directors
believe that the Group will be able to raise additional capital as required based on capital raised during the year and
ongoing interest in the Company and the lithium industry generally. However, should the Group be unsuccessful in
undertaking additional raisings, these conditions may cast significant doubt on the entity’s ability to continue as
a going concern. No adjustments have been made relating to the recoverability and classification of liabilities that
might be necessary should the Group not continue as a going concern.
(b)
Principles of Consolidation
The consolidated financial statements incorporate all the assets, liabilities and results of the parent (Lepidico Ltd)
and all of the subsidiaries (including any structured entities). 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 the subsidiaries is provided in Note 2.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group
from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the
date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between
group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and
adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling
interests”. The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries
and are entitled to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the
non-controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-
controlling interests are attributed their share of profit or loss and each component of other comprehensive income.
Non-controlling interests are shown separately within the equity section of the statement of financial position and
statement of comprehensive income.
37
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (contnued)
(c)
Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving
entities or businesses under common control. The business combination will be accounted for from the date that
control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent
liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a
contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent
consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any
change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a
financial instrument, are recognised as expenses in profit or loss when incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
(d)
Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the excess of the
sum of:
the consideration transferred;
any non-controlling interest (determined under either the full goodwill or proportionate interest method); and
i)
ii)
iii) the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired
The acquisition date fair value of the consideration transferred for a business combination plus the acquisition
date fair value of any previously held equity interest shall form the cost of the investment in the separate
financial statements.
Fair value re-measurements in any pre-existing equity holdings are recognised in profit or loss in the period in
which they arise. Where changes in the value of such equity holdings had previously been recognised in other
comprehensive income, such amounts are recycled to profit or loss. The amount of goodwill recognised on
acquisition of each subsidiary in which the Group holds less than a 100% interest will depend on the method adopted
in measuring the non-controlling interest. The Group can elect in most circumstances to measure the non-controlling
interest in the acquiree either at fair value (full goodwill method) or at the non-controlling interest’s proportionate
share of the subsidiary’s identifiable net assets (proportionate interest method).
In such circumstances, the Group determines which method to adopt for each acquisition and this is stated in the
respective notes to these financial statements disclosing the business combination. Under the full goodwill method,
the fair value of the non-controlling interests is determined using valuation techniques which make the maximum use
of market information where available. Under this method, goodwill attributable to the non-controlling interests is
recognised in the consolidated financial statements.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is
included in investments in associates. Goodwill is tested for impairment annually and is allocated to the Group’s cash-
generating units or groups of cash-generating units, representing the lowest level at which goodwill is monitored
being not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying
amount of goodwill related to the entity disposed of. Changes in the ownership interests in a subsidiary that do not
result in a loss of control are accounted for as equity transactions and do not affect the carrying amounts of goodwill.
38
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (contnued)
(e)
Income Tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or
disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance
sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred
income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination,
where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or
liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items
that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that
no adverse change will occur in income taxation legislation and the anticipation that the Consolidated Entity will
derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of
deductibility imposed by the law.
(f)
Property, Plant and Equipment
Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation
and impairment losses.
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash
flows which will be received from the assets’ employment and subsequent disposal. The expected net cash flows
have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the Consolidated Entity includes the cost of materials, direct labour,
borrowing costs and an appropriate proportion of fixed and variable overheads.
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 group and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive
income during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a straight-line basis
over their useful lives to the Consolidated Entity commencing from the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful
lives of the improvements.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
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.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or
losses are included in the statement of comprehensive income. When re-valued assets are sold, amounts included in
the revaluation reserve relating to that asset are transferred to retained earnings.
39
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (contnued)
(g)
Exploration and Development Expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area
of interest. These costs are only carried forward to the extent that they are expected to be recouped 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.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the
decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of
the area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry
forward costs in relation to that area of interest.
Costs of site restoration are provided over the life of the facility 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 clauses of the mining 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 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.
(h)
Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis,
depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell 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.
To the extent possible, market information is extracted from either the principal market for the asset or liability
(i.e. the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a
market, the most advantageous market available to the entity at the end of the reporting period (i.e. the market that
maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking
into account transaction costs and transport costs).
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.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instrument, by reference to observable market information where such instruments are held as assets. Where
this information is not available, other valuation techniques are adopted and, where significant, are detailed in the
respective note to the financial statements.
40
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (contnued)
(i)
Financial Instruments
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related
contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set
out below.
Financial assets at fair value through profit and loss
A financial asset is classified in this category if acquired principally for selling in the short term or if so designated
by management and within the requirements of AASB 139: Recognition and Measurement of Financial Instruments.
Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised
gains and losses arising from changes in the fair value of these assets are included in the statement of comprehensive
income in the period which they arise.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market and are stated at amortised cost using the effective interest rate method.
Available-for-sale financial assets
The Group’s investments in equity securities are classified as available-for-sale financial assets. Subsequent to initial
recognition, they are measured at fair value and changes therein, other than impairment losses, are recognised in
other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognised,
the cumulative gain or loss in equity is reclassified to profit or loss.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied
to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
Impairment
At each reporting date, the group assess whether there is objective evidence that a financial instrument has been
impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument
is considered to determine whether impairment has arisen. Impairment losses are recognised in the consolidated
statement of comprehensive income.
(j)
Impairment of Assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to
the assets carrying value. Any excess of the assets carrying value over its recoverable amount is expensed to the
consolidated statement of comprehensive income.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not
possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of
the cash-generating unit to which the asset belongs.
41
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (contnued)
(k)
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the group’s entities is measured using the currency of the primary economic
environment in which that Entity operates. The consolidated financial statements are presented in Australian dollars
which is the Parent Entity’s functional and presentation currency.
Transaction and Balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date
of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary
items measured at historical cost continue to be carried at the exchange rate at the date of the transaction.
Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values
were determined.
Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive
income, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences
arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain
or loss is directly recognised in equity; otherwise the exchange difference is recognised in the statement of
comprehensive income.
Group companies
The financial results and position of foreign operations whose functional currency is different from the group’s
presentation currency are translated as follows:
(i)
(ii)
(iii)
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained profits are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign
currency translation reserve in the statement of financial position. These differences are recognised in the statement
of comprehensive income in the period in which the operation is disposed.
Employee Benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to
balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts
expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year
have been measured at the present value of the estimated future cash outflows to be made for those benefits.
Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it
is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within
short-term borrowings in current liabilities on the statement of financial position.
(l)
(m)
(n)
42
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (contnued)
(o)
Revenue
Revenue from the sale of goods is recognised upon delivery of goods to customers.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from
associates are accounted for in accordance with the equity method of accounting.
Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
All revenue is stated net of the amount of goods and services tax (GST).
(p)
Goods and Services Tax (GST)
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. In these circumstances the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
(q)
Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgements incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events and
are based on current trends and economic data, obtained both externally and within the group.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting are recognised
in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future periods.
Key Sources of Estimation Uncertainty
The following key assumptions concerning the future, and other key sources of estimation uncertainty at the
reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year:
(i) Recoverability of Exploration and Evaluation Expenditure
The recoverability of the exploration and evaluation expenditure recognised as a non-current asset is dependent
upon the successful development, or alternatively sale, of the respective tenements which comprise the assets.
(ii) Recoverability of Intangible Asset (Development Expenditure)
The recoverability of capitalised development expenditure recognised as a non-current asset is dependent upon
the successful development, or alternatively sale, of the respective intellectual property which comprise the
assets. Refer to Note 12 for details of how the development expenditure has been valued.
(iii) Share based payment transactions
The fair value of any options issued as remuneration is measured using the Black-Scholes model. Measurement
inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on
weighted average historic volatility adjusted for changes expected due to publicly available information (if any)),
weighted average expected life of the instruments (based on historical experience and general option holder
behaviour), expected dividends, and the risk-free interest rate (based on government bonds).
43
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (contnued)
(r)
Intangibles Assets – Intellectual Property Development Expenditure
Such assets are recognised at cost of acquisition. Expenditure during the research phase of a project is
recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies
identify that the project is expected to deliver future economic benefits and these benefits can be measured
reliably. Development costs have a finite life and are amortised on a systematic basis based on the future economic
benefits over the useful life of the project.
An intangible asset arising from development (or from the development phase of an internal project) is recognised if,
and only if, all the following are demonstrated:
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
•
•
the availability of adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset; and
the ability to measure reliably the expenditure attributed to the intangible asset during its development.
Capitalised development costs will be amortised over their expected useful life of the intangible asset once full
commercialisation or production commences.
(s)
New and Amended Accounting Policies Adopted by the Group
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
(t)
New Accounting Standards for Application in Future Periods
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an
assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are
discussed below:
AASB 9: Financial Instruments and associated Amending Standards
(applicable to annual reporting periods beginning on or after 1 January 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and
includes revised requirements for the classification and measurement of financial instruments, revised recognition
and derecognition requirements for financial instruments, and simplified requirements for hedge accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification of
financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit
loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held
for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow
greater flexibility in the ability to hedge risk, particularly with respect to the hedging of non-financial items. Should
the Group elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the
application of such accounting would be largely prospective.
The directors anticipate that the adoption of AASB 9 should not have a material impact on the Group’s
financial instruments.
44
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (contnued)
AASB 15: Revenue from Contracts with Customers
(applicable to annual reporting periods beginning on or after 1 January 2018, as deferred by AASB 2015-8:
Amendments to Australian Accounting Standards – Effective Date of AASB 15).
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single,
principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB
15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of
business to facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
(i)
(ii)
(iii) determine the transaction price;
(iv) allocate the transaction price to the performance obligations in the contract(s); and
(v) recognise revenue when (or as) the performance obligations are satisfied.
This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue.
Tthe directors anticipate that the adoption of AASB 15 should not have a material impact on the Group’s
financial statements.
AASB 16: Leases
(applicable to annual reporting periods beginning on or after 1 January 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117:
Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the
requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
• recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12 months
of tenure and leases relating to low-value assets);
• depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and
unwinding of the liability in principal and interest components;
• inclusion of variable less payments that depend on an index or a rate in the initial measurement of the lease
liability using the index or rate at the commencement date;
• application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead
account for all components as a lease; and
• inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives
in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening
equity on the date of initial application.
Although the directors anticipate that the adoption of AASB 16 may have an impact on the Group’s financial
statements, it is impracticable at this stage to provide a reasonable estimate of such impact.
45
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 1: Statement of Significant Accounting Policies (contnued)
AASB 2014-10: Amendments to Australian Accounting Standards – Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture
(applicable to annual reporting periods beginning on or after 1 January 2018, as deferred by AASB2015-10:
Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128).
This Standard amends AASB 10: Consolidated Financial Statements with regards to a parent losing control over a
subsidiary that is not a “business” as defined in AASB 3: Business Combinations to an associate or joint venture, and
requires that:
•
•
•
a gain or loss (including any amounts in other comprehensive income (OCI) be recognised only to the extent of
the unrelated investor’s interest in that associate or joint venture;
the remaining gain or loss be eliminated against the carrying amount of the investment in that associate or joint
venture; and
any gain or loss from remeasuring the remaining investment in the former subsidiary at fair value also be
recognised only to the extent of the unrelated investor’s interest in the associate or joint venture. The remaining
gain or loss should be eliminated against the carrying amount of the remaining investment.
The application of AASB 2014-10 will result in a change in accounting policies for transactions of loss of control over
subsidiaries (involving an associate or joint venture) that are businesses per AASB 3 for which gains or losses were
previously recognised only to the extent of the unrelated investor’s interest.
The transitional provisions require that the Standard should be applied prospectively to sales or contributions of
subsidiaries to associates or joint ventures occurring on or after 1 July 2018. Although the directors anticipate that the
adoption of AASB 2014-10 may have an impact on the Group’s financial statements, it is impractical at this stage to
provide a reasonable estimate of such impact.
(u)
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation in the current financial year.
Note 2: Controlled Entities
The legal corporate structure of the Consolidated Entity is set out below:
Country of
Incorporation
Interest as at
30 June
(%)
2017
2016
Principal Activity
Parent Entity:
Lepidico Ltd
Subsidiaries of Lepidico Ltd:
Ashburton Gold Mines NL
Trans Pacific Gold Pty Ltd
Transdrill Pty Ltd
Southern Pioneer Ltd
Platypus Resources Ltd
Lepidico Holdings Pty Ltd
Li Technology Pty Ltd
Mica Exploration Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
46
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Dormant
Dormant
Dormant
Interest in Gobbos Tenement
Dormant
Lithium Exploration and Investment
Holder of L-Max® Technology
Lithium Exploration
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 3: Revenue
Operating activities
Revenue
Other activities
Interest
Profit on sale of available for sale financial assets
Break fee for sale of exploration tenement
Other
Other Income
Note 4: Administrative Expenses
Office & general
Professional services
Compliance related
Travel
2017
$
2016
$
126,548
115,836
126,548
115,836
37,673
22,287
66,364
1,249
8,041
-
-
-
127,573
8,041
2017
$
236,626
322,171
181,576
222,195
962,568
2016
$
159,319
358,571
128,884
32,111
678,885
Other Significant Administrative Expenses
The following significant expenses were incurred during the period
and impacted the financial performance:
Legal Costs associated with settled dispute
Takeover Response
162,892
628,138
-
-
Total Administrative Expenses
1,753,598
678,885
47
2017 LEPIDICO ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 5: Income Tax Expense
(a)
The components of tax expense comprise:
Current tax
Deferred tax
Losses recouped not previously recognised
Income tax expense reported in statement of comprehensive income
(b)
The prima facie tax benefit on loss from ordinary activities before income tax
is reconciled to the income tax as follows:
2017
$
2016
$
-
-
-
-
-
-
-
-
Prima facie tax benefit on loss from ordinary activities before income tax at
27.5% (2016: 30%)
(1,473,242)
(678,968)
Add tax effect of:
-
Losses not recognised
- Deferred tax balances not recognised
- Share based payments
- Foreign Expenditure
- Exploration expenditure written off
- Other non-allowable items
Less tax effect of:
- Deferred tax balances not recognised
-
Losses recouped not previously recognised
Income tax expense reported in statement of comprehensive income
(c)
Deferred tax recognised:
Deferred Tax Liabilities:
Exploration expenditure
L-Max® Technology
Deferred Tax Assets:
Carry forward revenue losses
Net deferred tax
(d)
Unrecognised deferred tax assets:
Carry forward revenue losses
Carry forward capital losses
Capital raising and other costs
Unlisted investments
Provision and accruals
48
-
882,406
477,508
45,304
61,376
6,648
-
-
-
-
281,575
162,889
6,000
-
108,810
119,694
-
-
-
-
(9,994)
(239,392)
(145,590)
-
249,386
145,590
-
-
4,289,830
268,663
217,230
-
20,632
4,146,613
1,332,477
170,931
600
276,088
4,796,355
5,926,709
2017 LEPIDICO ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
(e)
Tax consolidation:
Lepidico Ltd and its wholly owned Australian resident subsidiaries formed a tax consolidated group with effect from
1 July 2014. Lepidico Ltd is the head entity of the tax consolidated group.
The tax benefits of the above Deferred Tax Assets will only be obtained if:
a)
the Company derives future assessable income of a nature and of an amount sufficient to enable the benefits
to be utilised;
the Company continues to comply with the conditions for deductibility imposed by law; and
b)
c) no changes in income tax legislation adversely affect the company in utilising the benefits.
Note 6: Auditor’s Remuneration
Audit services
Taxation and other services
2017
$
36,500
-
2016
$
41,000
6,000
36,500
47,000
Note 7: Earnings per Share
The calculation of basic profit or loss per share for each year was based on the profit or loss attributable to ordinary
shareholders and using a weighted average number of ordinary shares outstanding during the year. The Company’s potential
ordinary shares were not considered dilutive as the Company is in a loss position.
2017
$
2016
$
Loss attributable to the ordinary equity holders of the Company
0.003
0.005
Loss from continuing operations
5,357,243
2,263,225
Weighted average number of ordinary shares
1,801,689,967
465,336,155
No.
No.
$
$
Note 8: Cash and Cash Equivalents
Cash at bank and in hand
2017
$
2016
$
3,307,337
650,260
3,307,337
650,260
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 23
49
2017 LEPIDICO ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 9: Trade and Other Receivables
Current
Trade receivables
Prepaid expenses
R&D tax rebate receivable
Goods and services tax receivable
Other receivables
2017
$
28,313
41,417
467,718
81,458
591
2016
$
32,000
3,045
106,790
68,614
3,659,824
Total Current Trade and Other Receivables
619,497
3,870,273
Non-Current
Cash backed guarantees
86,003
16,003
Total Non-Current Trade and Other Receivables
86,003
16,003
Total Trade and Other Receivables
705,500
3,886,276
2017
$
2016
$
75,841
10,088
(5,875)
80,054
72,098
6,098
(5,874)
74,841
1,000
-
75,841
65,937
6,161
-
72,322
72,098
7,732
3,743
Note 10: Property, Plant and Equipment
Furniture, Fittings and Equipment
At cost
Opening Balance
Additions
Disposals
Closing Balance
Accumulated depreciation
Opening Balance
Depreciation
Disposals
Closing Balance
Net Book Value
50
2017 LEPIDICO ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 11: Exploration and Evaluation Expenditure
Exploration expenditure
2017
$
2016
$
1,619,842
614,797
The recoverability of the carrying amount of exploration assets is dependent on the successful development and commercial
exploitation or sale of the respective mining permits. Amortisation of the costs carried forward for the development phase
is not being charged pending the commencement of production. The impairment of exploration expenditure represents
projects that the company is no longer pursuing.
Reconciliation of movements during the year:
Balance at the beginning of year
Exploration and evaluation costs recognised on acquisition
Exploration and evaluation costs capitalised
Exploration and evaluation costs written off
2017
$
2016
$
614,797
-
1,882,664
(877,619)
667,770
50,312
311,719
(415,004)
Balance at the end of the year
1,619,842
614,797
Note 12: Intangible asset
L-Max® Technology
2017
$
2016
$
16,698,154
16,203,762
The Group acquired the L-Max® Technology as part of the 100% acquisition of Lepidico Holdings Pty Ltd (formerly Lepidico
Ltd) on 30 May 2016. The consideration for the acquisition was the issue of 750,000,000 shares in the Company based on
the share price at the date of acquisition. The fair value of the technology was deemed to be the excess consideration paid
over the carrying value of the net tangible assets acquired. Any change in the market value of the Company’s shares had an
impact on the value of the consideration paid, and therefore the value attributable to the technology acquired. The value of
the technology therefore represented a critical accounting estimate for the year ended 30 June 2016.
The recoverability of the carrying amount of the L-Max® Technology is dependent of the successful development and
commercial exploitation or sale of the asset.
Capitalised development costs will be amortised over their expected useful life of the intangible asset once full
commercialisation or production commences.
Reconciliation of movements during the year:
Balance at the beginning of year
Fair value recognised on acquisition
Development costs capitalised
Research and Development Tax Credit received/receivable
2017
$
2016
$
16,203,762
-
1,246,891
(752,499)
-
16,141,737
62,025
-
Balance at the end of the year
16,698,154
16,203,762
51
2017 LEPIDICO ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 13: Available for Sale Financial Assets
Investments in listed companies
Reconciliation of movements during the year:
Balance at the beginning of year
Shareholder payments to Minera Chanape (at cost)
Additions
Sale of investment in listed companies
Impairment
Balance at the end of the year
Note 14: Trade and Other Payables
Current
Trade payables
Sundry payables and accrued expenses
2017
$
2016
$
-
100,000
2017
$
2016
$
100,000
-
-
(100,000)
-
-
2017
$
406,356
1,256,499
807,513
80,000
100,000
-
(887,513)
100,000
2016
$
292,311
332,205
Total Current Trade and Other Payables
1,662,855
624,516
Note 15: Provisions
Current
Employee Provisions
Reconciliation of movements during the year:
Balance at the beginning of year
Additional provisions
Provisions used
Balance at the end of the year
52
2017
$
2016
$
45,797
22,294
2017
$
2016
$
22,294
44,490
(20,987)
40,080
36,692
(54,478)
45,797
22,294
2017 LEPIDICO ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 16: Contributed Equity
Share capital
a)
Fully paid ordinary shares
Share Issue Costs
2017
2016
Number
$
Number
$
2,035,978,065
33,999,124
1,729,443,773
29,703,143
(2,507,326)
31,491,798
(2,428,973)
27,274,170
Ordinary shares have the right to receive dividends and, in the event of winding-up the Company, to participate in the
proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Movements in ordinary share capital
Description
Opening Balance
Exercise of options
Fair value of options exercised
Date
Number of
shares
Issue Price
$
1 July 2016
1,729,443,773
6 July 2016
6 July 2016
2,500,000
$0.01
Shares issued under Lemare Option Agreement
25 July 2016
18,514,939
$0.028355
Options exercised
Options exercised
Entitlement Offer
Shortfall Allotment
Less: Transaction Costs
25 November 2016
2 December 2016
38,234
40,645
20 April 2017
238,659,066
15 May 2017
46,781,408
$0.035
$0.035
$0.013
$0.013
Closing Balance
30 June 2017
2,035,978,065
b)
As at reporting date, Lepidico has the following options on issue:
Share options
27,274,170
25,000
32,500
524,991
1,339
1,423
3,102,569
608,159
(78,353)
31,491,798
Number
27,750,000
40,000,000
9,000,000
50,000,000
25,000,000
Exercise Price
Grant
Expiry
$0.03
$0.01815
$0.01
$0.025
$0.025
5 December 2014
30 September 2017
4 August 2016
3 August 2018
7 December 2015
31 December 2018
25 November 2016
31 December 2019
30 November 2016
31 December 2019
Options carry no dividend or voting rights. Upon exercise, each option is convertible into one ordinary share to rank pari passu
in all respects with the Group’s existing fully paid ordinary shares.
53
2017 LEPIDICO ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Movements in Options
Balance at 1 July 2015
Granted
Exercised
Balance at 30 June 2016
Granted
Exercised
Expired
Balance at 30 June 2017
Weighted
Average Exercise
Price
$
0.032
0.011
0.010
0.028
0.023
0.011
0.034
0.023
Number
53,198,523
74,500,000
(61,135,707)
66,562,816
115,000,000
(2,578,879)
(27,233,937)
151,750,000
c)
Share Based Payments
On 25 July 2016, the Group issued 18,514,939 Ordinary Shares to Critical Elements Corporation as per the terms of
the Lemare Option Agreement announced on 6 May 2016. The shares equated to C$500,000 at a C$:A$ exchange
rate of 0.9524 at the 5 day VWAP post 31 May 2016 of 2.8355 cents per Ordinary Share.
On 4 August 2016, the Group issued 40,000,000 options (valued at $0.008) to Alchemy Advisors Pty Ltd, a
controlled body corporate of Mr Joe Walsh as compensation for consultancy work completed prior to becoming an
Executive Director. The options were valued using Black Scholes with the following assumptions:
Number of options
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Interest Rate
Unlisted Options
40,000,000
$0.015
$0.0185
109%
2 years
0.00%
1.96%
On 25 November 2016, options (valued at $0.009) were issued to Directors and were valued using Black Scholes with the
following assumptions:
Number of options in series
50,000,000
Unlisted Options
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Interest Rate
54
$0.015
$0.025
109%
3 years
0.00%
1.96%
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
On 30 November 2016, options (valued at $0.009) were issued to employees and were valued using Black Scholes with the
following assumptions:
Number of options in series
25,000,000
Unlisted Options
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Interest Rate
$0.015
$0.025
109%
3 years
0.00%
1.96%
Issue of shares to Bacchus Capital Advisers
At balance date, the Company had accrued $746,391 in corporate advisory fees payable to Bacchus Capital Advisors which
were incurred during the Company’s takeover defence. Under the terms of engagement, Bacchus Capital had elected to
receive these fees in Lepidico shares. As detailed in Note 25(c), the Company has subsequently issued 52,195,175 fully paid
ordinary shares to Bacchus Capital at an issue price of $0.0143 to settle this liability.
Note 17: Reserves
Opening Balance
Option expense for the year
Transfer of value on exercise of options
2017
$
555,750
990,000
(32,500)
2016
$
415,750
140,000
-
Closing Balance
1,513,250
555,750
Note 18: Contingent Liabilities and Contingent Assets
The Company is involved in a dispute with two individuals who are alleging that they are employees of the Company and that
the Company has not complied with the terms of their employment contracts. The Directors believe that the claims have no
merit and it is unlikely that the two claimants will succeed in their action and, on consideration of their claims, the Directors
believe to disclose further detail relating to the claims being made against the Company would be clearly prejudicial to the
interests of the Company.
There are no other contingent liabilities as at 30 June 2017.
55
2017 LEPIDICO ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 19: Segment reporting
Reportable Segments
Following the acquisition of the L-Max® Technology as part of the 100% acquisition of Lepidico Holdings Pty Ltd (formerly
Lepidico Ltd) on 30 May 2016 the Group has operated two reportable segments, being mineral exploration and development
of its L-Max® technology, which reflects the structure used by the Group’s management to assess the performance of the
Group. Prior period comparatives have been restated to reflect the Group’s current structure.
(i) Segment performance
Year ended 30 June 2017
Revenue
Mineral
Exploration
Technology
Corporate &
Unallocated items
$
$
$
Total
$
66,364
126,548
61,209
254,121
Total Profit/(Loss)
(812,935)
(86,290)
(4,458,018)
(5,357,243)
Year ended 30 June 2016
Revenue
Total Profit/(Loss)
(ii) Segment assets
As at 30 June 2017
As at 30 June 2016
Geographical Information
Australia
Total Revenue
Australia
Peru
Total Loss
Australia
Canada
Portugal
Total Assets
56
100,000
(1,202,516)
-
-
23,877
123,877
(1,060,709)
(2,263,225)
1,619,842
16,698,154
4,020,569
22,338,565
614,797
16,203,762
4,640,279
21,458,838
2017
$
2016
$
254,121
123,877
254,121
123,877
5,357,243
-
1,083,012
1,180,213
5,357,243
2,263,225
20,755,063
21,408,526
1,414,968
168,534
50,312
-
22,338,565
21,458,838
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 20: Commitments
Operating lease commitments
Not later than one year
After one year but less than two years
2017
$
122,400
38,035
160,435
2016
$
27,755
-
27,755
Exploration lease commitments
The Group must meet the following tenement expenditure commitments to maintain them in good standing until they
are farmed out, sold, reduced, relinquished, exemptions from expenditure are applied or are otherwise disposed of. These
commitments, net of farm outs, are not provided for in the financial statements and are:
Not later than one year
After one year but less than two years
Note 21: Cash Flow Information
Reconciliation of Cash Flow from Operations
with Loss after Income Tax
Loss after income tax
Adjustments items not impacting cash flow used in operations:
Depreciation and amortisation
Exploration expenditure written-off
Impairment of Available for Sale financial asset
Share based payments
(Profit)/Loss on sale of available for sale financial assets
(Profit)/Loss on break fee from tenement sale
Changes in current assets and liabilities:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
2017
$
1,207,874
203,656
1,411,530
2016
$
1,335,000
5,200,000
6,535,000
2017
$
2016
$
(5,357,243)
(2,263,225)
6,098
877,619
-
1,736,391
(22,286)
(66,364)
(118,120)
250,672
23,503
6,161
415,004
887,513
40,000
-
-
(80,301)
228,644
(7,299)
Cash flow used in operations
(2,669,730)
(773,503)
57
2017 LEPIDICO ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 22: Related Party Transactions
Key Management Personnel Remuneration
Salaries and other short-term benefits
Post employment benefits
Share based payments
2017
$
698,211
66,331
525,000
2016
$
322,644
15,395
140,000
1,289,542
478,039
Detailed remuneration disclosures are provided in the remuneration report included in the Directors’ Report.
Payments to director-related parties
2017
$
2016
$
Payments to director-related entities(1)
1,072,521
92,062
(1) Payments were made to Strategic Metallurgy Pty Ltd, a company of which Mr Gary Johnson is a director and beneficial
shareholder. The payments were in relation to the development of L-Max® technology on an arm’s length basis. As at 30
June 2017 invoices totalling $108,044 are payable (2016: $101,268).
During the year 40,000,000 options were issued to Alchemy Advisors Pty Ltd, an entity controlled by Mr Joe Walsh in
satisfaction of consulting services provided. Neither Alchemy Advisors Pty Ltd, nor Mr Joe Walsh were a related party of the
Company at the time the options were issued.
Note 23: Financial Risk Management
The Group has exposure to the following risks:
(a) Credit Risk
(b) Liquidity Risk
(c) Market Risk
This note presents information on the Group’s exposure to each of the above risks, their objectives, policies and processes for
measuring risk, and management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Management is responsible for establishing procedures which provide assurance that major business risks are identified,
consistently assessed and appropriately mitigated.
The Group’s Audit & Risk Management Committee oversees how management monitors compliance with the Group’s risk
management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks
faced by the Group.
(a)
Credit Risk
Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in financial loss to
the consolidated entity. The consolidated entity has adopted the policy of only dealing with creditworthy counter-
parties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of
financial loss from defaults. The consolidated entity measures credit risk on a fair value basis. The consolidated entity
does not have any significant credit risk exposure to any single counter-party.
The Group’s cash and cash equivalents are held with ANZ Bank, and management consider the Group’s exposure to
credit risk is low.
58
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum
exposure to credit risk at the reporting date was:
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Note
8
9
2017
$
2016
$
3,307,337
705,500
650,260
3,886,276
4,012,837
4,536,536
(b)
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by
continuously monitoring forecast and actual cash flows. The Group does not have any external borrowings.
The Company will need to raise additional capital in the next 12 months. The decision on how and when the Company
will raise future capital will largely depend on the market conditions existing at that time.
As at the reporting date the Group had the following financial liabilities comprised of non-interest bearing trade
creditors and accruals with a maturity of less than 6 months:
Financial liabilities
Trade and other payables
Note
14
2017
$
2016
$
1,662,855
624,516
(c)
(i)
Market Risk
Market risk was the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market
risk management is to manage and control market risk exposure within acceptable parameters, while optimising
the return.
Interest Rate Risk
As at and during the year ended on reporting date the Group had no significant interest-bearing assets or liabilities
other than liquid funds on deposit. As such, the Group’s income and operating cash flows (other than interest income
from funds on deposit) are substantially independent of changes in market interest rates. The Group’s exposure to
interest rate risk and the effective weighted average interest rate for each class of financial assets and liabilities is set
out below:
Financial assets
Cash assets
Floating rate
1.47%
3,307,337
1.75%
650,260
%
2017
$
%
2016
$
The Group adopts a policy of ensuring that as far as possible it maintains excess cash and cash equivalents in higher
interest-bearing cash management account.
59
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk over the reporting period. The
sensitivity analysis demonstrates the effect on the current year’s results and equity values reported at the end of the reporting
period which would result from a 1% change in interest rates.
Change in Loss
Increase by 1%
Decrease by 1%
Change in Equity
Increase by 1%
Decrease by 1%
2017
$
25,642
(25,624)
25,642
(25,642)
2016
$
6,663
(6,663)
6,663
(6,663)
(ii)
Market Price Risk for Available for Sale Financial Assets
The Group has performed a sensitivity analysis relating to its exposure to market price for Available for Sale financial
assets as at reporting date. The sensitivity analysis demonstrates the effect on the current year results and equity
which would result from a 10% change in market price.
Change in Loss
Increase by 10%
Decrease by 10%
Change in Equity
Increase by 10%
Decrease by 10%
2017
$
-
-
-
-
2016
$
10,000
(10,000)
10,000
(10,000)
Currency Risk
The Group has potential exposure to foreign currency movements by virtue of its involvement in exploration
tenements in Portugal and Canada. At this time the currency risk is not considered significant. The Group has not
entered into any derivative financial instruments to hedge such transactions.
Commodity Price Risk
The Group is operating primarily in the exploration and evaluation phase and accordingly the Group’s financial assets
and liabilities are not yet subject to commodity price risk.
Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
and to maintain a strong capital base sufficient to maintain future exploration and development of its projects. In
order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or
sell assets.
There were no changes in the Group’s approach to capital management during the year. Risk management policies
and procedures are established with regular monitoring and reporting.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
(iii)
(iv)
(v)
60
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
Note 24: Parent Entity Financial Information
The following information relates to the legal parent only.
(a)
Summary of Financial Information
Assets
Current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Shareholders’ Equity
Issued capital
Reserves
Accumulated Losses
2017
$
2016
$
3,430,116
4,348,993
28,957,151
27,593,899
1,398,168
630,806
1,398,168
630,806
67,025,800
1,740,074
62,808,171
782,574
(41,206,890)
(36,627,653)
Total Shareholders’ Equity
27,558,983
26,963,092
Loss for the year
(4,579,238)
(996,656)
Total comprehensive loss for the year
(4,579,238)
(996,656)
(b)
Contractual commitments for the acquisition of property, plant and equipment
As at 30 June 2017 the parent entity has no contractual commitments for the acquisition of property, plant
or equipment.
(c)
Guarantees and contingent liabilities
As at 30 June 2017 the parent entity has no guarantees or contingent liabilities other than as disclosed in Note 18.
Note 25: Events Subsequent to Reporting Date
(a)
Appointment of Lycopodium for the provision of engineering services
On 3 August 2017 the Company confirmed the appointment of Lycopodium Minerals Pty Ltd a subsidiary of
Lycopodium Limited (ASX:LYL) (“Lycopodium”) for the provision of engineering services for the Company’s Phase 1
L-Max® Plant Feasibility Study (the “Study”).
The objective of the Study is to define an economically and technically viable small commercial scale L-Max® plant,
to be built in Ontario, Canada that will treat lithium mica concentrate feed from a variety of sources. Final process
design data is expected to be completed by end December 2017.
Lycopodium elected to receive payment for the anticipated fees for its engineering services in Lepidico shares. Under
the terms of the agreement with Lycopodium, the Company allotted and issued 45,000,000 new fully paid ordinary
shares to Lycopodium. The shares issued are subject to escrow restrictions pending completion of the Study and are
also subject to pro-rata buyback and cancellation provisions (subject to Shareholder approval) should the Study be
terminated prior to completion.
61
2017 LEPIDICO ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
for the Year ended 30 June 2017
(b)
Lepidico secures Moriarty Lithium Project in WA
On 18 August 2017 the Company signed a Binding Term Sheet (“Agreement”) with Maximus Resources Limited
(“Maximus”) under which Lepidico can earn a 75% interest in Maximus’s lithium rights in the Spargoville Project,
located 70km south of Kalgoorlie in Western Australia.
The lithium rights will be known as the Moriarty Lithium Project.
Under the Agreement, Lepidico can earn 75% of Maximus’s lithium rights by meeting all of the following terms:
(i) On execution of the Term Sheet, payment to Maximus of $80,000 in Lepidico shares, at a 5 day VWAP
issue price;
(ii) Six months after execution, payment to Maximus, at Lepidico’s discretion, of $120,000 in cash or Lepidico shares
at a 5 day VWAP issue price; and
(iii) 12 months after execution, payment to Maximus, at Lepidico’s discretion, of $150,000 in cash or Lepidico shares
at a 5 day VWAP issue price.
Lepidico has the discretion to accelerate any or all of the above payments.
At any time within three years after the third payment Lepidico can choose to secure 100% of the Lithium Rights
by making a payment to Maximus of $400,000 which can be made, at Lepidico’s discretion, as either cash, or a
combination of 50% cash and 50% in Lepidico shares at a 5 day VWAP issue price.
Field work at Moriarty is intended to commence in September, in conjunction with the anticipated drilling program at
the PEG009 prospect.
Under the terms of the Agreement with Maximus, the Company allotted and issued 6,333,432 new fully paid ordinary
shares to Maximus on 18 August 2017.
(c)
Issue of shares to Bacchus Capital Advisers
On 5 September 2017 the Company issued 52,195,175 fully paid ordinary shares to Bacchus Capital Advisors at an
issue price of $0.0143 for the corporate advice provided during the Company’s takeover defence which under the
terms of the engagement Bachhus Capital elected to receive the majority of its fee in Lepidico shares.
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2017 LEPIDICO ANNUAL REPORT
In the opinion of the Directors of Lepidico Ltd (the “Company”):
1.
The financial statements and notes and the remuneration disclosures that are
contained in the Directors’ Report, are in accordance with the Corporations
Act 2001, including:
a.
b.
complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
giving a true and fair view of the consolidated entity’s financial position as
at 30 June 2017 and of its performance for the year ended on that date.
There are reasonable grounds to believe that the company will be able to pay
its debts as and when they become due and payable.
The Directors have been given the declarations required by Section 295A of
the Corporations Act 2001 from the chief executive officer and chief financial
officer for the financial year ended 30 June 2017.
Note 1 confirms that the financial statements also comply with the
International Financial Reporting Standards as issued by the International
Accounting Standards Board.
2.
3.
4.
This declaration is made in accordance with a resolution of the Board of Directors.
DIRECTORS’
REPORT
Joe Walsh
Managing Director
Dated this 18th day of September 2017
63
2017 LEPIDICO ANNUAL REPORT
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LEPIDICO LTD
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Lepidico Limited (the Company) and its subsidiaries (the “Group”), which comprises
the consolidated statement of financial position as at 30 June 2017, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and notes to
the financial statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion:
a) the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
i.
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance for the
year then ended; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Material Uncertainty Related to Going Concern
Without qualification to the opinion expressed above, we draw attention to note 1(a) of the financial statements, which
describes the principal conditions that raise doubt about the Group’s ability to continue as a going concern. These conditions
indicate the existence of a material uncertainty that may cast doubt about the Group’s ability to continue as a going concern
and therefore, the Group may be unable to realise its assets and discharge its liabilities in in the normal course of business and
at amounts other than as stated in the financial report. The Group financials do not include the adjustments that would result
if the Group were unable to continue as a going concern.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors
of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
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2017 LEPIDICO ANNUAL REPORT
Key Audit Matters
In addition to the matter described in the Material Uncertainty Related to Going Concern section above, we have determined
the matters described below to be the key audit matters to be communicated in our report. 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
Valuation of Intangible Assets
Refer to Note 12 Intangible asset
As at 30 June 2017 the Group had intangible assets with a
carrying value of $16,698,154. The intangible asset includes
the Group’s investment in the L-Max® Technology, including
the cost of acquisition of the technology and subsequent
development costs and patent fees capitalised. The
value of the technology was a key audit matter given the
significance of the technology to the Group’s operations,
and the judgement involved in the assessment of its value.
As part of their annual impairment review, management
prepared an analysis of the recoverable amount of the
technology which was based on “fair value less costs to
sell”. Note that given the early stages of development of
the technology, we are not able to rely on forecast cash
flows as a reliable estimate of value in use.
Our procedures included, amongst others:
• Assessing the methodologies used by management to
estimate fair value including challenging the methodology
used, testing the integrity of the information provided,
and assessing the appropriateness of the key assumptions
based on our knowledge of the technology and industry.
• Reviewing professional technological reports and testing
results of the technology for evidence of impairment
indicators, including reviewing the Pre-Feasibility Report.
We also assessed the competence and independence of
the experts used by management to prepare these reports.
• Reviewing recent professional, independent valuation
reports (included in the target’s statement document
announced on 28 March 2017) that were prepared as
part of the recent take-over bid, including a review of the
bidder’s consideration to determine fair value of the Group.
We also assessed the competence and independence of
the experts used by management to prepare these reports.
• Compared the market capitalisation of the Group
($26,467,715) to its net asset position ($20,629,913) and
noted that the market capitalisation (based on closing
share price of $0.013) was higher at balance date.
• Assessing the appropriateness of the relevant disclosures in
the financial statements
65
2017 LEPIDICO ANNUAL REPORT Key Audit Matters (continued)
Related Party Transactions and Share Based Payments to Key Management Personnel
Refer to Note 16(c) Share Based Payments, Note 22 Related Party Transactions and Remuneration Report
During the year ended 30 June 2017, the Group transacted
with Key Management Personnel and their related entities
including:
• Awarded share based payments amounting to
$525,000, in the form of share options, to Key
Management Personnel
• Paid $1,075,521 in development and consulting costs
related to the L-Max Technology
As these transactions are made with related parties,
there are additional inherent risks associated with these
transactions, including the potential for these transactions
to be made on terms and conditions more favourable than
if they had been with an independent third party.
The value of the share based payments is a key audit
matter due to it being a key material transaction with
members of key management personnel, the valuation
of which involves significant judgement and accounting
estimation.
We therefore identified these related party transactions as
a key area of focus.
Our procedures included, amongst others:
• Enquiring and obtaining confirmations from Key
Management Personnel regarding related party
transactions occurring during the period.
• Reviewing minutes of meetings, ASX announcements and
agreements, and considered other transactions undertaken
during the financial year.
• Reviewing payments, receipts and general journals
throughout the year, and examining transactions with
known related parties, or those that appear large or unusual
for the Group.
• Evaluating, based on supporting documentation, whether
related party transactions were on an arms-length basis.
• Assessing the valuation methodology used by
management to estimate fair value of share options issued,
including testing the integrity of the information provided,
assessing the appropriateness of the key assumptions input
into the valuation model and recalculating the valuation
using the Black Scholes Model.
• Assessing whether the share based payments have been
appropriately classified and accounted for in the financial
statements.
• Assessing the appropriateness of the relevant disclosures in
the financial statements.
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2017 LEPIDICO ANNUAL REPORT Key Audit Matters (continued)
Group’s ability to continue as a Going Concern
Refer to Note 1(a) Going Concern
During the year ended 30 June 2017, the Group incurred
a net loss after tax of $5,357,243 and a net cash outflow
from operating activities of $2,669,730. As at 30 June
2017 the Group had net current assets of $2,218,182, and a
cash balance of $3,307,337. The Group is reliant on capital
raising within the next 12 months in order to continue
normal business activity. At the time of approving the
financial statements, the outcome of future capital raising
was uncertain. The ability of the Company to raise capital
in the future is fundamental to the ability of the Group
to continue as a going concern. In the event that the
Group is unable to raise capital as and when required, the
Group may be unable to continue as a going concern and
therefore, the Group may be unable to realise its assets and
settle its liabilities in the normal course of business and at
amounts other than as stated in the financial report. The
issue is referred to in the Material Uncertainty Related to
Going Concern paragraph above.
Our procedures included, amongst others:
• Review and testing of cash flow forecasts for the 15 months
ended 30 September 2018, including assessment of the key
financial and operational assumptions, understanding
forecast expenditure and commitments, and assessing the
liquidity of existing assets on the balance sheet.
• Discussion with management regarding the Group’s
reliance on future equity financing, and the Group’s ability
to successfully raise capital in the current economic climate.
Based on the work done, we agree with the Directors
assessment that the going concern basis of preparation
is appropriate, however we also concur that there is a
material uncertainty, which may cast doubt on the Group’s
ability to continue as a going concern because of the
uncertainty over the ability to raise capital. The disclosures
in the financial statements appropriately identify this risk.
Other Information
The directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s
report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of 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.
67
2017 LEPIDICO ANNUAL REPORT Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, international omissions, misrepresentation, or the override of
internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the
financial report represents the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance
of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of
the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
68
2017 LEPIDICO ANNUAL REPORT REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report as included in the directors’ report for the year ended 30 June 2017.
In our opinion, the Remuneration Report of Lepidico Limited, for the year ended 30 June 2017 complies with section 300A of
the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian Auditing Standards.
Suan-Lee Tan
Partner
Moore Stephens
chartered accountants
Signed at Perth this 18th day of September 2017
69
2017 LEPIDICO ANNUAL REPORT
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Lepidico Ltd (the “Company”) is responsible for the corporate governance of the Company. The
Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected
and to whom they are accountable.
This statement sets out the main corporate governance practices in place throughout the financial year in accordance with
the 3rd edition of the ASX Principles of Good Corporate Governance and Best Practice Recommendations.
This Statement was approved by the Board of Directors and is current as at 18 September 2017.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
ASX Recommendation 1.1: A listed entity should establish the functions reserved to the Board and those delegated to
senior executives and disclose those functions.
The Company has complied with this recommendation.
The Board has adopted a formal charter that details the respective Board and management functions and responsibilities. A
copy of this Board charter is available in the corporate governance section of the Company's website at www.lepidico.com.
ASX Recommendation 1.2: A listed entity should 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 relevant to a decision on whether or not to elect or re-elect a Director.
The Company has complied with this recommendation.
The Company appointed Mr Rodda on 24 August 2016 and Mr Walsh as Managing Director on 22 September 2016.
Information in relation to Directors seeking election and re-election is set out in the Directors report and Notice of Annual
General Meeting.
ASX Recommendation 1.3: A listed entity should have a written agreement with each director and senior executive
setting out the terms of their appointment.
The Company has complied with this recommendation.
The Company has in place written agreements with each Director and Senior Executive.
ASX Recommendation 1.4: The company secretary of a listed company should be accountable directly to the Board,
through the chair, on all matters to do with the proper functioning of the Board.
The Company has complied with this recommendation.
The Board Charter provides for the Company Secretary to be accountable directly to the Board through the Chair.
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2017 LEPIDICO ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT
ASX Recommendation 1.5: A listed entity should:
• Have a diversity policy which includes the requirement for the Board to set measurable objectives for achieving
gender diversity and assess annually the objectives and the entity’s progress to achieving them;
• disclose the policy or a summary of it;
• disclose the measurable objectives and progress towards achieving them; and
• disclose the respective proportions of men and women on the Board and at each level of management and the
company as a whole.
The Company partly complies with this recommendation.
The Company has adopted a Diversity Policy which is available in the corporate governance section of the Company's
website at www.lepidico.com.
The Board considers that, due to the size, nature and stage of development of the Company, setting measurable objectives
for the Diversity Policy at this time is not practical. The Board will consider setting measurable objectives as the Company
increases in size and complexity.
There are no women currently on the Board. The Company has three full-time employees which includes one woman in a
senior management position.
ASX Recommendation 1.6: A listed entity should disclose the process for evaluating the performance of the Board, its
committees and individual Directors.
The Company has complied with this recommendation.
The Company’s Board charter outlines the process for evaluating the performance of the Board and its Committees.
This provides that, once a year, the Board shall review and discuss the performance of the Board as a whole, its Committees
and individual Directors. If it is apparent that there are problems which cannot be satisfactorily considered by the Board itself,
the Board may decide to engage an independent adviser to undertake this review.
The Company’s Nomination and Remuneration Committee is also required review the performance of the Board, its
committees and individual Directors.
A performance review was undertaken for the reporting period.
ASX Recommendation 1.7: A listed entity should have and disclose a process for periodically evaluating the performance
of its senior executives and disclose in relation to each reporting period where a performance evaluation was undertaken
in accordance with a process.
The Company has complied with this recommendation.
The Company has in place procedures for evaluating the performance of its senior executives overseen by the Nomination
and Remuneration Committee. This evaluation is based on specific criteria, including the business performance of the
Company and its subsidiaries, whether strategic objectives are being achieved and the development of management
and personnel.
A performance review was undertaken for the reporting period.
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2017 LEPIDICO ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
ASX Recommendation 2.1: The Board of a listed entity should establish a Nomination Committee:
• With at least three members the majority of which are independent Directors;
• chaired by an independent director; and
• disclose the charter of the committee, the members of the committee and the number of times the committee met
throughout the period and member attendance at those meetings.
The Company has partly complied with this recommendation.
The Board has established a Nomination and Remuneration Committee. The current members of the Nomination and
Remuneration Committee are:
• Mr Gary Johnson (Chair)
• Mr Mark Rodda
The qualifications of the members of the committee are set out in the Directors’ Report.
The Board will reassess the composition of the committee upon future changes to the size and composition of the Board.
A copy of the Committee’s charter is available in the corporate governance section of the Company's website at
www.lepidico.com. Details of the number of meetings of the committee and attendance at those meetings are set out in the
Directors’ Report.
ASX Recommendation 2.2: A listed entity should have and disclose a Board skills matrix setting out the mix of skills and
diversity that the Board currently has or is looking to achieve in its membership.
The Company has complied with this recommendation.
The Board has established a skill matrix. On a collective basis the Board has the following skills:
Strategic expertise: Ability to identify and critically assess strategic opportunities and threats and develop strategies.
Specific Industry knowledge: Geological and metallurgical qualifications are held by Board members and all members of
the Board have a general background and experience in the resources sector including exploration, mineral resource project
development, mining and mineral processing.
Accounting and finance: The ability to read and comprehend the Company’s accounts, financial material presented to the
Board, financial reporting requirements and an understanding of corporate finance.
Legal: Overseeing compliance with numerous laws, ensuring appropriate legal and regulatory compliance frameworks and
systems are in place and understanding an individual Director’s legal duties and responsibilities.
Risk management: Identify and monitor risks to which the Company is, or has the potential to be exposed to.
Experience with financial markets: Experience in working in or raising funds from the equity or other capital markets.
Investor relations: Experience in identifying and establishing relationships with Shareholders, potential investors, institutions
and equity analysts.
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2017 LEPIDICO ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT
ASX Recommendation 2.3: A listed entity should disclose the names of the Directors considered by the Board to be
independent Directors and provide details in relation to the length of service of each Director.
The Company has complied with this recommendation.
Mr Mark Rodda is a non-executive Director and considered to be an independent Director.
Mr Gary Johnson is a non-executive Director and is an associate of Strategic Metallurgy Pty Ltd (Strategic Metallurgy),
a substantial shareholder of the Company. Mr Johnson, through his interest in Strategic Metallurgy controls 349,680,293
shares in Lepidico Ltd. In addition to its shareholding Strategic Metallurgy also receives fees on normal commercial terms for
technical services in relation to the development of the L-Max® technology and as such is not considered independent. Where
the Board considers matters relating to Strategic Metallurgy, Mr Johnson does not participate.
Mr Joe Walsh and Mr Tom Dukovcic are Executive Directors and are not considered independent Directors as they are
employed in an executive capacity.
The appointment date of current Directors is set out in the Directors’ Report.
ASX Recommendation 2.4: The majority of the Board of a listed entity should be independent Directors.
The Company has not complied with this recommendation.
As in ASX recommendation 2.3, the majority of the Board is not considered to be independent.
The Board considers that its current composition is appropriate given the current size and stage of development of the
Company and allows for the best utilisation of the experience and expertise of its members.
Directors having a conflict of Interest in relation to a particular Item of business must absent themselves from the Board
meeting before commencement of discussion on the topic.
ASX Recommendation 2.5: The Chair of a listed entity should be an independent Director and, in particular, should not be
the same person as the CEO of the entity.
The Company partly complies with this recommendation.
The Chairperson, Mr Gary Johnson is not considered to be an independent Director. Notwithstanding this the Directors
believe that Mr Johnson is able to, and does make, quality and independent judgement in the best interests of the Company
on all relevant issues before the Board.
Mr Joe Walsh is Managing Director of the Company.
ASX Recommendation 2.6: A listed entity should have a program for inducting new Directors and provide appropriate
professional development opportunities.
The Company has complied with this recommendation.
The Nomination and Remuneration Committee has responsibility for the approval and review of induction procedures for
new appointees to the Board to ensure that they can effectively discharge their responsibilities which will be facilitated by the
Company Secretary.
The Nomination and Remuneration Committee is also responsible for the program for providing adequate professional
development opportunities for Directors and management.
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2017 LEPIDICO ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT
PRINCIPLE 3: ACT ETHICALLY AND RESPONSIBLY
ASX Recommendation 3.1: A listed entity should establish a code of conduct and disclose the code or a summary of the code.
The Company has complied with this recommendation.
The Company has established a code of conduct that sets out the principles covering appropriate conduct in a variety of
contexts and outlines the minimum standard of behaviour expected from Directors and employees.
A copy of the Company’s code of conduct is available in the corporate governance section of the Company's website at
www.lepidico.com.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
ASX Recommendation 4.1: The Board of a listed entity should establish an audit committee:
• With at least three members, all of whom are non-executive Directors and a majority of which are
independent Directors;
• chaired by an independent Director; and
• disclose the charter of the committee, the members of the committee and the number of times the committee met
throughout the period and member attendance at those meetings.
The Company has partly complied with this recommendation.
The Board has established an Audit and Risk Committee. The current members of the Audit and Risk Committee are:
• Mr Mark Rodda (Chair)
• Mr Gary Johnson
The role of the Audit and Risk Committee is to assist the Board in monitoring and reviewing any matters of significance
affecting financial reporting, risk management and compliance.
The qualifications of the members of the Audit and Risk committee are set out in the Directors report. Although members
of the committee do not hold accounting or finance qualifications they do have an understanding of financial reporting
requirements and experience in ensuring that these requirements are met and that relevant controls are in place to ensure the
integrity of the financial statements and reports.
The Board will reassess the composition of the committee upon future changes to the size and composition of the Board.
A copy of the charter of the Audit and Risk Committee is available in the corporate governance section of the Company's
website at www.lepidico.com.
Details of the number of meetings of the committee and attendance at those meetings are set out in the Directors’ Report.
ASX Recommendation 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.
The Company partly complies with this recommendation.
The Board has received the assurance required by ASX Recommendation 4.2 in respect of the financial statements for
the half year ended 31 December 2016 and the full year ended 30 June 2017. Given the size and nature of the Company’s
operations the Board has not received the assurance in respect of the quarterly cash flow statements believing that the
provision of the assurance for the half and full year financial statements is sufficient.
ASX Recommendation 4.3: A listed entity should ensure that the external auditor attends its Annual General Meeting and
is available to answer questions from security holders relevant to the audit.
The Company has complied with this recommendation.
The external auditor attends the Annual General Meeting and is available to answer questions from shareholders relevant
to the audit and financial statements. The external auditor will also be allowed a reasonable opportunity to answer written
questions submitted by shareholders to the auditor as permitted under the Corporations Act.
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2017 LEPIDICO ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
ASX Recommendation 5.1: A listed entity should establish written policies designed to ensure compliance with ASX
Listing Rules disclosure requirements and to ensure accountability at a senior executive level for that compliance and
disclose those policies or a summary of those policies.
The Company has complied with this recommendation.
The Company has established a continuous disclosure policy which is designed to guide compliance with ASX Listing Rules
disclosure requirements and to ensure that all Directors, senior executives and employees of the Company understand their
responsibilities under the policy.
The Board has designated the Chairman, Managing Director and the Company Secretary as the persons responsible for
ensuring that this policy is implemented and enforced and that all required price sensitive information is disclosed to the ASX
as required.
In accordance with the Company's continuous disclosure policy, all information provided to ASX for release to the market is
posted to its website at www.lepidico.com after ASX confirms an announcement has been made.
A copy of the continuous disclosure policy is available in the corporate governance section of the Company's website at
www.lepidico.com.
PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
ASX Recommendation 6.1: A listed entity should provide information about itself and its governance to investors via
its website.
The Company has complied with this recommendation.
The Company’s website at www.lepidico.com contains information about the Company’s projects, Directors and
management and the Company’s corporate governance practices, policies and charters. All ASX announcements made to the
market, including annual and half year financial results are posted on the website as soon as they have been released by the
ASX. The full text of all notices of meetings and explanatory material, the Company’s Annual Report and copies of all investor
presentations are posted on the website.
ASX Recommendation 6.2: A listed entity should design and implement an investor relations program to facilitate
effective two-way communication with investors.
The Company has complied with this recommendation.
The Company’s Managing Director and Director Exploration are the Company’s main contacts for investors and potential
investors and make themselves available to discuss the Company’s activities when requested. In addition to announcements
made in accordance with its continuous disclosure obligations, the Company, from time to time, prepares and releases general
investor updates about the Company.
Contact with the Company can be made via an email address provided on the website and investors can subscribe to the
Company’s email contact list.
ASX Recommendation 6.3: A listed entity should disclose the policies and processes it has in place to facilitate and
encourage participation at meetings of security holders.
The Company has complied with this recommendation.
The Company encourages participation of shareholders at any general meetings and its Annual General Meeting each
year. Shareholders are encouraged to lodge direct votes or proxies subject to the adoption of satisfactory authentication
procedures if they are unable to attend the meeting.
The full text of all notices of meetings and explanatory material are posted on the Company’s website at www.lepidico.com.
75
2017 LEPIDICO ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT
ASX Recommendation 6.4: A listed entity should give security holders the option to receive communications from, and
send communications to, the entity and its security register electronically.
The Company has complied with this recommendation.
Contact with the Company can be made via an email address provided on the website and investors can subscribe to the
Company’s email contact list.
The Company’s share register provides a facility whereby investors can provide email addresses to receive correspondence
from the Company electronically and investors can contact the share registry via telephone, facsimile or email.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
ASX Recommendation 7.1: The Board of a listed entity should have a committee to oversee risk:
• With at least three members, all of whom are non-executive Directors and a majority of which are independent
Directors;
• chaired by an independent director; and
• disclose the charter of the committee, the members of the committee and the number of times the committee met
throughout the period and member attendance at those meetings.
The Company has complied with this recommendation.
The Board has established an Audit and Risk Committee and adopted a charter that sets out the committee’s role and
responsibilities, composition and membership requirements.
The current members of the Audit and Risk Committee are:
• Mr Mark Rodda (Chair)
• Mr Gary Johnson
The role of the Audit and Risk Committee is to oversee the Company’s risk management systems, practices and procedures
to ensure effective risk identification and management and compliance with internal guidelines and external requirements.
A copy of the charter of the Audit and Risk Committee is available in the corporate governance section of the Company's
website at www.lepidico.com.
Details of the number of meetings of the committee and attendance at those meetings are set out in the Directors’ Report.
ASX Recommendation 7.2: The Board or a committee of the Board, of a listed entity should review the entity’s risk
management framework at least annually to satisfy itself that it continues to be sound and disclose in relation to each
reporting period whether such a review was undertaken.
The Company has complied with this recommendation.
The charter of the Audit and Risk Committee provides that the committee will annually review the Company’s risk
management framework to ensure that it remains sound.
The committee conducted such a review for the reporting period.
ASX Recommendation 7.3: A listed entity should disclose if it has an internal audit function and if it does not have an
internal audit function that fact and the processes it employs for evaluating and continually improving the effectiveness
of risk management and internal control processes.
The Company has complied with this recommendation.
Given the Company’s current size and level of operations it does not have an internal audit function. The Audit and
Risk Committee oversees the Company’s risk management systems, practices and procedures to ensure effective risk
identification and management and compliance with internal guidelines and external requirements and monitors the quality
of the accounting function.
76
2017 LEPIDICO ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT
ASX Recommendation 7.4: A listed entity should disclose whether it has any material exposure to economic, environmental
and social sustainability risks and if it does how it manages or intends to manage those risks.
The Company has complied with this recommendation.
The Company has exposure to economic risks, including general economy wide economic risks and risks associated with
the economic cycle which impact on the price and demand for minerals which affects the sentiment for investment in
exploration companies.
There will be a requirement in the future for the Company to raise additional funding to pursue its business objectives.
The Company’s ability to raise capital may be effected by these economic risks.
The Company has in place risk management procedures and processes to identify, manage and minimise its exposure to these
economic risks where appropriate.
The operations and proposed activities of the Company are subject to International, Federal and State laws and regulations
concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected
to have an impact on the environment, particularly if advanced exploration or mine development proceed.
It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance
with all environmental laws.
The Board currently considers that the Company does not have any material exposure to social sustainability risk.
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 behaviour expected from employees when dealing with stakeholders.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
ASX Recommendation 8.1: The Board of a listed entity should establish a remuneration committee:
• With at least three members the majority of which are independent Directors;
• chaired by an independent Director; and
• disclose the charter of the committee, the members of the committee and the number of times the committee met
throughout the period and member attendance at those meetings.
The Company has partly complied with this recommendation.
The Board has established a Nomination and Remuneration Committee and adopted a charter that sets out the remuneration
and nomination committee’s role and responsibilities, composition and membership requirements.
The current members of the Nomination and Remuneration Committee are:
• Mr Gary Johnson (Chair)
• Mr Mark Rodda
A copy of the Committee’s charter is available in the corporate governance section of the Company's website at www.lepidico.com.
Details of the number of meetings of the committee and attendance at those meetings are set out in the Directors’ Report.
ASX Recommendation 8.2: A listed entity should separately disclose its policies and practices regarding the remuneration
of non-executive Directors and the remuneration of executive Directors and other senior executives.
The Company has complied with this recommendation.
Mr Gary Johnson, and Mr Mark Rodda are paid a fixed annual fee for their service to the Company as a Non-Executive
Directors. Non-Executive Directors may, subject to shareholder approval, be granted equity based remuneration.
Executives of the Company typically receive remuneration comprising a base salary component and other fixed benefits
based on the terms of their employment agreements with the Company and potentially the ability to participate in short term
incentives and may, subject to shareholder approval and if appropriate, be granted equity based remuneration.
ASX Recommendation 8.3: A listed entity which has an equity based remuneration scheme should have a policy on
whether participants are permitted to enter into transactions which limit the economic risk of participating in the scheme
and disclose the policy or a summary of that policy.
The Company has complied with this recommendation.
Participants in any Company equity based remuneration scheme are not permitted to enter into transactions which limit the
economic risk of participating in the scheme.
77
2017 LEPIDICO ANNUAL REPORT TENEMENT INFORMATION
The Company holds interests in various tenements as shown in the below tables.
AUSTRALIAN OPERATIONS
A: Owned directly
Project/
Tenement ID
Euriowie (EL 8468),
Broken Hill, NSW
Registered Holder
Lepidico Interest in
tenement
Expiry Date
Area
Mica Exploration Areas Pty Ltd*
100%
21 September 2018
17 Units
* Mica Exploration Areas Pty Ltd is a wholly owned subsidiary of the Company
B: Farm-in Agreements
Project/
Tenement ID
Gobbos (E45/3326),
East Pilbara, WA
PEG 009 (part E63/1669)
Norseman, WA
Moriarty Lithium Project
Kambalda, WA
Registered Holder
Gondwana Resources Limited
Pioneer Resources Limited
Lepidico Interest in
tenement
51%; earning up
to75%
Earning 75% of Peg
9 prospect only
Earning 75% of
MXR lithium rights
Expiry Date
20 January 2020
13 April 2020
Area
40 sub-
blocks
2 sub-
blocks
P15/5545
Maximus Resources Ltd
MXR 100%
M15/1475, M15/1101,
M15/1263, M15/1264,
M15/1323, M15/1338,
M15/1474, M15/1769,
M15/1770, M15/1771,
M15/1772, M15/1773,
M15/1774, M15/1775,
M15/1776
M15/1448
M15/1449, P15/5912
Maximus Resources Ltd & Tychean
Resources Ltd
MXR 100%
Various
Various
Maximus Resources Ltd, Tychean
Resources Ltd & Bullabulling Pty Ltd
Maximus Resources Ltd, Tychean
Resources Ltd & Pioneer Resources Ltd
MXR 90%
Various
Various
MXR 75%
Various
Various
CANADIAN OPERATIONS
Farm-in Option Agreement with Critical Elements Corporation (TSX-V:CRE); Company earning up to 75%
Farm-in Option Agreement with Critical Elements Corporation (TSX-V:CRE); Company earning up to 75%
Claim Number
Expiry date
CDC-2139598
CDC-2139599
CDC-2139600
CDC-2139618
CDC-2139619
CDC-2139620
CDC-101661
CDC-101662
CDC-101663
CDC-101667
CDC-103376
CDC-103379
CDC-103381
CDC-103382
CDC-2141610
CDC-2141611
CDC-2142017
CDC-2002394
11 Dec 2017
11 Dec 2017
11 Dec 2017
11 Dec 2017
11 Dec 2017
11 Dec 2017
12 Dec 2017
12 Dec 2017
12 Dec 2017
12 Dec 2017
12 Dec 2017
12 Dec 2017
12 Dec 2017
12 Dec 2017
23 Jan 2018
23 Jan 2018
23 Jan 2018
8 March 2018
Area
(ha)
53.37
53.37
53.37
53.37
53.37
53.37
0.1
12.11
32.33
5.47
2.13
9.32
53.34
53.34
53.41
53.41
53.41
53.31
NTS
Sheet
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O14
32O14
32O14
32O14
32O14
Claim Number
Expiry date
CDC-2160114
CDC-2160120
CDC-2160123
CDC-2160124
CDC-2160125
CDC-2160126
CDC-2160600
CDC-2160601
CDC-2160602
CDC-2160603
CDC-2160604
CDC-2160605
CDC-2160606
CDC-2160610
CDC-2160611
CDC-2160612
CDC-2160613
CDC-2160614
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
Area
(ha)
53.34
7.84
1.82
28.94
52.68
53.33
1.06
11.49
44.51
53.32
53.32
53.32
53.32
53.31
53.31
53.31
44.51
44.71
NTS
Sheet
32O11
32O11
32O11
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O11
32O11
32O11
32O12
32O12
32O12
32O14
78
2017 LEPIDICO ANNUAL REPORT
NTS
Sheet
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O12
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
32O11
Claim Number
Expiry date
CDC-2003026
CDC-2003027
CDC-2003028
CDC-2003029
CDC-2003030
CDC-2003031
CDC-2003032
CDC-2003033
CDC-2003034
CDC-2003035
CDC-2003036
CDC-2003037
CDC-2003038
CDC-2003039
CDC-2003040
CDC-2003041
CDC-2003042
CDC-2003043
CDC-2003044
CDC-2003045
CDC-2003046
CDC-2003047
CDC-2003049
CDC-2003050
CDC-2003051
CDC-2003052
CDC-2003053
CDC-2003054
CDC-2003055
CDC-2003056
CDC-2003057
CDC-2003587
CDC-2004630
CDC-2004631
CDC-2004632
CDC-2004633
CDC-2004634
CDC-2004635
CDC-2004636
CDC-2004637
CDC-2004639
CDC-2234284
CDC-2158840
CDC-2160050
CDC-2160051
CDC-2160052
CDC-2160053
CDC-2160057
CDC-2160058
CDC-2160065
CDC-2160066
CDC-2160090
CDC-2160097
CDC-2160098
CDC-2160099
CDC-2160104
CDC-2160105
CDC-2160110
CDC-2160111
CDC-2160112
CDC-2160113
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
21 March 2018
23 March 2018
30 March 2018
30 March 2018
30 March 2018
30 March 2018
30 March 2018
30 March 2018
30 March 2018
30 March 2018
30 March 2018
17 May 2018
4 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
8 June 2018
Area
(ha)
53.31
53.31
53.31
53.31
53.31
53.31
53.3
53.3
53.3
53.3
53.3
53.29
53.29
53.29
53.27
53.27
53.27
53.27
53.27
53.26
53.26
53.26
53.28
53.28
53.28
44.71
44.61
44.51
44.42
53.29
53.3
53.27
53.32
53.32
53.32
53.32
53.32
25.46
51.58
26.74
27.42
53.38
50.41
44.33
44.24
46.67
30.08
53.27
20.03
53.26
9.99
53.37
53.36
53.36
53.36
53.35
53.35
13.87
45.73
53.34
53.34
NTS
Sheet
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O14
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O12
32O14
32O14
32O14
32O14
32O14
32O14
32O12
32O12
158
Claim Number
Expiry date
CDC-2160615
CDC-2160616
CDC-2160617
CDC-2160618
CDC-2160619
CDC-2160621
CDC-2160625
CDC-2160626
CDC-2099284
CDC-2099285
CDC-2099286
CDC-2099289
CDC-2099290
CDC-2099291
CDC-2099292
CDC-2099293
CDC-2099294
CDC-2099295
CDC-2099296
CDC-2099297
CDC-2099298
CDC-2099299
CDC-2099300
CDC-2099301
CDC-2099302
CDC-2099303
CDC-2099304
CDC-2099305
CDC-2099306
CDC-2099307
CDC-2099308
CDC-2099309
CDC-2099310
CDC-2099311
CDC-2099312
CDC-2099313
CDC-2099314
CDC-2107873
CDC-2107875
CDC-2107877
CDC-2107881
CDC-2107883
CDC-2107885
CDC-2107887
CDC-2107890
CDC-2107894
CDC-2107895
CDC-2308539
CDC-2308540
CDC-2308541
CDC-2119927
CDC-2119929
CDC-2119930
CDC-2120984
CDC-2120989
CDC-2121343
CDC-2121344
CDC-2121346
CDC-2121347
CDC-2317957
CDC-2317958
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
10 June 2018
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
3 July 2019
18 July 2019
18 July 2019
18 July 2019
18 July 2019
18 July 2019
18 July 2019
18 July 2019
18 July 2019
18 July 2019
18 July 2019
18 Aug 2019
18 Aug 2019
18 Aug 2019
30 Aug 2019
30 Aug 2019
30 Aug 2019
11 Sept 2019
11 Sept 2019
13 Sept 2019
13 Sept 2019
13 Sept 2019
13 Sept 2019
13 Oct 2019
13 Oct 2019
Area
(ha)
44.91
45.11
45.3
45.48
47.67
14.23
14.48
23.64
53.31
53.31
53.31
53.3
53.3
53.3
53.3
53.3
53.29
53.29
53.29
53.29
53.29
53.29
53.28
53.28
53.28
53.28
53.28
53.28
53.28
53.27
53.27
53.27
53.27
53.27
53.27
53.27
53.27
53.39
53.39
53.39
53.38
53.38
53.38
53.38
53.38
37.89
52.67
53.4
53.39
53.39
53.4
53.39
53.39
53.29
53.28
53.3
53.3
53.29
53.29
25.01
45.15
7433.55
79
2017 LEPIDICO ANNUAL REPORT SUPPLEMENTARY (ASX) INFORMATION
Security Holder Details
The following Security Holder information was applicable as at 4 October 2017.
1.
The distribution of members and their shareholding was as follows:
Distribution of shareholding (ASX:LPD)
Number Held
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
101,000 and above
Number of Shareholders
890
321
137
960
1,220
Total number of shareholders
3,528
2.
The distribution of members and their shareholding:
Twenty largest Shareholders (ASX:LPD; as at 4 October 2017)
Shareholder
Lithium Australia NL
Strategic Metallurgy Pty Ltd
JP Morgan Nominees Australia Ltd
Bacchus Capital Advisers Ltd
Strategic Metallurgy Pty Ltd
Lycopodium Minerals Pty Ltd
1
2
3
4
5
6
7 Wythenshawe Pty Ltd
Becker GSM & WM
8
9
Perth Capital Pty Ltd
10 Netwealth Inv Pty Ltd
Georgaklis Bill & G
11
Blammo Inv Pty Ltd
12
Citicorp Nominees Pty Ltd
13
Isaiah Sixty Pty Ltd
14
15 Wythenshawe Pty Ltd
Critical Elements Corp
16
Avalon Retmnt Inv Pty Ltd
17
Khoo John
18
Rae Michael
19
20 Whitten David John
Total Top 20
Number
319,920,852
266,603,370
71,933,931
52,195,175
50,000,000
45,000,000
40,000,000
39,357,683
38,000,000
24,716,923
24,187,190
23,425,693
22,704,347
22,250,000
19,750,000
18,514,939
17,091,742
13,621,410
12,607,500
12,594,459
1,134,475,214
%
14.95%
12.46%
3.36%
2.44%
2.34%
2.10%
1.87%
1.84%
1.78%
1.16%
1.13%
1.09%
1.06%
1.04%
0.92%
0.87%
0.80%
0.64%
0.59%
0.59%
53.03%
Substantial Shareholders
3.
As disclosed in the most recent notices provided to the Company, the following shareholders held a substantial interest, being
5.0% or greater, in the issued capital of the Company:
Shareholder
Lithium Australia NL (as per Notice dated 6 September 2017)
Strategic Metallurgy Pty Ltd (as per Notice dated 15 September 2017)
Number of Shares
%
320,566,248
349,680,293
14.98%
16.344%
4.
The company has 124,000,000 unlisted options with varying expiry and exercise price on issue which carry no voting entitlement.
Unlisted Option holdings as at 4 October 2017
40,000,000 options expiring 3 August 2018 with an exercise price of 1.815c (“A”), all of which were issued to Alchemy Advisors Pty Ltd,
a company related to Joe Walsh.
9,000,000 options expiring 31 December 2018 with an exercise price of 1.0c (“B”), all of which were issued to Tom Dukovcic.
50,000,000 options expiring 31 December 2019 with an exercise price of 2.5c (“C’), which were issued to the Company’s Directors.
25,000,000 options expiring 31 December 2019 with an exercise price of 2.5c (“D”), which were issued under the Company Employee
Share Plan.
1 – 1,000
1,001 – 5,000
5,001 – 10,000
101,000 and above
Total number of holders
A
-
-
-
1
1
B
-
-
-
1
1
C
-
-
-
4
4
D
-
-
-
2
2
5.
45,000,000 shares are currently held under voluntary escrow until completion of the Phase 1 L-Max® Plant Feasibility Study.
Restricted Securities
80
2017 LEPIDICO ANNUAL REPORT 2
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www.lepidico.com