Contents
Chairman’s Letter
Operating and Financial Review
Mineral Resource Statement
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 Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Directory
DIRECTORS
Timothy Rupert Barr Goyder
David Ross Richards
Craig Russell Williams
Anthony James Cipriano
Steven John Micheil Chadwick
COMPANY SECRETARY
Kym Verheyen
Chairman
Managing Director
Non-executive Director
Non-executive Director
Non-executive Director
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WEST PERTH, WESTERN AUSTRALIA 6005
Tel:
Fax:
Web: www.ltresources.com.au
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(+61 8) 9322 5800
AUDITORS
HLB Mann Judd
Level 4, 130 Stirling Street
PERTH, WESTERN AUSTRALIA 6000
SHARE REGISTRY
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Australian Securities Exchange Limited
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ASX CODES
Share Code: LTR
O
CHAIRMAN’S LETTER
Tim Goyder
Chairman
Dear Fellow Shareholders,
I am pleased to report on what has
been a year of significant
accomplishment for your Company,
with the many milestones achieved
transforming Liontown in short order
from junior explorer to an emerging
developer owning a globally
significant lithium resource.
1 | CHAIRMAN’S LETTER
This fast-paced and exciting period has been driven largely
by our success in rapidly expanding our flagship Kathleen
Valley Lithium Project from a maiden Mineral Resource
Estimate (MRE) of 21.2Mt at 1.4% Li2O and 170ppm Ta2O5
last year, with an impressive 353% increase to the current
MRE of 74.9 million tonnes at 1.3% Li2O and 140ppm Ta2O5
in July 2019.
The size, grade and location of the Kathleen Valley deposit
make it stand out amongst its peers and has rapidly
elevated the project to become the 5th largest hard rock
lithium resource in Australia.
The current MRE forms part of a larger high-grade
mineralised system at Kathleen Valley which has so far
been defined over a strike length of at least 1km. The
Resource remains open both at depth and along strike and
offers significant potential for further growth.
At the time of writing, a resource expansion drilling program
is in full swing and I am confident this will be a catalyst to
deliver further value for Shareholders over the coming
months. The completion of the current Pre-Feasibility Study
(PFS) in Q4 2019, and the commencement of the Definitive
Feasibility Study (DFS) immediately thereafter remain
Liontown’s unwavering objective.
With Kathleen Valley as our cornerstone asset, Liontown is
ideally positioned to become a significant player in the
global battery metals space through the construction of a
standalone mining operation in a well-established mining
district of Western Australia.
Ensuring that Liontown is at the fore front of the next
generation of successful lithium producers remains at the
core of our strategy. The Company has placed a high
priority on metallurgical studies with the objective of
designing a flow sheet that will optimise grade and
recoveries. We believe this ongoing emphasis on test work
will deliver a superior end product, enabling the Company
to avoid some of the issues currently being experienced in
the lithium industry.
Liontown is well-funded to maintain its exploration and
development momentum following two capital raisings
delivering ~$24.6 million during the calendar year. The
raisings collectively strengthened our share register and
capital base, with the introduction of several institutional
investors alongside continued strong support from our
existing Shareholders.
Our strong financial position means we can progress
Kathleen Valley at full pace while also continuing to
advance a second major lithium discovery at our Buldania
Project. The appeal of this project lies not only in the
potential of the discovery but also in its strategic location
within a lithium-rich mineral province supported by excellent
infrastructure with the port of Esperance only ~230km to the
south.
Further resource definition drilling was recently completed
at Buldania and the early results have confirmed the
potential for significant widths and grades over an extended
strike length of >1.4km. At the time of finalising this report,
CHAIRMAN’S LETTER
Managing Director, David Richards and our dedicated and
skilled team. I would also like to thank our Shareholders and
my fellow directors, executives, employees and contractors
for their continued and valued support.
I can assure Shareholders that your Board has a laser-like
focus on building value through the completion of the PFS
and subsequent DFS, with the ultimate goal to minimise risk
and maximise return.
I am extremely optimistic about the long-term future of the
Company and believe 2020 will provide further significant
opportunity for growth and progress which I look forward to
sharing with you.
Yours faithfully,
work is about to commence on preparing a maiden MRE,
which is likely to be completed by November this year.
Liontown’s rapid progress – and the increase in the
Company’s market capitalisation to ~$144 million at the
time of writing – has coincided with a significant pull-back in
the lithium sector. Based on our own market intelligence
and interactions with prospective customers, we believe this
situation is temporary and that the long-term future outlook
for lithium demand remains extremely robust.
The emergence of electric vehicles, powered by lithium-ion
batteries, is reflected in global commitments by leading
auto-makers who are reported to be investing ~US$225
billion on developing over 200 new models of plug-in
vehicles by 2023. Liontown’s timeline to produce battery-
grade lithium concentrate within 3-5 years will hopefully
coincide with the forecast surge in demand for lithium raw
materials.
In conclusion, our many achievements over the past year
are testament to the hard work and leadership of our
Tim Goyder
Chairman
2019 Key Highlights
• Kathleen Valley Project: Drilling completed in June 2019 delineated Australia’s 5th largest lithium
deposit with a Mineral Resource estimate (MRE) of 74.9Mt @ 1.3% Li2O and 140ppm Ta2O5,
83% of which is in the higher-confidence Measured and Indicated categories.
•
Buldania Project: Latest resource definition drilling has extended previously defined mineralisation
at Anna prospect to the south-east under shallow cover over a strike length >1.4km, as a precursor
to a maiden Mineral Resource Estimate.
• Continued advancement of our battery metals portfolio, with both Projects wholly-owned and
located in globally recognised and established mining regions.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 2
INVESTMENT HIGHLIGHTS
Liontown - A Next Generation Lithium Producer
Low Risk
• Western Australia
• Granted Mining Leases
• Well-funded
Location
• Established mining regions
• Modern infrastructure
Established mining region
•
• Modern infrastructure
100% Ownership
•
•
• Modern infrastructure
• No third party
Established mining region
obligations
(excluding royalties)
•
Established mining region
•
• Modern infrastructure
Quality
• Kathleen Valley – 5th biggest
lithium resource in Australia
• 83% M&I
Going Forward
• Kathleen Valley PFS Q4 2019
• Maiden MRE at Buldania Nov 2019
• Exploration Upside
KATHLEEN VALLEY
LITHIUM PROJECT
PERTH
KALGOORLIE
BULDANIA
LITHIUM PROJECT
3 | INVESTMENT HIGHLIGHTS
OPERATING AND FINANCIAL REVIEW
Looking ahead…
Liontown is progressing the Kathleen Valley Lithium deposit
towards a new mining and processing operation in Western
Australia. The definition of a 74.9 million tonnes at 1.3% Li2O
and 140ppm Ta2O5 Mineral Resource Estimate (MRE)
during 2019 and further expansion drilling is confirming the
resource as one of the most significant, high quality, hard
rock lithium deposits in Australia.
The rising demand in the global market for lithium ion
batteries
forecasts
is unprecedented with consensus
continuing to predict exponential growth in battery demand
driven by high environmental targets and incentivised
transition to electric vehicles. It is expected that Liontown will
be well positioned to become a significant source of supply
just in time to meet this demand which is expected to
escalate from the early 2020’s.
Importantly, the Kathleen Valley deposit is one of the few
remaining large, uncommitted (i.e. no off take agreements
and 100% ownership), hard rock lithium deposits in tier one
mining jurisdictions providing flexibility in terms of future
financing or attracting strategic partners.
The Company’s key corporate strategy over the next 12-18
months is to maintain a focused, consistent approach to the
systematic conversion of exploration targets to mineral
resources, and then to reserves that can be profitably mined
and processed. Ongoing feasibility studies will carefully
consider the learnings from recently commissioned, hard
rock lithium mine developments with a focus on metallurgical
test work to ensure a high quality spodumene concentrate
will be produced at optimal grades and recoveries.
The Company’s primary objectives in advancing Kathleen
Valley are the:
• Completion of a Pre-Feasibility Study (PFS) by end
of 2019 and immediate transition to a Definitive
Feasibility Study (DFS); and
• Planning and execution of the transition from an
exploration to a mineral development company.
The PFS is already well-advanced and will include results
from:
• Comprehensive metallurgical test work;
• Pit optimisation and scheduling;
• Review of infrastructure requirements;
•
Financial analyses of open pit mining; and
• A Scoping Study on potential additional
underground Resources.
In addition, the Company will seek to unlock the significant
exploration potential at its second lithium project at Buldania
with a maiden MRE due to be completed later in 2019.
While the Company cautions that key risks associated with
external factors (movements in commodity prices, foreign
exchange rates, interest rates and debt and equity markets)
may adversely impact these achievements, we remain
focused on delivering Australia’s next major
lithium
development.
A new drilling program is underway at Kathleen Valley,
aimed at expanding the current MRE and defining potential
underground Resources and Reserves.
.
YZ
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 4
OPERATING AND FINANCIAL REVIEW
Key Achievements of the Year
2
BULDANIA
LITHIUM PROJECT
•
Resource definition drilling has extended
lithium mineralisation at the Anna prospect to
the southeast for a minimum strike length of
1.4km with the system open along strike and at
depth.
•
Better intersections for the year include:
o
o
o
o
29m @ 1.3% Li2O from 66m (BDRC0089)
39m @ 1.6% Li2O from 9m (BDRC0090)
42m @ 1.0% Li2O from 155m (BDRC0106)
30m @ 1.4% Li2O from 9m (BDDD0003)
•
Drill data from the current and last year’s drilling
will be used
to prepare maiden Mineral
Resource estimate in Q4 2019.
3
CORPORATE
•
•
Capital raising subsequent to year end raised up
to $16.57 million (before costs)with a further
$1.43 million subject to Shareholder approval,
meaning Liontown is well placed to achieve key
milestones.
mining
The appointment of Steven Chadwick, a highly
experienced
and
metallurgist, to the board in January 2019 adds
valuable
further
strengthens the Liontown team.
in-house expertise and
professional
1
•
KATHLEEN VALLEY
LITHIUM PROJECT
New Measured, Indicated and Inferred Mineral
Resource estimate completed for the Kathleen
Valley Lithium-Tantalum deposit:
o
74.9Mt @ 1.3% Li2O and 140ppm Ta2O5
o Containing 0.97Mt of Li2O or 2.5Mt of lithium
carbonate equivalent (LCE) and 23Mlbs of
Ta2O5.
The updated Mineral Resource represents a 353%
increase in tonnes from the maiden Mineral
Resource of 21.2Mt @ 1.4% Li2O and 170ppm
Ta2O5 released in September 2018.
83% of the new Mineral Resource is classified as
Measured or Indicated, which will be available for
conversion to Proven or Probable Reserves.
Latest results indicate that the mineralisation is
hosted by multiple stacked, spodumene-bearing
pegmatites that merge at depth to form a thick (35-
75m) single pegmatite that is interpreted to be the
feeder zone for the system.
The Mineral Resource remains open along strike
and at depth and a major new resource expansion
drilling program commenced subsequent to year
end.
Feasibility-level metallurgical test work designed to
optimise the process flowsheet is ongoing with
initial DMS
results delivering a 6.2% Li2O
concentrate.
A Scoping Study based on the maiden Mineral
Resource generated strong financial outcomes
confirming the potential viability of a proposed
standalone mining and processing operation.
A Pre-Feasibility Study using the new, expanded
resource is due for completion in late 2019 after
which it is envisaged that a Definitive Feasibility
Study will be undertaken.
•
•
•
•
•
•
•
5 | OPERATING AND FINANCIAL REVIEW
The inevitable rise of the electric
vehicle is forecast to lead to a
unprecedented demand in the
global market for lithium
KATHLEEN VALLEY LITHIUM PROJECT
W E S T E R N A U S T R A L I A ( 1 0 0 % )
The Kathleen Valley Project is a significant, high-grade lithium deposit located on granted Mining Leases
in a Tier-1 mining jurisdiction, in close proximity to existing transport and energy infrastructure,
approximately 670km north-east of Perth, Western Australia (Figure 1). Drilling by Liontown has delineated
Australia’s 5th largest lithium resource and feasibility studies are in progress to determine the economic
viability of a standalone mining and processing operation.
Following release of the maiden mineral resource estimate
last year, Liontown completed a Scoping Study which
confirmed
for an economically viable,
standalone
lithium-tantalum mining and processing
operation at Kathleen Valley. The Scoping Study indicated
that the conceptual open pits were constrained by the limit of
the potential
FIGURE 1: KATHLEEN VALLEY PROJECT – LOCATION
PLAN AND REGIONAL GEOLOGY.
7 | OPERATING AND FINANCIAL REVIEW
drill data and that further drilling would define extensions to
mineralisation that could be mined as part of a larger, long
life mining operation (refer to page 9).
The Scoping Study also incorporated results of preliminary
metallurgical test work which indicated that a saleable
spodumene concentrate with low impurities could be
produced from Kathleen Valley.
Based on the Scoping Study, the Liontown Board approved
further drilling designed to expand the maiden Mineral
Resource Estimate and further metallurgical test work to
refine optimal processing parameters for a future mining
operation. Results of these programs and other ongoing
related studies would then be incorporated into a Pre-
Feasibility Study due for completion in late 2019.
2019 RESOURCE EXPANSION DRILLING AND
UPGRADE
Liontown re-commenced Reverse Circulation (RC) drilling at
Kathleen Valley in February 2019 and drilled 117 new holes
(KVRC0147-0263) and re-entered 28 pre-existing holes for
a total of 24,404m.
Since acquiring the Kathleen Valley Project, Liontown has
drilled 263 Reverse Circulation drill holes (KVRC0001 –
KVRC0263) for a total of 43,072m and 17,614 assays; and
42 diamond drill holes (KVDD0001 – KVDD0042) for a total
of 4,562m and 1,705 assays. Data from all these holes were
used to prepare an updated Mineral Resource Estimate
(MRE) which is summarised below.
The updated MRE was prepared by independent specialist
resource and mining consulting group Optiro Pty Ltd
(“Optiro”) and comprises 74.9Mt @ 1.3% Li2O and 140ppm
Ta2O5.
This represents a 353% increase in tonnes on the maiden
MRE of 21.2Mt @ 1.4% Li2O and 170ppm Ta2O5 which was
reported in 2018.
83% of the updated MRE is classified as Measured or
Indicated compared with 75% for the maiden MRE.
Details of the new MRE are provided in Tables 1 and 2
below.
TABLE 1: KATHLEEN VALLEY MINERAL RESOURCE
ESTIMATE AS AT JULY 2019
KATHLEEN VALLEY LITHIUM PROJECT
W E S T E R N A U S T R A L I A ( 1 0 0 % )
Seventeen mineralised pegmatites have been identified at
the Kathleen Valley Project. These are hosted by two
outcropping, NW/SE
trending pegmatite swarms – a
shallowly-dipping, north-eastern swarm (Kathleen’s Corner),
which contains approximately 80% of the pegmatites, and a
steeper-dipping south-western swarm (Mt Mann).
The two swarms are interpreted to merge at depth to form a
single, thick, moderately dipping mineralised body which
remains open down-dip and along strike (Figure 2)
Resource
Category
Million
tonnes
Li2O %
Ta2O5
ppm
Cut-off
grade
Li2O %
0.5
Measured
Indicated
Inferred
Sub-total
Indicated
0.7
Inferred
Sub-total
17.6
42.2
10.1
69.9
2.5
2.5
5.0
1.3
1.3
1.1
1.3
1.4
1.3
1.4
160
140
150
150
120
110
110
Total
74.9
1.3
140
Notes:
•
•
Reported above a Li2O cut-off grade of 0.5% for
open pit potential (above 200 mRL) or 0.7% for
underground potential (below 200 mRL).
Tonnages and grades have been rounded to
reflect the relative uncertainty of the estimate.
TABLE 2: MINERAL RESOURCE ESTIMATE
REPORTED BY Li2O % CUT-OFF GRADES
Cut-
off
Li2O
%
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Open pit potential
above 200mRL
Underground potential
below 200mRL
Million
tonnes
Li2O
%
Ta2O5
ppm
Million
tonnes
Li2O
%
Ta2O5
ppm
70.2
70.1
69.9
69.3
68.1
65.6
61.8
56.4
1.3
1.3
1.3
1.3
1.3
1.3
1.3
1.4
150
150
150
150
150
150
150
150
5.1
5.1
5.1
5.1
5.0
4.9
4.7
4.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
110
110
110
110
110
110
110
110
The MRE is reported and 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).
FIGURE 2: KATHLEEN VALLEY – >3X INCREASE IN
MRE CONFIRMS POTENTIAL FOR A LARGER PIT.
METALLURGICAL TEST WORK
Preliminary metallurgical test work carried out in late 2018
on 300kg of sample collected from six diamond core holes
confirmed that a saleable Li2O concentrate can be produced.
Key outcomes included:
•
•
•
•
•
•
from Dense Media Separation
5.9% Li2O
concentrate;
36% mass rejection with two-stage Dense Media
Separation;
5.5% Li2O from flotation concentrate;
Low iron (Fe2O3) content of <0.5%;
Predicted recovery of 79% Li2O; and
Preliminary Ta2O5 concentrate.
A more comprehensive Pre-Feasibility Study test work
programme on drill core from an additional 33 diamond core
holes is ongoing at ALS Laboratories in Perth.
Results to date from this test work support the Scoping Study
flowsheet and include:
•
•
•
•
•
from Dense Media Separation
6.2% Li2O
concentrate;
41% Li2O recovered to Dense Media Separation
concentrate;
15% mass rejection with two-stage Dense Media
Separation;
<2% Li2O loss to coarse tailings; and
Comminution data
competency.
indicates moderate
that
Flotation and preliminary Ta2O5 recovery test work is in
progress.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 8
KATHLEEN VALLEY LITHIUM PROJECT
W E S T E R N A U S T R A L I A ( 1 0 0 % )
SCOPING STUDY
TABLE 4: KEY PARAMETERS AND ASSUMPTIONS
The maiden MRE reported last year and the preliminary
metallurgical test work referred to above were used as a
basis for a Scoping Study which is summarised below. The
much larger new MRE will now form the basis of the Pre-
feasibility Study currently underway where it is expected that
the mine life will be significantly increased.
Financial Outcomes
Based on a proposed 2Mtpa standalone mining and
processing operation, the Scoping Study demonstrated
the potential for strong financial metrics (Table 3).
TABLE 3: KATHLEEN VALLEY PROJECT – BASE
CASE KEY METRICS
Scoping Study
Outcome
2Mtpa Base Case
(Lithium and Tantalum)
Post-tax NPV8%
(real, post-tax)
A$316M to A$526M with a Base
Case of A$421M (range +/-25% of
Base Case NPV)
Internal Rate of
Return (IRR)
Payback period
(Lithium and
Tantalum)
Life of mine
(LOM)
38% (Base Case IRR)
<3 years
9 Years (including ramp-up)
Pre-production
capital cost
~A$232M including A$40M in
contingency
Average LOM
cash operating
costs1
~US$376/tonne (A$522/tonne) of
spodumene concentrate.
~US$308/tonne (A$428/tonne) of
spodumene concentrate net of
tantalum by-product credits
Annual
production
~360,000 tonnes of spodumene
concentrate at nameplate capacity
1 Cash operating costs include all mining, processing,
transport, state and private royalties, freight to port, port
costs and site administration and overhead costs
Approximately 80% of the LOM Production Target is in the
Measured and Indicated Mineral Resource categories
and 20% is in the Inferred Mineral Resource category.
There is a low level of geological confidence associated
with Inferred Mineral Resources and there is no certainty
that
the
determination of further Measured or Indicated Mineral
Resources or that the Production Target will be realised.
further exploration work will
result
in
Parameters and Assumptions
The Scoping Study was completed to an overall +/- 35%
accuracy using the key parameters and assumptions set
out in Table 4.
9 | OPERATING AND FINANCIAL REVIEW
Parameter
General and Economic
Discount rate (real, post-tax)
8%
Spodumene concentrate price
Tantalum concentrate price
(contained Ta2O5)
US$650 per tonne
FOB
US$71 per pound FOB
Exchange rate – AUD/USD
0.72
Mining and Production
Average Life-of-Mine strip ratio
Processing rate
8.24:1
2Mtpa
Life-of-Mine Production Target
15.7Mt ore
Average Li2O grade (diluted)
Average Ta2O5 grade (diluted)
1.26%
154ppm
Li2O recoveries
Ta2O5 recoveries
Spodumene concentrate grade
Tantalite concentrate grade
Moisture content of concentrate
Cost Assumptions
79%
50%
5.6%
30%
13%
LOM average open pit mining
costs ($/t ore mined)
LOM average processing cost
($/t ore milled)
Logistics and transport
($/t concentrate)
A$37.72
A$19.32
A$75.65
General and admin ($/t ore milled)
A$6.01
Western Australia State royalty
5%
Other royalties
Corporate tax rate
Estimated opening tax losses
available
3% gross sales and
$0.5/t ore mined
30%
A$25M
The recovery and grade assumptions for spodumene are
based on the preliminary test work program. The recovery
and grade assumptions for tantalum are based on
industry norms and will be evaluated in the next phase of
metallurgical testing.
Revenue and costs are based on FOB (Geraldton) using
an estimated sale price for spodumene concentrate of
US$650 per tonne and a AUD/USD exchange rate of
0.72.
KATHLEEN VALLEY LITHIUM PROJECT
W E S T E R N A U S T R A L I A ( 1 0 0 % )
FIGURE 3: KATHLEEN VALLEY PROJECT – DRILL
HOLE PLAN SHOWING BETTER LITHIUM
INTERSECTIONS FROM 2019 DRILLING.
FUTURE EVALUATION AND EXPLORATION
The updated Kathleen Valley MRE will underpin a PFS which
is due for completion in late 2019. The PFS is being
managed by Lycopodium Minerals Pty Ltd and will include:
•
•
•
•
Results from ongoing, comprehensive metallurgical
test work;
Pit optimisations and scheduling;
Review of infrastructure requirements; and
Financial analyses.
It is envisaged that a Definitive Feasibility Study (DFS) will
commence immediately following the PFS.
The Mineral Resource at Kathleen Valley remains open and
the latest drilling indicates that the multiple, outcropping
pegmatites merge at depth (see Figures 3 and 4) to form a
single, thick (35-75m) mineralised body which has the
potential to support an underground mining operation.
A drilling programme comprising up to 31 RC/diamond core
holes for a total of 15,000m and designed to test for
immediate extensions of the current Kathleen Valley MRE
commenced subsequent to the end of the year. Results from
this programme will be used to estimate an updated MRE
and will be incorporated into the DFS which will include an
assessment of both open pit and underground mining
scenarios.
KATHLEEN VALLEY GOLD RIGHTS
Liontown purchased the Kathleen Valley Mining Leases
in 2016 from Ramelius Resources Limited; however, at
the time Ramelius retained the rights to gold, which
included priority access to the tenements (“Reserved
the
Rights”). During
Reserved Rights from Ramelius for a consideration of
$100,000.
the year, Liontown acquired
FIGURE 4: KATHLEEN VALLEY PROJECT – DRILL SECTION SHOWING MINERALISED PEGMATITES
MERGING AT DEPTH (SEE FIGURE 3 FOR LOCATION).
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 10
BULDANIA LITHIUM PROJECT
W E S T E R N A U S T R A L I A ( 1 0 0 % )
The Buldania Project is the Company’s second lithium discovery in Western Australia, and is located in the
southern part of the Eastern Goldfields Province. The Project is located close to major infrastructure in a
region well-known for hosting significant lithium deposits including the Mt Marion and Bald Hill lithium
mines. Buldania is part of a large, strategic land position highly prospective for lithium that has been
compiled through the acquisition of a number of adjacent projects previously held by other parties.
EXPLORATION
Exploration drilling last year discovered a
large, lithium mineralised pegmatite at
the Anna prospect which remained open
along strike and at depth.
Drilling undertaken this year comprises a
further 94 RC holes (BDRC0069 – 0162)
for 14,916m and 3 diamond core holes
(BDD0001 – 0003) for 548.5m. Since
acquiring the Buldania Project, Liontown
has drilled 165 holes for a total of
22,835.5m.
Most holes have been drilled at the Anna
prospect; however, a number of other
targets defined by geochemical sampling
and geological mapping has also been
assessed by drilling.
Anna Prospect
Drilling at
the Anna prospect has
intersected ore grades and ore widths
over 1.4km strike (Figure 6) with the
mineralised system
remaining open
along strike and at depth (Figure 7).
The lithium mineralisation at Anna is
hosted by multiple, stacked, sub-parallel,
spodumene-bearing pegmatite
lenses
which vary from ~5-25m in thickness. In
places, the pegmatites merge to form
zones >50m thick.
Data from all holes drilled into the Anna
pegmatite will be used to prepare a
maiden MRE which should be completed
in Q4 2019.
FIGURE 5: REGIONAL GEOLOGY PLAN OF SE GOLDFIELDS, WA
SHOWING LIONTOWN PROJECT AREAS.
11 | OPERATING AND FINANCIAL REVIEW
BULDANIA LITHIUM PROJECT
W E S T E R N A U S T R A L I A ( 1 0 0 % )
FIGURE 6: BULDANIA PROJECT/ANNA PROSPECT – DRILL HOLE PLAN SHOWING BETTER DRILL RESULTS.
FIGURE 7: BULDANIA PROJECT – LONG SECTION LOOKING NORTH-EAST.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 12
BULDANIA LITHIUM PROJECT
W E S T E R N A U S T R A L I A ( 1 0 0 % )
Other Prospects
Regional exploration 5-10km north-west of
the Anna
pegmatite (Figure 5) identified a new spodumene-bearing
pegmatite swarm with coincident lithium-in-soil anomalism
(>100ppm Li). This area (NW Pegmatites) is interpreted to
be in the same lithium-prospective structural corridor as the
Anna pegmatite.
The soil anomalism is spatially associated with multiple sub-
cropping, spodumene-bearing pegmatites (Figure 8) which
have returned surface rock chip assays of up to 3% Li2O.
FIGURE 8: BULDANIA PROJECT/NW PEGMATITE
AREA – LITHIUM IN SOIL IMAGE SHOWING
PEGMATITES, ROCK CHIP CHIP SAMPLING AND
MAIDEN DRILL HOLES.
Maiden drill testing of this area comprising 17 RC holes
(BDRC0097 - -0105, 0144 – 0151) for 1,560m has confirmed
the potential for significant lithium mineralisation with better
intersections including 5m @ 1.2% Li2O from 20m in
BDRC0104 and 6m @ 1.5% Li2O from 54m in BDRC0105
(Figure 9).
The mineralised trend remains open with further drilling
planned.
13 | OPERATING AND FINANCIAL REVIEW
FIGURE 9: BULDANIA PROJECT/NW PEGMATITE
AREA – DRILL SECTION (SEE FIGURE 8 FOR
LOCATION).
METALLURGICAL TEST WORK
The three diamond core holes drilled at Anna provided
sufficient material to undertake preliminary metallurgical test
work which is being conducted at Nagrom’s laboratory in
Perth, Western Australia. Results from this work are
pending.
FUTURE EVALUATION AND EXPLORATION
Data from drilling at Anna will be used to prepare a maiden
MRE after which a review will be completed to determine
whether there is adequate information to support a Scoping
Study including further metallurgical test work.
Additional drilling will be planned to follow up initial results
from the NW Pegmatites and further regional exploration will
be undertaken to identify other lithium target areas.
BULDANIA ROYALTIES
The lithium rights for a number of tenements (E63/856,
P63/1977 and M63/647) at Buldania were acquired from
Westgold Resources Limited (ASX: WGX) and, as part of
the Sales Agreement, were subject to revenue and
production royalties relating to future production of lithium
and related minerals.
The royalties, a 1.5% gross revenue royalty and a
production royalty of A$2 per tonne of ore mined and/or
processed, were acquired immediately subsequent to the
end of the year from Westgold for total consideration of
A$2 million in cash.
TOOLEBUC VANADIUM PROJECT
Q U E E N S L A N D ( 1 0 0 % )
The 100%-owned Toolebuc Vanadium Project has an Inferred Mineral Resource of 83.7Mt @ 0.30% V2O5
located in NW Queensland, approximately 440km west of Townsville. The region hosts a number of large
vanadium deposits and offers excellent road, rail and camp infrastructure. Liontown has five, wholly-owned
tenements which adjoin existing resources held by other companies and the Project represents a low-cost
entry into vanadium, a commodity that is potentially important to the future of energy storage.
finalised access negotiations
Liontown has
the
Cambridge deposit area and an aircore drilling program will
be undertaken to test for extensions of the Inferred Mineral
Resource Estimate of 83.7Mt @ 0.30% V2O5.
for
drilling on the adjacent Lilyvale deposit (held by Intermin and
the extent of outcropping
Richmond Vanadium) and
Toolebuc Formation shown on Queensland Government
geological maps.
The Inferred MRE at Cambridge is open in all directions and
Liontown has defined an Exploration Target area based on
the continuity of the mineralisation indicated by resource
Material from the planned drilling program will be used to
undertake preliminary metallurgical test work to confirm that
vanadium can be potentially recovered economically.
4 .
Financial Review
4.1
FINANCIAL PERFORMANCE
The group reported a net loss from continuing operations of
$12.7 million for the year compared to a net loss of $0.9
million in 2018. The increase in reported net loss compared
to 2018 is primarily due to an increase in exploration
expenditure of $6.7 million and corporate administrative
expenditure of $1.2 million.
4.2
STATEMENT OF CASH FLOWS
Current liabilities increased by 680% from $0.5 million in
2018 to $3.9 million in the 2019 financial year. The
significant increase in current liabilities is mainly as a result
of the balance of consideration payable of $1.75 million for
the Buldania Revenue and Production Royalty, share
application monies held on trust, and also an increase in
trade payables owing at 30 June 2019 compared to 30 June
2018.
4.4
CORPORATE
Capital Raisings
Cash and cash equivalents at 30 June 2019 was $3.4 million
(2018: $2.9 million). The increase in cash of $0.5 million is
primarily due to an increase in proceeds from capital
raisings, proceeds from the sale of investments, offset by an
increase in exploration expenditure.
During and since the end of the financial year, Liontown
successfully raised $24.5 million with an addition placement
to directors of $1.43 million subject to shareholder approval.
The Company is now well funded to achieve its stated
objectives over the next 12 to 18 months.
4.3
FINANCIAL POSITION
At balance date the group had net liabilities of $18,088
(2018: net assets of $3.9 million), and a deficit of current
assets over current liabilities of $116,912 (2018: excess of
current assets over current liabilities of $3.8 million). Current
assets decreased 11.6% from $4.3 million in 2018 to $3.8
million in 2019 due to the sale of investments in listed entities
offset by an increase in cash and cash equivalents in the
current year.
Board Appointment
In January 2019, experienced and highly-regarded
metallurgist, Steven Chadwick, was appointed to the Board
to provide the necessary skills and technical knowledge to
guide the company through the feasibility stages over the
next 12 – 18 months.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 14
MINERAL RESOURCE STATEMENT
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 the Mineral Resource estimates for
the Company’s mining projects over the course of the year, the Company is required to report these changes.
KATHLEEN VALLEY LITHIUM PROJECT
The Company reported its maiden Mineral Resource estimate for the Kathleen Valley Lithium-Tantalum Project in Western
Australia on 4 September 2018. The Company announced an updated Mineral Resource estimate for the Project on 9 July 2019.
The Kathleen Valley Project Mineral Resource estimate:
As at 9 July 20191
As at 30 June 20192
As at 30 June 2018
Million
Tonnes
Li2O %
Ta2O5
ppm
Million
Tonnes
Li2O %
Ta2O5
ppm
Million
Tonnes
Li2O %
Ta2O5
ppm
17.6
42.2
10.1
69.9
2.5
2.5
5.0
74.9
1.3
1.3
1.1
1.3
1.5
1.3
1.4
1.3
160
140
150
150
120
110
110
140
3.2
12.7
5.3
21.2
-
-
-
1.3
1.4
1.3
1.4
-
-
-
190
160
150
170
-
-
-
21.2
1.4
170
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Resource
Category
Measured
Indicated
Inferred
Sub-total
Indicated
Inferred
Sub-total
Total
Notes:
1 Reported above a Li2O cut-off grade of 0.5% for open pit potential (above 200 mRL) or 0.7% for underground potential
(below 200 mRL).
2 Announced 4 September 2018.
The tonnage and grades of all estimates are subject to rounding to reflect the relative uncertainty of the applicable estimate.
Inconsistencies in totals are due to rounding
TOOLEBUC VANADIUM PROJECT
The Company reported its maiden Mineral Resource estimate for the Toolebuc Vanadium Project in North West Queensland on
30 July 2018.
The Toolebuc Project Mineral Resource estimate:
As at June 2019
As at June 2018
Resource
Category
Million
Tonnes
V2O5%
MoO5 ppm
Inferred
Total
83.7
83.7
0.30
0.30
188
188
Million
Tonnes
-
-
V2O5%
MoO5 ppm
-
-
-
-
JUBILEE REEF GOLD PROJECT
During the 30 June 2017 reporting period the Company issued a maiden Mineral Resource statement for the Jubilee Reef Project
in Tanzania. On 13 September 2018 the Company announced that it was withdrawing from the Jubilee Reef Gold Project as a
result of the ongoing success of exploration and resource development activities at its key Australian lithium and vanadium
projects. The surrender documentation has been lodged with the relevant governmental authorities for the withdrawal.
15 | MINERAL RESOURCE STATEMENT
MINERAL RESOURCE STATEMENT
The Jubilee Reef Project Mineral Resource estimate:
June 2019
June 2018
Deposit
Resource
Category
Million
Tonnes
Grade g/t
gold
Contained
metal
(koz gold)
Million
Tonnes
Grade g/t
gold
Contained
metal
(koz gold)
Simba
Inferred
Panapendesa
Inferred
Total
Inferred
-
-
-
-
-
-
-
-
-
7.4
1.1
8.5
1.4
2.0
1.4
320
70
390
GOVERNANCE ARRANGEMENTS AND INTERNAL CONTROLS
The Company has ensured that the Mineral Resources quoted are subject to thorough governance arrangements and internal
controls.
The Mineral Resource estimates for the Kathleen Valley Project and Toolebuc Project were prepared by independent specialist
resource and mining consulting group Optiro Pty Ltd (Optiro). The Company understands that Optiro is an experienced consulting
group which applies best practice in modelling and estimation methods. Optiro has also undertaken reviews of the underlying
information used to generate the resource estimation. In addition, the Company’s management carries out regular reviews and
audits of internal processes and external consultants that have been engaged by the Company.
The Company confirms the following:
•
•
The Mineral Resource statements above are based on and fairly represents information and supporting documentation
prepared by a Competent Person or Persons.
The Mineral Resource statement above has, as a whole, been approved by Mr Ian Glacken. Mr Ian Glacken is an
employee of Optiro Pty Ltd and a fellow of the Australian Institute of Mining and Metallurgy.
• Mr Ian Glacken has provided prior written consent to the issue of the Mineral Resource statement in the form and
context in which it appears in this annual report.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 16
COMPETENT PERSONS STATEMENT
KATHLEEN VALLEY LITHIUM PROJECT
The Information in this report that relates to Exploration
Results for the Kathleen Valley Project is extracted from the
ASX announcement “Further spectacular drill intercepts
returned from Kathleen Valley” released on the 24th June
2019 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 Persons’
findings are presented have not been materially modified
from the original market announcement.
the Australasian
The information in this report which relates to Mineral
Resources for the Kathleen Valley deposit is based upon
information compiled by Mrs Christine Standing who is a
Member of
Institute of Mining and
Metallurgy. Mrs Standing is an employee of Optiro Pty Ltd
and has sufficient experience relevant to the style of
mineralisation, the type of deposit under consideration and
to the activity 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’. Mrs Standing consents to the inclusion in the
report of a summary based upon her information in the form
and context in which it appears.
BULDANIA LITHIUM PROJECT
The Information in this report that relates to the Exploration
Results for the Buldania Project is extracted from the ASX
announcement entitled “Further thick lithium intercepts from
ongoing Resource definition drilling at Buldania on the 29th
July 2019 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 Persons’ findings are presented have not been
materially modified from the original market announcement.
TOOLEBUC VANADIUM PROJECT
the Australasian
The information in this report which relates to Mineral
Resources for the Cambridge Deposit is based upon
information compiled by Mrs Christine Standing who is a
Member of
Institute of Mining and
Metallurgy. Mrs Standing is an employee of Optiro Pty Ltd
and has sufficient experience relevant to the style of
mineralisation, the type of deposit under consideration and
to the activity 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’. Mrs Standing consents to the inclusion in the
report of a summary based upon her 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 report.
No obligation is assumed to update forward looking
statements if these beliefs, opinions and estimates should
change or to reflect other future developments.
17 | OPERATING AND FINANCIAL REVIEW
Project
Tenement No.
Registered Holder
Nature of interests
TENEMENT SCHEDULE
Kathleen Valley
M36/264
M36/265
M36/459
M36/460
E36/879
L36/236
L36/237
E63/856
LRL (Aust) Pty Ltd (wholly owned
subsidiary of Liontown Resources
Limited).
100% - nickel claw back rights
retained by other party
Liontown Resources Limited
100% - all metal rights
LRL (Aust) Pty Ltd (wholly owned
subsidiary of Liontown Resources
Limited).
0% - Applications
Buldania
P63/1977
Avoca Resources Pty Ltd
M63/647
E63/1824
Galahad Resources Limited
100% of rights to lithium and
related metals secured by
Lithium Rights Agreement
0% - application. Right
100% of all metal
secured by Agreement
to
rights
Norcott
Killaloe
E63/1863
E63/1018
E63/1655
E63/1660
E63/1713
M63/0177
P63/2152
P63/2127
Norseman Regional
P63/2128
P63/2129
EPM26490
EPM26491
LRL (Aust) Pty Ltd (wholly owned
subsidiary of Liontown Resources
Limited).
80% LRL (Aust) Pty Ltd/
20% Cullen Resources Limited
100%
80%
LRL (Aust) Pty Ltd (wholly owned
subsidiary of Liontown Resources
Limited).
100%
LRL (Aust) Pty Ltd (wholly owned
subsidiary of Liontown Resources
Limited).
0% - application
LRL (Aust) Pty Ltd (wholly owned
subsidiary of Liontown Resources
Limited).
100%
Toolebuc
EPM26492
Liontown Resources Limited
100%
EPM26494
EPM26495
E70/5217
E70/5286
E70/5287
Moora
ERL (Aust) Pty Ltd (wholly owned
subsidiary of Liontown Resources
Limited).
100%
0% - applications
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 18
TENEMENT SCHEDULE
Directors’ Report
19 | OPERATING AND FINANCIAL REVIEW
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 2019 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.
Mr T R B Goyder
Non-Executive Chairman
Experience:
Mr Goyder has considerable experience in the resource industry. He has been involved
in the formation and management of a number of publicly-listed companies. Mr Goyder
was appointed as Non-Executive Chairman on 2 February 2006.
Interests in Shares and
Options at the date of this
report:
283,421,980 ordinary shares
10,000,000 unlisted options
Special Responsibilities:
None
Directorships held in other
listed entities in the last
three years:
Mr Goyder is currently Executive Chairman of Chalice Gold Mines Limited, Chairman of
DevEx Resources Limited and was previously a Non-Executive Director of Strike Energy
Limited (resigned 31 December 2018).
Mr D R Richards
Managing Director
Qualifications:
BSc (Hons), MAIG
Experience:
Mr Richards 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. Mr
Richards was appointed as Managing Director on 1 May 2010.
Interests in Shares and
Options at the date of this
report:
5,117,800 ordinary shares
15,000,000 unlisted options
Special Responsibilities:
None
Directorships held in other
listed entities in the last
three years:
None
Mr A J Cipriano
Independent Non-Executive Director
Qualifications:
B.Bus, CA, GAICD
Experience:
Mr Cipriano is a Chartered Accountant with over 30 years’ accounting and finance
experience. Mr Cipriano was formerly a partner at Deloitte and at the time of his retirement
he was the Deloitte National Tax Leader for Energy & Resources and leader of its Western
Australian Tax Practice. Mr Cipriano has significant experience working across tax,
accounting, legal and financial aspects of corporate transactions. Mr Cipriano was
appointed as a Non-Executive Director on 1 July 2014.
Interests in Shares and
Options at the date of this
report:
9,644,575 ordinary shares
5,500,000 unlisted options
Special Responsibilities:
Chairman of the Audit Committee.
Directorships held in other
listed entities in the last
three years:
None
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 20
DIRECTORS’ REPORT
Mr C R Williams
Independent Non-Executive Director
Qualifications:
BSc (Hons)
Experience:
Mr Williams is a Geologist with over 40 years’ experience in mineral exploration and
development. Mr Williams co-founded Equinox Minerals Limited in 1993 and was
President, Chief Executive Officer and Director prior to Barrick Gold’s takeover of Equinox.
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. Mr Williams was appointed as a Non-Executive Director on 14 November
2006.
Interests in Shares and
Options at the date of this
report:
20,595,747 ordinary shares
5,500,000 unlisted options
Special Responsibilties:
Member of the Audit Committee.
Mr Williams is currently Chairman of OreCorp Limited.
Directorships held in other
listed entities in the last
three years:
Mr S J M Chadwick
Independent Non-Executive Director
Qualifications:
BAppSc, AusIMM
Experience:
Mr Chadwick has over 40 years' experience in the mining industry, incorporating technical,
operating and management roles, as well as a strong metallurgical background. He was
a founding director of BC Iron Limited and a former managing director of Coventry
Resources, PacMin Mining Limited and Northern Gold Limited, prior to their corporate
acquisitions. Mr Chadwick was also a Director of and consulted to major Canadian miner
Teck Resources' Australian subsidiary for ten years. Mr Chadwick is currently a director of
Lycopodum Limited. Mr Chadwick was appointed as a Non-Executive Director on 10
January 2019.
Interests in Shares and
Options at the date of this
report:
6,766,995 ordinary shares
Special Responsibilities:
None
Directorships held in other
listed entities in the last
three years:
Mr Chadwick is currently a Director of Quantum Graphite Limited and Lycopodium Limited.
2) COMPANY SECRETARY
The names and details of the Company Secretary in office during the financial year and until the date of this report are as follows:
Ms K A Verheyen
Qualifications:
Experience:
B.Com, CA
Ms Verheyen is a Chartered Accountant with over
20 years’ experience gained in both public practice
and commerce. Ms Verheyen commenced her
career with Deloitte and has since held finance
positions in a diverse range of industries.
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:
21 | DIRECTORS’ REPORT
DIRECTORS’ REPORT
Directors’
Meetings
Audit Committee Risk Committee(1)
Remuneration
Committee(1)
Nomination(1)
No. of meetings held:
No. of meetings
attended:
T R B Goyder
D R Richards
C R Williams
A J Cipriano
S J M Chadwick
8
8
7
8
6
6
2
-
-
2
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1)Given the current size and composition of the Board, the Company has not established a separate risk, remuneration or
nomination committee. The role of these committees are performed by the full Board and any matters to be dealt with by these
committees are included in board meetings.
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 4 to 14 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) DIVIDENDS
No dividends were declared or paid during the period and the directors recommend that no dividend be paid.
8) EVENTS SUBSEQUENT TO REPORTING DATE
In August 2019, the Company completed a placement of 138,083,335 shares at $0.12 per share to institutional and sophisticated
investors raising $16.57 million (before costs). An additional placement of 11,916,665 shares at $0.12 per share to the
Company’s Directors (or their associates), will be undertaken subject to Shareholder approval.
LIKELY DEVELOPMENTS
There are no likely developments that will impact on the Company other than as disclosed elsewhere in this report.
9)
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company has taken out an insurance policy insuring Directors and Officers of the Company against any liability arising from
a claim bought by a third party against the Company or its current or former Directors or Officers and against liabilities for costs
and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in their capacity as
a Director or Officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company.
The Company indemnifies each of the Directors and Officers of the Company. Under its Constitution, the Company will indemnify
those Directors or Officers against any claim or for any expenses or costs which may arise as a result of work performed in their
respective capacities as Directors or Officers of the Company and any related entity.
10) PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.
11) ENVIRONMENTAL REGULATIONS
The Company is subject to material environmental regulation in respect to its exploration activities. The Company aims to ensure
the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is compliant with all
environmental legislation. The Directors of the Company are not aware of any breach of environmental legislation for the period
under review.
12) NON-AUDIT SERVICES
During the year HLB Mann Judd, the Company’s auditor performed no other services in addition to their statutory audit duties.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 22
DIRECTORS’ REPORT
13) OPTIONS AND PERFORMANCE RIGHTS GRANTED OVER UNISSUED SHARES
(a) Options
At the date of this report 65,800,000 fully paid ordinary shares of the Company are under option on the following terms and
conditions:
Exercisable at $0.026 each on or before 22 October 2020
Exercisable at $0.035 each on or before 31 March 2021
Exercisable at $0.035 each on or before 28 March 2022
Exercisable at $0.02 each on or before 21 October 2022
Exercisable at $0.02 each on or before 31 October 2022
Exercisable at $0.035 each on or before 28 November 2023
Total Options
(b) Performance Rights
Number
2,500,000
7,800,000
14,800,000
2,700,000
16,000,000
22,000,000
65,800,000
At the date of this report 1,000,000 performance rights have been issued on the following terms and conditions:
Expire on 13 December 2020, with a nil exercise price
14) REMUNERATION REPORT – AUDITED
(a) Introduction
Number
1,000,000
This remuneration report for the year ended 30 June 2019 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:
(i) Directors
T R B Goyder (Chairman)
D R Richards (Managing Director)
C R Williams (Non-executive Director)
A J Cipriano (Non-executive Director)
S J M Chadwick (Non-executive Director) (appointed 10 January 2019)
(ii) Executives
Richard Hacker (CFO)
There were no other changes to KMP after the reporting date and before the date the financial report was authorised for issue.
(b) 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 caliber employees and
to link a significant component of executive rewards to shareholder value creation. The size, nature and financial strength of the
Company is also taken into account when setting remuneration levels so as to ensure that the operations of the Company remain
sustainable.
(c) 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.
23 | DIRECTORS’ REPORT
DIRECTORS’ REPORT
(d) Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive and executive remuneration is separate
and distinct.
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 caliber, whilst incurring a cost that is acceptable to shareholders.
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. At the Company’s 2018 AGM, Shareholders
approved an aggregate amount of fees up to $500,000 per year (including superannuation).
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 2019 AGM.
The remuneration of non-executive directors consists of directors’ fees, consulting fees (where applicable) and an additional fee
of $5,000 per annum is paid to members of the Audit Committee to recognise additional time commitment required for the Audit
Committee.
The non-executive directors are not entitled to receive retirement benefits and, at the discretion of the Board, may participate in
the Employee Securities Incentive Scheme (“Scheme”) (refer below for further details of the Scheme), subject to the usual
approvals required by shareholders.
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.
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 any consultancy services agreement. The nature of the consultancy work may vary depending on the
expertise of the relevant non-executive director. Under the terms of any 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.
During the year Mr Chadwick received fees for his consultancy services of $9,600 (30 June 2018: nil). No other fees were paid
to non-executive directors under any such consultancy services agreement.
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 informally on an annual basis by the Board and generally consists of a review of relevant
comparative remuneration in the market and, where appropriate, external advice is sought on policies and practices.
Variable remuneration - Long term incentive scheme
The Company may issue equity securities (i.e. options or performance rights) under the Employee Securities Incentive Scheme
(“Scheme”) to attract, motivate and retain directors, employees and consultants of the Company and to provide an opportunity
to participate in the growth of the Company. The Scheme was approved by Shareholders at the 2018 AGM and replaced the
Company’s existing Employee Share Option Plan.
Under the Scheme, the Company can issue either share options or performance rights, and generally, the Company believes
that the issue of share options in the Company aligns the interests of directors, employees and shareholders alike. No formal
performance hurdles are set on options issued to executives, however 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. There were no bonuses paid or
received in the years ended 30 June 2019 and 30 June 2018.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 24
DIRECTORS’ REPORT
Link between performance and executive remuneration
The focus of executive remuneration over the financial year was fixed remuneration and options under the Scheme (i.e. growing
the value of Company as reflected through share price) which seeks to ensure that executive remuneration is appropriately
aligned with the Business strategy and shareholder interests.
The share price performance over the last 5 years is as follows:
30 June 2015
30 June 2016
30 June 2017
30 June 2018
30 June 2019
Share price
0.009
0.017
0.009
0.028
0.10
(e) Remuneration of Key Management Personnel
The table below shows the fixed and variable remuneration for key management personnel.
2019
Short-term benefits
Post-
employment
benefits
Share-based
payments
Salary
& fees
Other
fees(2)
Superannuation
Options(3)
Total
Proportion of
remuneration
performance
based
$
$
$
$
$
%
Directors
T R B Goyder(4)
129,502
3,999
D R Richards
262,557
10,002
C R Williams
A J Cipriano
S J M Chadwick(1)
37,110
37,110
26,328
3,999
3,999
1,884
Executive
R K Hacker(5)
Total
12,303
24,943
3,525
3,525
-
-
74,036
219,840
92,546
390,048
46,273
90,907
46,273
90,907
76,714
104,926
52,581
52,581
-
-
492,607
23,883
44,296
388,423
949,209
2018
Short-term benefits
Post-employment
benefits
Share-based
payments
Salary &
fees
Other
fees(2)
Superannuation
Options(3)
Total
Proportion of
remuneration
performance
based
$
$
$
$
$
%
3,201
9,291
3,201
3,201
3,050
19,412
3,288
3,288
88,381
126,742
176,762
409,803
44,190
85,289
44,190
85,289
34,610
34,610
Directors
T R B Goyder(4)
32,110
D R Richards
204,338
C R Williams
A J Cipriano
Executive
R K Hacker(5)
Total
-
-
-
11,569
11,569
305,668
18,894
29,038
365,092
718,692
(1) Mr Chadwick receives directors’ fees and consulting fees via a consultancy agreement with the company. Amounts are billed
based on normal market rates for such consultancy services and were due and payable under normal payment terms.
(2) Other fees, where applicable, includes the cost to the Company of providing fringe benefits and the attributable non-cash
benefit applied by virtue of the Company’s Directors and Officers Liability policy.
25 | DIRECTORS’ REPORT
34
24
51
51
73
100
-
70
43
52
52
100
-
DIRECTORS’ REPORT
(3) The fair value of the options is calculated using a Black-Scholes valuation model and allocated to each reporting period starting
from grant date to vesting date.
(4) From 1 July 2017 Mr Goyder received a non-executive director’s fee of $35,160 per annum (inclusive of superannuation) and
from 1 August 2018, Mr Goyder’s non-executive director’s fee increased to $151,500 per annum (inclusive of superannuation).
The increase reflects the increase in time by Mr Goyder to assist the Managing Director.
(5) Mr Hacker did not receive any salary and wages for the 2019 and 2018 financial year as Mr Hacker is remunerated by Chalice
Gold Mines Limited and his services are recovered through a corporate services agreement between the Company and Chalice
Gold Mines Limited.
(f) Key Management Personnel Shareholdings
The relevant interest of each of the key management personnel in the share capital of the Company as at 30 June 2019 was:
Balance
Directors
1 July 2018
T R B Goyder
226,184,982
D R Richards
3,431,500
C R Williams
14,663,122
A J Cipriano
6,370,479
S J M Chadwick
-
R K Hacker
4,250,000
Balance
Directors
1 July 2017
T R B Goyder
226,184,982
D R Richards
3,431,500
C R Williams
14,663,122
A J Cipriano
6,370,479
R K Hacker
5,487,190
Granted as
remuneration
Received on
exercise of
options
Other
changes(1)
Balance
30 June 2019
55,236,998
281,421,980
1,686,300
5,117,800
5,432,625
20,095,747
2,774,096
9,144,575
-
-
-
-
3,500,000
3,266,995
6,766,995
-
2,000,000
6,250,000
-
-
-
-
-
-
Granted as
remuneration
Received on
exercise of
options
Other
changes(1)
-
-
-
-
-
-
-
-
-
-
Balance
30 June 2018
226,184,982
3,431,500
14,663,122
6,370,479
-
-
-
-
(1,237,190)
4,250,000
(1) Other changes refer to shares purchased and sold on the open market or via participation in the Company’s capital raisings
that have taken place during the year.
(g) Share-based Payments
As outlined in the Remuneration Report, Directors, key employees and consultants may be eligible to participate in equity-based
compensation schemes via the Employee Securities Incentive Plan (“Scheme”). During the reporting period, only options were
granted to KMP under the Scheme.
Options
Under the terms and conditions of the Scheme, options issued allow the holder the right to subscribe to one fully paid ordinary
share. Any option not exercised before the expiry date will lapse on the expiry date.
During the reporting period, 20,500,000 options were granted to KMP and those options have been valued using the Black-
Scholes option valuation method. The following table lists the inputs to the model:
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 26
DIRECTORS’ REPORT
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of options (years)
Exercise price
Grant date share price
Expiry date
Number
Executives
Directors
(Tranche 1)
Directors
(Tranche 2)
Nil
100%
2.01%
5
$0.035
$0.025
Nil
100%
2.29%
5
$0.035
$0.026
Nil
100%
1.37%
5
$0.035
$0.031
28 November 2023
28 November 2023
28 November 2023
Fair value at grant date
$0.018
$0.019
3,000,000
14,000,000
3,500,000
$0.022
There are no participating rights or entitlements inherent in the options and the holders will not be entitled to participate in new
issues of capital offered to shareholders during the currency of the options. All shares allotted upon the exercise of options will
rank pari passu in all respect with other shares.
The below table shows a reconciliation of options held by each KMP during the year:
2019
Grant
date
Opening
balance
vested and
exercisabl
e
Granted
as
compen-
sation
Vested
Vested
%
Exercised
T R B Goyder
28 Nov 18
6,000,000
4,000,000
4,000,000
D R Richards
28 Nov 18
10,000,000
5,000,000
5,000,000
C R Williams
28 Nov 18
3,000,000
2,500,000
2,500,000
A J Cipriano
28 Nov 18
3,000,000
2,500,000
2,500,000
S J M Chadwick
20 Dec 18
-
3,500,000
3,500,000
R K Hacker
1 May 19
3,000,000
3,000,000
3,000,000
100
100
100
100
100
100
Closing
balance
vested and
exercisable
10,000,000
15,000,000
5,500,000
5,500,000
-
-
-
-
(3,500,000)
-
-
6,000,000
2018
Grant
date
Opening
balance
vested and
exercisable
Granted
as
compen-
sation
Vested
Vested
%
Expired /
forfeited
T R B Goyder
28 Nov 17
2,000,000
4,000,000
4,000,000
D R Richards
28 Nov 17
2,000,000
8,000,000
8,000,000
C R Williams
28 Nov 17
1,000,000
2,000,000
2,000,000
A J Cipriano
28 Nov 17
1,000,000
2,000,000
2,000,000
R K Hacker
10 Oct 17
1,000,000
2,000,000
2,000,000
100
100
100
100
100
-
-
-
-
-
Closing
balance
vested and
exercisable
6,000,000
10,000,000
3,000,000
3,000,000
3,000,000
(h) Employment Contracts
Remuneration arrangements for KMP are generally formalised in employment agreements. Details of these contracts are
provided below.
27 | DIRECTORS’ REPORT
DIRECTORS’ REPORT
Name and job title
Employment contract
duration
D R Richards
Unlimited
Notice period
Termination provisions
3 months by the Company
and employee
Nil
R K Hacker(1)
n/a
n/a
n/a
(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 is outlined below.
(i) Other Transactions with Key Management Personnel
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 Group receives corporate services including office rent and facilities, management and accounting services under a
Corporate Services Agreement with Chalice Gold Mines Limited. Mr Goyder is the Executive Chairman and Mr Hacker is also
the CFO of Chalice Gold Mines Limited. 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. The amount recognised in the statement of comprehensive
income for the year is $249,107 (2018: $99,825) and the amount unpaid as at 30 June 2019 was $27,746 (2018: $22,825).
The Group received database administrative services and field services from related parties to the Managing Director, Mr
Richards. These services are provided on arm’s length commercial terms. The total value of these services was $124,728
(2018: $44,096) and the amount unpaid as at 30 June 2019 was $2,842 (2018: $8,760).
Mr Chadwick provides general metallurgical and technical advisory services to the Company through a consultancy agreement.
There is no fixed remuneration component under the consultancy agreement for these services and those services are provided
on an “as required basis” at a rate of $2,000 per day. Either party may terminate the agreement by providing one month’s notice.
Consultancy fees are due and payable under normal payment terms. For the reporting period, the amount billed was $9,600
(2018: nil) and the amount unpaid as at 30 June 2019 was nil (2018: nil).
This is the end of the audited information.
15) AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 29 and forms part of the Directors’ Report for the year ended 30 June
2019.
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 9th September 2019 released to ASX and posted on the Company
website at http://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 9th day of September 2019
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 28
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 2019, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
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
9 September 2019
L Di Giallonardo
Partner
29 | DIRECTORS’ REPORT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Financial Report
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 30
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019D STATEMENT OF COMPREHENSIVE INCOME
Continuing operations
Revenue
Proceeds on sale of exploration and evaluation tenements
Net fair value loss on fair value of equity instruments designated as
FVTPL
Exploration and evaluation expenditure expensed
Corporate administrative expenses
Share based payments
Impairment loss on loan
Loss from continuing operations
Net financing income
Loss before income tax
Income tax expense
Note
2019
$
2018
$
5(a)
11
5(d)
5(b)
8
5(e)
6
1,450
-
(139,012)
(10,013,181)
(2,023,817)
(563,788)
(30,912)
(12,769,260)
1,554
3,814,297
(71,160)
(3,283,313)
(847,696)
(386,926)
(48,358)
(821,602)
45,545
28,424
(12,723,715)
(793,178)
-
(59,375)
Loss after tax from continuing operations
(12,723,715)
(852,553)
Discontinued operations
Loss from discontinued operations
5(f)
-
(6,514)
Net loss after tax
(12,723,715)
(859,067)
Other comprehensive loss:
Items reclassified to profit or loss
Exchange differences on translation of foreign operations:
Members of the parent
Transferred to profit and loss – disposed subsidiaries
Total comprehensive loss after tax attributable to owners of the
parent
Earnings per share from continuing operations
Basic and diluted loss per share (cents per share)
Earnings per share from total operations
Basic and diluted loss per share (cents per share)
(5,493)
-
9,408
(4,469)
(12,729,208)
(854,128)
7
7
(1.018)
(0.086)
(1.018)
(0.087)
The statement of comprehensive income is to be read in conjunction with the notes to the financial statements.
31 | FINANCIAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Note
2019
$
2018
$
9
10
11
11
12
13
14
15
3,363,269
414,985
-
3,778,254
54,400
44,424
98,824
2,856,744
227,653
1,229,270
4,313,667
50,000
49,718
99,718
3,877,078
4,413,385
3,759,149
136,017
3,895,166
482,685
43,259
525,944
3,895,166
525,944
(18,088)
3,887,441
45,228,551
(46,591,731)
1,345,092
(18,088)
37,199,397
(33,982,669)
670,713
3,887,441
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Total current assets
Non-current assets
Financial assets
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Total current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Share capital
Accumulated losses
Reserves
Total equity
The statement of financial position is to be read in conjunction with the notes to the financial statements.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 32
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Issued
capital
Accumulated
losses
Share based
payments
reserve
Foreign
currency
translation
reserve
Total equity
$
$
$
$
$
As at 1 July 2018
37,199,397
(33,982,669)
526,129
144,584
3,887,441
Loss for the period
Other comprehensive loss
Total comprehensive loss for the year
-
-
-
(12,723,715)
-
(12,723,715)
Transactions with owners in their capacity as
owners:
Issue of shares (net of costs)
Share-based payments
Transfer between equity items
As at 30 June 2019
8,029,154
-
-
-
-
-
-
794,525
-
(12,723,715)
(5,493)
(5,493)
(5,493)
(12,729,208)
-
-
-
8,029,154
794,525
-
114,653
(114,653)
45,228,551
(46,591,731)
1,206,001
139,091
(18,088)
Issued
capital
Accumulated
losses
Share based
payments
reserve
Foreign
currency
translation
reserve
Total equity
$
$
$
$
$
As at 1 July 2017
34,347,000
(33,144,913)
160,514
139,645
1,502,266
Loss for the period
Other comprehensive loss
Total comprehensive loss for the year
-
-
-
(859,067)
-
(859,067)
Transactions with owners in their capacity as
owners:
Issue of shares (net of costs)
Share-based payments
Transfer between equity items
As at 30 June 2018
2,852,377
-
-
37,199,397
(33,982,669)
526,129
144,584
3,887,441
21,311
(21,311)
-
-
-
-
386,926
-
(859,067)
4,939
4,939
4,939
(854,128)
-
-
-
2,852,377
386,926
-
-
-
-
-
The statement of changes in equity is to be read in conjunction with the notes to the financial statements.
33 | FINANCIAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows from operating activities
Cash paid to suppliers and employees
Payments for exploration and evaluation
Proceeds from sale of exploration and evaluation tenements
Interest received
Income tax paid
Acquisition of royalty rights
Net cash used in operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from sale of financial assets
Loan to other entity
Net cash disposed from disposal of subsidiary
Payments for property, plant and equipment
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share application monies held on trust
Payment for share issue costs
Security deposits
Net cash from financing activities
Net increase in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
Note
2019
$
2018
$
(1,816,601)
(6,181,008)
-
46,079
-
(250,000)
(8,201,530)
-
1,090,258
-
-
(11,447)
1,078,811
8,046,955
163,750
(577,171)
(4,400)
7,629,134
506,415
110
2,856,744
3,363,269
(842,000)
(3,046,038)
1,525,000
28,382
(59,375)
-
(2,394,031)
2,879
988,866
(7,717)
(1,930)
(20,451)
961,647
3,076,250
-
(202,044)
-
2,874,206
1,441,822
(679)
1,415,601
2,856,744
9
9
The statement of cash flows is to be read in conjunction with the notes to the financial statements.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 34
CONTENTS OF THE NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
BASIS OF PREPARATION
Note 1: Corporate information
Note 2: Reporting entity
Note 3: Basis of preparation
PERFORMANCE FOR THE YEAR
Note 4: Segment reporting
Note 5: Revenue and expenses
Note 6: Income tax
Note 7: Loss per share
EMPLOYEE BENEFITS
Note 8: Share-based payments
ASSETS
Note 9: Cash and cash equivalents
Note 10: Trade and other receivables
Note 11: Financial assets
EQUITY AND LIABILITIES
Note 12: Trade and other payables
Note 13: Employee benefits
Note 14: Capital and capital management
Note 15: Reserves
FINANCIAL INSTRUMENTS
Note 16: Financial instruments
GROUP COMPOSITIION
Note 17: List of subsidiaries
Note 18: Parent entity information
OTHER INFORMATION
Note 19: Contingent liabilities and assets
Note 20: Remuneration of auditors
Note 21: Commitments
Note 22: Related party transactions
Note 23: Events occurring after the reporting period
ACCOUNTING POLICIES
Note 24: Changes in accounting policies
Note 25: New accounting standards and interpretations
35 | FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
BASIS OF PREPARATION
This Section of the financial report sets out the Group’s (being Liontown Resources Limited and its controlled entities) accounting
policies that relate to the Financial Statements as a whole. Where an accounting policy is specific to one Note, the policy is
described in the Note to which it relates.
The Notes include information which is required to understand the Financial Statements and is material and relevant to the
operations and the financial position and performance of the Group.
Information is considered relevant and material if:
•
•
•
•
The amount is significant due to its size or nature
The amount is important in understanding the results of the Group
It helps to explain the impact of significant changes in the Group’s business
It relates to an aspect of the Group’s operations that is important to its future performance.
1. CORPORATE INFORMATION
The consolidated financial report of Liontown Resources Limited for the year ended 30 June 2019 was authorised for issue on
9 September 2019.
Liontown Resources Limited (the ‘Company’ or ‘Liontown’) is a for-profit company limited by shares whose shares are publicly
traded on the Australian Securities Exchange. The Company and the majority of its subsidiaries were incorporated and domiciled
in Australia. Refer to note 17 for details of subsidiaries and country of incorporation. The registered office and principal place
of business of the Company is Level 2, 1292 Hay Street, West Perth, WA 6005.
The nature of the operations and principal activities are disclosed in the Directors’ Report.
2. REPORTING ENTITY
The Financial Statements are for the Group consisting of Liontown Resources Limited and its subsidiaries. A list of the Group’s
subsidiaries is provided at Note 17.
3. BASIS OF PREPARATION
These general purpose Financial Statements have been prepared in accordance 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’).
These Financial Statements have been prepared under the historical cost convention except for certain financial assets and
liabilities which are required to be measured at fair value.
(a) Basis of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to
direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.
Accounting policies of the subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or
loss, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.
(b) Functional currency translation
The functional currency of the Company is Australian dollars and the functional currency of the controlled entities based in
Tanzania is United States dollars (US$). The presentation currency of the Group is Australian dollars.
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
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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.
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.
(c) Goods and Services Tax (‘GST’)
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 Australia 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.
(d) Going concern
Notwithstanding the net liability position of the Group at 30 June 2019, the financial report has been prepared on a going concern
basis due principally to the Group having completed a significant capital raising in August 2019 as disclosed in Note 23.
PERFORMANCE FOR THE YEAR
This section provides additional information about those individual line items in the Statement of Comprehensive Income that
the Directors consider most relevant in the context of the operations of the entity.
4. SEGMENT REPORTING
The Group has identified its operating segments based on internal reports that are reviewed and used by the Board of Directors
in assessing performance and in determining the allocation of resources. The operating segments are identified by management
based on the allocation of costs; whether they are corporate related costs or exploration costs. Results of both segments are
reported to the Board of Directors at each board meeting.
37 | FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Exploration and Evaluation
Unallocated
Total
2019
$
2018
$
2019
$
2018
$
2019
$
2018
$
812
1,450
742
1,450
1,554
-
-
3,814,297
(10,013,181)
(3,283,313)
-
-
-
-
-
-
-
-
-
-
Other income
Profit on sale of
exploration tenement
Exploration and
evaluation expenses
Corporate and
administration
expenses
Share based
payments
Net fair value loss on
fair value of equity
instruments
designated at FVTPL
Impairment on Loan
Net financing income
Loss from
continuing
operations before
income tax
-
-
-
-
3,814,297
-
(10,013,181)
(3,283,313)
(2,023,817)
(802,696)
(2,023,817)
(802,696
(563,788)
(386,926)
(563,788)
(386,926)
(139,012)
(71,160)
(139,012)
(30,912)
45,545
(48,358)
(30,912)
28,424
45,545
(71,160)
(48,358)
28,424
(10,013,181)
478,437
(2,710,534)
(1,271,615)
(12,723,715)
(793,178)
Segment asset
41,855
39,788
65,292
1,290,147
107,147
1,329,935
Unallocated assets
Total assets
3,769,931
3,083,450
3,877,078
4,413,385
Segment liabilities
3,251,605
378,931
643,561
147,013
3,895,166
525,944
Unallocated liabilities
Total liabilities
5. REVENUE AND EXPENSES
-
-
3,895,166
525,944
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. The following specific recognition criteria must also be met before revenue is recognised:
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.
(a) Proceeds from sale of exploration and evaluation tenements
Bynoe Lithium Project
Kathleen Valley tenements
2019
$
2018
$
3,579,297
235,000
3,814,297
-
-
-
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
In the prior period ended 30 June 2018, the Company sold its Bynoe Lithium Project, Northern Territory to Core Lithium Limited
(formerly Core Exploration Limited) (“Core”). Consideration for the sale included $1.5 million in cash and 39,232,025 fully paid
ordinary shares in Core. In addition, a contingent payment of $1.5 million in cash or Core shares (at Core’s election) upon Core
defining a JORC compliant Mineral Resource totaling 5 million tonnes within the Company’s Bynoe tenure.
The Company also divested seven non-core mining leases within the Company’s Kathleen Valley Lithium Project to Bellevue
Gold Limited (formerly Draig Resources Limited) for 1 million fully paid ordinary shares in Bellevue Gold and a cash payment of
$25,000.
(b) Corporate and administration expenses
Depreciation and amortisation
Insurance
Legal fees
Office costs – corporate service charge and reimbursements
Personnel expenses (5(c))
Promotions and Investor relations
Conferences and travel
Regulatory and compliance
Business development costs
Fixed assets written off
Other
(c) Personnel expenses
Directors’ fees, wages and salaries
Other associated personnel expenses
Annual leave
(d) Exploration and evaluation expenditure
Exploration Expenditure
Toolebuc, QLD
Kathleen Valley, WA
Buldania, WA
Bynoe Lithium, WA
Lake Percy, WA
Other
Scoping and Pre-Feasibility Studies(1)
Kathleen Valley, WA – Scoping Study
Kathleen Valley, WA – Pre-feasibility Study
39 | FINANCIAL REPORT
2019
$
2018
$
11,999
41,659
61,134
160,479
815,585
384,494
198,916
195,517
-
4,640
149,394
2,023,817
9,801
28,642
12,302
91,691
300,820
144,785
-
119,528
53,359
230
86,538
847,696
2019
$
2018
$
673,261
56,975
85,349
815,585
294,993
4,671
1,156
300,820
2019
$
2018
$
116,303
4,207,644
2,949,668
-
-
21,642
104,199
2,163,585
650,584
136,843
10,395
217,707
7,295,257
3,283,313
374,998
342,926
717,924
-
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Royalty acquisition(2)
Acquisition of Buldania revenue and production royalties
2,000,000
2,000,000
-
-
10,013,181
3,283,313
(1)During the reporting period the Company completed a Scoping Study and commenced a Pre-feasibility Study at the Kathleen
Valley Lithium Project.
(2)In June 2019, the Company entered into an agreement to acquire the revenue and production royalties relating to lithium and
related materials over the Company’s 100% owned Buldania Lithium Project for $2 million. The royalties acquired consisted of
a 1.5% gross revenue royalty and a production royalty of A$2 per tonne of ore mined and/or processed from tenements E63/856,
P63/1977 and M63/647. The acquisition was completed in July 2019.
Costs incurred in the exploration and evaluation stages of specific areas are expenses against profit or loss as incurred. All
exploration and evaluation expenditure, including general permit activity, geological and geophysical costs, project generation
and drilling costs, is expensed as incurred. In addition, costs associated with acquiring interests in new exploration licences and
study related costs is also expensed. Once the technical feasibility and commercial viability of extracting a mineral resource is
demonstrable in respect to an area of interest, development expenditure is capitalised to the statement of financial position.
(e) Net financing income
Interest income
2019
$
2018
$
45,545
45,545
28,424
28,424
Net financing costs comprise interest payable on borrowings calculated using the effective interest method, the discount unwind
on rehabilitation provisions and interest receivable on funds invested.
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 the statement of comprehensive income using the effective
interest method.
(f) Discontinued operations
Discontinued operations for the prior year ended 30 June 2018, represents the disposal of the Company’s beneficial interest
in Chela Resources Limited (Tanzania).
6. INCOME TAX
Numerical reconciliation between tax (expense)/benefit and pre-tax net loss:
Loss before tax
Income tax benefit using the domestic corporation tax rate of 27.5%
Decrease in income tax benefit due to:
Non-deductible expenses
Deferred tax assets and liabilities not recognised
JMEI/Exploration development incentive
Exploration development incentive – clawback adjustment on assets sold
Effect of different tax rates of foreign subsidiaries operating other
jurisdictions
Income tax expense on loss before tax
2019
$
(12,723,715)
(3,499,022)
759,320
1,459,067
1,127,500
-
2018
$
(799,692)
(219,915)
246,231
(256,911)
235,522
(59,375)
153,135
(4,927)
-
(59,375)
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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.
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.
Deferred tax assets and liabilities for the Group are attributable to the following:
Assets
Revenue losses available to offset against future taxable income
Capital Losses available to offset against future taxable income
Available-for-sale asset impairment
Share issue expenses
Accrued expenses and liabilities
Liabilities
Exploration expenditure amortised for tax purposes
Accrued interest
Foreign exchange differences
Prepayments
2019
$
2018
$
4,670,588
81,529
-
(14,263)
(79,278)
4,658,576
(211,901)
-
144,981
-
(66,920)
3,301,294
-
43,155
96,033
109,099
3,549,581
(47,887)
147
53,266
11,619
17,145
The unrecognised benefit from temporary differences on capital items amounts to $185,811 (2018: $61,565).
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.
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.
Liontown and its 100% owned Australian resident subsidiaries have implemented the tax consolidation legislation. Current and
deferred amounts are accounted for in each individual entity as if each entity continued to act as a taxpayer on its own. The
Company recognises its own current and deferred tax amounts and those current tax liabilities, current tax assets and deferred
tax assets arising from unused tax credits and unused tax losses which is has assumed from its controlled entities within the tax
consolidated Group.
7. LOSS PER SHARE
The calculation of basic and diluted loss per share at 30 June 2019 was based on the loss attributable to ordinary shareholders
of the parent entity of $12,723,715 (2018: ($859,067)).
The weighted average number of ordinary shares outstanding during the financial years comprised the following:
Weighted average number of ordinary shares on issue at the end of the year
(Basic)
Weighted average number of ordinary shares on issue at the end of the year
(Diluted)
2019
$
2018
$
1,239,424,852
992,271,011
1,249,827,308
996,513,113
41 | FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
At 30 June 2019 there were 72,400,000 unlisted options (2018: 19,450,000) included in the diluted weighted average number of
ordinary shares calculation as their effect is anti-dilutive.
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.
SHARE-BASED PAYMENTS
This section of the Notes includes information that must be disclosed to comply with accounting standards and other
pronouncements relating to the provision of services and remuneration of employees and consultants of the Group, but that is
not immediately related to individual line items in the Financial Statements.
8. SHARE BASED PAYMENTS
Employee Securities Incentive Scheme (“Scheme”)
The Company 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 Company currently provides benefits under an Employee Securities Incentive Scheme (“Scheme”), as approved by
Shareholders at the 2018 AGM.
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.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and
designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a
modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options and rights is reflected as additional share dilution in the computation of earnings
per share.
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
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 Group measures the cost of equity-settled share-based payments at fair value at the grant date using a Black Scholes
option-pricing model taking into account the terms and conditions upon which the instruments were granted.
The total expenditure recognised in the statement of comprehensive income is $563,788 (2018: $386,926).
Under the terms of the Scheme, the Board may offer equity securities (i.e. options or performance rights) at no consideration to
full-time or part-time employees (including persons engaged under a consultancy agreement) and executive and non-executive
directors.
Options issued under Employee Securities Incentive Scheme
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 are 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 unissued ordinary shares when the options have been exercised.
The number and weighted average exercise prices of share options under the Scheme is as follows:
Weighted
average
exercise price
2019
$
Number of
options
2019
Weighted
average
exercise price
2018
$
Number of
options
2018
0.026
0.035
33,750,000
29,250,000
0.035
(4,500,000)
0.038
(1,000,000)
0.040
0.022
0.035
0.035
10,800,000
24,450,000
(750,000)
(750,000)
Outstanding at beginning of the year
Granted during the period
Exercised during the period
Lapsed/expired during the period
Outstanding at the end of the year
0.030
57,500,000
0.026
33,750,000
Exercisable at the end of the year
0.030
55,000,000
0.026
31,250,000
The weighted average contractual life remaining as at 30 June 2019 is 3.33 years (2018: 2.85 years).
Non-market performance conditions are not taken into account in the grant date fair value measurement of the services received.
The fair value of the options is estimated at the grant date using a Black Scholes option-pricing model. Refer to the table below
for inputs to the Black Scholes option-pricing model:
Share price at grant date (weighted average)
Exercise price (weighted average)
Expected volatility (expressed as weighted average used in the modelling
under Black Scholes option pricing model)
Expected life (expressed as weighted average used in the modelling under
Black Scholes option pricing model)
Expected dividends
Risk-free interest rate (weighted average)
2019
2018
$0.026
$0.035
100%
4.93
Nil
2.06%
$0.023
$0.022
100%
4.53
Nil
2.30%
43 | FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Other Share Based Payments
Options
In March 2019 the Company issued 15,000,000 unlisted share options to corporate advisors of the Company as partial
consideration for services provided in connection with a placement and rights issue.
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 are 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 unissued ordinary shares when the options have been exercised.
The number and weighted average exercise prices of other shared based payment options is as follows:
Weighted average
exercise price
2019
$
Number of options
2019
Outstanding at beginning of the year
Granted during the period
Exercised during the period
Outstanding and exercisable at the end of the year
The weighted average contractual life remaining as at 30 June 2019 is 2.75 years.
-
0.035
0.035
0.035
-
15,000,000
(100,000)
14,900,000
Non-market performance conditions are not taken into account in the grant date fair value measurement of the services received.
The fair value of the options is estimated at the grant date using a Black Scholes option-pricing model. Refer to the table below
for inputs to the Black Scholes option-pricing model:
Share price at grant date (weighted average)
Exercise price (weighted average)
Expected volatility (expressed as weighted average used in the modelling under Black Scholes option
pricing model)
Expected life (expressed as weighted average used in the modelling under Black Scholes option
pricing model)
Expected dividends
Risk-free interest rate (weighted average)
Performance Rights
2019
$0.019
$0.035
100%
3.00
Nil
1.53%
On 14 September 2018, 1,000,000 performance rights were granted to a consultant, vesting upon the consultant meeting certain
objectives. The performance rights have an expiry date of 13 September 2020, and a nil exercise price. The fair value of the
performance rights granted was determined using the share price at grant date of $0.027.
Performance rights contain non-market performance conditions which were not taken into account in the grant date fair value
measurement of the services received.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
ASSETS
This section provides additional information about those individual line items in the Statement of Financial Position that the
Directors consider most relevant in the context of the operations of the entity.
9. CASH AND CASH EQUIVALENTS
Cash at bank
Petty cash
2019
$
2018
$
3,362,421
2,850,712
848
6,032
3,363,269
2,856,744
Cash and cash equivalents comprise cash balances and term deposits which are readily convertible to cash. Bank overdrafts
that are repayable on demand and form an integral part of the consolidated entity’s cash management are included as a
component of cash and cash equivalents for the purpose of the statement of cash flows.
The reconciliation to loss after income tax for the year to net cash flows from operations is below:
Loss for the period
Depreciation and amortisation
Bad debts written off
Foreign exchange (gain)/losses
Share-based payments
Loss from disposal of subsidiary
Net fair value loss on fair value of equity instruments designated as FVTPL
Profit on sale of assets
Proceeds from sale of exploration and evaluation tenements (non-cash)
Fixed assets written off
Impairment of loan
Changes in operating assets and liabilities:
Increase in trade and other receivables
Increase in trade and other payables
Decrease in other financial assets
Increase in provisions
Net operating cash flows
10. TRADE AND OTHER RECEIVABLES
Current
Other trade receivables
Prepayments
2019
$
(12,723,715)
12,215
2,862
(36,633)
563,788
-
139,012
-
-
4,640
30,912
2018
$
(859,067)
11,776
-
(39,963)
386,926
6,514
71,160
(812)
(2,289,297)
230
48,358
(12,006,919)
(2,664,175)
(185,390)
3,142,516
755,505
92,758
(95,302)
364,291
-
1,155
(8,201,530)
(2,394,031)
2019
$
2018
$
358,274
56,711
414,985
182,103
45,550
227,653
Trade and other receivables are initially recognised at fair value and subsequently at amortised cost less impairment losses.
45 | FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
11. FINANCIAL ASSETS
Current
Listed shares
2019
$
2018
$
-
-
1,229,270
1,229,270
At 30 June 2018, listed shares represented the Company’s holding in Core which were subsequently sold during the year ended
30 June 2019. The Company held a total of 26,154,683 shares in Core and net proceeds from the sale of shares was $1,090,258.
The fair value movement in the shares held was a loss of $139,012 (2018: net loss of $71,160) and has been recognised in the
Consolidated Statement of Comprehensive Income.
Non-current
Bank guarantee deposits
Security deposits
2019
$
2018
$
50,000
4,400
54,400
50,000
-
50,000
Financial instruments are classified as either held at amortised costs or fair value. Financial instruments are carried at amortised
cost if the business model concept can be satisfied.
All equity instruments are carried at fair value and the cost exemption under AASB 139 which was used where it was not possible
to reliably measure the fair value of an unlisted entity has been removed. Equity instruments which are non-derivative and not
held for trading may be designated as fair value through other comprehensive income (FVOCI). Previously classified available-
for-sale investments, now carried at fair value are exempt from impairment testing and gains or losses on sale are no longer
recognised in profit or loss.
The AASB 9 impairment model is based on expected loss on day 1 rather than needing the evidence of an incurred loss, this is
likely to cause earlier recognition of bad debt expenses. Most financial instruments held at fair value are exempt from impairment
testing.
Subsequent to initial recognition, these shares are measured at fair value being the published price quotation in an active market.
Financial assets comprise of equity securities and the fair value has been determined by reference to their quoted closing bid
price at the reporting date (Level 1).
LIABILITIES
This section provides additional information about those individual line items in the Statement of Financial Position that the
Directors consider most relevant in the context of the operations of the entity.
12. TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Acquisition of royalty payable(1)
Share application monies held on trust(2)
2018
$
2017
$
1,460,738
384,661
1,750,000
163,750
3,759,149
115,683
366,999
-
-
482,685
(1)Represents the balance of consideration payable to acquire the Buldania revenue and production royalties (refer note 5(d)).
The outstanding consideration payable of $1.75 million was subsequently paid in July 2019.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(2)Share application monies held on trust relates to funds received prior to the issue of shares on exercise of options. The shares
were subsequently issued after reporting date.
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost.
13. EMPLOYEE BENEFITS
Annual leave
Long service leave
2019
$
2018
$
62,922
73,095
136,017
12,755
30,504
43,259
Liabilities for employee benefits for wages, salaries, annual 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
consolidated entity expects to pay as at reporting date including related on-costs, such as, workers compensation insurance and
payroll tax.
The Group’s obligation in respect of long-term employee benefits such as long service leave is the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its
present value using corresponding government bond yields as a discount rate.
Obligations for contributions to defined contribution pension plans are recognised as an expense in the statement of
comprehensive income as incurred.
14. CAPITAL AND CAPITAL MANAGEMENT
Issued share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising
on the issue of ordinary shares are recognised, net of tax, directly in equity as a reduction of the share proceeds received.
Ordinary shares entitle the holder to participate in dividends in proportion to the number of and amounts paid on the shares held.
On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote and upon
a poll, each share is entitled to one vote.
Ordinary shares on issue:
2019
2018
No.
$
No.
$
On issue at the beginning of the year
1,103,987,460
37,199,397
990,340,635
34,347,020
Rights issues and placements(1)
394,297,741
7,885,955
111,111,111
3,000,000
Issue of shares for unlisted options
4,600,000
161,000
750,000
Issue of shares for Norcott acquisition
-
-
1,785,714
Issue of shares to acquire the Killaloe Project(2)
20,000,000
520,000
Issue of shares to acquire Buldania mining lease
lithium rights(3)
Share issue costs
10,000,000
240,000
-
(777,801)
-
-
-
26,250
50,000
-
-
(223,873)
On issue at the end of the year
1,532,885,201
45,228,551
1,103,987,460
37,199,397
(1) In February 2019, the Company completed a placement to raise $3,000,000 by issuing 150,000,000 fully paid ordinary shares
at an issue price of $0.02 per share.
During March 2019, the Company completed a 1 for 5 non-renounceable rights issue raising $4,535,950 (before issue costs) by
issuing 226,797,741 fully paid ordinary shares at an issue price of $0.02 per share.
A placement of 17,500,000 fully paid ordinary shares at the same issue price of $0.02 per share was completed in May 2019 to
Directors of the Company, to raise $350,000.
47 | FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(2)During the year, 20,000,000 fully paid ordinary shares were issued to Matsa Resources Limited in consideration for the
acquisition of the Killaloe Project.
(3)In November 2018, the Company issued 10,000,000 fully paid ordinary shares to Avoca Resources Pty Ltd, a wholly owned
subsidiary of Westgold Resources Limited to incorporate the granted Mining Lease (M6/647) into the existing Buldania Lithium
Rights Agreement.
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 consisting of equity attributable to equity holders, comprising issued capital, reserves and
accumulated losses and the Consolidated Statement of Changes in Equity.
15. RESERVES
Nature and purpose of reserves:
Share-based payments
This reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration and
other parties as part of their compensation for services.
Foreign currency translation reserve
This reserve is used to record the exchange differences arising from the translation of the financial statements of foreign
subsidiaries.
16. FINANCIAL INSTRUMENTS
(a) Capital risk management
The capital structure of the Group consists of equity attributable to equity holders, comprising issued capital, reserves and
retained earnings / accumulated losses as disclosed in notes 14 and 15, and in the statement of financial position.
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
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.
(c) Foreign exchange rate risk
The Group undertakes certain transactions denominated in foreign currencies, hence has exposure to exchange rate
fluctuations. The Group does not hedge this exposure. The Group currently has no significant expose to foreign exchange
rates.
(d) Equity prices
Equity investments held for sale are recorded at their fair value being either the quoted price or last known traded price on the
balance date (see note 11). There is a risk that changes in prices effect the fair value of investments held by the consolidated
entity. As the Company no longer holds equity investment, there is currently no exposure to equity price risk.
(e) Interest rate risk
Interest rate risk is the risk that changes in bank deposit rates affect the consolidated entity’s income and future cash flow from
interest income. The exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets
and financial liabilities is set out below:
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2019
Fixed interest maturing in:
>1 year
1-5 years
Floating
interest
Non-
interest
bearing
$
$
$
$
Weighted
average
interest rate
%
Total
$
Financial assets
Bank balances
Trade and other receivables
Financial assets
Financial liabilities
-
-
54,400
Trade and other payables
-
-
-
-
-
3,362,420
849
3,363,269
-
-
414,981
414,981
-
54,400
0.69
-
3.29
-
(3,759,149)
(3,769,149)
-
2018
Fixed interest maturing in:
>1 year
1-5 years
Floating
interest
Non-interest
bearing
$
$
$
$
Weighted
average
interest rate
%
Total
$
Financial assets
Bank balances
Trade and other receivables
Financial assets
Financial liabilities
-
-
50,000
Trade and other payables
-
-
-
-
2,850,712
6,032
2,856,744
-
-
227,653
277,653
1,229,270
1,279,270
482,685
482,685
1.31%
2.29%
-
-
A change of 100 basis points in interest rates on bank balances and term deposits over the reporting period would have
increased/(decreased) the Group’s profit and loss by $16,420 (2018: $17,969).
(f) Credit risk
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 consolidated entity’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 and cash and cash equivalents.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised
financial assets is the carrying amount, net of any provision for doubtful debts, as disclosed in the notes to the financial
statements.
(g) Liquidity risk
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 $3,759,149 (2018: $482,685) all of
which are due within 60 days.
(h) Net fair values of financial instruments
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
•
•
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices) (level 2), and
49 | FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
•
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
All financial assets and liabilities approximate their net fair values and are disclosed as level 1 fair values. The carrying amount
of all financial assets and liabilities approximate their net fair values.
GROUP COMPOSITION
This section of the Notes includes information that must be disclosed to comply with accounting standards and other
pronouncements relating to the structure of the Group, but that is not immediately related to individual line items in the Financial
Statements.
17. LIST OF SUBSIDIARIES
Country of
incorporation
Ownership interest
2019
%
100%
100%
100%
Australia
Tanzania
Australia
Australia
2018
%
100%
100%
100%
Parent entity
Liontown Resources Limited
Subsidiaries
Liontown Resources (Tanzania) Limited
LRL (Aust) Pty Ltd
ERL (Aust) Pty Ltd
18. PARENT ENTITY INFORMATION
The financial information for the parent entity, Liontown Resources Limited, has been prepared on the same basis as the
consolidated financial statements, except as set out below.
(a) 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.
(b) Share-based payments
The grant by the Company of equity securities 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.
Statement of comprehensive income
Loss for the year
Total comprehensive loss
Statement of financial position
Assets
Current assets
Non-current assets
Total assets
2019
$
2018
$
(2,877,306)
(1,513,066)
(2,762,652)
(1,560,940)
3,778,250
8,266,849
12,045,099
4,302,383
107,296
4,409,679
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Liabilities
Current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accmulated losses
Total equity
OTHER INFORMATION
2019
$
2018
$
1,912,877
1,912,877
223,830
223,830
10,132,222
4,185,849
45,228,551
37,199,397
1,206,000
526,129
(36,302,329)
(33,539,677)
10,132,222
4,185,849
This section of the Notes includes other information that must be disclosed to comply with accounting standards and other
pronouncements, but that is not immediately related to individual line items in the Financial Statements
19. CONTINGENT LIABILITIES AND ASSETS
For the year ended 30 June 2019, there are no contingent liabilities.
In November 2017, the Company completed the sale of the Bynoe Lithium Project, Northern Territory to Core Lithium Ltd
(“Core”). In consideration, the Company received $1.5 million in cash, 39,232,025 shares in Core and a contingent payment of
$1.5 million in cash or Core shares (at Core’s election) upon Core defining a JORC 2012 compliant Mineral resource totaling 5
million tonnes within the previously owned Bynoe tenure.
As at 30 June 2019, the contingent consideration has not been recorded as income in the financial statements as it is contingent
upon the outcome of a possible future event, however, the directors have now determined, that based on information disclosed
by Core, it is considered probable that the consideration will become due and payable to Liontown.
20. REMUNERATION OF AUDITORS
Audit and review services
HLB Mann Judd
21. COMMITMENTS
2019
$
2018
$
30,376
30,376
28,500
28,500
In order to maintain current rights of tenure to exploration tenements, the Group together with its joint venture partners is required
to perform exploration work to meet the minimum expenditure requirements specified by various State governments. These
amounts are subject to negotiation when application for a lease application and renewal is made and at other times. These
amounts are not provided for in the financial report and are payable:
51 | FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Within 1 year
1-5 years
>5 years
2019
$
2018
$
587,990
1,327,380
1,162,200
3,077,570
324,562
29,038
365,092
718,692
To the extent that expenditure commitments are not met, tenement areas may be reduced, and other arrangements made in
negotiation with the relevant state and territory government departments on renewal of tenements to defer expenditure
commitments or partially exempt the Company.
22. RELATED PARTY TRANSACTIONS
(a) 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 for the entire period:
Directors
T R B Goyder
D R Richards
C R Williams
A J Cipriano
S J M Chadwick (appointed 10 January 2019)
Executives
R K Hacker
The key management personnel compensation is as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
2019
$
2018
$
516,490
44,296
388,423
949,209
324,562
29,038
365,092
718,692
(b) Loans made to key management personnel and related parties
No loans were made to key management personnel and their related parties.
(c) Other transactions with key management personnel
A number of key management personnel, 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 Company or its subsidiaries in the reporting period. The terms and conditions of
the transactions with key management personnel 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-key management personnel 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:
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Corporate service charge and provision of KMP services(1)
Consultancy services of KMP(2)
Database management and field services(3)
2019
$
2018
$
249,107
9,600
124,728
436,145
99,825
-
44,096
143,921
(1)The Group receives corporate services including office rent and facilities, management and accounting services under a
Corporate Services Agreement with Chalice Gold Mines Limited and KMP services. Messrs Goyder and Hacker are KMP’s of
Chalice Gold Mines Limited. 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.
(2)The Company’s Non-executive Director, Mr Chadwick provides general metallurgical and technical advisory services to the
Company through a consultancy agreement. There is no fixed remuneration component under the consultancy agreement for
these services and those services are provided on an “as required basis” at a rate of $2,000 per day. Either party may terminate
the agreement by providing one months’ notice and are payable under normal payment terms.
(3)The Group receives database management and field services from related parties of the Managing Director, Mr Richards.
Amounts paid are on normal commercial terms.
Amounts payable to KMP and related parties at reporting date arising from these transactions was $30,588 (2018: $19,760).
23. EVENTS OCCURRING AFTER THE REPORTING PERIOD
In August 2019, the Company completed a placement of 138,083,335 shares at $0.12 per share to institutional and sophisticated
investors raising $16.57 million (before costs). An additional placement of 11,916,665 shares at $0.12 per share to the
Company’s Directors (or their associates), will be undertaken subject to Shareholder approval.
ACCOUNTING POLICIES
This section of the Notes includes information that must be disclosed to comply with accounting standards and other
pronouncements relating to new and revised accounting standards and their impact.
24. CHANGES IN ACCOUNTING POLICIES
In the year ended 30 June 2019, the Directors have reviewed all of the new and revised Standards and Interpretations issued
by the Australian Accounting Standards Board that are relevant to the Group and effective for the current annual reporting period.
As a result of this review, the Group has initially applied AASB 9 and AASB 15 from 1 July 2018. Due to the transition methods
chosen by the Group in applying these standards, comparative information through the financial statements have not been
restated to reflect the requirements of the new standards.
AASB 9 Financial Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and makes changes to a number of areas
including classification of financial instruments, measurement, impairment of financial assets and hedge accounting model.
Financial instruments are classified as either held at amortised costs or fair value. Financial instruments are carried at amortised
cost if the business model concept can be satisfied.
All equity instruments are carried at fair value and the cost exemption under AASB 139 which was used where it was not possible
to reliably measure the fair value of an unlisted entity has been removed. Equity instruments which are non-derivative and not
held for trading may be designated as fair value through other comprehensive income (FVOCI). Previously classified available-
for-sale investments, now carried at fair value are exempt from impairment testing and gains or losses on sale are no longer
recognised in profit or loss.
The AASB 9 impairment model is based on expected loss on day 1 rather than needing the evidence of an incurred loss, this is
likely to cause earlier recognition of bad debt expenses. Most financial instruments held at fair value are exempt from impairment
testing.
The Group has applied AASB 9 retrospectively, with the effect of initially applying this standard recognised at the date of initial
application, being 1 July 2018 and has elected not to restate comparative information. Accordingly, the information presented
for 30 June 2018 has not been restated.
On initial application date, an election has been made to designate available for sale financial instruments that are non-derivative
equity instruments held for trading as fair value through profit or loss (FVTPL).
53 | FINANCIAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
There is no material impact to profit or loss or net assets on the adoption of this new standard in the current or comparative
periods, other than the effect of recording fair value losses during the current period in profit or loss as opposed to disclosing
these as part of other comprehensive income/loss.
AASB 15 Revenue from Contracts with Customers
As the Group has negligible revenue, there is no material impact to profit or loss or net assets on the adoption of this new
standard in the current or comparative periods.
25. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and
have not been adopted by the Group for the year ended 30 June 2019 are outlined below.
AASB 16 Leases (effective from 1 July 2019)
AASB16 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by the customer.
Distinctions between operating leases (previously off balance sheet) and finance leases (previously on balance sheet) are
removed under the new standard and replaced by the concept of right of use. Where an entity has control over and an ongoing
right to use an asset, that asset will be recognised on the balance sheet as an asset with a corresponding liability.
The Group has considered the impact on its consolidated Financial Statements and assessed that the effect of the new standard
will be minimal. The Group continues to assess its contracts and other arrangements that may be impacted by the introduction
of revised standard AASB16.
AASB Interpretation 23 Uncertainty over Income Tax Treatments (effective from 1 July 2019)
This interpretation clarifies the application of the recognition and measurement criteria in AASB 112 Income Taxes when there
is uncertainty over income tax treatments. The Interpretation specifically addresses the following:
• Whether an entity considers uncertain tax treatments separately;
•
•
•
The assumptions an entity makes about the examination of tax treatments by taxation authorities;
How an entity determines taxable profit, tax bases, unused tax losses, unused tax credits and tax rates;
How an entity considers changes in facts and circumstances.
The Group has considered the impact on its consolidated Financial Statements and assessed that the effect of the new standard
will be minimal.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 54
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2019
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 2019 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;
(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 2019.
This declaration is signed in accordance with a resolution of the Directors:
David R Richards
Managing Director
Dated this 9th day of September 2019
55 | DIRECTORS’ DECLARATION
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 2019, 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, and notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration for the Group.
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 2019 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 Company and 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. We have determined that there are no key
audit matters to communicate in our report.
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 2019, 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.
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 56
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.
In preparing the financial report, the directors are responsible for assessing the ability of the
Company and 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.
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.
57|
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 the directors’ report for the year ended 30
June 2019.
In our opinion, the Remuneration Report of Liontown Resources Limited for the year ended 30 June
2019 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
9 September 2019
L Di Giallonardo
Partner
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 58
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this
report applicable as at 5 September 2019 is set out below.
Shareholdings
Substantial shareholders
The number of shares held by substantial shareholders and their associated interests 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
283,421,980
16.89
10,000,000
15.20
Class of Shares and Voting Rights
There were 3,765 holders of the ordinary shares of the Company, 14 holders of unlisted options and 1 holder of performance
rights. The Company has 65,8000,000 unlisted options and 1,000,000 performance rights on issue, of which 51,000,000 were
issued under the Employee Securities Incentive Scheme.
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 or performance rights do not have voting rights.
Restricted Securities
There are no restricted ordinary shares on issue.
On-Market Buy-Back
There are no current no-market buy-back of securities.
Distribution of equity security holders
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Marketable Parcel
Number of equity security holders
Ordinary Shares
Unlisted Share Options
Performance Rights
135
152
336
1,761
1,381
3,765
-
-
-
-
14
14
-
-
-
-
1
1
The number of shareholders holding less than a marketable parcel was 322.
59 | ASX ADDITIONAL INFORMATION
ASX ADDITIONAL INFORMATION
TWENTY LARGEST ORDINARY FULLY PAID SHAREHOLDERS AS AT 5 SEPTEMBER 2019
Name
Number of ordinary
shares held
Percentage of
capital held %
Mr Timothy Goyder
283,421,980
16.89
J P Morgan Nominees Australia Ltd
Clement Pty Ltd
Graham Kluck Management & Investment Pty Ltd
The Universal Zone Pty Ltd
Invia Custodian Pty Ltd
Soderholme Co Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
David Groom Ewan + Jennie Bar Goyder-Ewan
Delta Resource Management Pty Ltd
Anisimoff Super Fund Pty Ltd
Calm Holdings Pty Ltd
Botsis Holdings Pty Ltd
CS Fourth Nominees Pty Limited
Mr Mario Giosue Franco + Mrs Immacolata Franco
Gremar Holdings Pty Ltd
Equity Trustees Limited
Dog Trap Investments Pty Ltd
Gremlyn Pty Ltd
Total
94,764,424
48,940,000
43,506,000
26,290,000
20,595,747
19,256,936
18,553,715
18,496,954
17,693,516
17,600,000
15,883,441
15,250,000
15,000,000
14,190,043
12,750,000
11,300,000
10,640,000
10,000,000
10,000,000
5.65
2.92
2.59
1.57
1.23
1.15
1.11
1.10
1.05
1.05
0.95
0.91
0.89
0.85
0.76
0.67
0.63
0.60
0.60
724,132,756
43.17
LIONTOWN RESOURCES ANNUAL REPORT 2019 | 60
LIONTOWN RESOURCES LIMITED
ABN 39 118 153 825
Level 2, 1292 Hay Street
West Perth, Western Australia 6005
T:
F:
E:
+61 8 9322 7431
+61 8 9322 5800
info@ltresources.com.au
W:
www.ltresources.com.au
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liontown-resources-limited
@LiontownRes