Annual Report 2017
Corporate Directory
Liontown Resources Limited
Corporate Directory
Directors
Timothy Rupert Barr Goyder
David Ross Richards
Craig Russell Williams
Anthony James Cipriano
Company Secretary
Kym Verheyen
Chairman
Managing Director
Non-executive Director
Non–executive Director
Principal Place of Business & Registered Office
Level 2, 1292 Hay Street
WEST PERTH, WESTERN AUSTRALIA 6005
(+61 8) 9322 7431
Tel:
(+61 8) 9322 5800
Fax:
Web: www.ltresources.com.au
Email: info@ltresources.com.au
Auditors
HLB Mann Judd
Level 4, 130 Stirling Street
PERTH, WESTERN AUSTRALIA 6000
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
PERTH, WESTERN AUSTRALIA 6000
Tel: 1300 557 010
Home Exchange
Australian Securities Exchange Limited
Level 40, Central Park
152- 158 St Georges Terrace
PERTH, WESTERN AUSTRALIA 6000
ASX Codes
Share Code:
LTR
1
Liontown Resources Limited
Corporate Directory
Timothy Rupert Barr Goyder
Chairman
Managing Director
Non-executive Director
Non–executive Director
Directors
David Ross Richards
Craig Russell Williams
Anthony James Cipriano
Company Secretary
Kym Verheyen
Principal Place of Business & Registered Office
Level 2, 1292 Hay Street
WEST PERTH, WESTERN AUSTRALIA 6005
Tel:
Fax:
(+61 8) 9322 7431
(+61 8) 9322 5800
Web: www.ltresources.com.au
Email: info@ltresources.com.au
Auditors
HLB Mann Judd
Level 4, 130 Stirling Street
PERTH, WESTERN AUSTRALIA 6000
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
PERTH, WESTERN AUSTRALIA 6000
Tel: 1300 557 010
Home Exchange
Australian Securities Exchange Limited
Level 40, Central Park
152- 158 St Georges Terrace
PERTH, WESTERN AUSTRALIA 6000
ASX Codes
Share Code:
LTR
Chairman’s Letter
Operating and Financial Review
Mineral Resource Statement
Appendices
Tenement Schedule
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Contents
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Annual Report 2017
Chairman’s Letter
Dear Shareholder
I am pleased to report on an active year by the Company as we continue to focus on making discoveries to
supply the ever increasing demand for battery metals.
After a busy year exploring at the Company’s Bynoe Lithium Project in the Northern Territory, we recently
announced that we have reached agreement with Core Exploration to sell the asset.
Exploration drilling by the Company since its acquisition in 2016 intersected spodumene-related, >1% Li2O
mineralisation at 8 of the 23 prospects targeted with broad zones (>10m) of ore grade mineralisation
delineated at the Sandras, BP33 and Carlton prospects. While wide-spread lithium mineralisation was
intersected, a commercial review pointed towards the need to consolidate the area, the result of which
will likely enhance the economics of any future mining operations in the area.
The transaction secures the financial position of the Company for the immediate future with consideration
consisting of $1.5 million in cash and $2.0 million in Core Exploration shares (subject to escrow). In
addition, a deferred payment of $1.5 million in cash or Core Exploration shares (at Core’s election) is
payable upon Core defining a JORC compliant Mineral Resource totalling 5Mt within Liontown’s Bynoe
tenure.
With the Company’s existing cash, this will leave the Company in an enviable position of having
approximately $4 million in cash and investments to channel towards our other projects in Australia.
At the Kathleen Valley Project, maiden drilling results confirmed the potential of the pegmatite swarms
to host significant widths of high grade lithium and tantalum mineralisation with intersections of up to
58m @ 1.2% Li2O and 156ppm Ta2O from 135m.
Unfortunately exploration activities at the priority targets at Mt Mann and Kathleen’s Corner have been
delayed pending Native Title clearance. The Company is currently going through the statutory process with
the WA State Government seeking clearance to access the main target areas where the pegmatites are
interpreted to be the thickest and where the highest grade lithium and tantalum results have been
recorded by historical rock chip sampling.
Whilst lithium has been a focal point, Liontown has also secured five tenements (the RJC Vanadium
Project) covering approximately1,000km2 in NW Queensland situated approximately 440km west of
Townsville. This region hosts a number of large vanadium resources defined as part of previous exploration
for hydrocarbons in oil shale. The project, which adjoins and partially incorporates existing resources
represents a low cost entry into vanadium, a commodity that is part of the battery metal suite and likely
important to the future of energy storage. We look forward to further assessing the potential of this project
by undertaking metallurgical testing and resource definition.
In Tanzania, the Jubilee Reef Gold Project and the Mohanga Lithium Project continue to be held, however,
we are disappointed with recent extreme changes to the Tanzanian Mining Act which have unfortunately
cast significant uncertainty over the Company’s tenure and ability to operate within the Country. The full
impact of the changes to this legislation have yet to be fully determined and will need to be assessed in
the fullness of time.
I remain very positive about the macro economic outlook for battery metals and with a significantly
improved balance sheet I look forward to another busy year. Early success will, however, be dependent
upon resolving Native Title clearance at Kathleen Valley.
I would also like to take the opportunity to thank shareholders, Managing Director, David Richards, my
fellow directors and our small team of employees for their continual valued support.
Kind Regards
TIM GOYDER
CHAIRMAN
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Annual Report 2017
Liontown Resources Limited
Operating and Financial Review
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
1. Highlights
Bynoe Lithium Project (NT, Australia)
•
Sold to Core Exploration Limited for an upfront consideration of $3.5 million plus a milestone payment of
$1.5 million in cash or shares if a 5Mt lithium resource is defined on Liontown’s tenure.
Kathleen Valley (WA, Australia)
• Maiden drilling intersects strong lithium and tantalum mineralisation
•
Best targets yet to be drilled, subject to access approval
RJC Vanadium Project (Qld, Australia)
• New project prospective for vanadium, a commodity that is part of the battery-related suite critical to the
future of energy storage
Due to recently enacted changes to The Tanzanian Mining Act (2010) which were announced and enacted subsequent
to year end, Liontown has decreased its exposure to Tanzania having closed its Tanzanian office and now only
maintains a representative presence on the ground in Tanzania. Liontown is continuing to review its tenure over the
Jubilee Reef Project. In particular, and consistent with the Company’s ASX announcement on 20 July 2017, there is
increased risk and uncertainty in regard to its tenure over the Simba and Panapendesa gold resource contained within
the Jubillee Reef Project. Liontown has retained the Mohanga Lithium Project. It will continue to monitor the
situation in Tanzania with a view to restarting activities once the impact of the amendments to the Mining Act are
fully understood.
achievement of these objectives.
Movements in commodity prices, foreign exchange rates and interest rates may also adversely impact the
Project includes part of previously estimated vanadium resource reported in 2010
•
• Mineralisation is shallow (<10m), flat lying and amenable to free digging
•
Located close to major road and rail infrastructure
Mohanga Lithium Project (Tanzania)
Spodumene-related lithium mineralisation discovered
•
•
• New mining legislation in Tanzania providing uncertainty
Potential of project largely untested with no previous drilling
Corporate
•
•
Strong financial position following divestment of Bynoe Project
Fully funded for aggressive exploration program in 2017-2018
2. Business Strategy
Consistent with a review of its corporate objectives completed last year, Liontown has continued to target battery-
related metals in addition to its traditional gold and base metal focus.
During the year, the Company targeted pegmatite-hosted lithium projects in Australia and Tanzania and acquired
the RJC Vanadium Project in northwest Queensland.
The decision to target these metals followed a recognition of their increasing importance, with demand particularly
related to renewable energy and the need for cost effective power storage.
The Company’s strategy is to maintain a focused, consistent approach and to explore projects where drill targets are
or can be quickly defined. Where deemed appropriate, Liontown will divest projects or otherwise seek partners to
assist with advancing its strategy if it believes this will provide the best outcome for the Company.
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Annual Report 2017
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
Due to recently enacted changes to The Tanzanian Mining Act (2010) which were announced and enacted subsequent
to year end, Liontown has decreased its exposure to Tanzania having closed its Tanzanian office and now only
maintains a representative presence on the ground in Tanzania. Liontown is continuing to review its tenure over the
Jubilee Reef Project. In particular, and consistent with the Company’s ASX announcement on 20 July 2017, there is
increased risk and uncertainty in regard to its tenure over the Simba and Panapendesa gold resource contained within
the Jubillee Reef Project. Liontown has retained the Mohanga Lithium Project. It will continue to monitor the
situation in Tanzania with a view to restarting activities once the impact of the amendments to the Mining Act are
fully understood.
Movements in commodity prices, foreign exchange rates and interest rates may also adversely impact the
achievement of these objectives.
Liontown Resources Limited
Operating and Financial Review
1. Highlights
Bynoe Lithium Project (NT, Australia)
•
Sold to Core Exploration Limited for an upfront consideration of $3.5 million plus a milestone payment of
$1.5 million in cash or shares if a 5Mt lithium resource is defined on Liontown’s tenure.
Kathleen Valley (WA, Australia)
• Maiden drilling intersects strong lithium and tantalum mineralisation
•
Best targets yet to be drilled, subject to access approval
RJC Vanadium Project (Qld, Australia)
future of energy storage
• New project prospective for vanadium, a commodity that is part of the battery-related suite critical to the
Project includes part of previously estimated vanadium resource reported in 2010
• Mineralisation is shallow (<10m), flat lying and amenable to free digging
Located close to major road and rail infrastructure
•
•
•
•
•
•
Mohanga Lithium Project (Tanzania)
Spodumene-related lithium mineralisation discovered
Potential of project largely untested with no previous drilling
• New mining legislation in Tanzania providing uncertainty
Corporate
Strong financial position following divestment of Bynoe Project
Fully funded for aggressive exploration program in 2017-2018
2. Business Strategy
Consistent with a review of its corporate objectives completed last year, Liontown has continued to target battery-
related metals in addition to its traditional gold and base metal focus.
During the year, the Company targeted pegmatite-hosted lithium projects in Australia and Tanzania and acquired
the RJC Vanadium Project in northwest Queensland.
The decision to target these metals followed a recognition of their increasing importance, with demand particularly
related to renewable energy and the need for cost effective power storage.
The Company’s strategy is to maintain a focused, consistent approach and to explore projects where drill targets are
or can be quickly defined. Where deemed appropriate, Liontown will divest projects or otherwise seek partners to
assist with advancing its strategy if it believes this will provide the best outcome for the Company.
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Annual Report 2017
Liontown Resources Limited
Operating and Financial Review
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
3. Review of Operations
During the reporting period, Liontown maintained a strong exploration effort with significant programs completed
on most of its projects.
Fieldwork included RC drilling at the Bynoe, Kathleen Valley and Lake Percy lithium projects in Australia as well as
soil sampling at Mohanga in Tanzania. In addition, Liontown pegged the RJC Vanadium Project in northwest
Queensland and is currently compiling historic data.
Strong lithium mineralisation was recorded at Bynoe, Kathleen Valley and Mohanga.
Australian Projects
3.1
Bynoe Lithium Project – Northern Territory
The Bynoe Project is located in the Northern Territory approximately 35km SSW of Darwin (see Figure 1), where it
covers a large part of the Bynoe Pegmatite Field which has been mined historically for tin and tantalum. Liontown
secured a number of tenements which cover a total area of 88km2 and include more than 60 rare metal pegmatites
documented by the NT Geological Survey. The pegmatites are similar to those that host economic lithium
mineralisation elsewhere in Australia
Subsequent to reporting date, Liontown has entered into a Tenement Sale Agreement (“the Agreement”) with ASX
listed Core Exploration Limited (ASX: CXO) (“Core” or “CXO”) by which Core will acquire 100% of all Liontown’s Bynoe
Project tenure by:
Paying Liontown $1,500,000 cash and issuing $2,000,000 in CXO shares (calculated using a 10 day VWAP prior
to the date of the Agreement) (“Consideration Shares”); and
Paying Liontown $1,500,000 in cash or CXO shares (at Core’s election) upon defining a JORC compliant Mineral
Resource totaling 5Mt within Liontown’s Bynoe tenure.
The Consideration Shares issued to Liontown will be subject to a 12 month voluntary escrow with the following terms:
Liontown may sell one third of the Consideration Shares after 4 months from the date of issue and a further
one third after 8 months from the date of issue; and
Liontown may sell all the Consideration Shares (or any balance remaining) as a block at any time within the
escrow period with the consent of Core, which cannot be unreasonably withheld or delayed.
Following the issue of the Consideration Shares, Liontown will hold 39,232,025 Core shares representing 8.2% of
Core’s issued capital.
Liontown acquired the Bynoe Project in early 2016 due to the large number of documented rare metal pegmatites
prospective for lithium and the Project’s close proximity to Darwin and related infrastructure which would be critical
for the development of a commercial mining operation.
Exploration drilling by the Company since it acquired the Project has intersected >1% Li2O, spodumene-related
mineralisation at 8 of the 23 prospects targeted with broad zones (>10m) of ore grade mineralisation delineated at
the Sandras, BP33 and Carlton prospects.
Exploration work completed this year included additional target definition work, comprising soil sampling and a low-
level airborne geophysical survey, and follow-up Reverse Circulation (RC) drilling.
While wide-spread lithium mineralisation has been intersected within Liontown’s tenure, a commercial review
indicates that rationalisation of tenements and resources in the area would significantly enhance the economics of
future mining operations. For this reason the Company agreed to sell its properties to Core.
3.2
Kathleen Valley Lithium-Tantalum Project – Western Australia
The Kathleen Valley Project is located in Western Australia approximately 680km north-east of Perth within the
Eastern Goldfields of the Archaean Yilgarn Craton (Figure 2). Historical exploration has defined a large swarm of
spodumene-bearing pegmatites which have not been drill tested. Liontown owns 100% of the pegmatite-hosted rare
metal rights for a contiguous project area totalling 77km2.
Liontown finalised the Purchase Agreement for the Kathleen Valley Mining Leases with Ramelius Resources and
undertook a heritage survey over the main prospect areas where previous exploration had recorded multiple
spodumene-bearing pegmatites with numerous high grade lithium (>2% Li2O) values.
Figure 1: Bynoe Project – Location and Tenure Plan
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Annual Report 2017
Liontown Resources Limited
Operating and Financial Review
3. Review of Operations
During the reporting period, Liontown maintained a strong exploration effort with significant programs completed
on most of its projects.
Fieldwork included RC drilling at the Bynoe, Kathleen Valley and Lake Percy lithium projects in Australia as well as
soil sampling at Mohanga in Tanzania. In addition, Liontown pegged the RJC Vanadium Project in northwest
Queensland and is currently compiling historic data.
Strong lithium mineralisation was recorded at Bynoe, Kathleen Valley and Mohanga.
Australian Projects
3.1
Bynoe Lithium Project – Northern Territory
The Bynoe Project is located in the Northern Territory approximately 35km SSW of Darwin (see Figure 1), where it
covers a large part of the Bynoe Pegmatite Field which has been mined historically for tin and tantalum. Liontown
secured a number of tenements which cover a total area of 88km2 and include more than 60 rare metal pegmatites
documented by the NT Geological Survey. The pegmatites are similar to those that host economic lithium
mineralisation elsewhere in Australia
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
Subsequent to reporting date, Liontown has entered into a Tenement Sale Agreement (“the Agreement”) with ASX
listed Core Exploration Limited (ASX: CXO) (“Core” or “CXO”) by which Core will acquire 100% of all Liontown’s Bynoe
Project tenure by:
Paying Liontown $1,500,000 cash and issuing $2,000,000 in CXO shares (calculated using a 10 day VWAP prior
to the date of the Agreement) (“Consideration Shares”); and
Paying Liontown $1,500,000 in cash or CXO shares (at Core’s election) upon defining a JORC compliant Mineral
Resource totaling 5Mt within Liontown’s Bynoe tenure.
The Consideration Shares issued to Liontown will be subject to a 12 month voluntary escrow with the following terms:
Liontown may sell one third of the Consideration Shares after 4 months from the date of issue and a further
one third after 8 months from the date of issue; and
Liontown may sell all the Consideration Shares (or any balance remaining) as a block at any time within the
escrow period with the consent of Core, which cannot be unreasonably withheld or delayed.
Following the issue of the Consideration Shares, Liontown will hold 39,232,025 Core shares representing 8.2% of
Core’s issued capital.
Liontown acquired the Bynoe Project in early 2016 due to the large number of documented rare metal pegmatites
prospective for lithium and the Project’s close proximity to Darwin and related infrastructure which would be critical
for the development of a commercial mining operation.
Exploration drilling by the Company since it acquired the Project has intersected >1% Li2O, spodumene-related
mineralisation at 8 of the 23 prospects targeted with broad zones (>10m) of ore grade mineralisation delineated at
the Sandras, BP33 and Carlton prospects.
Exploration work completed this year included additional target definition work, comprising soil sampling and a low-
level airborne geophysical survey, and follow-up Reverse Circulation (RC) drilling.
While wide-spread lithium mineralisation has been intersected within Liontown’s tenure, a commercial review
indicates that rationalisation of tenements and resources in the area would significantly enhance the economics of
future mining operations. For this reason the Company agreed to sell its properties to Core.
3.2
Kathleen Valley Lithium-Tantalum Project – Western Australia
The Kathleen Valley Project is located in Western Australia approximately 680km north-east of Perth within the
Eastern Goldfields of the Archaean Yilgarn Craton (Figure 2). Historical exploration has defined a large swarm of
spodumene-bearing pegmatites which have not been drill tested. Liontown owns 100% of the pegmatite-hosted rare
metal rights for a contiguous project area totalling 77km2.
Liontown finalised the Purchase Agreement for the Kathleen Valley Mining Leases with Ramelius Resources and
undertook a heritage survey over the main prospect areas where previous exploration had recorded multiple
spodumene-bearing pegmatites with numerous high grade lithium (>2% Li2O) values.
Figure 1: Bynoe Project – Location and Tenure Plan
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Annual Report 2017
Liontown Resources Limited
Operating and Financial Review
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
o
o
o
13m @ 1.6% Li2O and 114ppm Ta2O5 from 0m (KVRC0002), including:
9m @ 1.9% Li2O and 107ppm Ta2O5 from 2m;
13m @ 1.6% Li2O and 111ppm Ta2O5 from 83m (KVRC0002), including:
6m @ 2.0% Li2O and 113ppm Ta2O5 from 88m;
14m @ 1.7% Li2O and 163ppm Ta2O5 from 91m (KVRC0003), including:
8m @ 2.0% Li2O and 130ppm Ta2O5 from 97m;
Figure 2: Kathleen Valley Project – Location plan, tenure and regional geology
Liontown obtained heritage approvals to drill along strike and north of the main targets at the Mt Mann trend and
Kathleen’s Corner (Figure 3). While a lower priority, the Company elected to test these northern areas to determine
whether the Mt Mann Trend and Kathleen’s Corner warranted drilling.
Subsequently, Liontown completed a maiden drilling program comprising 19 Reverse Circulation (RC) holes for 2,053m
(see Appendix 1 for full listing of drill statistics).
Significant zones of strong lithium-tantalum mineralisation were intersected in a number of holes with better
intersections including:
The results confirm the potential of the pegmatite swarms at Kathleen Valley to host significant widths of high grade
lithium and tantalum mineralisation, enhance the prospectivity of the main targets and upgrade the potential of the
o
o
58m @ 1.2% Li2O and 156ppm Ta2O5 from 135m (KVRC0015), including:
9m @ 1.8% Li2O and 220ppm Ta2O5 from 141m; and
13m @ 2.0% Li2O and 138ppm Ta2O5 from 167m
24m @ 1.3% Li2O and 139ppm Ta2O5 from 206m (KVRC0015), including:
3m @ 1.6% Li2O and 105ppm Ta2O5 from 208m; and
2m @ 2.6% Li2O and 271ppm Ta2O5 from 217m; and
4m @ 1.6% Li2O and 145ppm Ta2O5 from 226m
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Figure 3: Kathleen Valley Project –Geology and drill hole plan showing better intersections along strike of main target zones
Due to the limited access, hole KVRC0015 was drilled oblique to the strike and dip of the main trend and the true
width of the strongly mineralised pegmatite is estimated to be between 30 to 35 metres. The intersections listed
above indicate that the Mt Mann pegmatite is increasing in width towards the south-east and at depth.
covered northern areas.
lepidolite observed.
Importantly, the high grade lithium values appear to be largely related to spodumene mineralisation with only minor
Exploration activities at the priority targets at Mt Mann and Kathleen’s Corner have been delayed by Native Title
clearance. Liontown has lodged a Section 18 application with the State Government seeking statutory clearance to
access the main target areas, where the pegmatites are interpreted to be the thickest and where the highest grade
lithium and tantalum results have been recorded by historical rock chip sampling.
Annual Report 2017
Liontown Resources Limited
Operating and Financial Review
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
o
o
o
13m @ 1.6% Li2O and 114ppm Ta2O5 from 0m (KVRC0002), including:
9m @ 1.9% Li2O and 107ppm Ta2O5 from 2m;
13m @ 1.6% Li2O and 111ppm Ta2O5 from 83m (KVRC0002), including:
6m @ 2.0% Li2O and 113ppm Ta2O5 from 88m;
14m @ 1.7% Li2O and 163ppm Ta2O5 from 91m (KVRC0003), including:
8m @ 2.0% Li2O and 130ppm Ta2O5 from 97m;
Figure 2: Kathleen Valley Project – Location plan, tenure and regional geology
Liontown obtained heritage approvals to drill along strike and north of the main targets at the Mt Mann trend and
Kathleen’s Corner (Figure 3). While a lower priority, the Company elected to test these northern areas to determine
whether the Mt Mann Trend and Kathleen’s Corner warranted drilling.
Subsequently, Liontown completed a maiden drilling program comprising 19 Reverse Circulation (RC) holes for 2,053m
(see Appendix 1 for full listing of drill statistics).
Significant zones of strong lithium-tantalum mineralisation were intersected in a number of holes with better
intersections including:
o
o
58m @ 1.2% Li2O and 156ppm Ta2O5 from 135m (KVRC0015), including:
9m @ 1.8% Li2O and 220ppm Ta2O5 from 141m; and
13m @ 2.0% Li2O and 138ppm Ta2O5 from 167m
24m @ 1.3% Li2O and 139ppm Ta2O5 from 206m (KVRC0015), including:
3m @ 1.6% Li2O and 105ppm Ta2O5 from 208m; and
2m @ 2.6% Li2O and 271ppm Ta2O5 from 217m; and
4m @ 1.6% Li2O and 145ppm Ta2O5 from 226m
Figure 3: Kathleen Valley Project –Geology and drill hole plan showing better intersections along strike of main target zones
Due to the limited access, hole KVRC0015 was drilled oblique to the strike and dip of the main trend and the true
width of the strongly mineralised pegmatite is estimated to be between 30 to 35 metres. The intersections listed
above indicate that the Mt Mann pegmatite is increasing in width towards the south-east and at depth.
The results confirm the potential of the pegmatite swarms at Kathleen Valley to host significant widths of high grade
lithium and tantalum mineralisation, enhance the prospectivity of the main targets and upgrade the potential of the
covered northern areas.
Importantly, the high grade lithium values appear to be largely related to spodumene mineralisation with only minor
lepidolite observed.
Exploration activities at the priority targets at Mt Mann and Kathleen’s Corner have been delayed by Native Title
clearance. Liontown has lodged a Section 18 application with the State Government seeking statutory clearance to
access the main target areas, where the pegmatites are interpreted to be the thickest and where the highest grade
lithium and tantalum results have been recorded by historical rock chip sampling.
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Annual Report 2017
Liontown Resources Limited
Operating and Financial Review
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
Further drilling will commence once access permits are granted.
3.3
RJC Vanadium Project – Queensland
The RJC Vanadium Project is located in NW Queensland approximately 440km west of Townsville in a region which
hosts a number of large vanadium resources defined as part of previous exploration for hydrocarbons in oil shale.
Liontown has secured 5 tenements which adjoin and partially incorporate existing resources. The Project represents
a low cost entry into vanadium, a commodity that is part of the battery metal suite, critical to the future of energy
storage.
The Company has 5 EPMs covering a combined area of 1,040km2 located approximately 440km west of Townsville in
NW Queensland (Figure 4).
Figure 4: RJC Vanadium Project – Location, regional geology and tenure
The RJC Vanadium Project (RJCVP) is strategically located close to major infrastructure corridors including the
Flinders Highway and the Great Northern Railway, which connect to industrial-scale port facilities in Townsville.
The acquisition of the RJCVP is consistent with the Company’s strategy of exploring for battery-related metals that
are needed for the future storage of energy on small and large scales.
Liontown’s RJCVP tenements adjoin and partially incorporate very large (>3 billion tonnes) vanadium resources
previously defined by Intermin Resources Limited (see Intermin ASX releases dated 5th February 2007 and 12th March
2010). Significantly, Liontown’s tenure overlays a substantial portion of Intermin’s higher grade Lilyvale resource
area (Figure 4).
There is good potential to increase the resources, which are near-surface and appear largely drill constrained.
Liontown is compiling available historical data prior to planning the first phase of work.
Geology and Mineralisation
Liontown’s tenure includes large areas of outcropping Toolebuc Formation, the main host unit to the vanadium
mineralisation. The Toolebuc Formation is a Cretaceous-aged (~100 million years old), flat-lying sediment consisting
of black carbonaceous and bituminous shale and minor siltstone with lenses of limestone and coquinite (a shell
fragment limestone conglomerate).
Locally, the Formation is draped over an interpreted basement high and has been structurally uplifted to the surface.
Previous exploration has focused on the potential of the Toolebuc Formation to host economic quantities of
hydrocarbons. The vanadium resources previously estimated by Intermin are reportedly related to near-surface
mineralisation derived from the oxidation of the oil shale horizon.
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At Lilyvale, Intermin reported that the mineralisation is contained in a continuous block up to 4km wide and 10-12m
in thickness beneath 5-6m of overburden. The mineralisation is soft and would likely be suitable for free-digging.
Further work is required to determine the metallurgy of the mineralisation; however, preliminary studies are well
advanced by other companies working in the area.
About Vanadium
Vanadium is an important metal for the steel strengthening and alloys market and, importantly, for use in vanadium
redox flow batteries (VRFB) for large-scale energy storage.
Energy storage is a fast-evolving market sector, set to grow significantly over the coming years as the world seeks to
control carbon emissions and advance toward mandated renewable energy targets.
Vanadium redox flow batteries (VRFB), which can be charged and discharged at the same time, are recognised as
potentially important contributors to the storage of renewable energy. In addition lithium-vanadium-phosphate
batteries are seen as one of the more promising solutions for increasing the range of electric vehicles.
An uplift in demand due to the increasing use of VRFBs could see an increase in the price of the commodity which
has been on a steady uptrend for the last year.
3.4
Lake Percy Lithium Project – Western Australia
The Lake Percy Project is located in Western Australia approximately 430km east of Perth within the southern part
of the Archaean Yilgarn Craton which hosts a number of world class and emerging hard rock lithium deposits.
Liontown entered into a Joint Venture Agreement with White Cliff Minerals to test a number of very large, strongly
weathered pegmatites, defined by historic nickel exploration, which were considered prospective for primary lithium
mineralisation at depth.
Exploration work completed by Liontown during the year comprised a review of historic data, detailed geological
mapping, soil sampling and a RC drilling program (8 holes/1,623m).
No significant lithium mineralisation was recorded and the Company elected to withdraw from the Joint Venture
immediately subsequent to the end of the year.
Tanzanian Projects
3.5
Tanzania General
In July 2017, the Tanzanian Parliament enacted a number of amendments to The Tanzanian Mining Act (2010), the
legal framework governing the natural resources sector in Tanzania.
While the impact of the amendments to the legislation on Liontown’s activities in Tanzania are still yet to be fully
determined, it does appear that they will have an adverse impact as currently enacted and will severely limit the
company’s activities in Country.
As a result of the above, the Company has closed its Tanzanian office and retrenched all professional staff but will
retain a senior consultant in the Country to administer its current tenement portfolio until the practical effects of
changed legislation are fully understood.
3.6
Jubilee Reef Gold Project - Tanzania
The Jubilee Reef Project is located approximately 850km northwest of Dar es Salaam within the Lake Victoria
Goldfield of northern Tanzania. This Archaean greenstone-granite terrain hosts several multimillion ounce gold
deposits including Acacia Mining’s Bulyanhulu deposit and AngloGold Ashanti’s Geita deposit
Previous exploration by Liontown at Jubilee Reef has tested a number of targets and an Inferred Mineral Resource of
approximately 8.5Mt @ 1.4g/t gold (~390,000 ounces) has been estimated based on drilling results from the Simba
and Panapendesa prospects.
Annual Report 2017
Liontown Resources Limited
Operating and Financial Review
Further drilling will commence once access permits are granted.
3.3
RJC Vanadium Project – Queensland
The RJC Vanadium Project is located in NW Queensland approximately 440km west of Townsville in a region which
hosts a number of large vanadium resources defined as part of previous exploration for hydrocarbons in oil shale.
Liontown has secured 5 tenements which adjoin and partially incorporate existing resources. The Project represents
a low cost entry into vanadium, a commodity that is part of the battery metal suite, critical to the future of energy
storage.
NW Queensland (Figure 4).
The Company has 5 EPMs covering a combined area of 1,040km2 located approximately 440km west of Townsville in
Figure 4: RJC Vanadium Project – Location, regional geology and tenure
The RJC Vanadium Project (RJCVP) is strategically located close to major infrastructure corridors including the
Flinders Highway and the Great Northern Railway, which connect to industrial-scale port facilities in Townsville.
The acquisition of the RJCVP is consistent with the Company’s strategy of exploring for battery-related metals that
are needed for the future storage of energy on small and large scales.
Liontown’s RJCVP tenements adjoin and partially incorporate very large (>3 billion tonnes) vanadium resources
previously defined by Intermin Resources Limited (see Intermin ASX releases dated 5th February 2007 and 12th March
2010). Significantly, Liontown’s tenure overlays a substantial portion of Intermin’s higher grade Lilyvale resource
area (Figure 4).
There is good potential to increase the resources, which are near-surface and appear largely drill constrained.
Liontown is compiling available historical data prior to planning the first phase of work.
Geology and Mineralisation
Liontown’s tenure includes large areas of outcropping Toolebuc Formation, the main host unit to the vanadium
mineralisation. The Toolebuc Formation is a Cretaceous-aged (~100 million years old), flat-lying sediment consisting
of black carbonaceous and bituminous shale and minor siltstone with lenses of limestone and coquinite (a shell
fragment limestone conglomerate).
Locally, the Formation is draped over an interpreted basement high and has been structurally uplifted to the surface.
Previous exploration has focused on the potential of the Toolebuc Formation to host economic quantities of
hydrocarbons. The vanadium resources previously estimated by Intermin are reportedly related to near-surface
mineralisation derived from the oxidation of the oil shale horizon.
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
At Lilyvale, Intermin reported that the mineralisation is contained in a continuous block up to 4km wide and 10-12m
in thickness beneath 5-6m of overburden. The mineralisation is soft and would likely be suitable for free-digging.
Further work is required to determine the metallurgy of the mineralisation; however, preliminary studies are well
advanced by other companies working in the area.
About Vanadium
Vanadium is an important metal for the steel strengthening and alloys market and, importantly, for use in vanadium
redox flow batteries (VRFB) for large-scale energy storage.
Energy storage is a fast-evolving market sector, set to grow significantly over the coming years as the world seeks to
control carbon emissions and advance toward mandated renewable energy targets.
Vanadium redox flow batteries (VRFB), which can be charged and discharged at the same time, are recognised as
potentially important contributors to the storage of renewable energy. In addition lithium-vanadium-phosphate
batteries are seen as one of the more promising solutions for increasing the range of electric vehicles.
An uplift in demand due to the increasing use of VRFBs could see an increase in the price of the commodity which
has been on a steady uptrend for the last year.
3.4
Lake Percy Lithium Project – Western Australia
The Lake Percy Project is located in Western Australia approximately 430km east of Perth within the southern part
of the Archaean Yilgarn Craton which hosts a number of world class and emerging hard rock lithium deposits.
Liontown entered into a Joint Venture Agreement with White Cliff Minerals to test a number of very large, strongly
weathered pegmatites, defined by historic nickel exploration, which were considered prospective for primary lithium
mineralisation at depth.
Exploration work completed by Liontown during the year comprised a review of historic data, detailed geological
mapping, soil sampling and a RC drilling program (8 holes/1,623m).
No significant lithium mineralisation was recorded and the Company elected to withdraw from the Joint Venture
immediately subsequent to the end of the year.
Tanzanian Projects
3.5
Tanzania General
In July 2017, the Tanzanian Parliament enacted a number of amendments to The Tanzanian Mining Act (2010), the
legal framework governing the natural resources sector in Tanzania.
While the impact of the amendments to the legislation on Liontown’s activities in Tanzania are still yet to be fully
determined, it does appear that they will have an adverse impact as currently enacted and will severely limit the
company’s activities in Country.
As a result of the above, the Company has closed its Tanzanian office and retrenched all professional staff but will
retain a senior consultant in the Country to administer its current tenement portfolio until the practical effects of
changed legislation are fully understood.
3.6
Jubilee Reef Gold Project - Tanzania
The Jubilee Reef Project is located approximately 850km northwest of Dar es Salaam within the Lake Victoria
Goldfield of northern Tanzania. This Archaean greenstone-granite terrain hosts several multimillion ounce gold
deposits including Acacia Mining’s Bulyanhulu deposit and AngloGold Ashanti’s Geita deposit
Previous exploration by Liontown at Jubilee Reef has tested a number of targets and an Inferred Mineral Resource of
approximately 8.5Mt @ 1.4g/t gold (~390,000 ounces) has been estimated based on drilling results from the Simba
and Panapendesa prospects.
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Liontown Resources Limited
Operating and Financial Review
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
The Mineral Resource estimates for the Jubilee Reef Project, which was prepared by independent consultants Optiro
Pty Ltd in December 2015, are classified in accordance with the guidelines of the 2012 Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code; 2012).
During the year, specific gravities were calculated for mineralised drill core from Simba with results confirming
assumptions made for the Inferred Mineral Resource referred to above.
Preliminary metallurgical test work was also carried out for the Simba resource with good recoveries (>90%) recorded
for both oxidized and primary mineralisation.
A number of untested drill targets have been defined at Jubilee Reef indicating good potential to increase the
resource base. Further work will be considered once the impact of the recent legislative amendments are fully
understood.
Tenement Status
Prior to the passing of the recent amendments, The Tanzanian Mining Act (2010) provided companies with the right
to apply for a Retention Licences (RL) over resources that were uneconomic at prevailing prices but that may be
mineable within the foreseeable future.
In accordance with applicable law at the time, Liontown lodged a RL application over the Simba and Panapendesa
gold resources in April 2017. The new legislation has repealed the right to apply for RLs going forward. However, it
is currently unclear whether there will be any saving provision made to favourably deal with a RL application made
prior to the enactment of the amendments. The Company is awaiting the release of the Regulations that will
accompany the enacted changes to determine whether any such provision will be made.
Liontown retains nine other tenements (see Tenement Schedule) which together with the RL application cover a
combined area of approximately 120km2 in Tanzania.
3.7 Mohanga Lithium-Tantalum-Gold Project - Tanzania
The Mohanga Project is located in central Tanzania approximately 40km NNE of the capital Dodoma and 400km WNW
of Dar es Salaam within the south eastern part of the Tanzanian Craton. The regional geological setting is similar
to the southwestern part of Western Australia which hosts world class lithium (i.e. Greenbushes) and gold (e.g.
Boddington) deposits. Liontown has retained a contiguous 74km2 area over the most prospective geology where
geochemical sampling has defined strong lithium, tantalum and gold anomalism.
A review of rock chip data identified a previously unrecognised spodumene-related lithium occurrence at Mohanga.
The anomalous results come from the Tresor prospect (Figure 5), where additional rock chip sampling has recorded
high grade lithium and tantalum assays from a pegmatite zone which is interpreted to be up to 90m wide and at least
500m long, with the trend open along strike beneath transported cover (see Figure 6).
Multiple plus 1.5% Li2O values have now been returned from the Tresor prospect with better rock chip results
including:
o
o
o
Sample ID 146948
Sample ID 146951
Sample ID 146953
3.3% Li2O
2.6% Li2O
2.3% Li2O
The high-grade (>1% Li2O) lithium zone is up to 30m thick and at least 150m long; however, its full extent is unknown
due to limited outcrop.
The spodumene mineralisation was not initially identified in the field due to weathering, poor exposure and relatively
fine grain size; however, it has now been confirmed by XRD, microscopic and pathfinder geochemical analyses. No
lepidolite or other lithium minerals apart from spodumene have been observed in the prospective pegmatite trend.
Figure 5: Mohanga Project – Geology and Location Plan
Figure 6: Mohanga Project – Tresor prospect showing local geology and better lithium in rock chip results
Liontown completed trenching across the mineralised pegmatite and soil sampling over the remaining project area.
Assays have not yet been received due to the ban on the export of unrefined mineral products which includes sample
pulps.
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Liontown Resources Limited
Operating and Financial Review
Operating and Financial Review
Liontown Resources Limited
Operating and Financial Review
The Mineral Resource estimates for the Jubilee Reef Project, which was prepared by independent consultants Optiro
Pty Ltd in December 2015, are classified in accordance with the guidelines of the 2012 Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code; 2012).
During the year, specific gravities were calculated for mineralised drill core from Simba with results confirming
assumptions made for the Inferred Mineral Resource referred to above.
Preliminary metallurgical test work was also carried out for the Simba resource with good recoveries (>90%) recorded
for both oxidized and primary mineralisation.
A number of untested drill targets have been defined at Jubilee Reef indicating good potential to increase the
resource base. Further work will be considered once the impact of the recent legislative amendments are fully
understood.
Tenement Status
Prior to the passing of the recent amendments, The Tanzanian Mining Act (2010) provided companies with the right
to apply for a Retention Licences (RL) over resources that were uneconomic at prevailing prices but that may be
mineable within the foreseeable future.
In accordance with applicable law at the time, Liontown lodged a RL application over the Simba and Panapendesa
gold resources in April 2017. The new legislation has repealed the right to apply for RLs going forward. However, it
is currently unclear whether there will be any saving provision made to favourably deal with a RL application made
prior to the enactment of the amendments. The Company is awaiting the release of the Regulations that will
accompany the enacted changes to determine whether any such provision will be made.
Liontown retains nine other tenements (see Tenement Schedule) which together with the RL application cover a
combined area of approximately 120km2 in Tanzania.
3.7 Mohanga Lithium-Tantalum-Gold Project - Tanzania
The Mohanga Project is located in central Tanzania approximately 40km NNE of the capital Dodoma and 400km WNW
of Dar es Salaam within the south eastern part of the Tanzanian Craton. The regional geological setting is similar
to the southwestern part of Western Australia which hosts world class lithium (i.e. Greenbushes) and gold (e.g.
Boddington) deposits. Liontown has retained a contiguous 74km2 area over the most prospective geology where
geochemical sampling has defined strong lithium, tantalum and gold anomalism.
A review of rock chip data identified a previously unrecognised spodumene-related lithium occurrence at Mohanga.
The anomalous results come from the Tresor prospect (Figure 5), where additional rock chip sampling has recorded
high grade lithium and tantalum assays from a pegmatite zone which is interpreted to be up to 90m wide and at least
500m long, with the trend open along strike beneath transported cover (see Figure 6).
Multiple plus 1.5% Li2O values have now been returned from the Tresor prospect with better rock chip results
including:
o
o
o
Sample ID 146948
Sample ID 146951
Sample ID 146953
3.3% Li2O
2.6% Li2O
2.3% Li2O
The high-grade (>1% Li2O) lithium zone is up to 30m thick and at least 150m long; however, its full extent is unknown
due to limited outcrop.
The spodumene mineralisation was not initially identified in the field due to weathering, poor exposure and relatively
fine grain size; however, it has now been confirmed by XRD, microscopic and pathfinder geochemical analyses. No
lepidolite or other lithium minerals apart from spodumene have been observed in the prospective pegmatite trend.
Figure 5: Mohanga Project – Geology and Location Plan
Figure 6: Mohanga Project – Tresor prospect showing local geology and better lithium in rock chip results
Liontown completed trenching across the mineralised pegmatite and soil sampling over the remaining project area.
Assays have not yet been received due to the ban on the export of unrefined mineral products which includes sample
pulps.
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Liontown Resources Limited
Operating and Financial Review
Operating and Financial Review
Liontown Resources Limited
Mineral Resource Statement
Due to Liontown’s focus on lithium and the Project’s location close to existing infrastructure, a low-cost exploration
effort will be maintained at Mohanga subject to a further review of the recently enacted amendments to The
Tanzanian Mining Act (2010).
4. Financial Review
4.1
Financial Performance
The group reported a net loss of $3.3 million for the year compared to a restated net loss of $2.1 million in 2016.
The increase in net loss of $1.2 million is predominately due to an increase of $1.3 million in exploration and
evaluation expenditure, due to increased activity on the Company’s Australian lithium projects in the current
financial year.
4.2
Statement of Cash Flows
Cash and cash equivalents at 30 June 2017 were $1.4 million (2016: $0.8 million). The increase in cash of $0.6 million
is primarily due the Company carrying out a share placement and rights issue during the year raising approximately
$3.9 million (before issue costs), which resulted in net cash from financing activities increasing from $1.7 million to
$3.7 million ($2 million increase). This increase in cash, was then offset by an increase in cash outflows of $0.9
million in relation to exploration and evaluation expenditure. As noted above, exploration and evaluation
expenditure increased during the year due to an increased level of activity at the Company’s Australian lithium
projects.
4.3
Financial Position
At balance date the group had net assets of $1.5 million (2016 (restated): $0.6 million), and an excess of current
assets over current liabilities of $1.4 million (2016 (restated): $0.5 million). Current assets increased by 67% from
$0.9 million to $1.5 million due to an increase in cash at bank. Current liabilities decreased by 75% to $0.1 million in
2017 from $0.4 million in the 2016 financial year. The significant decrease in current liabilities is mainly a result of
a decrease in accruals in the current year.
4.4
Corporate
Capital Raisings
A 1-for-5 non-renounceable rights issue was completed in October 2016 whereby the Company issued 139,890,234
fully paid ordinary shares at an issue price of $0.01 per share, to raise $1.4 million (before issue costs).
In January 2017, the Company completed a $2.5 million placement to institutional and professional investors.
126,000,000 fully paid ordinary shares were issued at $0.02 per share. Funds raised were used by the Company to
complete a drill program at the Company’s lithium projects in Australia.
The Company reviews and reports its mineral resources at least annually. The date of reporting is 30 June each year,
to coincide with the Company’s end of financial year balance date. If there are any material changes to its mineral
resources over the course of the year, the Company is required to report these changes.
On 30 November 2015, the Company issued a maiden mineral resources statement for the Jubilee Reef Gold Project
in Tanzania. The report was prepared in accordance with the JORC Code (2012 Edition).
The Jubilee Reef Gold Project is not an active mining operation and hence no resource depletion has occurred since
the resource statement was issued. Furthermore, exploration work carried out since the resource has not resulted
in a change to the reported mineral resources.
The Jubilee Reef Gold Project mineral resource is set out in the table below.
Table 1: Jubilee Reef – Mineral Resource statement as at 30 November 2015 reported above a cut-off grade of 0.7g/t gold
Deposit
Classification
Million
Grade
Tonnes
g/t gold
Contained
metal (koz
Simba
Panapendesa
Total
Inferred
Inferred
Inferred
7.4
1.1
8.5
1.4
2.0
1.4
Note: Inconsistencies in totals are due to rounding
gold)
320
70
390
Governance Arrangements and Internal Controls
The Company has ensured that the mineral resources quoted are subject to good governance arrangements and
internal controls. The mineral resources reported have been generated by Mrs Christine Standing of Optiro Pty Ltd,
an independent external consultant who is experienced in this style of gold deposit and who undertakes best practices
in modelling and estimation methods. The consultant has also undertaken reviews of the quality and suitability of
the underlying information used to generate the resource estimation. In addition, Liontown’s management carries
out regular reviews and audits of internal processes and external consultants that have been engaged by the
Company.
As noted above at section 3.6, Liontown lodged a RL application over the Simba and Panapendesa gold resources in
April 2017. Subsequent to year end amendments to The Tanzanian Mining Act (2010) have repealed the right to apply
for RLs going forward. However, it is currently unclear whether there will be any saving provision made to favourably
deal with a RL application made prior to the enactment of the amendments. The Company is awaiting the release
of the Regulations that will accompany the enacted changes to determine whether any such provision will be made.
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Annual Report 2017
Liontown Resources Limited
Operating and Financial Review
Mineral Resource Statement
Liontown Resources Limited
Mineral Resource Statement
Due to Liontown’s focus on lithium and the Project’s location close to existing infrastructure, a low-cost exploration
effort will be maintained at Mohanga subject to a further review of the recently enacted amendments to The
Tanzanian Mining Act (2010).
4. Financial Review
4.1
Financial Performance
financial year.
4.2
Statement of Cash Flows
projects.
4.3
Financial Position
4.4
Corporate
Capital Raisings
The group reported a net loss of $3.3 million for the year compared to a restated net loss of $2.1 million in 2016.
The increase in net loss of $1.2 million is predominately due to an increase of $1.3 million in exploration and
evaluation expenditure, due to increased activity on the Company’s Australian lithium projects in the current
Cash and cash equivalents at 30 June 2017 were $1.4 million (2016: $0.8 million). The increase in cash of $0.6 million
is primarily due the Company carrying out a share placement and rights issue during the year raising approximately
$3.9 million (before issue costs), which resulted in net cash from financing activities increasing from $1.7 million to
$3.7 million ($2 million increase). This increase in cash, was then offset by an increase in cash outflows of $0.9
million in relation to exploration and evaluation expenditure. As noted above, exploration and evaluation
expenditure increased during the year due to an increased level of activity at the Company’s Australian lithium
At balance date the group had net assets of $1.5 million (2016 (restated): $0.6 million), and an excess of current
assets over current liabilities of $1.4 million (2016 (restated): $0.5 million). Current assets increased by 67% from
$0.9 million to $1.5 million due to an increase in cash at bank. Current liabilities decreased by 75% to $0.1 million in
2017 from $0.4 million in the 2016 financial year. The significant decrease in current liabilities is mainly a result of
a decrease in accruals in the current year.
A 1-for-5 non-renounceable rights issue was completed in October 2016 whereby the Company issued 139,890,234
fully paid ordinary shares at an issue price of $0.01 per share, to raise $1.4 million (before issue costs).
In January 2017, the Company completed a $2.5 million placement to institutional and professional investors.
126,000,000 fully paid ordinary shares were issued at $0.02 per share. Funds raised were used by the Company to
complete a drill program at the Company’s lithium projects in Australia.
The Company reviews and reports its mineral resources at least annually. The date of reporting is 30 June each year,
to coincide with the Company’s end of financial year balance date. If there are any material changes to its mineral
resources over the course of the year, the Company is required to report these changes.
On 30 November 2015, the Company issued a maiden mineral resources statement for the Jubilee Reef Gold Project
in Tanzania. The report was prepared in accordance with the JORC Code (2012 Edition).
The Jubilee Reef Gold Project is not an active mining operation and hence no resource depletion has occurred since
the resource statement was issued. Furthermore, exploration work carried out since the resource has not resulted
in a change to the reported mineral resources.
The Jubilee Reef Gold Project mineral resource is set out in the table below.
Table 1: Jubilee Reef – Mineral Resource statement as at 30 November 2015 reported above a cut-off grade of 0.7g/t gold
Deposit
Classification
Million
Tonnes
Grade
g/t gold
Simba
Panapendesa
Total
Inferred
Inferred
Inferred
7.4
1.1
8.5
1.4
2.0
1.4
Note: Inconsistencies in totals are due to rounding
Contained
metal (koz
gold)
320
70
390
Governance Arrangements and Internal Controls
The Company has ensured that the mineral resources quoted are subject to good governance arrangements and
internal controls. The mineral resources reported have been generated by Mrs Christine Standing of Optiro Pty Ltd,
an independent external consultant who is experienced in this style of gold deposit and who undertakes best practices
in modelling and estimation methods. The consultant has also undertaken reviews of the quality and suitability of
the underlying information used to generate the resource estimation. In addition, Liontown’s management carries
out regular reviews and audits of internal processes and external consultants that have been engaged by the
Company.
As noted above at section 3.6, Liontown lodged a RL application over the Simba and Panapendesa gold resources in
April 2017. Subsequent to year end amendments to The Tanzanian Mining Act (2010) have repealed the right to apply
for RLs going forward. However, it is currently unclear whether there will be any saving provision made to favourably
deal with a RL application made prior to the enactment of the amendments. The Company is awaiting the release
of the Regulations that will accompany the enacted changes to determine whether any such provision will be made.
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Liontown Resources Limited
Competent Persons Statement
The Information in this report that relates to the Exploration Results for the Kathleen Valley Project is extracted
from the ASX announcement entitled “Liontown intersects strong lithium and tantalum mineralisation in maiden
drill program at Kathleen Valley, WA” released on the 20th March 2017 which
is available on
www.ltresources.com.au.
The Information in this report that relates to Exploration Results for the Bynoe Project is extracted from the ASX
announcements entitled “Initial Assays from Second Phase of Drilling at Bynoe Lithium Project Confirm Extensions
to Sandras Prospect”, “New Drill Targets Outlined at Bynoe Lithium Project Following Successful Soil Sampling
Program”, “Joint Airborne Geophysical Survey Commences across Bynoe/Finniss Pegmatite-Lithium Field, NT” and
“Large new pegmatite target identified at Bynoe”, “Bynoe Lithium Project, NT – Drilling Update” released on the 2
November 2016, 6 December 2016, 10 January 2017, 13 February 2017 and 28 June 2017 respectively all of which
are available on www.ltresources.com.au .
The Information in this report that relates to the Exploration Results for the Lake Percy Project is extracted from
the ASX announcement entitled “Quarterly Activities Report 31 March 2017” released on the 20 April 2017 which is
available on www.ltresources.com.au.
The information in this report which relates to Mineral Resources for the Jubilee Reef Project is is extracted from
the ASX announcement entitled “Liontown Announces Maiden 390,000oz Mineral Resource for the Jubilee Reef Gold
Project in Tanzania, East Africa” released on 30 November 2015 and which is available on www.ltresources.com.au.
The information in this report which relates to Exploration Results for the Jubilee Reef Project is extracted from
the ASX announcement entitled “Quarterly activities report for the Quarter ending 30th September 2016” released
on the 12th October 2016 which is available on www.ltresources.com.au.
The information in this report which relates to Exploration Results for the Mohanga Project is extracted from the
ASX announcement entitled ‘New High-Grade Lithium Discovery in Tanzania” released on the 5th April 2017 which is
available on www.ltresources.com.au.
The company confirms that it is not aware of any new information or data that materially affects the information
included in the original market announcements. The Company confirms that the form and context in which the
Competent Person’s findings are presented have not been materially modified from the original market
announcement.
The information in this report that relates to Exploration Results for the RJC Vanadium Project is based on
information compiled by Mr David Richards, a full time employee of Liontown Resources Limited, who is a Member
of the Australian Institute of Geoscientists. Mr Richards has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activities being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Mr Richards consents to the inclusion in the report of the matters based on
his information in the form and context in which it appears.
Forward Looking Statement
This report contains forward-looking statements which involve a number of risks and uncertainties. These forward
looking statements are expressed in good faith and believed to have a reasonable basis. These statements reflect
current expectations, intentions or strategies regarding the future and assumptions based on currently available
information. Should one or more of the risks or uncertainties materialise, or should underlying assumptions prove
incorrect, actual results may vary from the expectations, intentions and strategies described in this announcement.
No obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should
change or to reflect other future developments.
Liontown Resources Limited
Appendices
APPENDIX 1: Kathleen Valley Project – RC Drilling Statistics
Hole_ID
East
North
RL
Dip
Azimuth
Depth (m)
Significant Li2O (>0.5%) and Ta2O5 (>50ppm) results
From(m)
To(m)
Interval(m)
Li2O (%)
Ta2O5 (ppm)
KVRC0007
258452
6959426
500
-47
45
132
incl. 3m @ 1.9% Li2O and 166ppm Ta2O5 from 30m
incl. 9m @ 1.9% Li2O and 107ppm Ta2O5 from 2m
incl. 6m @ 2% Li2O and 113ppm Ta2O5 from 88m
incl. 8m @ 2% Li2O and 130ppm Ta2O5 from 92m
incl. 3m @ 1.8% Li2O and 106ppm Ta2O5 from 45m
3
10
16
0
26
35
83
91
36
45
32
39
37
29
39
124
81
95
57
70
83
91
100
24
12
135
6
11
17
13
29
36
96
38
56
34
40
43
35
105
40
125
82
96
59
71
85
92
106
25
17
193
KVRC0001
258306
6958744
500
-60
45
65
KVRC0002
258379
6958675
500
-60
225
109
KVRC0003
258395
6958690
500
-59
225
155
KVRC0004
258348
6958645
500
-50
KVRC0005
258276
6958707
500
-53
KVRC0006
258433
6958654
500 -49.5
227.5
KVRC0008
258512
6959469
500
-50
KVRC0009
258590
6959528
500
-50
KVRC0010
258593
6959527
500
-50
225
KVRC0011
KVRC0012
KVRC0013
KVRC0014
258208
258154
258205
258157
6958788
6958729
6958930
6958881
500
500
500
500
-50
-55
-50
-50
45
40
55
45
45
45
45
45
45
45
45
45
89
89
80
130
113
130
89
65
108
113
40
119
101
89
KVRC0015
258443
6958652
500
-50
180
241
206
230
KVRC0016
KVRC0017
KVRC0018
KVRC0019
258331
257899
257951
258252
6958764
6958809
6958853
6958969
500
500
500
500
-50
-50
-50
-50
* True widths estimated as follows:
Holes drilled towards NE (040-055), true widths 70-80% of downhole width
Holes drilled towards SW (040-055), true widths 30-50% of downhole width
KVRC0015 true widths ~30% of downhole width
3
1
1
13
3
1
13
14
2
11
2
1
6
6
1
1
1
1
2
1
2
1
6
1
5
58
24
2
1
1
1.1
1.1
1.6
1.3
1.6
1.6
1.7
1
1.2
1.3
1.5
1.1
1.4
1.1
2.4
1.2
1
0.7
0.6
1.1
1.4
1.2
1
0
1.2
1.3
1.3
1.4
122
85
94
114
101
127
111
163
99
100
112
132
153
170
198
302
310
124
248
266
211
239
284
112
240
156
139
212
93
No significant assays
incl. 9m @ 1.8% Li2O and 220ppm Ta2O5 from 141m and
13m @ 2.0% Li2O and 138ppm Ta2O5 from 67m and
incl. 3m @ 1.6% Li2O and 105ppm Ta2O5 from 208m and
2m @ 2.6% Li2O and 271ppm Ta2O5 from 217m and
4m @ 1.6% Li2O and 145ppm Ta2O5 from 226m and
No significant assays
63
1
65
2
No significant assays
14
16
17
Annual Report 2017
Liontown Resources Limited
Competent Persons Statement
The Information in this report that relates to the Exploration Results for the Kathleen Valley Project is extracted
from the ASX announcement entitled “Liontown intersects strong lithium and tantalum mineralisation in maiden
drill program at Kathleen Valley, WA” released on the 20th March 2017 which
is available on
www.ltresources.com.au.
The Information in this report that relates to Exploration Results for the Bynoe Project is extracted from the ASX
announcements entitled “Initial Assays from Second Phase of Drilling at Bynoe Lithium Project Confirm Extensions
to Sandras Prospect”, “New Drill Targets Outlined at Bynoe Lithium Project Following Successful Soil Sampling
Program”, “Joint Airborne Geophysical Survey Commences across Bynoe/Finniss Pegmatite-Lithium Field, NT” and
“Large new pegmatite target identified at Bynoe”, “Bynoe Lithium Project, NT – Drilling Update” released on the 2
November 2016, 6 December 2016, 10 January 2017, 13 February 2017 and 28 June 2017 respectively all of which
are available on www.ltresources.com.au .
The Information in this report that relates to the Exploration Results for the Lake Percy Project is extracted from
the ASX announcement entitled “Quarterly Activities Report 31 March 2017” released on the 20 April 2017 which is
available on www.ltresources.com.au.
The information in this report which relates to Mineral Resources for the Jubilee Reef Project is is extracted from
the ASX announcement entitled “Liontown Announces Maiden 390,000oz Mineral Resource for the Jubilee Reef Gold
Project in Tanzania, East Africa” released on 30 November 2015 and which is available on www.ltresources.com.au.
The information in this report which relates to Exploration Results for the Jubilee Reef Project is extracted from
the ASX announcement entitled “Quarterly activities report for the Quarter ending 30th September 2016” released
on the 12th October 2016 which is available on www.ltresources.com.au.
The information in this report which relates to Exploration Results for the Mohanga Project is extracted from the
ASX announcement entitled ‘New High-Grade Lithium Discovery in Tanzania” released on the 5th April 2017 which is
available on www.ltresources.com.au.
The company confirms that it is not aware of any new information or data that materially affects the information
included in the original market announcements. The Company confirms that the form and context in which the
Competent Person’s findings are presented have not been materially modified from the original market
announcement.
The information in this report that relates to Exploration Results for the RJC Vanadium Project is based on
information compiled by Mr David Richards, a full time employee of Liontown Resources Limited, who is a Member
of the Australian Institute of Geoscientists. Mr Richards has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activities being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Mr Richards consents to the inclusion in the report of the matters based on
his information in the form and context in which it appears.
Forward Looking Statement
This report contains forward-looking statements which involve a number of risks and uncertainties. These forward
looking statements are expressed in good faith and believed to have a reasonable basis. These statements reflect
current expectations, intentions or strategies regarding the future and assumptions based on currently available
information. Should one or more of the risks or uncertainties materialise, or should underlying assumptions prove
incorrect, actual results may vary from the expectations, intentions and strategies described in this announcement.
No obligation is assumed to update forward looking statements if these beliefs, opinions and estimates should
change or to reflect other future developments.
Appendices
Liontown Resources Limited
Appendices
APPENDIX 1: Kathleen Valley Project – RC Drilling Statistics
Hole_ID
East
North
RL
Dip
Azimuth
Depth (m)
KVRC0001
258306
6958744
500
-60
45
65
KVRC0002
258379
6958675
500
-60
225
109
KVRC0003
258395
6958690
500
-59
225
155
KVRC0004
258348
6958645
500
-50
KVRC0005
258276
6958707
500
-53
45
40
KVRC0006
258433
6958654
500 -49.5
227.5
89
89
80
KVRC0007
258452
6959426
500
-47
45
132
KVRC0008
258512
6959469
500
-50
KVRC0009
258590
6959528
500
-50
55
45
KVRC0010
258593
6959527
500
-50
225
KVRC0011
KVRC0012
KVRC0013
KVRC0014
258208
258154
258205
258157
6958788
6958729
6958930
6958881
500
500
500
500
-50
-55
-50
-50
45
45
45
45
130
113
130
89
65
108
113
KVRC0015
258443
6958652
500
-50
180
241
KVRC0016
KVRC0017
KVRC0018
KVRC0019
258331
257899
257951
258252
6958764
6958809
6958853
6958969
500
500
500
500
-50
-50
-50
-50
45
45
45
45
40
119
101
89
Significant Li2O (>0.5%) and Ta2O5 (>50ppm) results
From(m)
3
10
16
0
To(m)
6
11
17
13
Li2O (%)
1
1.1
1.1
1.6
Interval(m)
3
1
1
13
Ta2O5 (ppm)
122
85
94
114
incl. 9m @ 1.9% Li2O and 107ppm Ta2O5 from 2m
101
127
111
1.3
1.6
1.6
29
36
96
3
1
13
26
35
83
91
36
45
32
39
37
29
39
124
81
95
57
70
83
91
100
24
incl. 6m @ 2% Li2O and 113ppm Ta2O5 from 88m
105
14
1.7
163
38
56
2
11
2
1
6
6
1
1.2
34
40
43
35
1.3
1.5
1.1
1.4
incl. 8m @ 2% Li2O and 130ppm Ta2O5 from 92m
99
100
incl. 3m @ 1.8% Li2O and 106ppm Ta2O5 from 45m
112
132
153
170
incl. 3m @ 1.9% Li2O and 166ppm Ta2O5 from 30m
198
302
310
124
248
266
211
239
284
112
40
125
82
96
59
71
85
92
106
25
1.1
2.4
1.2
1
0.7
0.6
1.1
1.4
1.2
1
1
1
1
1
2
1
2
1
6
1
No significant assays
24
230
5
58
0
1.2
240
156
17
193
12
135
incl. 9m @ 1.8% Li2O and 220ppm Ta2O5 from 141m and
13m @ 2.0% Li2O and 138ppm Ta2O5 from 67m and
139
206
incl. 3m @ 1.6% Li2O and 105ppm Ta2O5 from 208m and
2m @ 2.6% Li2O and 271ppm Ta2O5 from 217m and
4m @ 1.6% Li2O and 145ppm Ta2O5 from 226m and
No significant assays
1.3
1.4
No significant assays
212
93
63
1
65
2
1.3
2
1
* True widths estimated as follows:
Holes drilled towards NE (040-055), true widths 70-80% of downhole width
Holes drilled towards SW (040-055), true widths 30-50% of downhole width
KVRC0015 true widths ~30% of downhole width
16
17
15
Annual Report 2017
Liontown Resources Limited
Tenement Schedule
Tenement Schedule
Liontown Resources Limited
Tenement Schedule
AUSTRALIA
TANZANIA
Project
Tenement No.
Registered Holder
Nature of interests
Project
Tenement No.
Registered Holder
Nature of interests
Bynoe
Kathleen
Valley
RJC Vanadium
EL30012
EL30015
MLN16
EMP28651
EL29699
M36/162
M36/176
M36/264
M36/265
M36/266
M36/328
M36/342
M36/365
M36/375
M36/376
M36/441
M36/459
M36/460
M36/603
M36/660
E36/879
EPM26490
EPM26491
EPM26492
EPM26494
EPM26495
Liontown Resources Limited
100% direct interest (subject to Tenement
Jubilee Reef
RL/00040/2017 (replaces
Liontown Resources (T) Limited
0%
Sales Agreement with Core Exploration
Limited)
LRL (Aust) Pty Ltd (a wholly
100% direct interest (subject to Tenement
owned subsidiary of Liontown
Sales Agreement with Core Exploration
Resources Limited
Limited)
LRL (Aust) Pty Ltd (a wholly
100% direct interest - gold and
owned subsidiary of Liontown
nickel rights retained by other
Resources Limited
parties.
Liontown Resources (Tanzania) Limited
100% direct interest
Currie Rose Resources (T) Limited
100% - Pending transfer
Liontown Resources (Tanzania) Limited
100% direct interest
PL10222/2014
Currie Rose Resources (T) Limited
100% - Pending transfer
PL10599/2015
Liontown Resources (Tanzania) Limited
100% direct interest
PL4495/2007)(1)
PL6168/2009
PL8125/2012
PL8304/2012
PL9711/2014
PL9973/2014
PL10894/2016
PL10907/2016
PL11134/2017
Mohanga
PL9067/2013
Central Mining Company
Subject to Option Agreement
with Liontown Resources
(Tanzania) Limited.
Terms remaining –
4yr option period
with US$15,000
yearly payment (1st
year already paid)
purchase price of
US$900,000 (plus
10% CGT) to
acquire 100%
1% NSR on future
production can be
purchased at any
stage for
US$500,000
Liontown Resources Limited
100% direct interest
Liontown Resources Limited
100% direct interest
100% direct interest
100% direct interest
100% direct interest
0% - Application
PL10724/2015
Liontown Resources (Tanzania) Limited
100% direct interest
(1)In accordance with applicable law at the time, Liontown lodged a RL application over the Simba and Panapendesa
gold resources in April 2017. Subsequent to year end amendments to The Tanzanian Mining Act (2010) have repealed
the right to apply for RLs going forward. However, it is currently unclear whether there will be any saving provision
made to favourably deal with a RL application made prior to the enactment of the amendments. The Company is
awaiting the release of the Regulations that will accompany the enacted changes to determine whether any such
provision will be made.
16
18
19
Annual Report 2017
EL30012
EL30015
MLN16
EMP28651
EL29699
M36/162
M36/176
M36/264
M36/265
M36/266
M36/328
M36/342
M36/365
M36/375
M36/376
M36/441
M36/459
M36/460
M36/603
M36/660
E36/879
EPM26490
EPM26491
EPM26492
EPM26494
EPM26495
RJC Vanadium
Liontown Resources Limited
100% direct interest
Liontown Resources Limited
100% direct interest
100% direct interest
100% direct interest
100% direct interest
0% - Application
Liontown Resources Limited
Tenement Schedule
AUSTRALIA
Tenement Schedule
Liontown Resources Limited
Tenement Schedule
TANZANIA
Project
Tenement No.
Registered Holder
Nature of interests
Project
Tenement No.
Registered Holder
Nature of interests
Bynoe
Liontown Resources Limited
100% direct interest (subject to Tenement
Jubilee Reef
RL/00040/2017 (replaces
Liontown Resources (T) Limited
0%
Sales Agreement with Core Exploration
Limited)
LRL (Aust) Pty Ltd (a wholly
100% direct interest (subject to Tenement
owned subsidiary of Liontown
Sales Agreement with Core Exploration
Resources Limited
Limited)
LRL (Aust) Pty Ltd (a wholly
100% direct interest - gold and
owned subsidiary of Liontown
nickel rights retained by other
Resources Limited
parties.
PL4495/2007)(1)
PL6168/2009
PL8125/2012
PL8304/2012
PL9711/2014
PL9973/2014
Liontown Resources (Tanzania) Limited
100% direct interest
Currie Rose Resources (T) Limited
100% - Pending transfer
Liontown Resources (Tanzania) Limited
100% direct interest
PL10222/2014
Currie Rose Resources (T) Limited
100% - Pending transfer
PL10599/2015
Liontown Resources (Tanzania) Limited
100% direct interest
PL10894/2016
PL10907/2016
PL11134/2017
Kathleen
Valley
Mohanga
PL9067/2013
Central Mining Company
Subject to Option Agreement
with Liontown Resources
(Tanzania) Limited.
Terms remaining –
4yr option period
with US$15,000
yearly payment (1st
year already paid)
purchase price of
US$900,000 (plus
10% CGT) to
acquire 100%
1% NSR on future
production can be
purchased at any
stage for
US$500,000
PL10724/2015
Liontown Resources (Tanzania) Limited
100% direct interest
(1)In accordance with applicable law at the time, Liontown lodged a RL application over the Simba and Panapendesa
gold resources in April 2017. Subsequent to year end amendments to The Tanzanian Mining Act (2010) have repealed
the right to apply for RLs going forward. However, it is currently unclear whether there will be any saving provision
made to favourably deal with a RL application made prior to the enactment of the amendments. The Company is
awaiting the release of the Regulations that will accompany the enacted changes to determine whether any such
provision will be made.
18
19
17
Annual Report 2017
Liontown Resources Limited
Directors’ Report
Directors’ Report
The Directors present their report together with the financial statements of the Group consisting of Liontown
Resources Limited (‘Liontown Resources’ or ‘the Company’) and its controlled entities for the financial year ended
30 June 2017 and the independent auditor’s report thereon.
1. Directors
The names and details of the Company’s directors in office during the financial year and until the date of this report
are as follows. Directors were in office for the entire period unless otherwise stated.
Tim R B Goyder
Chairman
David R Richards
BSc (Hons), MAIG
Managing Director
Craig R Williams
BSc (Hons)
Independent Non-executive
Director
Anthony J Cipriano
B.Bus, CA, GAICD
Independent Non-executive
Director
Tim has considerable experience in the resource industry as an executive and
investor. He has been involved in the formation and management of a number
of publicly-listed companies and is currently Managing Director of Chalice Gold
Mines Limited (since 2006), Chairman of Uranium Equities Limited (since 2002)
and a director of Strike Energy Limited (since 2017) and PhosEnergy Limited
(since 2013). He has been a Director and Chairman since 2006.
David has over 30 years’ experience in mineral exploration in Australia,
Southeast Asia and western USA. His career includes exploration and resource
definition for a variety of gold and base metal deposit styles and he led the
team that discovered the multi-million ounce, high grade Vera-Nancy gold
deposits in North Queensland. He has held senior positions with Battle Mountain
Australia Inc, Delta Gold Limited, AurionGold Limited and was Managing
Director of ASX-listed Glengarry Resources Limited from 2003-2009. Managing
Director since 2010.
Craig is a Geologist with over 40 years’ experience in mineral exploration and
development. Craig co-founded Equinox Minerals Limited in 1993 and was
President, Chief Executive Officer and Director prior to Barrick Gold’s takeover
of Equinox. Craig has been the Chairman of OreCorp Limited (since 2011). He
has been directly involved in several significant discoveries, including the
Ernest Henry Deposit in Queensland and a series of gold deposits in Western
Australia. In addition to his technical capabilities, he also has extensive
corporate management and financing experience. Craig has been a Director
since 2006 and member of the Audit Committee.
Anthony is a Chartered Accountant with over 30 years accounting and finance
experience. Anthony was formerly a partner at Deloitte and at the time of his
retirement in 2013 he was the Deloitte National Tax Leader for Energy &
Resources and leader of its Western Australian Tax Practice. Anthony has
significant experience working across tax, accounting, legal and financial
aspects of corporate transactions. During the past three years, Anthony has also
been a director of Lachlan Star Limited (Subject to Deed of Company
Arrangement) (since 2014). Anthony has been a Director since 2014 and is
Chairman of the Audit Committee.
2. Company secretary
Kym Verheyen
B.Com, CA
(appointed 15 September 2017)
Kym is a Chartered Accountant with over 25 years’ experience gained in both
public practice and commerce. Kym commenced her career with Deloitte and
has since held finance positions in a diverse range of industries. Kym is also the
Company Secretary of Uranium Equities Limited.
Leanne Stevens
B.Com, CA, ACSA
(resigned 15 September 2017)
Leanne is a Chartered Accountant who has over 14 years of accounting and
governance experience within the mining and energy industries. Leanne
resigned from the position of Company Secretary effective 15 September 2017.
20
18
Annual Report 2017
Liontown Resources Limited
Directors’ Report
Directors’ Report
Liontown Resources Limited
Directors’ Report
The Directors present their report together with the financial statements of the Group consisting of Liontown
Resources Limited (‘Liontown Resources’ or ‘the Company’) and its controlled entities for the financial year ended
30 June 2017 and the independent auditor’s report thereon.
3. Directors’ meetings
The number of meetings of directors (including meetings of committees of directors) held during the year and the
number of meetings attended by each director were as follows:
1. Directors
Tim R B Goyder
Chairman
David R Richards
BSc (Hons), MAIG
Managing Director
The names and details of the Company’s directors in office during the financial year and until the date of this report
are as follows. Directors were in office for the entire period unless otherwise stated.
Tim has considerable experience in the resource industry as an executive and
investor. He has been involved in the formation and management of a number
of publicly-listed companies and is currently Managing Director of Chalice Gold
Mines Limited (since 2006), Chairman of Uranium Equities Limited (since 2002)
and a director of Strike Energy Limited (since 2017) and PhosEnergy Limited
(since 2013). He has been a Director and Chairman since 2006.
David has over 30 years’ experience in mineral exploration in Australia,
Southeast Asia and western USA. His career includes exploration and resource
definition for a variety of gold and base metal deposit styles and he led the
team that discovered the multi-million ounce, high grade Vera-Nancy gold
deposits in North Queensland. He has held senior positions with Battle Mountain
Australia Inc, Delta Gold Limited, AurionGold Limited and was Managing
Director of ASX-listed Glengarry Resources Limited from 2003-2009. Managing
Director since 2010.
Independent Non-executive
President, Chief Executive Officer and Director prior to Barrick Gold’s takeover
Craig is a Geologist with over 40 years’ experience in mineral exploration and
development. Craig co-founded Equinox Minerals Limited in 1993 and was
Craig R Williams
BSc (Hons)
Director
of Equinox. Craig has been the Chairman of OreCorp Limited (since 2011). He
has been directly involved in several significant discoveries, including the
Ernest Henry Deposit in Queensland and a series of gold deposits in Western
Australia. In addition to his technical capabilities, he also has extensive
corporate management and financing experience. Craig has been a Director
since 2006 and member of the Audit Committee.
Anthony J Cipriano
B.Bus, CA, GAICD
Anthony is a Chartered Accountant with over 30 years accounting and finance
experience. Anthony was formerly a partner at Deloitte and at the time of his
Independent Non-executive
retirement in 2013 he was the Deloitte National Tax Leader for Energy &
Director
Resources and leader of its Western Australian Tax Practice. Anthony has
significant experience working across tax, accounting, legal and financial
aspects of corporate transactions. During the past three years, Anthony has also
been a director of Lachlan Star Limited (Subject to Deed of Company
Arrangement) (since 2014). Anthony has been a Director since 2014 and is
Chairman of the Audit Committee.
Number of meetings held:
Number of meetings attended:
T R B Goyder
A J Cipriano
D R Richards
C R Williams
Directors’ Meetings
4
Audit
2
Remuneration*
-
Nomination*
-
4
4
4
4
-
2
-
2
-
-
-
-
-
-
-
-
*The full Board did not officially convene as a nomination or remuneration committee during the reporting period,
however, nomination and remuneration discussions occurred at Board meetings as required.
Given the current size and composition of the Board, the Company has not established a separate remuneration or
nomination committee.
4. Principal activities
The principal activities of the Company during the course of the financial year were mineral exploration and
evaluation.
5. Review of operations
Refer to the Operating and Financial Review from pages 2 to 12 of the Annual Report.
6. Significant changes in the state of affairs
There were no significant changes in the state of affairs other than as noted elsewhere in this financial report.
7. Remuneration report – audited
7.1. Introduction
This remuneration report for the year ended 30 June 2017 outlines remuneration arrangements in place for directors
and other members of the key management personnel (“KMP”) of Liontown Resources in accordance with the
requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as
required by section 308(3C) of the Act.
The remuneration report details the remuneration for KMP who are defined as those persons having authority and
responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including
any director (whether executive or otherwise) of the parent company, or any controlled entity. KMP’s during or since
year end were:
2. Company secretary
Kym Verheyen
B.Com, CA
(appointed 15 September 2017)
Kym is a Chartered Accountant with over 25 years’ experience gained in both
public practice and commerce. Kym commenced her career with Deloitte and
has since held finance positions in a diverse range of industries. Kym is also the
Company Secretary of Uranium Equities Limited.
Leanne Stevens
B.Com, CA, ACSA
Leanne is a Chartered Accountant who has over 14 years of accounting and
governance experience within the mining and energy industries. Leanne
(resigned 15 September 2017)
resigned from the position of Company Secretary effective 15 September 2017.
(i) Directors
T R B Goyder (Chairman)
C R Williams (Non-executive Director)
A J Cipriano (Non-executive Director)
D R Richards (Managing Director)
(ii) Executives
Richard Hacker (CFO)
20
19
19
Annual Report 2017
Liontown Resources Limited
Directors’ Report
Directors’ Report
Liontown Resources Limited
Directors’ Report
There were no other changes to KMP after the reporting date and before the date the financial report was authorised
for issue.
b) Executive remuneration
7.1.1 Remuneration philosophy
The performance of the Company depends upon the quality of the directors and executives. The philosophy of the
Company in determining remuneration levels is to set competitive remuneration packages to attract and retain high
calibre employees and to link a significant component of executive rewards to shareholder value creation. The size,
nature and financial strength of the Company are also taken into account when setting remuneration levels so as to
ensure that the operations of the Company remain sustainable.
The Company’s executive remuneration strategy is designed to attract, motivate and retain high performance
individuals and align the interests of executives and shareholders. Remuneration consists of fixed remuneration and
variable remuneration (comprising short-term and long-term incentive schemes).
Fixed remuneration
Fixed remuneration is reviewed annually by the Board by a process which consists of a review of relevant comparative
remuneration in the market and, where appropriate, external advice on policies and practices.
Variable remuneration - Long term incentive scheme
7.1.2 Remuneration committee
The Board performs the role of the Remuneration Committee and is responsible for determining and reviewing
compensation arrangements for the directors, the Managing Director and any executives.
Options may be issued under the Employee Share Option Plan to directors, employees and consultants of the Company
and must be exercised within 3 months of termination. Other than the vesting period, there is no performance hurdle
required to be achieved by the Company to enable the options to be exercised.
7.1.1. Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive and executive remuneration
is separate and distinct.
a) Non-executive director remuneration
The Board recognises the importance of attracting and retaining talented non-executive directors and aims to
remunerate these directors in line with fees paid to directors of companies of a similar size and complexity in the
mining and exploration industry. The Board seeks to set aggregate remuneration at a level that provides the Company
with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to
shareholders.
The Company believes that the issue of share options in the Company aligns the interests of directors, employees
and shareholders alike. As no formal performance hurdles are set on options issued to executives, the Company
believes that as options are issued at a price in excess of the Company’s current share price at the date of issue of
those options, there is an inherent performance hurdle as the share price of the Company’s shares has to increase
before any reward can accrue to the executive.
Short term incentive schemes
The Company currently has no formal performance related remuneration policy which governs the payment of annual
cash bonuses upon meeting pre-determined performance targets. However, the board may consider performance
related remuneration in the form of cash or share options when they consider these to be warranted.
The Company’s Constitution and the ASX Listing Rules specify that the aggregate fees to be paid to non-executive
directors for their role as a director are to be approved by shareholders at a general meeting. Shareholders have
approved an aggregate amount of up to $300,000 per year (including superannuation).
7.1.2. Employment contracts
are provided below.
Remuneration arrangements for KMP are generally formalised in employment agreements. Details of these contracts
The amount of total compensation apportioned amongst directors is reviewed annually and the Board considers advice
from external shareholders as well as the fees paid to non-executive directors of comparable companies when
undertaking the annual review process. The Board will not seek any increase for the non-executive pool at the 2017
AGM.
The remuneration of non-executive directors consists of directors’ fees. Each director receives a fee for being a
director of the Company. No additional fees are paid for each Board committee which a director sits due to the size
of the Company. The non-executive directors are not entitled to receive retirement benefits and, at the discretion
of the Board, may participate in the Employee Share Option Plan, subject to the usual approvals required by
shareholders.
Name and Job Title
Employment Contract
Notice Period
Termination Provisions
Duration
Executive Director
D R Richards
Managing Director
Executive
R K Hacker(1)
Unlimited
3 months by the
Nil
Company and the
employee
Chief Financial Officer
N/A
N/A
N/A
The Board considers it may be appropriate to issue options to non-executive directors given the current nature and
size of the Company as, until profits are generated, conservation of cash reserves remain a high priority. Any options
issued to directors will require separate shareholder approval.
(1) Chalice Gold Mines Limited provides corporate services to the Company which from 2006, includes the
services of Mr Hacker. Details of the Corporate Services Agreement between the two companies are
outlined in note 20 of the Financial Report.
Apart from their duties as directors, some non-executive directors may undertake work for the Company on a
consultancy basis pursuant to the terms of consultancy services agreement. The nature of the consultancy work
varies depending on the expertise of the relevant non-executive director. Under the terms of these consultancy
agreements non-executive directors would receive a daily rate or a monthly retainer for the work performed at a
rate comparable to market rates that they would otherwise receive for their consultancy services.
The remuneration of non-executive directors for the year ended 30 June 2017 is detailed in section 7.2 of this report.
20
22
23
Annual Report 2017
Liontown Resources Limited
Directors’ Report
Directors’ Report
Liontown Resources Limited
Directors’ Report
There were no other changes to KMP after the reporting date and before the date the financial report was authorised
for issue.
7.1.1 Remuneration philosophy
The performance of the Company depends upon the quality of the directors and executives. The philosophy of the
Company in determining remuneration levels is to set competitive remuneration packages to attract and retain high
calibre employees and to link a significant component of executive rewards to shareholder value creation. The size,
nature and financial strength of the Company are also taken into account when setting remuneration levels so as to
ensure that the operations of the Company remain sustainable.
7.1.2 Remuneration committee
The Board performs the role of the Remuneration Committee and is responsible for determining and reviewing
compensation arrangements for the directors, the Managing Director and any executives.
In accordance with best practice corporate governance, the structure of non-executive and executive remuneration
7.1.1. Remuneration structure
is separate and distinct.
a) Non-executive director remuneration
The Board recognises the importance of attracting and retaining talented non-executive directors and aims to
remunerate these directors in line with fees paid to directors of companies of a similar size and complexity in the
mining and exploration industry. The Board seeks to set aggregate remuneration at a level that provides the Company
with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to
shareholders.
b) Executive remuneration
The Company’s executive remuneration strategy is designed to attract, motivate and retain high performance
individuals and align the interests of executives and shareholders. Remuneration consists of fixed remuneration and
variable remuneration (comprising short-term and long-term incentive schemes).
Fixed remuneration
Fixed remuneration is reviewed annually by the Board by a process which consists of a review of relevant comparative
remuneration in the market and, where appropriate, external advice on policies and practices.
Variable remuneration - Long term incentive scheme
Options may be issued under the Employee Share Option Plan to directors, employees and consultants of the Company
and must be exercised within 3 months of termination. Other than the vesting period, there is no performance hurdle
required to be achieved by the Company to enable the options to be exercised.
The Company believes that the issue of share options in the Company aligns the interests of directors, employees
and shareholders alike. As no formal performance hurdles are set on options issued to executives, the Company
believes that as options are issued at a price in excess of the Company’s current share price at the date of issue of
those options, there is an inherent performance hurdle as the share price of the Company’s shares has to increase
before any reward can accrue to the executive.
Short term incentive schemes
The Company currently has no formal performance related remuneration policy which governs the payment of annual
cash bonuses upon meeting pre-determined performance targets. However, the board may consider performance
related remuneration in the form of cash or share options when they consider these to be warranted.
The Company’s Constitution and the ASX Listing Rules specify that the aggregate fees to be paid to non-executive
directors for their role as a director are to be approved by shareholders at a general meeting. Shareholders have
approved an aggregate amount of up to $300,000 per year (including superannuation).
7.1.2. Employment contracts
Remuneration arrangements for KMP are generally formalised in employment agreements. Details of these contracts
are provided below.
The amount of total compensation apportioned amongst directors is reviewed annually and the Board considers advice
from external shareholders as well as the fees paid to non-executive directors of comparable companies when
undertaking the annual review process. The Board will not seek any increase for the non-executive pool at the 2017
AGM.
shareholders.
The remuneration of non-executive directors consists of directors’ fees. Each director receives a fee for being a
director of the Company. No additional fees are paid for each Board committee which a director sits due to the size
of the Company. The non-executive directors are not entitled to receive retirement benefits and, at the discretion
of the Board, may participate in the Employee Share Option Plan, subject to the usual approvals required by
Name and Job Title
Executive Director
D R Richards
Managing Director
Executive
R K Hacker(1)
Chief Financial Officer
Employment Contract
Duration
Unlimited
Notice Period
Termination Provisions
3 months by the
Company and the
employee
Nil
N/A
N/A
N/A
The Board considers it may be appropriate to issue options to non-executive directors given the current nature and
size of the Company as, until profits are generated, conservation of cash reserves remain a high priority. Any options
issued to directors will require separate shareholder approval.
(1) Chalice Gold Mines Limited provides corporate services to the Company which from 2006, includes the
services of Mr Hacker. Details of the Corporate Services Agreement between the two companies are
outlined in note 20 of the Financial Report.
Apart from their duties as directors, some non-executive directors may undertake work for the Company on a
consultancy basis pursuant to the terms of consultancy services agreement. The nature of the consultancy work
varies depending on the expertise of the relevant non-executive director. Under the terms of these consultancy
agreements non-executive directors would receive a daily rate or a monthly retainer for the work performed at a
rate comparable to market rates that they would otherwise receive for their consultancy services.
The remuneration of non-executive directors for the year ended 30 June 2017 is detailed in section 7.2 of this report.
22
23
21
Annual Report 2017
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Liontown Resources Limited
Directors’ Report
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Notes in relation to the table of directors’ and executive officers’ remuneration
A. The fair value of the options are calculated at the date of grant using a Black Scholes option pricing model
and allocated to each reporting period evenly over the period from grant date to vesting date. The value
disclosed is the portion of the fair value of the options allocated to this reporting period. In valuing the
options, market conditions have been taken into account. (Refer to note 15).
B. Mr Hacker did not receive any salary and wages for the 2017 and 2016 financial year as he is remunerated
by Chalice Gold Mines Limited through the corporate services agreement between the Company and Chalice
Gold Mines Limited. (Refer to note 20).
C. Mr Goyder suspended his directors’ fees from 1 January 2015 to 30 June 2017 to assist in conserving the
Company’s cash reserves. From 1 July 2017 Mr Goyder will receive a non-executive director’s fee of $35,160
D. During the year there was no performance related remuneration awarded to KMP.
7.3 Equity instruments
7.3.1 Options and rights over ordinary shares granted as compensation
No options were granted as compensation during the current year to key management personnel (“KMP”).
7.3.2 Exercise of options granted as compensation
During the reporting period there were no shares issued on the exercise of options previously granted as
compensation to KMP.
7.3.3 Options forfeited/lapsed during the year
Details of options granted as compensation to KMP in the current and/or prior period which were
forfeited/lapsed:
Directors
D R Richards
Executives
R K Hacker
Number forfeited/lapsed
Financial year granted
4,000,000
30 June 2014
750,000
30 June 2014
7.3.4 Analysis of options vested during the period
No options granted as compensation in the current year and/or prior periods vested during the period.
7.3.5 Movement in equity holdings of KMP
The movement during the reporting period in the number of options over ordinary shares and ordinary shares in
Liontown Resources held, directly, indirectly or beneficially, by each KMP, including their related parties, is as
follows:
25
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Annual Report 2017
Directors’ Report
Liontown Resources Limited
Directors’ Report
Notes in relation to the table of directors’ and executive officers’ remuneration
A. The fair value of the options are calculated at the date of grant using a Black Scholes option pricing model
and allocated to each reporting period evenly over the period from grant date to vesting date. The value
disclosed is the portion of the fair value of the options allocated to this reporting period. In valuing the
options, market conditions have been taken into account. (Refer to note 15).
B. Mr Hacker did not receive any salary and wages for the 2017 and 2016 financial year as he is remunerated
by Chalice Gold Mines Limited through the corporate services agreement between the Company and Chalice
Gold Mines Limited. (Refer to note 20).
C. Mr Goyder suspended his directors’ fees from 1 January 2015 to 30 June 2017 to assist in conserving the
Company’s cash reserves. From 1 July 2017 Mr Goyder will receive a non-executive director’s fee of $35,160
per annum (inclusive of superannuation).
D. During the year there was no performance related remuneration awarded to KMP.
7.3 Equity instruments
7.3.1 Options and rights over ordinary shares granted as compensation
No options were granted as compensation during the current year to key management personnel (“KMP”).
7.3.2 Exercise of options granted as compensation
During the reporting period there were no shares issued on the exercise of options previously granted as
compensation to KMP.
7.3.3 Options forfeited/lapsed during the year
Details of options granted as compensation to KMP in the current and/or prior period which were
forfeited/lapsed:
Directors
D R Richards
Executives
R K Hacker
Number forfeited/lapsed
Financial year granted
4,000,000
30 June 2014
750,000
30 June 2014
7.3.4 Analysis of options vested during the period
No options granted as compensation in the current year and/or prior periods vested during the period.
7.3.5 Movement in equity holdings of KMP
The movement during the reporting period in the number of options over ordinary shares and ordinary shares in
Liontown Resources held, directly, indirectly or beneficially, by each KMP, including their related parties, is as
follows:
23
25
Annual Report 2017
Liontown Resources Limited
Directors’ Report
Directors’ Report
Liontown Resources Limited
Directors’ Report
-
-
-
-
-
Granted as
compensation
R K Hacker
1,750,000
Ordinary shares held by KMP
Options held by KMP
Held at
1 July
2016
2,000,000
6,000,000
1,000,000
1,000,000
T R B Goyder
D R Richards
C R Williams
A J Cipriano
Executive
Exercised
-
-
-
-
Expired/
Forfeited
-
4,000,000
-
-
Held at
30 June
2017
2,000,000
2,000,000
1,000,000
1,000,000
-
750,000
1,000,000
Vested during
the year
-
-
-
-
-
Vested and
exercisable at
30 June 2017
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
(i)
The group receives corporate services including office rent and facilities, management, accounting
and company secretarial services under a Corporate Services Agreement with Chalice Gold Mines
Limited. Mr Goyder is a Director of Chalice Gold Mines Limited and prior to this was the Executive
Chairman. Mr Hacker was also the CFO of Chalice Gold Mines Ltd during the year. Amounts billed
are based on a proportionate share of the cost to Chalice Gold Mines Limited of providing the services
and have normal payment terms.
Amounts payable to key management personnel at reporting date arising from these transactions were as
Liabilities arising from the above transactions
follows:
Current payables
8.
Dividends
2017
$
(5,500)
(5,500)
2016
$
(5,500)
(5,500)
No dividends were declared or paid during the period and the directors recommend that no dividend be paid.
On 3 August 2017, the Company exercised an option to acquire 100% of the Bynoe Lithium Project tenure that it
9. Events subsequent to reporting date
did not already own by paying the vendor $100,000.
On 12 September 2017, the Company agreed to sell its Bynoe Project to Core Exploration Limited (ASX: CXO)
(“Core” or “CXO”) for an upfront consideration of $1,500,000 in cash and issuing $2,000,000 in CXO shares
(calculated using a 10 day VWAP prior to the date of the Agreement) (“Consideration Shares”) and in addition, a
milestone payment of $1,500,000 in cash or shares (at Core’s election) upon defining a JORC compliant Mineral
Resource totaling 5Mt within Liontown’s Bynoe tenure. The Consideration Shares will be subject to voluntary
escrow provisions.
In July 2017 the Company announced that amendments to the legal framework governing the natural resources
sector in Tanzania were passed by the Tanzanian Parliament. The full impact of the new legislation on Liontown’s
activities in Tanzania has still yet to be fully determined, however, it does appear to increase risk and uncertainty
of the Company’s tenure over the Simba and Panapendesa gold resources at the Jubilee Reef Project.
Liontown lodged a Retention Licence (“RL”) application over the Simba and Panapendesa gold resources in April
2017. The new legislation has repealed the right to apply for RLs going forward. However, it is currently unclear
whether there will be any saving provision made to favourably deal with a RL application made prior to the
enactment of the amendments. The Company is awaiting the release of the Regulations that will accompany the
enacted changes to determine whether any such provision will be made.
There are no likely developments that will impact on the Company other than as disclosed elsewhere in this
10. Likely developments
report.
27
Held at
1 July 2016
180,487,483
2,859,583
12,219,268
5,308,732
Additions
45,697,499
571,917
2,443,854
1,061,747
4,333,333
1,153,857
Received on
exercise of
options
Sales
Held at
30 June 2017
-
-
-
-
-
-
-
-
-
-
226,184,982
3,431,500
14,663,122
6,370,479
5,487,190
Directors
T R B Goyder
D R Richards
C R Williams
A J Cipriano
Executives
R K Hacker
7.3.6 Other transactions with key management personnel
Individual directors’ and executives’ compensation disclosures
Information regarding individual directors’ and executives’ compensation is provided in the Remuneration
Report section of the Directors’ Report.
Loans to key management personnel and their related parties
No loans were made to key management personnel and their related parties.
Other key management personnel transactions with the Group
A number of key management persons, or their related parties, hold positions in other entities that result in
them having control or significant influence over the financial or operating policies of those entities.
A number of these entities transacted with the Group during any given reporting period. The terms and
conditions of the transactions with management persons and their related parties were no more favourable than
those available, or which might reasonably be expected to be available, on similar transactions to non-Director
related entities on an arm’s length basis.
The aggregate amounts recognised during the year relating to key management personnel and their related
parties were as follows:
As the Company’s primary focus is on its portfolio of lithium projects in Australia, the Company closed its
Tanzanian office until the practical effects of the changed legislation is understood.
Other related parties
Chalice Gold Mines Limited
Corporate Services
(i)
Note
24
Amounts paid or payable
2017
$
66,000
Amounts paid or payable
Amounts paid or
payable
2016
$
66,000
26
Annual Report 2017
Directors’ Report
Liontown Resources Limited
Directors’ Report
(i)
The group receives corporate services including office rent and facilities, management, accounting
and company secretarial services under a Corporate Services Agreement with Chalice Gold Mines
Limited. Mr Goyder is a Director of Chalice Gold Mines Limited and prior to this was the Executive
Chairman. Mr Hacker was also the CFO of Chalice Gold Mines Ltd during the year. Amounts billed
are based on a proportionate share of the cost to Chalice Gold Mines Limited of providing the services
and have normal payment terms.
Amounts payable to key management personnel at reporting date arising from these transactions were as
follows:
Liabilities arising from the above transactions
Current payables
2017
$
(5,500)
(5,500)
2016
$
(5,500)
(5,500)
Dividends
8.
No dividends were declared or paid during the period and the directors recommend that no dividend be paid.
9. Events subsequent to reporting date
On 3 August 2017, the Company exercised an option to acquire 100% of the Bynoe Lithium Project tenure that it
did not already own by paying the vendor $100,000.
On 12 September 2017, the Company agreed to sell its Bynoe Project to Core Exploration Limited (ASX: CXO)
(“Core” or “CXO”) for an upfront consideration of $1,500,000 in cash and issuing $2,000,000 in CXO shares
(calculated using a 10 day VWAP prior to the date of the Agreement) (“Consideration Shares”) and in addition, a
milestone payment of $1,500,000 in cash or shares (at Core’s election) upon defining a JORC compliant Mineral
Resource totaling 5Mt within Liontown’s Bynoe tenure. The Consideration Shares will be subject to voluntary
escrow provisions.
In July 2017 the Company announced that amendments to the legal framework governing the natural resources
sector in Tanzania were passed by the Tanzanian Parliament. The full impact of the new legislation on Liontown’s
activities in Tanzania has still yet to be fully determined, however, it does appear to increase risk and uncertainty
of the Company’s tenure over the Simba and Panapendesa gold resources at the Jubilee Reef Project.
Liontown lodged a Retention Licence (“RL”) application over the Simba and Panapendesa gold resources in April
2017. The new legislation has repealed the right to apply for RLs going forward. However, it is currently unclear
whether there will be any saving provision made to favourably deal with a RL application made prior to the
enactment of the amendments. The Company is awaiting the release of the Regulations that will accompany the
enacted changes to determine whether any such provision will be made.
As the Company’s primary focus is on its portfolio of lithium projects in Australia, the Company closed its
Tanzanian office until the practical effects of the changed legislation is understood.
10. Likely developments
There are no likely developments that will impact on the Company other than as disclosed elsewhere in this
report.
25
27
Annual Report 2017
15. Auditor’s independence declaration
The auditor’s independence declaration is set out on page 28 and forms part of the Directors’ Report for the
year ended 30 June 2017.
16. Corporate Governance
The directors of the Group support and adhere to the principles of corporate governance, recognising the need
for the highest standard of corporate behaviour and accountability. Please refer to the corporate governance
statement dated 19th September 2017 released to ASX and posted on the Company website at
www.ltresources.com.au/corporate-governance.
This report is made with a resolution of the directors:
David R Richards
Managing Director
Dated at Perth the 19th day of September 2017
Liontown Resources Limited
Directors’ Report
Directors’ Report
Liontown Resources Limited
Directors’ Report
11. Directors’ interests
The relevant interest of each director in the shares, rights or options over such instruments issued by the Company
and other related bodies corporate at the date of this report is as follows:
T R B Goyder
D R Richards
C R Williams
A J Cipriano
Ordinary shares
226,184,982
3,431,500
14,663,122
6,370,479
Unlisted Options over ordinary shares
2,000,000
2,000,000
1,000,000
1,000,000
12. Share options
Unissued shares under unlisted options
At the date of this report 10,800,000 unissued ordinary shares of the Company are under option on the following
terms and conditions:
Expiry date
31 March 2021
Exercise price
$
0.035
Number of shares
10,800,000
These options do not entitle the holder to participate in any share issue of the Company or any other body
corporate.
During the period between balance date and the date of this report, no options have been granted.
Shares issued on exercise of options
During or since the end of the year, the Company has not issued any ordinary shares as a result of the exercise
of options.
Indemnification and insurance of directors and officers
13.
The Company has agreed to indemnify all the directors and officers who have held office of the Company during
the year, against all liabilities to another person (other than the Company or a related body corporate) that
may arise from their position as directors and officers of the Company, except where the liability arises out of
conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount
of any such liabilities, including costs and expenses.
During the year the Company paid insurance premiums of $12,994 in respect of directors’ and officers’ indemnity
insurance contracts for current and former directors and officers. The insurance premiums relate to:
costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal
and whatever their outcome; and
other liabilities that may arise from their position, with the exception of conduct involving a wilful
breach of duty or improper use of information or position to gain a personal advantage.
The amount of insurance paid is included in key management personnel remuneration on page 22.
14. Auditor’s remuneration and non-audit services
Details of the auditor’s remuneration are disclosed in note 6 of the notes to the consolidated financial
statements.
During the year HLB Mann Judd, the Company’s auditors, performed no other services in addition to their
statutory duties.
26
26
27
Annual Report 2017
Liontown Resources Limited
Directors’ Report
Directors’ Report
Liontown Resources Limited
Directors’ Report
11. Directors’ interests
The relevant interest of each director in the shares, rights or options over such instruments issued by the Company
and other related bodies corporate at the date of this report is as follows:
15. Auditor’s independence declaration
The auditor’s independence declaration is set out on page 28 and forms part of the Directors’ Report for the
year ended 30 June 2017.
Ordinary shares
Unlisted Options over ordinary shares
226,184,982
3,431,500
14,663,122
6,370,479
2,000,000
2,000,000
1,000,000
1,000,000
16. Corporate Governance
The directors of the Group support and adhere to the principles of corporate governance, recognising the need
for the highest standard of corporate behaviour and accountability. Please refer to the corporate governance
statement dated 19th September 2017 released to ASX and posted on the Company website at
www.ltresources.com.au/corporate-governance.
12. Share options
Unissued shares under unlisted options
terms and conditions:
At the date of this report 10,800,000 unissued ordinary shares of the Company are under option on the following
This report is made with a resolution of the directors:
Exercise price
$
0.035
Number of shares
10,800,000
David R Richards
Managing Director
Dated at Perth the 19th day of September 2017
T R B Goyder
D R Richards
C R Williams
A J Cipriano
Expiry date
31 March 2021
corporate.
These options do not entitle the holder to participate in any share issue of the Company or any other body
During the period between balance date and the date of this report, no options have been granted.
Shares issued on exercise of options
of options.
During or since the end of the year, the Company has not issued any ordinary shares as a result of the exercise
13.
Indemnification and insurance of directors and officers
The Company has agreed to indemnify all the directors and officers who have held office of the Company during
the year, against all liabilities to another person (other than the Company or a related body corporate) that
may arise from their position as directors and officers of the Company, except where the liability arises out of
conduct involving a lack of good faith. The agreement stipulates that the Company will meet the full amount
of any such liabilities, including costs and expenses.
During the year the Company paid insurance premiums of $12,994 in respect of directors’ and officers’ indemnity
insurance contracts for current and former directors and officers. The insurance premiums relate to:
costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal
and whatever their outcome; and
other liabilities that may arise from their position, with the exception of conduct involving a wilful
breach of duty or improper use of information or position to gain a personal advantage.
The amount of insurance paid is included in key management personnel remuneration on page 22.
14. Auditor’s remuneration and non-audit services
Details of the auditor’s remuneration are disclosed in note 6 of the notes to the consolidated financial
During the year HLB Mann Judd, the Company’s auditors, performed no other services in addition to their
statements.
statutory duties.
26
27
27
Annual Report 2017
Liontown Resources Limited
Auditor’s Independence Declaration
Auditor’s Independence Declaration
Liontown Resources Limited
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2017
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Liontown Resources Limited for the
year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
AUDITOR’S INDEPENDENCE DECLARATION
Exploration and evaluation expenditure expensed
5
(2,636,723)
(1,304,519)
Business development expenses
(46,072)
(306,281)
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
Loss on sale of assets
As lead auditor for the audit of the consolidated financial report of Liontown Resources Limited for the
b)
year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
any applicable code of professional conduct in relation to the audit.
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
19 September 2017
L Di Giallonardo
Partner
Perth, Western Australia
19 September 2017
L Di Giallonardo
Partner
Continuing Operations
Revenue
Loss before income tax
Income tax expense
Note
2017
$
Restated 2016*
$
3(a)
16,869
50,294
-
-
(5,053)
-
(3,283,570)
(2,094,133)
(3,168)
(6,709)
(3,286,738)
(2,100,842)
(0.38)
(0.38)
(0.35)
(0.35)
7
8
8
Corporate administrative expenses
3(b)
(617,644)
(528,574)
Loss for the year attributable to owners of the parent
(3,283,570)
(2,094,133)
Other comprehensive loss
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Total comprehensive loss after tax attributable to owners of
the parent
(cents)
(cents)
Basic loss per share attributable to ordinary equity holders
Diluted loss per share attributable to ordinary equity holders
*The 30 June 2016 statement of comprehensive income has been restated pursuant to the Company’s voluntary change
in accounting policy for exploration and evaluation expenditure (note 1(d)).
The statement of comprehensive income is to be read in conjunction with the notes to the financial statements.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533
28
Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers
30
29
29
31
Annual Report 2017
Liontown Resources Limited
Auditor’s Independence Declaration
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Liontown Resources Limited for the
year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
AUDITOR’S INDEPENDENCE DECLARATION
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
As lead auditor for the audit of the consolidated financial report of Liontown Resources Limited for the
year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no
any applicable code of professional conduct in relation to the audit.
b)
contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
19 September 2017
L Di Giallonardo
Partner
Perth, Western Australia
19 September 2017
L Di Giallonardo
Partner
Consolidated Statement of Comprehensive Income
Liontown Resources Limited
For the year ended 30 June 2017
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2017
Continuing Operations
Revenue
Note
2017
$
Restated 2016*
$
3(a)
16,869
50,294
Exploration and evaluation expenditure expensed
5
(2,636,723)
(1,304,519)
Business development expenses
(46,072)
(306,281)
Loss on sale of assets
-
(5,053)
Corporate administrative expenses
3(b)
(617,644)
(528,574)
Loss before income tax
Income tax expense
(3,283,570)
(2,094,133)
7
-
-
Loss for the year attributable to owners of the parent
(3,283,570)
(2,094,133)
Other comprehensive loss
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
(3,168)
(6,709)
Total comprehensive loss after tax attributable to owners of
the parent
(3,286,738)
(2,100,842)
Basic loss per share attributable to ordinary equity holders
(cents)
Diluted loss per share attributable to ordinary equity holders
(cents)
8
8
(0.38)
(0.38)
(0.35)
(0.35)
*The 30 June 2016 statement of comprehensive income has been restated pursuant to the Company’s voluntary change
in accounting policy for exploration and evaluation expenditure (note 1(d)).
The statement of comprehensive income is to be read in conjunction with the notes to the financial statements.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533
Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers
30
29
29
29
31
Annual Report 2017
Consolidated Statement of Financial Position
As at 30 June 2017
Liontown Resources Limited
Consolidated Statement of Financial Position
As at 30 June 2017
Liontown Resources Limited
Liontown Resources Limited
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
As at 30 June 2017
As at 30 June 2017
Current assets
Current assets
Current assets
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents
Trade and other receivables
Trade and other receivables
Trade and other receivables
Total current assets
Total current assets
Total current assets
Non-current assets
Non-current assets
Non-current assets
Financial assets
Financial assets
Financial assets
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment
Total non-current assets
Total non-current assets
Total non-current assets
Total assets
Total assets
Total assets
Current liabilities
Current liabilities
Current liabilities
Trade and other payables
Trade and other payables
Trade and other payables
Employee benefits
Employee benefits
Employee benefits
Total current liabilities
Total current liabilities
Total current liabilities
Total liabilities
Total liabilities
Total liabilities
Net assets
Net assets
Net assets
Equity
Equity
Equity
Issued capital
Issued capital
Issued capital
Accumulated losses
Accumulated losses
Accumulated losses
Reserves
Reserves
Reserves
Total equity
Total equity
Total equity
Note
Note
Note
2017
2017
2017
$
$
$
Restated
2016*
$
Restated
Restated
2016*
2016*
$
$
Restated 1 July
Restated 1 July
Restated 1 July
2015*
2015*
2015*
$
$
$
9
10
11
12
9
9
10
10
11
11
12
12
1,415,601
75,272
1,490,873
1,415,601
1,415,601
75,272
75,272
1,490,873
1,490,873
800,948
89,637
890,585
800,948
800,948
89,637
89,637
890,585
890,585
907,882
30,580
938,462
907,882
907,882
30,580
30,580
938,462
938,462
107,081
45,030
152,111
107,081
107,081
45,030
45,030
152,111
152,111
25,000
52,052
77,052
25,000
25,000
52,052
52,052
77,052
77,052
25,000
53,937
78,937
25,000
25,000
53,937
53,937
78,937
78,937
1,642,984
1,642,984
1,642,984
967,637
967,637
967,637
1,017,399
1,017,399
1,017,399
13
14
13
13
14
14
98,614
42,104
140,718
98,614
98,614
42,104
42,104
140,718
140,718
359,163
14,143
373,306
359,163
359,163
14,143
14,143
373,306
373,306
985,447
19,520
1,004,967
985,447
985,447
19,520
19,520
1,004,967
1,004,967
140,718
140,718
140,718
373,306
373,306
373,306
1,004,967
1,004,967
1,004,967
1,502,266
1,502,266
1,502,266
594,331
594,331
594,331
12,432
12,432
12,432
16
16
16
16
16
16
16
16
16
34,347,020
(33,144,913)
300,159
1,502,266
34,347,020
34,347,020
(33,144,913)
(33,144,913)
300,159
300,159
1,502,266
1,502,266
30,194,966
(29,920,254)
319,619
594,331
30,194,966
30,194,966
(29,920,254)
(29,920,254)
319,619
319,619
594,331
594,331
27,646,045
(27,826,121)
192,508
12,432
27,646,045
27,646,045
(27,826,121)
(27,826,121)
192,508
192,508
12,432
12,432
*The 1 July 2015 and 30 June 2016 consolidated statement of financial position has been restated pursuant to the
*The 1 July 2015 and 30 June 2016 consolidated statement of financial position has been restated pursuant to the
*The 1 July 2015 and 30 June 2016 consolidated statement of financial position has been restated pursuant to the
Company’s voluntary change in accounting policy for exploration and evaluation expenditure (note 1(d)).
Company’s voluntary change in accounting policy for exploration and evaluation expenditure (note 1(d)).
Company’s voluntary change in accounting policy for exploration and evaluation expenditure (note 1(d)).
The statement of financial position is to be read in conjunction with the notes to the financial statements.
The statement of financial position is to be read in conjunction with the notes to the financial statements.
The statement of financial position is to be read in conjunction with the notes to the financial statements.
30
32
32
32
Annual Report 2017
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3
Liontown Resources Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2017
Note
2017
$
Restated 2016*
$
Cash flows from operating activities
Cash paid to suppliers and employees
Payments for exploration and evaluation and business development
costs
Interest received
Interest paid
Other
Net cash used in operating activities
18
(3,028,155)
(1,853,196)
Cash flows from investing activities
Acquisition of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Transaction costs of issue of shares
Proceeds from loans received
Security deposits
Share Issue – application monies held on trust
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at 30 June
9
1,415,601
*The 30 June 2016 consolidated statement of cash flows has been reclassified between operating and investing activities
pursuant to the Company’s voluntary change in accounting policy for exploration and evaluation expenditure (note 1(d)).
The statement of cash flows is to be read in conjunction with the notes to the financial statements.
(548,648)
(339,800)
(2,496,126)
(1,553,595)
9,542
-
7,077
7,410
(10,143)
42,932
(9,948)
(9,948)
(8,719)
(8,719)
3,918,902
(239,849)
(25,000)
-
-
3,654,053
615,950
(1,297)
800,948
2,155,728
(78,144)
350,000
-
(690,554)
1,737,030
(124,885)
17,951
907,882
800,948
35
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F
Annual Report 2017
Consolidated Statement of Cash Flows
For the year ended 30 June 2017
Liontown Resources Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2017
Note
2017
$
Restated 2016*
$
Cash flows from operating activities
Cash paid to suppliers and employees
Payments for exploration and evaluation and business development
costs
Interest received
Interest paid
Other
Net cash used in operating activities
18
Cash flows from investing activities
Acquisition of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Transaction costs of issue of shares
Proceeds from loans received
Security deposits
Share Issue – application monies held on trust
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at 30 June
9
(548,648)
(339,800)
(2,496,126)
9,542
-
7,077
(3,028,155)
(1,553,595)
7,410
(10,143)
42,932
(1,853,196)
(9,948)
(9,948)
(8,719)
(8,719)
3,918,902
(239,849)
-
(25,000)
-
3,654,053
615,950
(1,297)
800,948
1,415,601
2,155,728
(78,144)
350,000
-
(690,554)
1,737,030
(124,885)
17,951
907,882
800,948
*The 30 June 2016 consolidated statement of cash flows has been reclassified between operating and investing activities
pursuant to the Company’s voluntary change in accounting policy for exploration and evaluation expenditure (note 1(d)).
The statement of cash flows is to be read in conjunction with the notes to the financial statements.
33
35
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
1. Significant accounting policies
Liontown Resources is an ASX listed public company domiciled in Australia at Level 2, 1292 Hay Street, West Perth,
Western Australia. The consolidated financial report comprises the financial statements of Liontown Resources
Limited (‘Company’) and its subsidiaries (‘the Group’) for the year ended 30 June 2017.
The financial report was authorised for issue by the directors on 19th day of September 2017.
(a) Statement of compliance
The financial report complies with Australian Accounting Standards, which include Australian equivalents
to International Financial Reporting Standards (‘AIFRS’). Compliance with AIFRS ensures that the financial
report, comprising the financial statements and notes thereto, complies with International Financial
Reporting Standards (‘IFRS’).
(b) Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Accounting Standards and Interpretations and complies with
other requirements of the law. The financial report has also been prepared on a historical cost basis. The
financial report is presented in Australian dollars.
The accounting policies detailed below have been consistently applied to all of the years presented unless
otherwise stated.
The Company is a listed public company, incorporated in Australia and operating in Australia and Tanzania.
The principal activity is mineral exploration and evaluation.
(c) Adoption of new and revised standards
In the year ended 30 June 2017, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Group’s operations and effective for annual
reporting periods beginning on or after 1 July 2016. It has been determined that there is no impact, material
or otherwise, of the new and revised Standards and Interpretations on the Group. The Group has adopted
the following new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2016:
AASB 14 Regulatory Deferral Accounts.
AASB 2014-3 Amendments to Australian Accounting Standards- Accounting for Acquisitions of
Interests in Joint Operations.
AASB 2014-4 Amendments to Australian Accounting Standards- Clarification of Acceptable Methods
of Depreciation and Amortisation.
AASB 2014-9 Amendments to Australian Accounting Standards- Equity Method in Separate Financial
Statements.
AASB 2014-10 Amendments to Australian Accounting Standards- Sale or Contribution of Assets
between and Investor and its Associate or Joint Venture.
AASB 2015-1 Amendments to Australian Accounting Standards- Annual Improvements to Australian
Accounting Standards 2012- 2014 Cycle.
AASB 2015-2 Amendments to Australian Accounting Standards- Disclosure Initiative: Amendments
to AASB 101.
The Directors have also reviewed all new Standards and Interpretations that have been issued but are not
yet effective for the year ended 30 June 2017. The following Standards and Interpretations have been
recently issued or amended and have not been adopted by the Group for the annual reporting period ended
30 June 2017, outlined below:
The following new accounting standards and interpretations which are not yet effective and have not been
applied by the Company, have been assessed to have no material impact on the Company:
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets
for Unrealised Losses.
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments
to AASB 107.
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15.
AASB 2016-5 Amendments to Australian Accounting Standards- Classification and Measurement of
Share-based Payment Transactions.
AASB 9 Financial Instruments (2014).
AASB 15 Revenue from Contracts with Customers.
AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15.
AASB 2015-8 - Amendments to Australian Accounting Standards – Effective Date of AASB 15.
AASB 2014-10 – Amendments to Australian Accounting Standards- Sale or Contribution of Assets
between an Investor and its Associate of Joint Venture.
AASB 16 Leases.
As a result of this review the directors have determined that there will be no impact, material or otherwise,
of the new and revised Standards and Interpretations on the Group and, therefore, no change will be
necessary to the Group’s accounting policies.
(d) Voluntary Change in Accounting Policy – Exploration and evaluation expenditure
The financial report for the year ended 30 June 2017 has been prepared on the basis of a retrospective
application of a voluntary change in accounting policy relating to exploration and evaluation expenditure.
In previous financial reporting periods, the costs incurred in connection with exploration of areas with
current rights of tenure were capitalised in the Statement of Financial Position. The criteria for carrying
forward the costs were:
-
-
Such costs were expected to be recovered through successful development and exploitation of the
area of interest or alternatively by its sale; and
Exploration and/or evaluation activities were continuing in the area of interest and had not yet
reached a stage which permitted a reasonable assessment of the existence or otherwise of
economically recoverable resources, and active and significant operations in, or in relation to, the
area were continuing.
Costs carried forward in respect of an area of interest that was abandoned were written off in the year in
which the decision to abandon was made.
The new accounting policy was adopted as of 1 July 2016 and has been applied retrospectively. Under the
new policy exploration and evaluation expenditure including the cost of acquisition is expensed to the
Statement of Comprehensive Income in the year when it is incurred.
Directors are of the opinion that the change in accounting policy provides users with more relevant and no
less reliable financial information as the policy is more transparent and less subjective. Both the previous
and new accounting policies are compliant with AASB 6 Exploration for and Evaluation of Mineral Resources.
The impact of this change in accounting policy is reflect below:
The capitalised exploration and evaluation asset previously reported as at 30 June 2016 has decreased by
$1,924,935 (2015: decreased by $5,110,462). Accumulated losses brought forward at 1 July 2015 increased
by $4,300,297. Net loss after tax previously reported at 30 June 2016 has decreased by $3,360,159 and
restated as $2,094,133.
Basic and diluted loss per share have also been restated. The amount of the impact for the new result for
the year ended 30 June 2016 of the change in accounting policy is stated as follows:
Loss per share attributable to owners of the parent:
Basic loss per share (cents)
Diluted loss per share (cents)
30 June 2016
0.55
0.55
Exploration and evaluation expenditure that is expensed is included as part of cash flows from operating
activities, whereas previously capitalised exploration and evaluation expenditure was included as part of
cash flows from investing activities. As a result, for the year ended 30 June 2016, net cash used in operating
activities has increased from $299,601 to $1,853,196 and net cash used in investing activities has decreased
from $1,562,314 to $8,719.
34
36
37
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
1. Significant accounting policies
Liontown Resources is an ASX listed public company domiciled in Australia at Level 2, 1292 Hay Street, West Perth,
Western Australia. The consolidated financial report comprises the financial statements of Liontown Resources
Limited (‘Company’) and its subsidiaries (‘the Group’) for the year ended 30 June 2017.
The financial report was authorised for issue by the directors on 19th day of September 2017.
(a) Statement of compliance
The financial report complies with Australian Accounting Standards, which include Australian equivalents
to International Financial Reporting Standards (‘AIFRS’). Compliance with AIFRS ensures that the financial
report, comprising the financial statements and notes thereto, complies with International Financial
Reporting Standards (‘IFRS’).
(b) Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Accounting Standards and Interpretations and complies with
other requirements of the law. The financial report has also been prepared on a historical cost basis. The
financial report is presented in Australian dollars.
The accounting policies detailed below have been consistently applied to all of the years presented unless
otherwise stated.
The Company is a listed public company, incorporated in Australia and operating in Australia and Tanzania.
The principal activity is mineral exploration and evaluation.
(c) Adoption of new and revised standards
In the year ended 30 June 2017, the Directors have reviewed all of the new and revised Standards and
Interpretations issued by the AASB that are relevant to the Group’s operations and effective for annual
reporting periods beginning on or after 1 July 2016. It has been determined that there is no impact, material
or otherwise, of the new and revised Standards and Interpretations on the Group. The Group has adopted
the following new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2016:
Interests in Joint Operations.
of Depreciation and Amortisation.
Statements.
AASB 14 Regulatory Deferral Accounts.
AASB 2014-3 Amendments to Australian Accounting Standards- Accounting for Acquisitions of
AASB 2014-4 Amendments to Australian Accounting Standards- Clarification of Acceptable Methods
AASB 2014-9 Amendments to Australian Accounting Standards- Equity Method in Separate Financial
AASB 2014-10 Amendments to Australian Accounting Standards- Sale or Contribution of Assets
between and Investor and its Associate or Joint Venture.
AASB 2015-1 Amendments to Australian Accounting Standards- Annual Improvements to Australian
Accounting Standards 2012- 2014 Cycle.
AASB 2015-2 Amendments to Australian Accounting Standards- Disclosure Initiative: Amendments
to AASB 101.
The Directors have also reviewed all new Standards and Interpretations that have been issued but are not
yet effective for the year ended 30 June 2017. The following Standards and Interpretations have been
recently issued or amended and have not been adopted by the Group for the annual reporting period ended
30 June 2017, outlined below:
The following new accounting standards and interpretations which are not yet effective and have not been
applied by the Company, have been assessed to have no material impact on the Company:
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments
for Unrealised Losses.
to AASB 107.
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15.
AASB 2016-5 Amendments to Australian Accounting Standards- Classification and Measurement of
Share-based Payment Transactions.
AASB 9 Financial Instruments (2014).
AASB 15 Revenue from Contracts with Customers.
AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15.
AASB 2015-8 - Amendments to Australian Accounting Standards – Effective Date of AASB 15.
AASB 2014-10 – Amendments to Australian Accounting Standards- Sale or Contribution of Assets
between an Investor and its Associate of Joint Venture.
AASB 16 Leases.
As a result of this review the directors have determined that there will be no impact, material or otherwise,
of the new and revised Standards and Interpretations on the Group and, therefore, no change will be
necessary to the Group’s accounting policies.
(d) Voluntary Change in Accounting Policy – Exploration and evaluation expenditure
The financial report for the year ended 30 June 2017 has been prepared on the basis of a retrospective
application of a voluntary change in accounting policy relating to exploration and evaluation expenditure.
In previous financial reporting periods, the costs incurred in connection with exploration of areas with
current rights of tenure were capitalised in the Statement of Financial Position. The criteria for carrying
forward the costs were:
-
-
Such costs were expected to be recovered through successful development and exploitation of the
area of interest or alternatively by its sale; and
Exploration and/or evaluation activities were continuing in the area of interest and had not yet
reached a stage which permitted a reasonable assessment of the existence or otherwise of
economically recoverable resources, and active and significant operations in, or in relation to, the
area were continuing.
Costs carried forward in respect of an area of interest that was abandoned were written off in the year in
which the decision to abandon was made.
The new accounting policy was adopted as of 1 July 2016 and has been applied retrospectively. Under the
new policy exploration and evaluation expenditure including the cost of acquisition is expensed to the
Statement of Comprehensive Income in the year when it is incurred.
Directors are of the opinion that the change in accounting policy provides users with more relevant and no
less reliable financial information as the policy is more transparent and less subjective. Both the previous
and new accounting policies are compliant with AASB 6 Exploration for and Evaluation of Mineral Resources.
The impact of this change in accounting policy is reflect below:
The capitalised exploration and evaluation asset previously reported as at 30 June 2016 has decreased by
$1,924,935 (2015: decreased by $5,110,462). Accumulated losses brought forward at 1 July 2015 increased
by $4,300,297. Net loss after tax previously reported at 30 June 2016 has decreased by $3,360,159 and
restated as $2,094,133.
Basic and diluted loss per share have also been restated. The amount of the impact for the new result for
the year ended 30 June 2016 of the change in accounting policy is stated as follows:
Loss per share attributable to owners of the parent:
Basic loss per share (cents)
Diluted loss per share (cents)
30 June 2016
0.55
0.55
Exploration and evaluation expenditure that is expensed is included as part of cash flows from operating
activities, whereas previously capitalised exploration and evaluation expenditure was included as part of
cash flows from investing activities. As a result, for the year ended 30 June 2016, net cash used in operating
activities has increased from $299,601 to $1,853,196 and net cash used in investing activities has decreased
from $1,562,314 to $8,719.
36
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35
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
(e) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company and its subsidiaries. Control is achieved when the Company:
-
-
-
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the
investee when the voting rights are sufficient to give it the practical ability to direct the relevant activates
of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing
whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
-
-
-
-
the size of the Company’s holding for voting rights relative to the size and dispersion of holdings of
the other vote holders;
potential voting rights held by the Company, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have, the
current ability to direct the relevant activities at the time that decisions need to be made, including
voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when
the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or
disposed of during the year are included in the consolidated statement of comprehensive income from the
date the Company gains control until the date when the Company ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
Investments in subsidiaries held by Liontown Resources Limited are accounted for at cost in the accounts
of the parent entity less any impairment charges.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition
method of accounting involves recognising at acquisition date, separately from goodwill, the identifiable
assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable
assets acquired and the liabilities assumed are measured at their acquisition date fair values.
The difference between the above items and the fair value of consideration (including the fair value of any
pre-existing investment in the acquiree) is goodwill or a discount on acquisition.
A change in ownership interest of a subsidiary that does not result in a loss of control is accounted as an
equity transaction.
(f) Significant accounting judgements, estimates and assumptions
The preparation of a financial report in conformity with Australian Accounting Standards requires
management to make judgements, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions
are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates. These accounting policies have been consistently applied by the Group.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the next annual reporting period are:
(i) Shared-based payment transactions
The Group measures the cost of equity-settled share-based payments at fair value at the grant date
using a binomial formula taking into account the terms and conditions upon which the instruments
The functional currency of the Company is Australian dollars and the functional currency of the controlled
entities based in Tanzania are United States dollars (US$). The presentation currency of the Group is
were granted.
(g) Foreign currency translations
Australian dollars.
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group
entities at exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at reporting date are retranslated to the functional currency at the
exchange rate at that date. The foreign currency gain or loss on monetary items is the difference
between amortised cost in the functional currency at the beginning of the period, adjusted for
effective interest and payments during the period, and the amortised cost in foreign currency
translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value
are retranslated to the functional currency at the exchange rate at the date that the fair value was
determined. Non-monetary items in a foreign currency that are measured in terms of historical cost
are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for the
following differences which are recognised in other comprehensive income arising on the retranslation
available-for-sale equity investments (except on impairment in which case foreign
currency differences that are recognised in other comprehensive income are reclassified
to profit or loss);
a financial liability designated as a hedge of the net investment in a foreign operation to
the extent that the hedge is effective; or
qualifying cash flow hedges to the extent the hedge is effective.
(ii) Foreign Operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising
on acquisition, are translated to the functional currency at exchange rates at the reporting date. The
income and expenses of foreign operations are translated to Australian dollars at average exchange
of:
rates.
Foreign currency differences are recognised in other comprehensive income, and presented in foreign
currency translation reserve (translation reserve) in equity upon translation to presentation currency.
When a foreign operation is disposed of such that control, significant influence or joint control is lost,
the cumulative amount in the translation reserve related to that foreign operation is reclassified to
profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its
interest in a subsidiary that includes a foreign operation while retaining control, the relevant
proportion of the cumulative amount is reattributed to non-controlling interests. When the Group
disposes of only part of its investment in an associate or joint venture that includes a foreign operation
while retaining significant influence or joint control, the relevant proportion of the cumulative amount
is reclassified to profit or loss.
When settlement of a monetary item receivable from or payable to a foreign operation is neither
planned or likely in the foreseeable future, foreign exchange gains and losses arising from such a
monetary item are considered to form part of a net investment in a foreign operation and are
recognised in other comprehensive income, and are presented in the translation reserve in equity.
36
38
39
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
(e) Basis of consolidation
-
-
-
-
-
-
-
The consolidated financial statements incorporate the financial statements of the Company and entities
controlled by the Company and its subsidiaries. Control is achieved when the Company:
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the
investee when the voting rights are sufficient to give it the practical ability to direct the relevant activates
of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing
whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
the size of the Company’s holding for voting rights relative to the size and dispersion of holdings of
the other vote holders;
potential voting rights held by the Company, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have, the
current ability to direct the relevant activities at the time that decisions need to be made, including
voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when
the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or
disposed of during the year are included in the consolidated statement of comprehensive income from the
date the Company gains control until the date when the Company ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
Investments in subsidiaries held by Liontown Resources Limited are accounted for at cost in the accounts
of the parent entity less any impairment charges.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition
method of accounting involves recognising at acquisition date, separately from goodwill, the identifiable
assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable
assets acquired and the liabilities assumed are measured at their acquisition date fair values.
The difference between the above items and the fair value of consideration (including the fair value of any
pre-existing investment in the acquiree) is goodwill or a discount on acquisition.
A change in ownership interest of a subsidiary that does not result in a loss of control is accounted as an
equity transaction.
(f) Significant accounting judgements, estimates and assumptions
The preparation of a financial report in conformity with Australian Accounting Standards requires
management to make judgements, estimates and assumptions that affect the application of policies and
reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions
are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates. These accounting policies have been consistently applied by the Group.
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
The key estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the next annual reporting period are:
(i) Shared-based payment transactions
The Group measures the cost of equity-settled share-based payments at fair value at the grant date
using a binomial formula taking into account the terms and conditions upon which the instruments
were granted.
(g) Foreign currency translations
The functional currency of the Company is Australian dollars and the functional currency of the controlled
entities based in Tanzania are United States dollars (US$). The presentation currency of the Group is
Australian dollars.
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group
entities at exchange rates at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at reporting date are retranslated to the functional currency at the
exchange rate at that date. The foreign currency gain or loss on monetary items is the difference
between amortised cost in the functional currency at the beginning of the period, adjusted for
effective interest and payments during the period, and the amortised cost in foreign currency
translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value
are retranslated to the functional currency at the exchange rate at the date that the fair value was
determined. Non-monetary items in a foreign currency that are measured in terms of historical cost
are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for the
following differences which are recognised in other comprehensive income arising on the retranslation
of:
available-for-sale equity investments (except on impairment in which case foreign
currency differences that are recognised in other comprehensive income are reclassified
to profit or loss);
a financial liability designated as a hedge of the net investment in a foreign operation to
the extent that the hedge is effective; or
qualifying cash flow hedges to the extent the hedge is effective.
(ii) Foreign Operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising
on acquisition, are translated to the functional currency at exchange rates at the reporting date. The
income and expenses of foreign operations are translated to Australian dollars at average exchange
rates.
Foreign currency differences are recognised in other comprehensive income, and presented in foreign
currency translation reserve (translation reserve) in equity upon translation to presentation currency.
When a foreign operation is disposed of such that control, significant influence or joint control is lost,
the cumulative amount in the translation reserve related to that foreign operation is reclassified to
profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its
interest in a subsidiary that includes a foreign operation while retaining control, the relevant
proportion of the cumulative amount is reattributed to non-controlling interests. When the Group
disposes of only part of its investment in an associate or joint venture that includes a foreign operation
while retaining significant influence or joint control, the relevant proportion of the cumulative amount
is reclassified to profit or loss.
When settlement of a monetary item receivable from or payable to a foreign operation is neither
planned or likely in the foreseeable future, foreign exchange gains and losses arising from such a
monetary item are considered to form part of a net investment in a foreign operation and are
recognised in other comprehensive income, and are presented in the translation reserve in equity.
38
39
37
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
(h) Segment reporting
Operating segments are reported in a manner consistent with internal reporting provided to the Board of
Directors who are responsible for allocating resources and assessing the performance of the operating
segments.
Deferred tax is provided on all temporary differences at balance date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. The amount of deferred tax provided
is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance date.
(i) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be realised.
(i) Sale of goods and interests in exploration assets
Revenue is recognised when the significant risks and rewards of ownership of the goods/exploration
assets have passed to the buyer and the costs incurred or to be incurred in respect of the transaction
can be reliably measured. Risks and rewards of ownership are considered passed to the buyer at the
time of delivery of the goods/exploration assets to the buyer.
(ii) Services rendered
Revenue from services rendered is recognised in the statement of comprehensive income in proportion
to the stage of completion of the transaction at balance date. The stage of completion is assessed by
reference to surveys of work performed. No revenue is recognised if there are significant uncertainties
regarding recovery of the consideration due, the costs incurred or to be incurred cannot be measured
reliably.
(iii) Interest received
Interest income is recognised in the statement of comprehensive income as it accrues, using the
effective interest method. The interest expense component of finance lease payments is recognised
in the statement of comprehensive income using the effective interest method.
(j) Expenses
(i) Operating lease payments
Payments made under operating leases are recognised in the statement of comprehensive income on
a straight-line basis over the term of the lease. Lease incentives received are recognised in the
statement of comprehensive income as an integral part of the total lease expense and spread over
the lease term.
(ii) Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the
outstanding liability. The finance charge is allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining balance of the liability.
Impairment losses are recognised in the statement of comprehensive income unless the asset has previously
been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous
revaluation with any excess recognised through the statement of comprehensive income. Receivables with
(iii) Financing costs
Financing costs comprise interest payable on borrowings calculated using the effective interest
method and interest receivable on funds invested.
(k) Depreciation
Depreciation is charged to the statement of comprehensive income on a diminishing value basis over the
estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.
Depreciation rates used in the current and comparative periods are as follows:
of cash flows.
(p) Trade and other receivables
plant and equipment
motor vehicles
5%-50%
18.75%-37.5%
The residual value, if not insignificant, is reassessed annually.
(l)
Income tax
Income tax in the statement of comprehensive income comprises current and deferred tax. Income tax is
recognised in the statement of comprehensive income except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance date, and any adjustment to tax payable in respect of previous years.
A discontinued operation is a component of the Group’s business that represents a separate major line of
business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale.
40
41
38
(m) Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (‘GST’), except
where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances,
the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable
from, or payable to, the Australian Taxation Office (‘ATO’) is included as a current asset or liability in the
statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows
arising from investing and financing activities which are recoverable from, or payable to, the ATO are
classified as operating cash flows.
(n)
Impairment
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired.
Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where
the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is
written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is the
present value of the future cash flows expected to be derived from the asset or cash generating unit. In
estimating value in use, a pre-tax discount rate is used which reflects current market assessments of the
time value of money and the risks specific to the asset. For an asset that does not generate largely
independent cash flows, the recoverable amount is determined for the cash generating unit to which the
asset belongs.
a short duration are not discounted.
(o) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of six months
or less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash
management are included as a component of cash and cash equivalents for the purpose of the statement
Trade and other receivables are stated at cost less impairment losses (see accounting policy (n)).
(q) Non-current assets held for sale and discontinued operations
Immediately before classification as held for sale, the measurement of the assets (and all assets and
liabilities in a disposal group) is brought up to date in accordance with applicable AIFRS. Then, on initial
classification as held for sale, non-current assets and disposal groups are recognised at the lower of carrying
amount and fair value less costs to sell.
Impairment losses on initial classification as held for sale are included in profit or loss, even when there is
a revaluation. The same applies to gains and losses on subsequent re-measurement.
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Operating segments are reported in a manner consistent with internal reporting provided to the Board of
Directors who are responsible for allocating resources and assessing the performance of the operating
(h) Segment reporting
segments.
(i) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured.
(i) Sale of goods and interests in exploration assets
Revenue is recognised when the significant risks and rewards of ownership of the goods/exploration
assets have passed to the buyer and the costs incurred or to be incurred in respect of the transaction
can be reliably measured. Risks and rewards of ownership are considered passed to the buyer at the
time of delivery of the goods/exploration assets to the buyer.
Revenue from services rendered is recognised in the statement of comprehensive income in proportion
to the stage of completion of the transaction at balance date. The stage of completion is assessed by
reference to surveys of work performed. No revenue is recognised if there are significant uncertainties
regarding recovery of the consideration due, the costs incurred or to be incurred cannot be measured
(ii) Services rendered
reliably.
(iii) Interest received
Interest income is recognised in the statement of comprehensive income as it accrues, using the
effective interest method. The interest expense component of finance lease payments is recognised
in the statement of comprehensive income using the effective interest method.
(j) Expenses
(i) Operating lease payments
the lease term.
(ii) Finance lease payments
Payments made under operating leases are recognised in the statement of comprehensive income on
a straight-line basis over the term of the lease. Lease incentives received are recognised in the
statement of comprehensive income as an integral part of the total lease expense and spread over
Minimum lease payments are apportioned between the finance charge and the reduction of the
outstanding liability. The finance charge is allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining balance of the liability.
(iii) Financing costs
(k) Depreciation
method and interest receivable on funds invested.
Depreciation is charged to the statement of comprehensive income on a diminishing value basis over the
estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.
Depreciation rates used in the current and comparative periods are as follows:
plant and equipment
5%-50%
motor vehicles
18.75%-37.5%
The residual value, if not insignificant, is reassessed annually.
(l)
Income tax
Income tax in the statement of comprehensive income comprises current and deferred tax. Income tax is
recognised in the statement of comprehensive income except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Deferred tax is provided on all temporary differences at balance date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. The amount of deferred tax provided
is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the balance date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is
no longer probable that the related tax benefit will be realised.
(m) Goods and Services Tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (‘GST’), except
where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances,
the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable
from, or payable to, the Australian Taxation Office (‘ATO’) is included as a current asset or liability in the
statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows
arising from investing and financing activities which are recoverable from, or payable to, the ATO are
classified as operating cash flows.
(n)
Impairment
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired.
Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where
the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is
written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is the
present value of the future cash flows expected to be derived from the asset or cash generating unit. In
estimating value in use, a pre-tax discount rate is used which reflects current market assessments of the
time value of money and the risks specific to the asset. For an asset that does not generate largely
independent cash flows, the recoverable amount is determined for the cash generating unit to which the
asset belongs.
Impairment losses are recognised in the statement of comprehensive income unless the asset has previously
been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous
revaluation with any excess recognised through the statement of comprehensive income. Receivables with
a short duration are not discounted.
Financing costs comprise interest payable on borrowings calculated using the effective interest
(o) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of six months
or less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash
management are included as a component of cash and cash equivalents for the purpose of the statement
of cash flows.
(p) Trade and other receivables
Trade and other receivables are stated at cost less impairment losses (see accounting policy (n)).
(q) Non-current assets held for sale and discontinued operations
Immediately before classification as held for sale, the measurement of the assets (and all assets and
liabilities in a disposal group) is brought up to date in accordance with applicable AIFRS. Then, on initial
classification as held for sale, non-current assets and disposal groups are recognised at the lower of carrying
amount and fair value less costs to sell.
Impairment losses on initial classification as held for sale are included in profit or loss, even when there is
a revaluation. The same applies to gains and losses on subsequent re-measurement.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance date, and any adjustment to tax payable in respect of previous years.
A discontinued operation is a component of the Group’s business that represents a separate major line of
business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale.
40
41
39
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to
be classified as held for sale, if earlier. A disposal group that is to be abandoned also may qualify.
(r) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when
the cost of replacing the parts is incurred.
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
An item of plant and equipment is derecognised upon disposal or when no further future economic benefits
are expected from its use or disposal.
Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is
derecognised.
(s) Financial assets
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value
through profit or loss’. Financial assets are classified as held for trading if they are acquired for the
purpose of selling in the near term. Derivatives are also classified as held for trading unless they are
designated as effective hedging instruments. Gains or losses on investments held for trading are
recognised in profit or loss.
(ii) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as
available-for-sale or are not classified as any of the three preceding categories. After initial
recognition available-for sale investments are measured at fair value with gains or losses being
recognised as a separate component of equity until the investment is derecognised or until the
investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined by
reference to quoted market bid prices at the close of business on the reporting date. For investments
with no active market, fair value is determined using valuation techniques. Such techniques include
using recent arm’s length market transactions; reference to the current market value of another
instrument that is substantially the same; discounted cash flow analysis and option pricing models.
(t) Derecognition of financial assets and financial liabilities
(i) Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognised when:
-
-
-
the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has assumed an obligation
to pay them in full without material delay to a third party under a ‘pass-through’
arrangement; or
the Group has transferred its rights to receive cash flows from the asset and either):
(a)
has transferred substantially all the risks and rewards of the asset, or
(b)
has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
(iii) Available-for-sale investments
When the Group has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control of
the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset.
Continuing involvement that takes the form of a guarantee a guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration received that the Group could be required to repay.
40
42
43
When continuing involvement takes the form of a written and/or purchased option (including a cash-
settled option or similar provision) on the transferred asset, the extent of the Group’s continuing
involvement is the amount of the transferred asset that the Group may repurchase, except that in the
case of a written put option (including a cash-settled option or similar provision) on an asset measured
at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value
of the transferred asset and the option exercise price.
(ii) Financial liabilities
or expires.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled
When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability,
and the difference in the respective carrying amounts is recognised in profit or loss.
(u)
Impairment of financial assets
The Group assesses at each balance date whether a financial asset or group of financial assets is impaired:
(i) Financial assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised
cost has been incurred, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses
that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e.
the effective interest rate computed at initial recognition). The carrying amount of the asset is
reduced either directly or through use of an allowance account. The amount of the loss is recognised
in profit or loss.
The Group first assesses whether objective evidence of impairment exists individually for financial
assets that are individually significant, and individually or collectively for financial assets that are not
individually significant. If it is determined that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, the asset is included in a group of
financial assets with similar credit risk characteristics and that group of financial assets is collectively
assessed for impairment. Assets that are individually assessed for impairment and for which an
impairment loss is or continues to be recognised are not included in a collective assessment of
impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised
in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost
at the reversal date.
(ii) Financial assets carried at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity
instrument that is not carried at fair value (because its fair value cannot be reliably measured), or on
a derivative asset that is linked to and must be settled by delivery of such an unquoted equity
instrument, the amount of the loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows, discounted at the current market rate of return
for a similar financial asset. Such impairment loss shall not be reversed in subsequent periods.
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising
the difference between its cost (net of any principal repayment and amortisation) and its current fair
value, less any impairment loss previously recognised in profit or loss, is transferred from equity to
the statement of comprehensive income. Reversals of impairment losses for equity instruments
classified as available-for-sale are not recognised in profit. Reversals of impairment losses for debt
instruments are reversed through profit or loss if the increase in an instrument's fair value can be
objectively related to an event occurring after the impairment loss was recognised in profit or loss.
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to
be classified as held for sale, if earlier. A disposal group that is to be abandoned also may qualify.
(r) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when
the cost of replacing the parts is incurred.
When continuing involvement takes the form of a written and/or purchased option (including a cash-
settled option or similar provision) on the transferred asset, the extent of the Group’s continuing
involvement is the amount of the transferred asset that the Group may repurchase, except that in the
case of a written put option (including a cash-settled option or similar provision) on an asset measured
at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value
of the transferred asset and the option exercise price.
(ii) Financial liabilities
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate, at each financial year end.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled
or expires.
An item of plant and equipment is derecognised upon disposal or when no further future economic benefits
are expected from its use or disposal.
Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is
derecognised.
(s) Financial assets
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at fair value
through profit or loss’. Financial assets are classified as held for trading if they are acquired for the
purpose of selling in the near term. Derivatives are also classified as held for trading unless they are
designated as effective hedging instruments. Gains or losses on investments held for trading are
recognised in profit or loss.
(ii) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as
available-for-sale or are not classified as any of the three preceding categories. After initial
recognition available-for sale investments are measured at fair value with gains or losses being
recognised as a separate component of equity until the investment is derecognised or until the
investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is determined by
reference to quoted market bid prices at the close of business on the reporting date. For investments
with no active market, fair value is determined using valuation techniques. Such techniques include
using recent arm’s length market transactions; reference to the current market value of another
instrument that is substantially the same; discounted cash flow analysis and option pricing models.
(t) Derecognition of financial assets and financial liabilities
(i) Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognised when:
-
-
-
the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has assumed an obligation
to pay them in full without material delay to a third party under a ‘pass-through’
arrangement; or
the Group has transferred its rights to receive cash flows from the asset and either):
(a)
has transferred substantially all the risks and rewards of the asset, or
transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control of
the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset.
Continuing involvement that takes the form of a guarantee a guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration received that the Group could be required to repay.
When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability,
and the difference in the respective carrying amounts is recognised in profit or loss.
(u)
Impairment of financial assets
The Group assesses at each balance date whether a financial asset or group of financial assets is impaired:
(i) Financial assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised
cost has been incurred, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses
that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e.
the effective interest rate computed at initial recognition). The carrying amount of the asset is
reduced either directly or through use of an allowance account. The amount of the loss is recognised
in profit or loss.
The Group first assesses whether objective evidence of impairment exists individually for financial
assets that are individually significant, and individually or collectively for financial assets that are not
individually significant. If it is determined that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, the asset is included in a group of
financial assets with similar credit risk characteristics and that group of financial assets is collectively
assessed for impairment. Assets that are individually assessed for impairment and for which an
impairment loss is or continues to be recognised are not included in a collective assessment of
impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised
in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost
at the reversal date.
(ii) Financial assets carried at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity
instrument that is not carried at fair value (because its fair value cannot be reliably measured), or on
a derivative asset that is linked to and must be settled by delivery of such an unquoted equity
instrument, the amount of the loss is measured as the difference between the asset’s carrying amount
and the present value of estimated future cash flows, discounted at the current market rate of return
for a similar financial asset. Such impairment loss shall not be reversed in subsequent periods.
(b)
has neither transferred nor retained substantially all the risks and rewards of the asset, but has
(iii) Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising
the difference between its cost (net of any principal repayment and amortisation) and its current fair
value, less any impairment loss previously recognised in profit or loss, is transferred from equity to
the statement of comprehensive income. Reversals of impairment losses for equity instruments
classified as available-for-sale are not recognised in profit. Reversals of impairment losses for debt
instruments are reversed through profit or loss if the increase in an instrument's fair value can be
objectively related to an event occurring after the impairment loss was recognised in profit or loss.
42
43
41
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
(v) Exploration and evaluation expenditure
Costs incurred in the exploration and evaluation stages of specific areas of interest are expensed against
the profit or loss as incurred. All exploration expenditure, including general permit activity, geological and
geophysical costs, project generation and drilling costs, is expensed as incurred. The costs of acquiring
interests in new exploration licences is also expensed. Once the technical feasibility and commercial
viability of extracting a mineral resource are demonstrable in respect to an area of interest, development
expenditure is capitalised to the Statement of Financial Position.
(w) Trade and other payables
Trade and other payables are stated at cost. Trade and other payables are presented as current liabilities
unless payment is not due within 12 months.
(x) Employee benefits
(i) Superannuation
Obligations for contributions to defined contribution pension plans are recognised as an expense in
the statement of comprehensive income as incurred.
(ii) Share-based payment transactions
The Group provides benefits to employees (including directors) in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-
settled transactions’).
The Group currently provides benefits under an Employee Share Option Plan.
The cost of these equity-settled transactions with employees and directors is measured by reference
to the fair value at the date at which they are granted.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of the Company (‘market conditions’). The cost of equity-
settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects:
(i)
(ii)
the extent to which the vesting period has expired; and
the number of awards that, in the opinion of the directors, will ultimately vest. This opinion
is formed based on the best available information at balance date. No adjustment is made for
the likelihood of market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as
if the terms had not been modified. In addition, an expense is recognised for any increase in the value
of the transaction as a result of the modification, as measured at the date of modification.
(iii) Wages, salaries, annual leave, sick leave and non-monetary benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present
obligations resulting from employees' services provided to reporting date, calculated at undiscounted
amounts based on remuneration wage and salary rates that the Group expects to pay as at reporting
date including related on-costs, such as, workers compensation insurance and payroll tax.
(y) Provisions
A provision is recognised in the statement of financial position when the Group has a present legal or
constructive obligation as a result of a past event, and it is probable that an outflow of economic
benefits will be required to settle the obligation. If the effect is material, provisions are determined
by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, when appropriate, the risks specific to the liability.
Ordinary shares and partly paid shares are classified as equity
(z)
Issued capital
(i) Ordinary share capital
(ii) Transaction costs
related income tax benefit.
(aa) Earnings per share
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any
Basic earnings/loss per share is calculated as net profit/loss attributable to members of the parent,
adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends,
divided by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted earnings/loss per share is calculated as net profit/loss attributable to members of the parent,
adjusted for:
-
-
-
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares
that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result
from the dilution of potential ordinary shares; divided by the weighted average number of
ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element
(ab) Parent entity information
The financial information for the parent entity, Liontown Resources Limited, disclosed in note 22, has been
prepared on the same basis as the consolidated financial statements, except as set out below.
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the
parent entity’s financial statements. Dividends received from associates are recognised in the parent
entity’s profit or loss, rather than being deducted from the carrying amount of these investments.
(ii) Share-based payments
The grant by the Company of options over its equity instruments to the employees of subsidiary
undertakings in the group is treated as a capital contribution to that subsidiary undertaking. The fair
value of employee services received, measured by reference to the grant date fair value, is recognised
over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding
credit to equity.
42
44
45
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
(v) Exploration and evaluation expenditure
Costs incurred in the exploration and evaluation stages of specific areas of interest are expensed against
the profit or loss as incurred. All exploration expenditure, including general permit activity, geological and
geophysical costs, project generation and drilling costs, is expensed as incurred. The costs of acquiring
interests in new exploration licences is also expensed. Once the technical feasibility and commercial
viability of extracting a mineral resource are demonstrable in respect to an area of interest, development
expenditure is capitalised to the Statement of Financial Position.
(w) Trade and other payables
Trade and other payables are stated at cost. Trade and other payables are presented as current liabilities
unless payment is not due within 12 months.
(x) Employee benefits
(i) Superannuation
Obligations for contributions to defined contribution pension plans are recognised as an expense in
the statement of comprehensive income as incurred.
(ii) Share-based payment transactions
The Group provides benefits to employees (including directors) in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-
settled transactions’).
The Group currently provides benefits under an Employee Share Option Plan.
The cost of these equity-settled transactions with employees and directors is measured by reference
to the fair value at the date at which they are granted.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of the Company (‘market conditions’). The cost of equity-
settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects:
(i)
(ii)
the extent to which the vesting period has expired; and
the number of awards that, in the opinion of the directors, will ultimately vest. This opinion
is formed based on the best available information at balance date. No adjustment is made for
the likelihood of market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as
if the terms had not been modified. In addition, an expense is recognised for any increase in the value
of the transaction as a result of the modification, as measured at the date of modification.
(iii) Wages, salaries, annual leave, sick leave and non-monetary benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present
obligations resulting from employees' services provided to reporting date, calculated at undiscounted
amounts based on remuneration wage and salary rates that the Group expects to pay as at reporting
date including related on-costs, such as, workers compensation insurance and payroll tax.
(y) Provisions
A provision is recognised in the statement of financial position when the Group has a present legal or
constructive obligation as a result of a past event, and it is probable that an outflow of economic
benefits will be required to settle the obligation. If the effect is material, provisions are determined
by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, when appropriate, the risks specific to the liability.
(z)
Issued capital
(i) Ordinary share capital
Ordinary shares and partly paid shares are classified as equity
(ii) Transaction costs
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any
related income tax benefit.
(aa) Earnings per share
Basic earnings/loss per share is calculated as net profit/loss attributable to members of the parent,
adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends,
divided by the weighted average number of ordinary shares, adjusted for any bonus element.
Diluted earnings/loss per share is calculated as net profit/loss attributable to members of the parent,
adjusted for:
-
-
-
costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares
that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result
from the dilution of potential ordinary shares; divided by the weighted average number of
ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element
(ab) Parent entity information
The financial information for the parent entity, Liontown Resources Limited, disclosed in note 22, has been
prepared on the same basis as the consolidated financial statements, except as set out below.
(i) Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the
parent entity’s financial statements. Dividends received from associates are recognised in the parent
entity’s profit or loss, rather than being deducted from the carrying amount of these investments.
(ii) Share-based payments
The grant by the Company of options over its equity instruments to the employees of subsidiary
undertakings in the group is treated as a capital contribution to that subsidiary undertaking. The fair
value of employee services received, measured by reference to the grant date fair value, is recognised
over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding
credit to equity.
44
45
43
Annual Report 2017
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Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
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3.
Revenue and expenses
(a) Revenue
Refund of relinquished tenement rents and rates
Government grant
Insurance recoveries
Interest received
(b) Corporate administrative expenses
Depreciation and amortisation
Insurance
Legal fees
Office costs
Interest paid
Other
Personnel expenses
Regulatory and compliance
Corporate and administration office rent
4
4.
Personnel expenses
Wages and salaries
Directors’ fees
Other associated personnel expenses
Superannuation fund contributions
Equity-settled transactions
2017
$
6,092
-
985
9,792
16,869
2017
$
7,555
27,160
14,560
2,698
283,735
176,039
66,000
-
39,897
617,644
2017
$
83,348
70,321
32,567
54,880
42,619
283,735
2016
$
-
39,954
2,978
7,362
50,294
2016
$
4,154
28,129
8,821
1,625
303,637
117,142
60,500
10,143
(5,577)
528,574
2016
$
38,828
112,423
(3,286)
21,852
133,820
303,637
At 30 June 2016, the Company owed $34,827 to directors for outstanding directors’ fees. These outstanding
fees were subsequently paid in April 2017 and there were no directors’ fees outstanding at 30 June 2017.
5.
Exploration and evaluation expenditure
Exploration and evaluation expenditure – Australia
Exploration and evaluation expenditure - Tanzania
2017
$
2,189,510
447,213
2,636,723
2016
$
724,603
579,916
1,304,519
47
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F
Annual Report 2017
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
3.
Revenue and expenses
(a) Revenue
Refund of relinquished tenement rents and rates
Government grant
Insurance recoveries
Interest received
(b) Corporate administrative expenses
Depreciation and amortisation
Insurance
Legal fees
Office costs
Personnel expenses
Regulatory and compliance
Corporate and administration office rent
Interest paid
Other
4.
Personnel expenses
Wages and salaries
Directors’ fees
Other associated personnel expenses
Superannuation fund contributions
Equity-settled transactions
4
2017
$
6,092
-
985
9,792
16,869
2017
$
7,555
27,160
14,560
2,698
283,735
176,039
66,000
-
39,897
617,644
2017
$
83,348
70,321
32,567
54,880
42,619
283,735
2016
$
-
39,954
2,978
7,362
50,294
2016
$
4,154
28,129
8,821
1,625
303,637
117,142
60,500
10,143
(5,577)
528,574
2016
$
38,828
112,423
(3,286)
21,852
133,820
303,637
At 30 June 2016, the Company owed $34,827 to directors for outstanding directors’ fees. These outstanding
fees were subsequently paid in April 2017 and there were no directors’ fees outstanding at 30 June 2017.
5.
Exploration and evaluation expenditure
Exploration and evaluation expenditure – Australia
Exploration and evaluation expenditure - Tanzania
2017
$
2,189,510
447,213
2,636,723
2016
$
724,603
579,916
1,304,519
45
47
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
6. Auditor’s remuneration
(c) Income tax benefit not recognised directly in equity
Audit services
HLB Mann Judd
Audit and review of financial reports
Other services
7.
Income tax
(a) The prima facie income tax expense on pre-tax accounting
result from operations reconciles to the income tax expense
in the financial statements as follows:
Accounting loss before tax from continuing operations
2017
$
28,000
-
28,000
2016
$
25,000
-
25,000
2014
2013
2017
$
(3,283,570)
2016
(Restated)
$
(2,094,133)
Income tax benefit calculated at 27.5% (2016: 28.5%)
(902,982)
(596,828)
Tax effect of amounts which are not tax deductible (taxable) in
calculating taxable income:
Non-deductible expenses
Share based payments
Deferred tax assets and liabilities not recognised
Effect of change in tax rate
Effect of different tax rates of subsidiaries operating in
other jurisdictions
Exploration Development Incentive
Income tax expense reported in the statement of
comprehensive income
(b) Unrecognised deferred tax balances
The following deferred tax assets and liabilities have not been
brought to account:
Deferred tax assets comprise:
Revenue losses available to offset against future taxable income
Share issue expenses
Accrued expenses and liabilities
Deferred tax liabilities comprise:
Exploration expenditure amortised for tax purposes
Accrued interest
Foreign Exchange Difference
Prepayments
143,481
11,720
550,288
105,287
(9,915)
102,121
341,410
37,985
81,170
145,503
(9,240)
-
-
-
9.
Cash and cash equivalents
Bank accounts
Petty cash
Cash and cash equivalents in the statement of cash flows
Cash at bank earns interest at floating rates based on daily bank deposit rates. Refer to note 17.
3,502,178
54,491
26,193
3,582,862
2,895,561
3,239
67,062
2,965,862
(20,081)
136
(19,072)
2,266
(36,751)
-
69
(19,103)
3,326
(15,708)
10. Trade and other receivables
Current
Other trade receivables
Prepayments
Refer to note 17 for information about the Group’s exposure to credit and liquidity risk.
46
48
49
during the year:
Share issue costs
2017
$
2016
(Restated)
$
65,959
1,989
Deferred tax liabilities have not been recognised in respect of these taxable temporary differences as the
entity is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
8.
Earnings per share
Basic and diluted earnings/loss per share
The calculation of basic and diluted earnings/loss per share for the year ended 30 June 2017 was based on
the loss attributable to ordinary shareholders of $3,283,570 (2016: restated loss of $2,094,133) and a
weighted average number of ordinary shares outstanding during the year ended 30 June 2017 of 864,339,335
(2016: 603,472,355).
Loss attributable to ordinary shareholders
Loss attributable to ordinary shareholders
Loss attributable to ordinary shareholders (diluted)
Weighted average number of ordinary shares
Weighted average number of ordinary shares at 30 June
Weighted average number of ordinary shares (diluted) at 30 June
2017
$
(3,283,570)
(3,283,570)
2016
(Restated)
$
(2,094,133)
(2,094,133)
No.
No.
864,339,335
864,339,335
603,472,355
603,472,355
2017
$
1,409,592
6,009
1,415,601
2017
$
63,221
12,051
75,272
2016
$
782,648
18,300
800,948
2016
$
74,208
15,429
89,637
Annual Report 2017
2017
$
28,000
-
28,000
2016
$
25,000
-
25,000
2017
$
2016
(Restated)
$
143,481
11,720
550,288
105,287
(9,915)
102,121
-
341,410
37,985
81,170
145,503
(9,240)
-
-
54,491
26,193
3,239
67,062
3,582,862
2,965,862
(20,081)
136
(19,072)
2,266
(36,751)
-
69
(19,103)
3,326
(15,708)
Tax effect of amounts which are not tax deductible (taxable) in
calculating taxable income:
Non-deductible expenses
Share based payments
Deferred tax assets and liabilities not recognised
Effect of change in tax rate
Effect of different tax rates of subsidiaries operating in
other jurisdictions
Exploration Development Incentive
Income tax expense reported in the statement of
comprehensive income
(b) Unrecognised deferred tax balances
The following deferred tax assets and liabilities have not been
brought to account:
Deferred tax assets comprise:
Share issue expenses
Accrued expenses and liabilities
Deferred tax liabilities comprise:
Exploration expenditure amortised for tax purposes
Accrued interest
Foreign Exchange Difference
Prepayments
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
6. Auditor’s remuneration
Audit services
HLB Mann Judd
Other services
Audit and review of financial reports
7.
Income tax
2014
2013
(a) The prima facie income tax expense on pre-tax accounting
result from operations reconciles to the income tax expense
in the financial statements as follows:
Accounting loss before tax from continuing operations
(3,283,570)
(2,094,133)
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
(c) Income tax benefit not recognised directly in equity
during the year:
Share issue costs
2017
$
2016
(Restated)
$
65,959
1,989
Deferred tax liabilities have not been recognised in respect of these taxable temporary differences as the
entity is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
8.
Earnings per share
Basic and diluted earnings/loss per share
The calculation of basic and diluted earnings/loss per share for the year ended 30 June 2017 was based on
the loss attributable to ordinary shareholders of $3,283,570 (2016: restated loss of $2,094,133) and a
weighted average number of ordinary shares outstanding during the year ended 30 June 2017 of 864,339,335
(2016: 603,472,355).
Income tax benefit calculated at 27.5% (2016: 28.5%)
(902,982)
(596,828)
Loss attributable to ordinary shareholders
Loss attributable to ordinary shareholders
Loss attributable to ordinary shareholders (diluted)
2017
$
(3,283,570)
(3,283,570)
2016
(Restated)
$
(2,094,133)
(2,094,133)
No.
No.
Weighted average number of ordinary shares
Weighted average number of ordinary shares at 30 June
Weighted average number of ordinary shares (diluted) at 30 June
864,339,335
864,339,335
603,472,355
603,472,355
9.
Cash and cash equivalents
Bank accounts
Petty cash
Cash and cash equivalents in the statement of cash flows
2017
$
1,409,592
6,009
1,415,601
2016
$
782,648
18,300
800,948
Revenue losses available to offset against future taxable income
3,502,178
2,895,561
Cash at bank earns interest at floating rates based on daily bank deposit rates. Refer to note 17.
10. Trade and other receivables
Current
Other trade receivables
Prepayments
2017
$
63,221
12,051
75,272
2016
$
74,208
15,429
89,637
Refer to note 17 for information about the Group’s exposure to credit and liquidity risk.
48
49
47
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
11. Financial assets
Non-current
Bank guarantee deposits
Security deposits
12. Property, plant and equipment
At cost
Less: accumulated depreciation
Plant and equipment
Carrying amount at 1 July
Exchange differences
Additions
Assets written off
Depreciation
Carrying amount at end of period
13. Trade and other payables
Trade payables
Accrued expenses
14.
Employee benefits
Accrued annual leave
Provision for long service leave
Total employee benefits
2017
$
50,000
57,081
107,081
2016
$
25,000
-
25,000
2017
$
254,151
(209,121)
45,030
52,052
(376)
5,887
-
(12,533)
45,030
2017
$
28,002
70,612
98,614
2017
$
15,334
26,770
42,104
2016
$
249,672
(197,620)
52,052
53,937
665
12,787
(4,938)
(10,399)
52,052
2016
$
25,558
333,605
359,163
2016
$
14,143
-
14,143
15. Share based payments
Employee Share Option Plan
The Company has an Employees and Consultants Option Plan (‘ESOP’).
Under the terms of the Employees and Consultants Option Plan, the Board may offer options at no
consideration to full-time or part-time employees (including persons engaged under a consultancy
agreement) and executive and non-executive directors.
Each option entitles the holder, on exercise, to one ordinary fully paid share in the Company. There is no
issue price for the options. The exercise price for the options is such price as determined by the Board.
An option may only be exercised after that option has vested and any other conditions imposed by the Board
on exercise satisfied. The Board may determine the vesting period, if any.
There are no voting or dividend rights attached to the options. There are no voting rights attached to the
unissued ordinary shares. Voting rights will be attached to the issued ordinary shares when the options have
been exercised.
The number and weighted average exercise prices of employee share options are as follows:
Outstanding at the beginning of the year
Granted during the year
Lapsed during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted
average
exercise price
($)
2017
Number
of options
2017
14,650,000
3,000,000
(1,000,000)
-
(5,850,000)
10,800,000
10,800,000
0.03
0.04
0.04
0.03
0.04
0.04
Weighted
average
exercise price
($)
2016
Number
of options
2016
5,850,000
8,800,000
-
-
-
0.02
0.04
-
-
-
0.03
0.03
14,650,000
14,650,000
The options outstanding at 30 June 2017 have an exercise price of $0.035 and a remaining contractual life of
3.8 years.
During the year, no employee share options were exercised.
The fair value of the options is estimated at the grant date using a Black Scholes option-pricing model.
The following table gives the assumptions made in determining the fair value of the options granted in the year
to 30 June 2017.
Share price at grant date (weighted average)
Exercise price (weighted average)
Expected volatility (expressed as weighted average volatility used in the
modelling under Black Scholes option-pricing model)
Option life (expressed as weighted average life used in the modelling
under Black Scholes option-pricing model)
Expected dividends
Risk-free interest rate
services received.
Share options granted in 2016 - equity settled
Share options granted in 2017 - equity settled
Total expense recognised as personnel expenses (note 4)
2017
2016
0.02
0.035
100%
5 years
Nil
2.02%
0.022
0.035
100%
5 years
Nil
1.92%
2017
$
-
42,619
42,619
2016
$
133,820
-
133,820
Non-market performance conditions are not taken into account in the grant date fair value measurement of the
48
50
51
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
11. Financial assets
Non-current
Bank guarantee deposits
Security deposits
12. Property, plant and equipment
At cost
Less: accumulated depreciation
Plant and equipment
Carrying amount at 1 July
Exchange differences
Additions
Assets written off
Depreciation
Carrying amount at end of period
13. Trade and other payables
Trade payables
Accrued expenses
14.
Employee benefits
Accrued annual leave
Provision for long service leave
Total employee benefits
15. Share based payments
Employee Share Option Plan
The Company has an Employees and Consultants Option Plan (‘ESOP’).
Under the terms of the Employees and Consultants Option Plan, the Board may offer options at no
consideration to full-time or part-time employees (including persons engaged under a consultancy
agreement) and executive and non-executive directors.
Each option entitles the holder, on exercise, to one ordinary fully paid share in the Company. There is no
issue price for the options. The exercise price for the options is such price as determined by the Board.
An option may only be exercised after that option has vested and any other conditions imposed by the Board
on exercise satisfied. The Board may determine the vesting period, if any.
There are no voting or dividend rights attached to the options. There are no voting rights attached to the
unissued ordinary shares. Voting rights will be attached to the issued ordinary shares when the options have
been exercised.
2017
$
50,000
57,081
107,081
2016
$
25,000
-
25,000
2017
$
254,151
(209,121)
45,030
52,052
(376)
5,887
-
(12,533)
45,030
2017
$
28,002
70,612
98,614
2017
$
15,334
26,770
42,104
2016
$
249,672
(197,620)
52,052
53,937
665
12,787
(4,938)
(10,399)
52,052
2016
$
25,558
333,605
359,163
2016
$
14,143
-
14,143
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
The number and weighted average exercise prices of employee share options are as follows:
Outstanding at the beginning of the year
Granted during the year
Lapsed during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted
average
exercise price
($)
2017
0.03
0.04
0.04
0.03
0.04
0.04
Number
of options
2017
14,650,000
3,000,000
(1,000,000)
-
(5,850,000)
10,800,000
10,800,000
Weighted
average
exercise price
($)
2016
0.02
0.04
-
-
-
0.03
0.03
Number
of options
2016
5,850,000
8,800,000
-
-
-
14,650,000
14,650,000
The options outstanding at 30 June 2017 have an exercise price of $0.035 and a remaining contractual life of
3.8 years.
During the year, no employee share options were exercised.
The fair value of the options is estimated at the grant date using a Black Scholes option-pricing model.
The following table gives the assumptions made in determining the fair value of the options granted in the year
to 30 June 2017.
Share price at grant date (weighted average)
Exercise price (weighted average)
Expected volatility (expressed as weighted average volatility used in the
modelling under Black Scholes option-pricing model)
Option life (expressed as weighted average life used in the modelling
under Black Scholes option-pricing model)
Expected dividends
Risk-free interest rate
2017
2016
0.02
0.035
100%
5 years
Nil
2.02%
0.022
0.035
100%
5 years
Nil
1.92%
Non-market performance conditions are not taken into account in the grant date fair value measurement of the
services received.
Share options granted in 2016 - equity settled
Share options granted in 2017 - equity settled
Total expense recognised as personnel expenses (note 4)
2017
$
-
42,619
42,619
2016
$
133,820
-
133,820
50
51
49
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
16.
Issued capital and reserves
(a)
Issued Capital
There were 990,340,635 shares on issue at 30 June 2017 (30 June 2016: 696,450,401).
Movements in ordinary shares on issue:
At 30 June the Company had 10,800,000 unlisted options on issue under the following terms and
conditions:
Number
10,800,000
Expiry Date
31 March 2021
Exercise Price
$0.035
Balance at 1 July
Shares issued in lieu of directors
fees
Shares issued on exercise of listed
options
Share issue – settlement of
Directors’ loan
Share issued to consultant in lieu of
consulting fees(1)
Share issue – rights issue(2)
Shares issued to acquire the
Kathleen Valley Lithium Project(3)
Share issue – placement(4)
Cost of share issues
2017
2016
No.
696,450,401
$
30,194,966
No.
460,769,515
$
27,646,045
-
-
-
-
-
-
7,017,000
91,220
333
17
23,333,333
350,000
3,000,000
139,890,234
48,000
1,398,902
-
115,530,219
-
808,712
25,000,000
126,000,000
-
990,340,635
425,000
2,520,000
(239,848)
34,347,020
-
89,800,001
-
696,450,401
-
1,347,000
(48,028)
30,194,966
Listed share options
On issue at 1 July
Options issued during the year
Options exercised during the year
Options expired during the year
On issue at 30 June
(c)
Accumulated losses
Movements in accumulated losses:
(1) 3,000,000 fully paid ordinary shares were issued in August 2016 to a consultant of the Company
in consideration for the provision of corporate communications and investor relations support.
(d)
Reserves
Nature and purpose of reserves
2017
No.
2017
$
-
-
-
-
-
-
2016
No.
32,645,703
(333)
(32,645,370)
-
-
2016
(Restated)
$
(4,300,297)
(2,094,133)
-
(2) On 13 October 2016, the Company completed a 1-for-5 non-renounceable rights issue to raise
$1,398,902.
(3) In December 2016, 25,000,000 fully paid ordinary shares were issued to Ramelius Resources
Limited in consideration for the acquisition of the Kathleen Valley Lithium Project.
(4) The Company completed a share placement to raise $2,520,000 by issuing 126,000,000 shares
at a share price of $0.02 per share.
All shares were issued and fully paid during the year.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at shareholders’ meetings. In the event of winding up of the Company,
the ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any
proceeds on liquidation.
(b)
Share options
Unlisted shares options
As outlined in note 15, the Company has an ESOP under which options to subscribe for the Company’s
shares have been granted to Directors, KMP and all employees. Share options granted under the
Company’s employee share option plan carry no rights to dividends and no voting rights. Further details
of the employee share option plan are provided in note 15.
Balance at beginning of financial year
(29,920,254)
(23,525,824)
Retrospective adjustment for change in accounting policy
Loss for the year attributable to owners of the parent
Transfers between equity items
Balance at end of financial year
(3,283,570)
58,911
(33,144,913)
(29,920,254)
This reserve is used to record the value of equity benefits provided to employees and directors as
(i) Share based payments reserve
part of their remuneration.
(ii) Foreign currency translation reserve
The foreign currency translation reserve is used to record the exchange differences arising from the
translation of the financial statements of foreign subsidiaries.
All movements in the above reserves are as stated in the consolidated statement of changes in equity.
17. Financial instruments
(a)
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while
maximising the return to shareholders.
The capital structure of the Group consists of equity attributable to equity holders, comprising issued
capital, reserves and accumulated losses as disclosed in note 16.
The Board reviews the capital structure on a regular basis and considers the cost of capital and the
risks associated with each class of capital. The Group will balance its overall capital structure through
new share issues as well as the issue of debt, if the need arises.
(b)
Market risk exposures
Market risk is the risk that changes in market prices such as foreign exchange rates, equity prices and
interest rates will affect the Group’s income or value of its holdings of financial instruments.
50
52
53
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
16.
Issued capital and reserves
(a)
Issued Capital
There were 990,340,635 shares on issue at 30 June 2017 (30 June 2016: 696,450,401).
Movements in ordinary shares on issue:
Balance at 1 July
Shares issued in lieu of directors
Shares issued on exercise of listed
fees
options
Share issue – settlement of
Directors’ loan
Share issued to consultant in lieu of
consulting fees(1)
Share issue – rights issue(2)
Shares issued to acquire the
2017
2016
No.
$
No.
$
696,450,401
30,194,966
460,769,515
27,646,045
-
-
-
-
-
-
-
7,017,000
91,220
333
17
23,333,333
350,000
-
-
-
-
-
3,000,000
48,000
139,890,234
1,398,902
115,530,219
808,712
Kathleen Valley Lithium Project(3)
Share issue – placement(4)
25,000,000
126,000,000
Cost of share issues
425,000
2,520,000
(239,848)
89,800,001
1,347,000
(48,028)
990,340,635
34,347,020
696,450,401
30,194,966
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
At 30 June the Company had 10,800,000 unlisted options on issue under the following terms and
conditions:
Number
10,800,000
Expiry Date
31 March 2021
Exercise Price
$0.035
Listed share options
On issue at 1 July
Options issued during the year
Options exercised during the year
Options expired during the year
On issue at 30 June
(c)
Accumulated losses
Movements in accumulated losses:
Balance at beginning of financial year
Retrospective adjustment for change in accounting policy
Loss for the year attributable to owners of the parent
Transfers between equity items
Balance at end of financial year
2017
No.
2016
No.
32,645,703
-
(333)
(32,645,370)
-
-
-
-
-
-
2017
$
(29,920,254)
-
(3,283,570)
58,911
(33,144,913)
2016
(Restated)
$
(23,525,824)
(4,300,297)
(2,094,133)
-
(29,920,254)
(1) 3,000,000 fully paid ordinary shares were issued in August 2016 to a consultant of the Company
in consideration for the provision of corporate communications and investor relations support.
(d)
Reserves
Nature and purpose of reserves
(2) On 13 October 2016, the Company completed a 1-for-5 non-renounceable rights issue to raise
$1,398,902.
(3) In December 2016, 25,000,000 fully paid ordinary shares were issued to Ramelius Resources
Limited in consideration for the acquisition of the Kathleen Valley Lithium Project.
(4) The Company completed a share placement to raise $2,520,000 by issuing 126,000,000 shares
at a share price of $0.02 per share.
(i) Share based payments reserve
This reserve is used to record the value of equity benefits provided to employees and directors as
part of their remuneration.
(ii) Foreign currency translation reserve
The foreign currency translation reserve is used to record the exchange differences arising from the
translation of the financial statements of foreign subsidiaries.
All movements in the above reserves are as stated in the consolidated statement of changes in equity.
All shares were issued and fully paid during the year.
17. Financial instruments
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at shareholders’ meetings. In the event of winding up of the Company,
the ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any
(a)
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while
maximising the return to shareholders.
proceeds on liquidation.
(b)
Share options
Unlisted shares options
As outlined in note 15, the Company has an ESOP under which options to subscribe for the Company’s
shares have been granted to Directors, KMP and all employees. Share options granted under the
Company’s employee share option plan carry no rights to dividends and no voting rights. Further details
of the employee share option plan are provided in note 15.
The capital structure of the Group consists of equity attributable to equity holders, comprising issued
capital, reserves and accumulated losses as disclosed in note 16.
The Board reviews the capital structure on a regular basis and considers the cost of capital and the
risks associated with each class of capital. The Group will balance its overall capital structure through
new share issues as well as the issue of debt, if the need arises.
(b)
Market risk exposures
Market risk is the risk that changes in market prices such as foreign exchange rates, equity prices and
interest rates will affect the Group’s income or value of its holdings of financial instruments.
52
53
51
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Foreign exchange rate risk
The Group undertakes certain transactions denominated in foreign currencies, hence exposure to
exchange rate fluctuations arise. The Group does not hedge this exposure. The Group manages its
foreign exchange risk by constantly reviewing its exposure and ensuring that there are appropriate
cash balances in order to meet its commitments.
Equity prices
The Group currently has no significant exposure to equity price risk.
Interest rate risk exposures
The Group’s exposure to interest rate risk and the effective weighted average interest rate for classes
of financial assets and financial liabilities is set out below:
1 year
or less
$
Over 1 to
5 years
$
Floating
interest
$
Note
Non-
interest
bearing
$
Total
$
Weighted
average
int. rate
9
11
10
13
-
107,081
-
-
-
-
-
-
1,345,676
-
69,925
-
1,415,601
107,081
0.59%
1.26%
-
75,272
75,272
-
98,614
98,614
-
-
1 year
or less
$
Over 1 to
5 years
$
Floating
interest
$
Note
Non-
interest
bearing
$
Total
$
Weighted
average
int. rate
9
11
10
13
-
25,000
-
-
-
-
-
-
642,068
-
158,880
-
800,948
25,000
1.32%
2.44%
-
-
89,637
89,637
359,163
359,163
-
-
30 June 2017
Financial assets
Bank balances
Financial assets
Trade and other
receivables
Financial liabilities
Trade payables and
accrued expenses
30 June 2016
Financial assets
Bank balances
Financial assets
Trade and other
receivables
Financial liabilities
Trade payables and
accrued expenses
(c)
Credit risk exposure
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The Group’s exposure to credit risk is not
significant and currently arises principally from sundry receivables which represent an insignificant
proportion of the Group’s activities.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at
reporting date to recognised financial assets is the carrying amount, net of any allowance for doubtful
debts, as disclosed in the notes to the financial statements.
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
(d)
Liquidity risk exposure
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall
due. The Board actively monitors the Group’s ability to pay its debts as and when they fall due by
regularly reviewing the current and forecast cash position based on the expected future activities.
The Group has non-derivative financial liabilities which include trade and other payables of $98,614
all of which are due within 60 days.
(e)
Net fair values of financial assets and liabilities
The carrying amounts of all financial assets and liabilities approximate the net fair values.
18. Capital and other commitments
Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to perform
minimum exploration work to meet the minimum expenditure requirements specified by various
governments. These obligations are subject to renegotiation when application for a mining lease is made
and at other times. The amounts stated are based on the maximum commitments. The Group may in certain
situations apply for exemptions under relevant mining legislation. These obligations are not provided for in
the financial report and are payable:
19. Reconciliation of cash flows from operating activities to
Within 1 year
Within 2 – 5 years
Later than 5 years
loss for the period
Loss for the period
Adjustments for:
Depreciation and amortisation
Carrying amount of assets written off
Foreign exchange loss/(gain)
Directors fees paid in equity
Equity settled consulting fees
Equity settled exploration asset acquisition
Equity-settled share-based payment expenses
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade creditors and accruals
(Increase)/decrease in other financial assets
Increase/(decrease) in provisions
Net cash used in operating activities
(3,283,570)
(2,094,133)
2017
$
765,224
1,877,846
1,927,937
4,571,007
2017
$
12,533
1,294
-
-
48,000
425,000
42,619
20,170
(265,081)
(57,081)
27,961
2016
$
578,060
2,471,954
89,550
3,139,564
2016
(Restated)
$
10,399
5,053
(18,070)
91,220
-
-
-
133,820
(59,057)
82,949
(5,377)
(3,028,155)
(1,853,196)
Operating loss before changes in working capital and provisions
(2,754,124)
(1,871,711)
20.
Key management personnel
The following were key management personnel of the Group at any time during the reporting period and unless
otherwise indicated were key management personnel “KMP” for the entire period:
52
54
55
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Foreign exchange rate risk
The Group undertakes certain transactions denominated in foreign currencies, hence exposure to
exchange rate fluctuations arise. The Group does not hedge this exposure. The Group manages its
foreign exchange risk by constantly reviewing its exposure and ensuring that there are appropriate
cash balances in order to meet its commitments.
Equity prices
The Group currently has no significant exposure to equity price risk.
Interest rate risk exposures
The Group’s exposure to interest rate risk and the effective weighted average interest rate for classes
of financial assets and financial liabilities is set out below:
1 year
or less
Over 1 to
5 years
Floating
interest
Note
$
$
$
Non-
interest
bearing
$
Total
$
Weighted
average
int. rate
107,081
1,345,676
69,925
1,415,601
-
107,081
0.59%
1.26%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,272
75,272
-
98,614
98,614
-
-
-
89,637
89,637
359,163
359,163
1 year
or less
Over 1 to
Floating
5 years
interest
Note
$
$
$
Non-
interest
bearing
$
Total
$
Weighted
average
int. rate
25,000
642,068
158,880
800,948
25,000
1.32%
2.44%
-
30 June 2017
Financial assets
Bank balances
Financial assets
Trade and other
receivables
Financial liabilities
Trade payables and
accrued expenses
30 June 2016
Financial assets
Bank balances
Financial assets
Trade and other
receivables
Financial liabilities
Trade payables and
accrued expenses
9
11
10
13
9
11
10
13
(c)
Credit risk exposure
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The Group’s exposure to credit risk is not
significant and currently arises principally from sundry receivables which represent an insignificant
proportion of the Group’s activities.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at
reporting date to recognised financial assets is the carrying amount, net of any allowance for doubtful
debts, as disclosed in the notes to the financial statements.
-
-
-
-
54
(d)
Liquidity risk exposure
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall
due. The Board actively monitors the Group’s ability to pay its debts as and when they fall due by
regularly reviewing the current and forecast cash position based on the expected future activities.
The Group has non-derivative financial liabilities which include trade and other payables of $98,614
all of which are due within 60 days.
(e)
Net fair values of financial assets and liabilities
The carrying amounts of all financial assets and liabilities approximate the net fair values.
18. Capital and other commitments
Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to perform
minimum exploration work to meet the minimum expenditure requirements specified by various
governments. These obligations are subject to renegotiation when application for a mining lease is made
and at other times. The amounts stated are based on the maximum commitments. The Group may in certain
situations apply for exemptions under relevant mining legislation. These obligations are not provided for in
the financial report and are payable:
Within 1 year
Within 2 – 5 years
Later than 5 years
19. Reconciliation of cash flows from operating activities to
loss for the period
Loss for the period
Adjustments for:
Depreciation and amortisation
Carrying amount of assets written off
Foreign exchange loss/(gain)
Directors fees paid in equity
Equity settled consulting fees
Equity settled exploration asset acquisition
Equity-settled share-based payment expenses
Operating loss before changes in working capital and provisions
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade creditors and accruals
(Increase)/decrease in other financial assets
Increase/(decrease) in provisions
Net cash used in operating activities
2017
$
765,224
1,877,846
1,927,937
4,571,007
2017
$
(3,283,570)
12,533
-
1,294
-
48,000
425,000
42,619
(2,754,124)
20,170
(265,081)
(57,081)
27,961
(3,028,155)
2016
$
578,060
2,471,954
89,550
3,139,564
2016
(Restated)
$
(2,094,133)
10,399
5,053
(18,070)
91,220
-
-
133,820
(1,871,711)
(59,057)
82,949
-
(5,377)
(1,853,196)
20.
Key management personnel
The following were key management personnel of the Group at any time during the reporting period and unless
otherwise indicated were key management personnel “KMP” for the entire period:
53
55
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Directors
T R B Goyder
D R Richards
C R Williams
A J Cipriano
Executive
R K Hacker (Chief Financial Officer)
The key management personnel compensation is as follows:
Short-term employee benefits
Post-employment benefits
Equity-settled transactions
2017
$
280,538
25,187
-
305,725
2016
$
286,134
21,559
107,810
415,503
At 30 June 2016, the Company had directors’ fees owing of $34,827 which were subsequently settled in April
2017. No directors’ fees were outstanding at 30 June 2017.
Individual directors’ and executives’ compensation disclosures
Information regarding individual directors’ and executives’ compensation is provided in the Remuneration
Report section of the Directors’ Report.
Loans to key management personnel and their related parties
No loans were made to key management personnel and their related parties.
Other key management personnel transactions with the Group
A number of key management persons, or their related parties, hold positions in other entities that result in
them having control or significant influence over the financial or operating policies of those entities.
A number of these entities transacted with the Group in the reporting period. The terms and conditions of
the transactions with management persons and their related parties were no more favourable than those
available, or which might reasonably be expected to be available, on similar transactions to non-Director
related entities on an arm’s length basis.
The aggregate amounts recognised during the year relating to key management personnel and their related
parties were as follows:
Amounts paid or
payable
2017
$
Amounts paid or
payable
2016
$
Note
Key management persons
Other related parties
Chalice Gold Mines Limited
Transaction
Corporate Services
(i)
66,000
66,000
(i)
The Group receives corporate services including office rent and facilities, accounting and company
secretarial services under a Corporate Services Agreement with Chalice Gold Mines Limited. Mr Goyder
was a director, Mr Hacker was the CFO and Mrs Stevens was the company secretary of Chalice Gold
Mines Limited during the year. Amounts billed are based on a proportionate share of the cost to Chalice
Gold Mines Limited of providing the services and have normal payment terms.
Amounts payable to key management personnel at reporting date arising from these transactions were as
Liabilities arising from the above transactions
follows:
Current payables
21. Group entities
The consolidated financial statements includes the following entities:
2017
$
(5,500)
(5,500)
2016
$
(5,500)
(5,500)
Country of
Ownership interest
Investment
incorporation
Tanzania
Australia
Australia
Tanzania
2017
100%
100%
100%
0%*
2016
100%
100%
100%
0%*
2017
2016
$8,820
$9,412
$1
$1
-
$1
$1
-
The parent entity of the Group was Liontown Resources Limited throughout the financial years ended 30 June
Liontown Resources (Tanzania) Limited
LRL (Aust) Pty Ltd
ERL (Aust) Pty Ltd
Chela Resources Ltd
*Beneficial interest only
22. Parent entity disclosures
2017 and 30 June 2016.
Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Statement of comprehensive income
Loss for the year
Total comprehensive loss
2017
$
1,471,954
153,597
1,625,551
123,285
123,285
2016
(Restated)
$
822,314
60,371
882,685
288,354
288,354
1,502,266
594,331
34,347,021
160,513
30,194,968
176,806
(33,005,268)
(29,777,443)
1,502,266
594,331
(3,288,658)
(3,288,658)
(6,248,000)
(6,248,000)
54
56
57
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
For the year ended 30 June 2017
Directors
T R B Goyder
D R Richards
C R Williams
A J Cipriano
Executive
R K Hacker (Chief Financial Officer)
Short-term employee benefits
Post-employment benefits
Equity-settled transactions
The key management personnel compensation is as follows:
2017
$
280,538
25,187
-
305,725
2016
$
286,134
21,559
107,810
415,503
At 30 June 2016, the Company had directors’ fees owing of $34,827 which were subsequently settled in April
2017. No directors’ fees were outstanding at 30 June 2017.
Individual directors’ and executives’ compensation disclosures
Information regarding individual directors’ and executives’ compensation is provided in the Remuneration
Report section of the Directors’ Report.
Loans to key management personnel and their related parties
No loans were made to key management personnel and their related parties.
Other key management personnel transactions with the Group
A number of key management persons, or their related parties, hold positions in other entities that result in
them having control or significant influence over the financial or operating policies of those entities.
A number of these entities transacted with the Group in the reporting period. The terms and conditions of
the transactions with management persons and their related parties were no more favourable than those
available, or which might reasonably be expected to be available, on similar transactions to non-Director
related entities on an arm’s length basis.
The aggregate amounts recognised during the year relating to key management personnel and their related
parties were as follows:
Amounts paid or
Amounts paid or
Note
payable
2017
$
payable
2016
$
Key management persons
Transaction
Other related parties
Chalice Gold Mines Limited
Corporate Services
(i)
66,000
66,000
(i)
The Group receives corporate services including office rent and facilities, accounting and company
secretarial services under a Corporate Services Agreement with Chalice Gold Mines Limited. Mr Goyder
was a director, Mr Hacker was the CFO and Mrs Stevens was the company secretary of Chalice Gold
Mines Limited during the year. Amounts billed are based on a proportionate share of the cost to Chalice
Gold Mines Limited of providing the services and have normal payment terms.
Amounts payable to key management personnel at reporting date arising from these transactions were as
follows:
Liabilities arising from the above transactions
Current payables
21. Group entities
The consolidated financial statements includes the following entities:
2017
$
(5,500)
(5,500)
2016
$
(5,500)
(5,500)
Country of
incorporation
Ownership interest
Investment
Liontown Resources (Tanzania) Limited
LRL (Aust) Pty Ltd
ERL (Aust) Pty Ltd
Chela Resources Ltd
Tanzania
Australia
Australia
Tanzania
2017
100%
100%
100%
0%*
2016
100%
100%
100%
0%*
2017
2016
$8,820
$1
$1
-
$9,412
$1
$1
-
*Beneficial interest only
22. Parent entity disclosures
The parent entity of the Group was Liontown Resources Limited throughout the financial years ended 30 June
2017 and 30 June 2016.
Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Statement of comprehensive income
Loss for the year
Total comprehensive loss
2017
$
1,471,954
153,597
1,625,551
123,285
123,285
2016
(Restated)
$
822,314
60,371
882,685
288,354
288,354
1,502,266
594,331
34,347,021
160,513
(33,005,268)
1,502,266
30,194,968
176,806
(29,777,443)
594,331
(3,288,658)
(3,288,658)
(6,248,000)
(6,248,000)
56
57
55
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
23.
Subsequent events
On 3 August 2017, the Company exercised an option to acquire 100% of the Bynoe Lithium Project tenure that it
did not already own by paying the vendor $100,000.
On 12 September 2017, the Company agreed to sell its Bynoe Project to Core Exploration Limited (ASX: CXO)
(“Core” or “CXO”) for an upfront consideration of $1,500,000 in cash and issuing $2,000,000 in CXO shares
(calculated using a 10 day VWAP prior to the date of the Agreement) (“Consideration Shares”) and in addition, a
milestone payment of $1,500,000 in cash or shares (at Core’s election) upon defining a JORC compliant Mineral
Resource totaling 5Mt within Liontown’s Bynoe tenure. The Consideration Shares will be subject to voluntary
escrow provisions.
In July 2017 the Company announced that amendments to the legal framework governing the natural resources
sector in Tanzania was passed by the Tanzanian Parliament. The full impact of the new legislation on Liontown’s
activities in Tanzania has still yet to be fully determined, however, it does appear to increase risk and uncertainty
of the Company’s tenure over the Simba and Panapendesa gold resources at the Jubilee Reef Project.
Liontown lodged a Retention Licence (“RL”) application over the Simba and Panapendesa gold resources in April
2017. The new legislation has repealed the right to apply for RLs going forward. However, it is currently unclear
whether there will be any saving provision made to favourably deal with a RL application made prior to the
enactment of the amendments. The Company is awaiting the release of the Regulations that will accompany
the enacted changes to determine whether any such provision will be made.
As the Company’s primary focus is on its portfolio of lithium projects in Australia, the Company closed its
Tanzanian office until the practical effects of the changed legislation is understood.
24. Contingent assets and liabilities
There are no contingent assets or liabilities.
Liontown Resources Limited
Directors’ Declaration
1
In the opinion of the directors of Liontown Resources Limited (‘the Company’):
(a)
the financial statements, notes and additional disclosures of the Group are in accordance with the
Corporations Act 2001 including:
(i) giving a true and fair view of the financial position of the Group as at 30 June 2017 and of its
performance for the year then ended; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable; and
(c) the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board.
2
This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2017.
This declaration is signed in accordance with a resolution of the Directors:
David R Richards
Managing Director
Dated this 19th day of September 2017
56
58
59
Annual Report 2017
Liontown Resources Limited
Notes to the Consolidated Financial Statements
For the year ended 30 June 2017
23.
Subsequent events
On 3 August 2017, the Company exercised an option to acquire 100% of the Bynoe Lithium Project tenure that it
did not already own by paying the vendor $100,000.
On 12 September 2017, the Company agreed to sell its Bynoe Project to Core Exploration Limited (ASX: CXO)
(“Core” or “CXO”) for an upfront consideration of $1,500,000 in cash and issuing $2,000,000 in CXO shares
(calculated using a 10 day VWAP prior to the date of the Agreement) (“Consideration Shares”) and in addition, a
milestone payment of $1,500,000 in cash or shares (at Core’s election) upon defining a JORC compliant Mineral
Resource totaling 5Mt within Liontown’s Bynoe tenure. The Consideration Shares will be subject to voluntary
escrow provisions.
In July 2017 the Company announced that amendments to the legal framework governing the natural resources
sector in Tanzania was passed by the Tanzanian Parliament. The full impact of the new legislation on Liontown’s
activities in Tanzania has still yet to be fully determined, however, it does appear to increase risk and uncertainty
of the Company’s tenure over the Simba and Panapendesa gold resources at the Jubilee Reef Project.
Liontown lodged a Retention Licence (“RL”) application over the Simba and Panapendesa gold resources in April
2017. The new legislation has repealed the right to apply for RLs going forward. However, it is currently unclear
whether there will be any saving provision made to favourably deal with a RL application made prior to the
enactment of the amendments. The Company is awaiting the release of the Regulations that will accompany
the enacted changes to determine whether any such provision will be made.
As the Company’s primary focus is on its portfolio of lithium projects in Australia, the Company closed its
Tanzanian office until the practical effects of the changed legislation is understood.
24. Contingent assets and liabilities
There are no contingent assets or liabilities.
Directors’ Declaration
Liontown Resources Limited
Directors’ Declaration
1
In the opinion of the directors of Liontown Resources Limited (‘the Company’):
(a)
the financial statements, notes and additional disclosures of the Group are in accordance with the
Corporations Act 2001 including:
(i) giving a true and fair view of the financial position of the Group as at 30 June 2017 and of its
performance for the year then ended; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable; and
(c) the financial statements and notes thereto are in accordance with International Financial
Reporting Standards issued by the International Accounting Standards Board.
2
This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2017.
This declaration is signed in accordance with a resolution of the Directors:
David R Richards
Managing Director
Dated this 19th day of September 2017
58
59
57
Annual Report 2017
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT
To the members of Liontown Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Liontown Resources Limited (“the Company”) and its
controlled entities (“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 statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a)
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
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. We have determined the matters described below to be the key
audit matters to be communicated in our report.
58
59
Annual Report 2017
INDEPENDENT AUDITOR’S REPORT
To the members of Liontown Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Liontown Resources Limited (“the Company”) and its
controlled entities (“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 statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors’
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
declaration.
Act 2001, including:
a)
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
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. We have determined the matters described below to be the key
audit matters to be communicated in our report.
Independent Auditor’s Report
Key Audit Matter
How our audit addressed the key audit matter
Voluntary change in accounting policy – exploration
and evaluation expenditure
(Note 1(d) of the financial report)
financial
the Group changed
its
its
the year,
During
treatment of
accounting policy regarding
In
exploration and evaluation expenditure.
years, exploration and
previous
evaluation expenditure,
including acquisition
costs, in relation to areas of interest which had
not reached a stage which permitted reasonable
assessment of the existence or otherwise of
economically
was
capitalised. The Group then assessed whether
any indicators of impairment existed which would
to assess capitalised
require
exploration and evaluation expenditure
for
impairment. The new accounting policy is to
expense exploration and evaluation expenditure,
including the cost of acquisition, in the year when
it is incurred.
the Group
recoverable
reserves,
Our procedures included but were not limited to
the following:
We considered the appropriateness of the
change in accounting policy, ensuring that
the disclosure requirements set out in AASB
108 were complied with.
We reconciled the restated balances to the
prior year audited balances ensuring that the
change was
calculated and
disclosed in the financial report.
correctly
The change in accounting policy resulted in the
restatement of affected 2016 balances and the
disclosure of
restatement of balances
the
reported in the 2016 financial report.
The change in accounting policy was a key audit
matter due to the size and scope of the change
and impact on the presentation of the financial
statements.
Information other than the financial report and auditor’s report thereon
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 the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
59
60
59
Annual Report 2017
Independent Auditor’s Report
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the 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.
60
61
Annual Report 2017
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the 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.
Independent Auditor’s Report
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the remuneration report
We have audited the remuneration report included in pages 20 to 26 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the remuneration report of Liontown Resources 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.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
19 September 2017
L Di Giallonardo
Partner
61
62
61
Annual Report 2017
Liontown Resources Limited
ASX Additional Information
Twenty largest Ordinary Fully Paid Shareholders
as at 18 September 2017
Name
Timothy R B Goyder
Lujeta Pty Ltd
Graham Kluck Management & Investment Pty Ltd
Delta Resource Management
Ramelius Gold Pty Ltd
Bellarine Gold Pty Ltd
Clement Pty Ltd
Calm Holdings Pty Ltd
Craig Williams
Albion Bay Pty Ltd
Gremar Holdings Pty Ltd
Hazardous Investments Pty Ltd
Dog Trap Investments Pty Ltd
Precision Opportunities Fund
DM Middletons Pty Ltd
P R Perry Nominees Pty Ltd
Botsis Holdings Pty Ltd
Anthony Cipriano
JP Morgan Nominees Australia Limited
Total
Number of ordinary
shares held
Percentage of
capital held
%
22.84
226,184,982
56,604,350
42,463,332
38,400,000
25,000,000
20,132,017
17,620,856
16,189,278
14,663,122
13,579,292
12,308,000
11,500,000
10,091,622
10,000,000
9,500,000
7,500,000
7,140,000
6,403,600
6,370,479
6,270,849
5.72
4.29
3.88
2.52
2.03
1.78
1.63
1.48
1.37
1.24
1.16
1.02
1.01
0.96
0.76
0.72
0.65
0.64
0.63
557,921,779
56.33
Liontown Resources Limited
ASX Additional Information
ASX Additional Information
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed
elsewhere in this report is set out below.
Shareholdings
Substantial shareholders
The number of shares held by substantial shareholders and their associated interests as at 18 September 2017 were:
Shareholder
Number of ordinary
shares held
Percentage of
capital held %
Number of
unlisted
options held
Percentage of
unlisted
options held %
Timothy R B Goyder
226,184,982
22.84
2,000,000
18.52
Mr John Manson and Mrs Karen Manson
Luieta Pty Ltd
56,604,350
5.72
-
-
Class of Shares and Voting Rights
At 18 September 2017 there were 1,108 holders of the ordinary shares of the Company and 9 holders of unlisted
options. The Company has 10,800,000 unlisted options on issue at 18 September 2017, all of which were issued under
the Employee Share Option Plan.
The voting rights to the ordinary shares set out in the Company’s Constitution are:
“Subject to any rights or restrictions for the time being attached to any class or Classes of shares -
a)
b)
at meetings of members or classes of members each member entitled to vote in person or by proxy or
attorney: and
on a show of hands every person who is a member has one vote and on a poll every person in person or
by proxy or attorney has one vote for each ordinary share held.”
Holders of options do not have voting rights.
Distribution of equity security holders as at 18 September 2017:
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of equity security holders
Ordinary Shares
Unlisted Share Options
102
14
13
354
625
1,108
-
-
-
-
9
9
The number of shareholders holding less than a marketable parcel at 18 September 2017 was 304.
62
64
65
Annual Report 2017
ASX Additional Information
Liontown Resources Limited
ASX Additional Information
Twenty largest Ordinary Fully Paid Shareholders
as at 18 September 2017
Name
Timothy R B Goyder
Lujeta Pty Ltd
Graham Kluck Management & Investment Pty Ltd
Delta Resource Management
Ramelius Gold Pty Ltd
Bellarine Gold Pty Ltd
Clement Pty Ltd
Calm Holdings Pty Ltd
Craig Williams
Mr John Manson and Mrs Karen Manson
Albion Bay Pty Ltd
Gremar Holdings Pty Ltd
Hazardous Investments Pty Ltd
Dog Trap Investments Pty Ltd
Precision Opportunities Fund
DM Middletons Pty Ltd
P R Perry Nominees Pty Ltd
Botsis Holdings Pty Ltd
Anthony Cipriano
JP Morgan Nominees Australia Limited
Total
Number of ordinary
shares held
226,184,982
56,604,350
42,463,332
38,400,000
25,000,000
20,132,017
17,620,856
16,189,278
14,663,122
13,579,292
12,308,000
11,500,000
10,091,622
10,000,000
9,500,000
7,500,000
7,140,000
6,403,600
6,370,479
6,270,849
557,921,779
Percentage of
capital held
%
22.84
5.72
4.29
3.88
2.52
2.03
1.78
1.63
1.48
1.37
1.24
1.16
1.02
1.01
0.96
0.76
0.72
0.65
0.64
0.63
56.33
Liontown Resources Limited
ASX Additional Information
Shareholdings
Substantial shareholders
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed
elsewhere in this report is set out below.
The number of shares held by substantial shareholders and their associated interests as at 18 September 2017 were:
Shareholder
Number of ordinary
shares held
Percentage of
capital held %
Number of
unlisted
Percentage of
unlisted
options held
options held %
Timothy R B Goyder
226,184,982
22.84
2,000,000
18.52
Luieta Pty Ltd
56,604,350
5.72
-
-
Class of Shares and Voting Rights
At 18 September 2017 there were 1,108 holders of the ordinary shares of the Company and 9 holders of unlisted
options. The Company has 10,800,000 unlisted options on issue at 18 September 2017, all of which were issued under
the Employee Share Option Plan.
The voting rights to the ordinary shares set out in the Company’s Constitution are:
“Subject to any rights or restrictions for the time being attached to any class or Classes of shares -
a)
at meetings of members or classes of members each member entitled to vote in person or by proxy or
attorney: and
b)
on a show of hands every person who is a member has one vote and on a poll every person in person or
by proxy or attorney has one vote for each ordinary share held.”
Holders of options do not have voting rights.
Distribution of equity security holders as at 18 September 2017:
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of equity security holders
Ordinary Shares
Unlisted Share Options
102
14
13
354
625
1,108
-
-
-
-
9
9
The number of shareholders holding less than a marketable parcel at 18 September 2017 was 304.
64
65
63
Annual Report 2017
Level 2, 1 292 Hay Street, West Perth Western Australia 6005
GPO Box 2890, Perth WA 600 1
ABN 39 1 1 8 1 53 825