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2021
ANNUAL
REPORT
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LIONTOWN RESOURCES LIMITED | ABN 39 118 153 825
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Contents
CHAIRMAN’S LETTER ....................................................................................................... 4
OPERATING AND FINANCIAL REVIEW ........................................................................... 6
KEY ACHIEVEMENTS OF THE YEAR ............................................................................... 7
KATHLEEN VALLEY LITHIUM PROJECT ....................................................................... 10
BULDANIA LITHIUM PROJECT ...................................................................................... 14
ORE RESERVE AND MINERAL RESOURCE STATEMENTS ........................................ 16
COMPETENT PERSON STATEMENT AND REFERENCES ........................................... 18
TENEMENT SCHEDULE .................................................................................................. 19
DIRECTORS’ REPORT ..................................................................................................... 20
AUDITOR’S INDEPENDENCE DECLARATION .............................................................. 39
FINANCIAL REPORT ....................................................................................................... 40
DIRECTORS’ DECLARATION ......................................................................................... 65
INDEPENDENT AUDITOR’S REPORT ............................................................................ 66
ASX ADDITIONAL INFORMATION .................................................................................. 70
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CORPORATE DIRECTORY
DIRECTORS
Timothy Goyder ................................................................................................................................... Chairman
Antonino Ottaviano ................................................................................................................ Managing Director
David Richards .............................................................................................................. Non-Executive Director
Craig Williams ................................................................................................................ Non-Executive Director
Anthony Cipriano ........................................................................................................... Non-Executive Director
Steven Chadwick ........................................................................................................... Non-Executive Director
COMPANY SECRETARY
Clint McGhie
PRINCIPAL PLACE OF BUSINESS & REGISTERED OFFICE
Level 2, 1292 Hay Street, West Perth, Western Australia 6005
Tel: (+61 8) 6186 4600
Web: www.ltresources.com.au
Email: info@ltresources.com.au
AUDITORS
HLB Mann Judd (WA Partnership)
Level 4, 130 Stirling Street, Perth Western Australia 6000
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace, Perth, Western Australia 6000
Tel: 1300 557 010
HOME EXCHANGE
Australian Securities Exchange Limited
Level 40, Central Park, 152- 158 St Georges Terrace, Perth, Western Australia 6000
ASX CODE
Share Code: LTR
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Liontown moves into FY2022 in an
enviable position with a world-class
lithium asset and a development
timeline that is aligned with a predicted
market deficit as the growth of the
global Electric Vehicle (EV) and lithium-
ion battery industry moves to the next
level.
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CHAIRMAN’S LETTER
TIM GOYDER – CHAIRMAN
Dear Fellow Shareholders,
What a remarkable 12 months it has been!
When I sat down to write last year’s Chairman’s Letter, Liontown was
completing an updated Pre-Feasibility Study (PFS) on our Tier-1 lithium
asset, the Kathleen Valley Lithium and Tantalum Project in Western
Australia.
Notwithstanding the challenging market conditions at that time, the Board
and management were confident that the qualities of the Kathleen Valley
Project would prevail. When released in October 2020, the PFS
highlighted Kathleen Valley’s credentials as a Tier 1 resource with
outstanding financial returns. These financial metrics reinforce Kathleen
Valley’s potential viability and strong resilience through the commodity
cycle. Given the strong PFS results, the Board had the confidence to
immediately approve the commencement of a Definitive Feasibility Study (DFS) in late 2020.
Twelve months on the market fundamentals for lithium look exceptional, with major investment banks and commodity
analysts predicting that the market will be in deficit by 2024. The shortfall in supply is expected to increase to over 1Mt of
lithium carbonate equivalent (LCE) by 2030.
A key focus of our approach has been to implement strategies which leverage off the lessons learned from the first-
generation of hard rock lithium developers and avoid the pitfalls and issues which impacted the ramp-ups of some of the
early projects. On that basis, the DFS continues to be underpinned by a commitment towards detailed metallurgical test
work and evidence-based analysis, which has been ongoing for over 18 months. There has also been a strong focus on
areas of the Project where we believe we can deliver improved returns through further optimisation.
We have also substantially increased our focus on the Environmental, Social and Governance (ESG) aspects of the
Project, including the development of a climate strategy roadmap which aims to put us on a net-zero emissions trajectory.
This will be achieved with the incorporation of renewable power and other innovations in our operations. Our first-ever
Sustainability Report will be released in Q4 2021 – an important milestone for the Company. We’ve also ensured that we
have a social license to operate by meaningfully engaging with the Traditional Owners of the land upon which the
Kathleen Valley Project is situated.
The Kathleen Valley DFS is on track for completion in Q4 2021, providing a strong platform for us to secure near-term off-
take agreements, accelerate project financing and place orders for critical long-lead items.
In parallel with the updated PFS, we completed a Downstream Scoping Study (released October 2020), which
demonstrated the significant financial upside of an integrated mining, processing and refining operation. The exceptional
financial outcomes of this Scoping Study demonstrate the exciting growth opportunity for Liontown to participate
downstream in the lithium supply chain, thereby capturing additional value for shareholders. Further work is now being
undertaken to advance the outcomes of the Scoping Study.
MINERALS 260 DEMERGER AND IPO
At our Moora Gold-PGE-Nickel-Copper Project, the Company established a large and highly strategic land position in the
emerging Julimar mineral province. Exploration continued at Moora during the year, with outstanding results from a maiden
drilling program confirming the potential for the Project to host significant precious and base metal mineralisation.
The ground position in this exciting district was further strengthened after securing the right to earn 51% equity in the Koojan
JV Project, located adjacent to the western boundary of the Moora Project. Together, the Moora Project and our interest in
the Koojan JV, gave Liontown the second largest landholding (~1,100km2) in what is arguably one of Australia’s, if not the
world’s, most exciting minerals province.
After year end, the decision was made by the Board, subject to shareholder approval, to demerge the Company’s interests
in the Moora and Koojan JV Projects. This allows Liontown to remain steadfastly focused on the continued development of
its lithium projects and in particular Kathleen Valley, while also allowing the Moora and Koojan JV Projects to have their own
4 | C H A I R M A N ’ S L E T T E R
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dedicated resources. Minerals 260 Limited is the name of the company created to hold the Moora and Koojan JV Projects
and to become a focused Au-PGE-Ni-Cu exploration and development company. Minerals 260 listed successfully in October
2021 and we look forward to seeing this journey to unlock the full potential of the extensive and highly strategic landholding.
CORPORATE
With the Kathleen Valley Project moving rapidly towards development as a Tier-1 global lithium asset, the board decided
that it was time to recruit an appropriately qualified Managing Director to lead Liontown’s development to the next level as
a world-class battery materials producer. To that end, and on behalf of the Board, I want to thank our former Managing
Director, David Richards for his personal commitment and the effort of his team in discovering and proving a globally
significant, high-grade Mineral Resource – one of the largest, independently owned, undeveloped, hard rock lithium assets
worldwide. David has taken up the position of Managing Director of Minerals 260 following its demerger and listing on the
ASX.
Replacing David, we were delighted that Tony Ottaviano – a highly-credentialed global mining executive with extensive
strategic, operational, commercial and corporate experience – decided to accept the Managing Director/CEO role. Tony
was formerly a senior executive who had a lengthy and distinguished career at BHP. Tony, who commenced in May, has
slotted into the role extremely well – bringing vast amounts of energy, clear strategic vision, execution discipline and
enormous drive that has already had a big impact on the company as we move towards development of the Kathleen Valley
Project.
We have also strengthened our team with other senior appointments, including the appointment of experienced finance
executive Clint McGhie as Commercial Manager and Company Secretary.
Shortly after year end, the Company strengthened its balance sheet with a A$52M capital raising to underpin our growth
strategy and accelerate the development of Kathleen Valley.
OUTLOOK
Liontown has recently been included in the S&P/ASX 300 and moves into FY2022 in an enviable position with a world-class
lithium asset and a development timeline that is perfectly aligned with a predicted market deficit as the growth of the global
Electric Vehicle (EV) and lithium-ion battery industry moves to the next level.
We have enormous optionality at Kathleen Valley with the largest uncommitted spodumene concentrate supply available
globally – and the opportunity to integrate a future downstream processing capability. We will also look to further grow our
portfolio with pipeline assets such as the Buldania Lithium Project in Western Australia which has a resource of ~15Mt @
1% Li2O and significant exploration upside.
The lead up to the end of the year is exciting as we complete and deliver the Kathleen Valley DFS, look to secure off-take
agreements and accelerate our project financing strategy. We hope to make the Final Investment Decision in Q2 2022.
The strength of Liontown’s position is thanks to the hard work, commitment and dedication of our small but highly motivated
team, led previously by David Richards and now by Tony Ottaviano.
I would like to acknowledge everyone who has contributed to this pivotal year for the company – my fellow Directors, our
senior management team, consultants and advisers and, most importantly, our wonderful shareholders who supported us
through the tough times and are now reaping the rewards of the Company’s strong vision and strategic focus.
The coming year looks set to be another transformational period for Liontown as we finance and develop the Kathleen Valley
Project and I look forward to continuing to build this underlying value of the company for all stakeholders.
The coming year looks set to be another transformational period for Liontown as we finance and develop the Kathleen Valley
Project and I look forward to continuing to build this underlying value of the company for all stakeholders.
Chairman
Tim Goyder
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OPERATING AND FINANCIAL REVIEW
LOOKING AHEAD…
Liontown Resources Limited (Liontown or the Company) is rapidly progressing the Kathleen Valley Lithium deposit towards
a new mining and processing operation in Western Australia. The completion of an updated Pre-Feasibility Study (PFS) and
Downstream Scoping Study (DSS) has confirmed the resource as one of the most significant, high quality, hard rock lithium
deposits in Australia. The focus now is on completing the Definitive Feasibility Study (DFS), which is well advanced and will
be released in Q4 2021.
The rising demand in the global market for lithium-ion batteries continues with consensus forecasts predicting exponential
growth in battery demand driven by high environmental targets and incentivised transition to electric vehicles. Liontown is
well-positioned to become a significant source of lithium supply and has accelerated the Project development timeline to
take advantage of the rapid upturn in the lithium market.
Importantly, the Kathleen Valley deposit (Kathleen Valley) is one of the few large, uncommitted hard rock lithium deposits,
with full optionality, in a tier one mining jurisdiction, providing flexibility in terms of future financing or attracting strategic
offtake partners.
Ongoing studies at Kathleen Valley will carefully consider the experience from previously commissioned, hard rock lithium
mine developments with a focus on metallurgical test work to ensure high quality spodumene and tantalum concentrates
will be produced at optimal grades and recoveries. The Company’s primary objectives in the coming year at Kathleen Valley
are:
•
•
•
•
•
•
•
•
•
Completion of a DFS in Q4 2021;
Optimising mine planning and processing to ensure maximum economic benefits;
Committing to longer lead items and processes as soon as possible to enable production to begin within 3 years;
Secure offtake agreements from a diverse suite of tier 1 customers across the battery value chain;
Secure the optimal funding mix;
Completion of Front-End Engineering Design (FEED) and reaching Final Investment Decision (FID);
Progression of approvals in line with Project development milestones;
Commencement of early works; and
Continue to value add through profitable growth. Pursuing the downstream processing opportunity with an updated
Scoping Study based on the results of the DFS.
Consistent with its corporate strategy to focus on battery metals, the Company will continue to advance the Buldania Lithium
Project in southeast Western Australia where new drill targets have been defined with the potential to expand the current
resource base. In addition, it will continue to search for greenfield exploration opportunities in battery materials.
The Company’s decision to demerge the Moora and Koojan JV Projects located in the Julimar region of southwest Western
Australia and list on the ASX, via Minerals 260 Limited, enables the Company to now focus on its advanced lithium projects,
and while also enhancing the potential for Liontown shareholders to receive maximum value from the Moora and Koojan JV
projects which will be well funded and have independent management.
Liontown has also elevated its focus on ESG and formulated a strategy, which among many important aspects now sees it
on a Net Zero Emissions pathway by 2034. Liontown see this as a licence to operate and what our key stakeholders expect.
Three key areas of the Company’s ESG strategy include:
• Minimising carbon emissions, water usage and land disturbance;
•
•
Engaging meaningfully with the Traditional Owners and other local stakeholders; and
Ensuring corporate governance is consistent with industry best practices.
Liontown has also commissioned its first Sustainability Report, which is expected to be issued during Q4 2021.
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KEY ACHIEVEMENTS OF THE YEAR
Kathleen Valley Lithium & Tantalum Project
An updated PFS (issued October 2020) confirmed the technical and financial viability of a
standalone 2Mtpa mining and processing operation based on an updated Ore Reserve of 71Mt
@ 1.4% Li2O and 130ppm Ta2O5.
The Ore Reserve underpins a 40-year mine life with average production of ~350ktpa 6% Li2O
spodumene concentrate (SC6.0) and 430tpa of 30% Ta5O5 concentrate.
Key financial outcomes of the PFS include:
–
LOM free cash flow after-tax of A$4.8B;
– Project payback of ~3 years post-production;
– Post-tax NPV8%(real) of A$1.12B and IRR of 37%;
– Pre-production capital expenditure of A$325M; and
– Cash costs of US$283/dmt Li2O concentrate (excluding royalties) in Years 1-10.
A DSS leveraging off the updated PFS demonstrated the significant financial upside of an
integrated mining, processing and refining operation based on the production of lithium
hydroxide or lithium sulphate using SC6.0 from Kathleen Valley as feedstock.
Immediately following the completion of the updated PFS, the Board approved the
commencement of the DFS and significant work has been done on the DFS since that time, with
completion of the DFS scheduled for Q4 2021. There are a number of key areas the DFS is
focussed on which have the potential to deliver improved economic returns, including:
– Examining various scenarios to increase throughput beyond 2Mtpa;
– Simplification of the process plant flowsheet such that the crushing equipment required is
reduced while significantly increasing throughput capacity and potential for future
expansion; and
– Optimisation test work which validates continued high lithium recoveries at a coarser grind size.
The DFS is also expected to support an accelerated development and construction timeline,
which will see the Company now targeting a 3-year development timeline, enabling first
production of ore during Q2/Q3 2024, some 12 months ahead of the updated PFS timeline.
Shortly after year end and in line with the Company’s objective to optimise the financial metrics
of the Project, it agreed terms with Ramelius Resources Limited, to terminate the Kathleen
Valley Royalty held by Ramelius. This will result in a reduction in future operating costs by circa
US$10/t of concentrate.
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Buldania Lithium Project
During the year the Company completed a soil sampling program at Buldania and as reported post
year end, defined extensive, high-order anomalism for lithium and related metals adjacent to the
existing Anna lithium deposit (15Mt @ 1% Li2O), highlighting a pipeline of exploration and growth
opportunities in the area. The next phase of exploration at Buldania has commenced, with a follow
up drill program currently underway.
Moora Gold-PGE1- Nickel-Copper Project
The Moora Project and Koojan JV Projects, which are in the Julimar Region of southwest WA, form
the cornerstone of Minerals 260 Limited – a new gold-PGE*-nickel-copper focused exploration
company, which followings its demerger from Liontown post year end, has completed a successful
Initial Public Offering (IPO) and is now listed on the Australian Securities Exchange (ASX). Liontown
Shareholders participated on a pro-rata basis in the demerger and IPO and having strongly
supported the demerger and IPO held approximately 94.5% of the issued shares of Minerals 260
Limited at the time of listing. Maiden drilling at Moora, completed prior to the demerger and IPO,
intersected 43m @ 1.8g/t gold plus a number of other significant intersections confirming potential
for an economic discovery.
During the year (and prior to the IPO) the Company had also entered into the Koojan JV, having
the right to earn up to 51% in the Koojan JV project. Initial geochemical sampling on previously
unexplored Koojan JV Project (undertaken prior to the IPO) defined multiple high order gold and/or
PGE anomalies.
1 PGE – palladium and platinum
Corporate
Senior mining executive Tony Ottaviano appointed as Chief Executive Officer and Managing
Director.
$64.5 million raised (before costs), including $12.5 million during the year and a further $52 million
post year end, via strongly supported share placements ensuring Liontown is well funded to
advance development of the Kathleen Valley Lithium and Tantalum Project.
Subsequent to the end of the year, Shareholders approved the demerger of Minerals 260 Limited
(Minerals 260), which now holds Liontown’s non-lithium assets.
Eligible shareholders received approximately one Minerals 260 ordinary share for every 11.94
Liontown ordinary shares held and a Priority Offer to participate in the IPO capital raise.
Minerals 260 raised $30 million (before costs) through the issue of 60 million shares at an issue
price of $0.50 per share and successfully listed on the ASX on 12 October 2021.
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Liontown’s Environmental, Social & Governance
(ESG) Strategy
Companies and investors are increasingly focused on the impact of sustainability on their
operations and investments respectively. An increased understanding of how sustainability-related
factors can affect economic growth, asset performance and financial markets underlies this
increased focus.
Liontown believes that the way a company manages the environmental and social aspects of its
business offers an indication of how well the company is run. A strong commitment to corporate
governance is a sign of quality leadership and management required to ensure a company’s long-
term financial sustainability.
Liontown is proactively integrating environmental, social and governance factors into its practices
and decisions and has formalised its ESG strategy in conjunction with the Kathleen Valley DFS.
We are wholeheartedly committed to the development of our ESG principles which we believe
reflects our responsibility to our employees, shareholders, the communities in which we operate
and other stakeholders.
Liontown aspires to achieving Net Zero Emissions in line with the Paris Agreement and is assessing
pathways to achieve this goal.
The Company is compiling its inaugural sustainability report in-line with GRi Standards and
consideration of SASB, TCFD standards and SDG goals to ensure transparent assessment and
reporting in line with the ESG guidelines.
Liontown’s inaugural Sustainability Report is scheduled for release in Q4, 2021.
9 | K E Y A C H I E V E M E N T S O F T H E Y E A R
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KATHLEEN VALLEY LITHIUM
PROJECT
WESTERN AUSTRALIA (100%)
The Kathleen Valley Project is in Western Australia, ~680km north-east of Perth and ~350km north-
north-west of Kalgoorlie, within the Eastern Goldfields of the Archaean Yilgarn Craton (Figure 1).
Liontown commenced work at Kathleen Valley in 2017 and has since defined a world-class Mineral
Resource Estimate of 156Mt @ 1.4% Li2O and 130ppm Ta2O5 and completed a Pre-Feasibility
Study (PFS) which confirms the potential for a long-life, standalone mining and processing
operation.
Kathleen Valley represents the only large (>40 Mt), pre-development, hard rock, lithium deposit in
the developed world with 100% off-take optionality.
Figure 1: Kathleen Valley Project – Location plan and regional geology
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In October 2020, Liontown advanced the Kathleen Valley Project with completion of:
a. An updated Pre-Feasibility Study (PFS) investigating the establishment of a mining and processing operation to
produce spodumene and tantalum concentrates; and
b. A Downstream Scoping Study (DSS) into the viability of refining the spodumene concentrate onsite to produce either
lithium hydroxide or lithium sulphate.
Following the positive results from the updated PFS, Liontown immediately commenced a DFS focussed on SC6.0
production which is due for completion in Q4 2021. As part of the DFS, the Company investigated, and continues to
investigate, a number of opportunities to enhance the financial metrics of the Project including optimising mine scheduling
and processing.
UPDATED PRE-FEASIBILITY STUDY (PFS)
The updated PFS released in October 2020 built on the previous study completed in December 2019 and delivered an
updated Ore Reserve of 71Mt @ 1.4% Li2O and 130ppm Ta2O5 which will underpin a 2Mtpa mining and processing
operation over a 40-year mine life. The Ore Reserve was based on the May 2020 MRE of 156Mt @ 1.4% Li2O and 130ppm
Ta2O5.
The PFS evaluated a mining and processing operation delivering an average of 350ktpa of spodumene concentrate grading
6% Li2O (“SC6.0”) and 430tpa of a 30% Ta2O5tantalum concentrate. Following conventional underground and open pit
mining and delivery to the Run-of-Mine pad, ore will be processed by Whole of Ore Flotation (WOF) to produce spodumene
and tantalum concentrates which will then be transported in bulk for delivery to downstream customers.
Based on a proposed 2Mtpa standalone mining and processing operation, the PFS demonstrated strong financial metrics
for the Project (Table 1).
Table 1: Kathleen Valley Project – PFS Base Case Key Metrics
Study Outcomes
Post-tax NPV8% (real, post-tax)
Internal Rate of Return (IRR)
Payback
Life of mine (LOM)
Pre-production capital cost
Cash operating costs (LOM) (1) (2)
Cash operating costs (LOM) (1) (3)
Average steady state production
PFS
A$1.12B
37%
3 years post-production
~ 40 years
A$325M (inc. A$67M preproduction & A$27M contingency)
~US$310/dmt of SC6.0 (including tantalum credits)
~US$377/dmt of SC6.0 (including tantalum credits & Royalties)
350 ktpa of SC6.0, 430 tpa of 30% Ta2O5 concentrate
1 Cash operating costs include all mining, processing, transport, freight to port, port costs and site administration & overhead costs. Excludes
sustaining capital.
2 Royalties are predominantly sales price dependent hence not included, for a PFS Li2O price of US$739/t royalties equate to US$62/t for
the 1st 10 years and US$67/t for LOM.
3 Includes royalties of US$67/t for LOM.
The PFS was completed to an overall +/- 25% accuracy.
Figure 2: Kathleen Valley landscape
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DOWNSTREAM SCOPING STUDY (DSS)
Building on the updated PFS, Liontown engaged Lycopodium Minerals Pty Ltd (Lycopodium) to evaluate the impact
of integrating a downstream refinery with the mine and process plant (Integrated Project) at Kathleen Valley to produce
either battery-grade Lithium Hydroxide monohydrate (LiOH.H2O “LHM”) or Lithium Sulphate monohydrate (Li2SO4.H2O
“LSM”).
An Integrated Project is advantageous given the location of the Project relative to key infrastructure including power
and gas, the supply of key consumables such as acid from the nearby mining and logistics centre of Kalgoorlie and,
importantly, having a suitable area for storage of tailings. Reduced transport volumes of final product would also
significantly reduce operating costs.
The DSS assumed that the LHM and LSM processing plant options will be located at Kathleen Valley, adjacent to the
proposed WOF plant detailed in the updated PFS. A 2Mtpa WOF concentrator feed rate was considered in-line with
the PFS.
Based on a proposed 2Mtpa standalone mining, processing and refining operation, the DSS demonstrated strong
financial metrics for the Integrated Project.
Figure 3: Kathleen Valley landscape
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DEFINITIVE FEASIBILITY STUDY (DFS)
Following the positive results from the updated PFS, the Liontown Board approved the immediate commencement of a DFS
focussed on SC6.0 production, which is due for completion in Q4 2021.
Liontown appointed highly credentialed consulting groups to assist with the DFS, including Lycopodium Minerals Pty Ltd
(Process Engineering), Snowden Mining Industry Consultants Pty Ltd (Mine Engineering), Knight Piésold Pty Ltd (Tailings
and Hydrogeological Engineering), MBS Environmental (Environmental and Permitting) and ALS Metallurgy Pty Ltd
(Metallurgical Test Work).
Activities either completed or well-advanced during the Year include:
•
A Mineral Resource Estimate (MRE) update;
• Mine scheduling and geotechnical modelling;
•
•
•
•
•
•
•
•
•
Process flowsheet enhancements;
Detailed metallurgical test work with a focus on proving up recoveries across the ore body;
Hydrological drilling;
Assessing technology adoption to minimise Scope 1 and Scope 2 carbon emissions consistent with the Company’s
ESG policy;
Comprehensive optimization test work with early planning for a pilot program to produce ~5 tonne of spodumene
concentrate for offtake customer pre-qualification;
Open Pit and underground mine schedule optimisation;
Examination of options to increase throughput to >2Mtpa and future proofing the initial operation;
Flowsheet optimisation to improve concentrate/grade (with potential for >6% Li2O premium concentrate); and
Equipment tendering.
Figure 4: Liontown Directors and senior management inspecting core samples at Kathleen Valley
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BULDANIA LITHIUM PROJECT
WESTERN AUSTRALIA (100%)
The Buldania Project is the Company’s second lithium discovery in Western Australia and is located
approximately 600 km east of Perth in the southern part of the Eastern Goldfields Province (Figure 5).
The Project is located close to major infrastructure in a region that hosts significant lithium deposits
including the Mt Marion and Bald Hill lithium mines. Exploration by Liontown has resulted in a green
field’s discovery at the Anna prospect where a maiden MRE of ~15Mt @ 1% Li2O was defined during
the year.
Figure 5: Buldania Project – Location and regional geology plan
Liontown has been actively exploring the Buldania Project since early 2018 after acquiring 100% of the rights to lithium and
related metals from Avoca Resources Pty Ltd (a 100%-owned subsidiary of Karora Resources).
Work by Liontown initially focused on the spodumene-bearing Anna pegmatite, partially delineated by previous nickel and
gold explorers, with drilling by the Company subsequently defining a maiden Indicated and Inferred Mineral Resource
Estimate (MRE) of 14.9Mt @ 0.97% Li2O and 44ppm Ta2O5, containing 144,530t of Li2O or 372,889t of lithium carbonate
equivalent (LCE).
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During the Year, Liontown completed a soil sampling program comprising 1,391 samples collected on a 200 x 50m pattern,
which was designed to identify new drill targets with the potential to expand the resource base at Buldania.
The soil sampling defined three new, SW/NE trending soil anomalies adjacent to the Anna MRE area (Figure 6).
Figure 6: Anna Prospect – Image showing lithium-in-soil results
The definition of multiple, parallel soil anomalies is consistent with the geological setting of the Anna mineralisation, which
is hosted by a series of stacked, shallowly south-east dipping, SW/NE striking pegmatites. The soil anomalies may indicate
strike extensions or repeats of the Anna pegmatites into areas largely obscured by residual soils and dense vegetation.
The next phase of exploration at Buldania, which commenced post year end, comprised:
•
•
•
Ground truthing of the soil anomalies, including geological mapping;
Extension of soil sampling to the north-east of the existing anomalies; and
Follow-up drilling.
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ORE RESERVE AND MINERAL
RESOURCE STATEMENTS
The Company reviews and reports its Ore Reserves and 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 Ore Reserves and 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-TANTALUM 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 has since announced updated Mineral Resource estimates for the Project
on 9 July 2019 and 11 May 2020 and 8 April 2021.
The Kathleen Valley Project Mineral Resource Estimate:
Resource Category
Measured
Indicated
Inferred
Sub-total
As at 30 June 20211
As at 30 June 20201
Tonnage
(Mt)
20
109
27
156
Li2O
(%)
1.3
1.4
1.3
1.4
Ta2O5
(ppm)
145
130
113
129
Tonnage
(Mt)
20
105
32
156
Li2O
(%)
1.3
1.4
1.3
1.4
Ta2O5
(ppm)
140
130
110
130
1 Reported above a Li2O cut-off grade of 0.55% which strikes a balance between the potential open pit and underground expected cut-off
grades
The Company reported its maiden Ore Reserve for the Kathleen Valley Project on 2 December 2019 and updated the Ore
Reserve as part of the PFS released on 9 October 2020 (based on 11 May 2020 Mineral Resource). The Company is in the
process of completing a Definitive Feasibility Study on the Kathleen Valley Project and as part of that process (and consistent
with market practice) the Ore Reserve estimate will be updated.
The Kathleen Valley Project Ore Reserve:
Reserve Category
Underground
Proved
Probable
Sub-total
Open Pit
Proved
Probable
Sub-total
TOTAL
As at June 30 20211
As at June 30 20202
Tonnage
(Mt)
Li2O
(%)
Ta2O5
(ppm)
Tonnage
(Mt)
Li2O
(%)
Ta2O5
(ppm)
3.9
37.6
41.5
11.7
17.6
29.3
70.8
1.4
1.5
1.5
1.2
1.2
1.2
1.4
130
120
120
140
130
130
130
-
-
-
17.1
33.3
50.4
50.4
-
-
-
1.2
1.2
1.2
1.2
-
-
-
-3
-3
-3
-3
1 Tonnages and grades are diluted and reported at Li2O cut-off grade of 0.7-0.75% (open pit) and 1.2 -1.5% (underground). Tonnages and
grades have been rounded.
2 Reported above a Li2O cut-off grade of 0.50%
3 Tantalum not assessed
1 6 | O R E R E S E R V E A N D M I N E R A L R E S O U R C E S T A T E M E N T S
a
BULDANIA LITHIUM PROJECT
The Company reported its maiden Mineral Resource estimate for the Anna Deposit, Buldania Lithium Project in Western
Australia on 8 November 2019.
The Anna Deposit, Buldania Project Mineral Resource estimate:
Resource Category
Indicated
Inferred
Total
As at June 30 20211
As at June 30 20201
Tonnage
(Mt)
9.1
5.9
14.9
Li2O
(%)
0.98
0.95
0.97
Ta2O5
(ppm)
45
42
44
Tonnage
(Mt)
9.1
5.9
14.9
Li2O
(%)
0.98
0.95
0.97
Ta2O5
(ppm)
45
42
44
1 Reported above a Li2O cut-off grade of 0.50% for open pit potential
TOOLEBUC VANADIUM PROJECT
The Company reported its maiden Mineral Resource estimate for the Cambridge Deposit, Toolebuc Vanadium Project in
North West Queensland on 30 July 2018.
The Cambridge Deposit, Toolebuc Project Mineral Resource estimate:
Resource Category
Inferred
Total
As at June 30 2021
As at June 30 2020
Million
Tonnes
83.7
83.7
V2O5
%
0.30
0.30
MoO5
ppm
188
188
Million
Tonnes
83.7
83.7
V2O5
%
0.30
0.30
MoO5
ppm
188
188
GOVERNANCE ARRANGEMENTS AND INTERNAL CONTROLS
The Company has ensured that the Ore Reserve and Mineral Resources quoted are subject to thorough governance
arrangements and internal controls.
The Ore Reserve for the Kathleen Valley Project was prepared by independent mining consulting group Orelogy Consulting
Pty Ltd with metallurgical and engineering input provided by Lycopodium.
The Mineral Resource estimates for the Kathleen Valley, Buldania and Toolebuc Projects were prepared by independent
specialist resource and mining consulting group Optiro Pty Ltd.
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 Ore Reserve and Mineral Resource statements above are based on and fairly represents information and
supporting documentation prepared by a Competent Person or Persons.
The Mineral Resource statements above have been approved by Mrs Christine Standing. Mrs Christine Standing is
an employee of Optiro Pty Ltd and a Member of the Australasian Institute of Mining and Metallurgy.
• Mrs Christine Standing has provided prior written consent to the issue of the Mineral Resource statements in the form
and context in which they appear in this annual report.
•
The Kathleen Valley Ore Reserve statement above relating to open pit reserves has been approved by Mr Jake
Fitzsimmons. Mr Jake Fitzsimmons is a consultant working for Orelogy Group Pty Ltd and a fellow of the Australasian
Institute of Mining and Metallurgy.
• Mr Jake Fitzsimmons has provided prior written consent to the issue of the Ore Reserve statement relating to open pit
reserves in the form and context in which it appears in this annual report.
•
The Kathleen Valley Ore Reserve statement above relating to underground reserves has been approved by Mr Andrew
Cooper. Mr Andrew Cooper is a consultant working for Orelogy Group Pty Ltd and a member of the Australasian
Institute of Mining and Metallurgy.
• Mr Andrew Cooper has provided prior written consent to the issue of the Ore Reserve statement relating to undergound
reserves in the form and context in which it appears in this annual report.
1 7 | O R E R E S E R V E A N D M I N E R A L R E S O U R C E S T A T E M E N T S
a
COMPETENT PERSON STATEMENT
AND REFERENCES
The Information in this report that relates to Ore Reserves, Production Target and PFS for the Kathleen Valley Project is
extracted from the ASX announcements “Updated Kathleen Valley Pre-Feasibility Study delivers substantial increase in
NPV to $1.1 billion and a mine life to ~ 40 years” released on 9th October 2020 which is available on
www.ltresources.com.au.
The Information in this report that relates to Exploration Results, Mineral Resources and metallurgical test work for the
Kathleen Valley Project is extracted from the ASX announcement “Strong progress with Kathleen Valley Definitive Feasibility
Study as ongoing work identifies further key project enhancements” released on the 8th April 2021 which is available on
www.ltresources.com.au.
The Information in this report that relates to Mineral Resources for the Buldania Project is extracted from the ASX
announcement “Liontown announces maiden Mineral Resource Estimate for its 100%-owned Buldania Lithium Project, WA”
released on the 8th November 2019 which is available on www.ltresources.com.au.
The Information in this report that relates to Exploration Results for the Buldania Project is extracted from the ASX
announcement “Potential new growth drill targets defined at 100%-owned Buldania Lithium Project, WA” released on the
5th July 2021 which is available on www.ltresources.com.au.
The Information in this report that relates to Exploration Results for the Moora Gold-PGE-Nickel-Copper Project is extracted
from the Minerals 260 Limited Prospectus dated 19th August 2021 which is available on www.ltresources.com.au.
The Information in this report relates to the Exploration Results firm the Koojan Gold-PGE-Nickle- Copper JV is extracted
from the Minerals 260 Limited Prospectus dated 19th August 2021 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 and that all material assumptions and technical parameters underpinning the estimates
or production targets or forecast financial information derived from a production target (as applicable) in the relevant market
announcements continue to apply and have not materially changed. The Company confirms that the form and context in
which the Competent Person’s findings are presented have not been materially modified from the original market
announcements.
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.
1 8 | C O M P E T E N T P E R S O N S T A T E M E N T A N D R E F E R E N C E S
a
TENEMENT SCHEDULE
(AS AT 6 OCTOBER 2021)
Country Project
Kathleen Valley
Australia
Buldania
Toolebuc
Tenement No.
M36/264
M36/265
M36/459
M36/460
M36/696
E36/879
L36/236
L36/237
L36/248
L36/250
L36/251
L53/253
L53/254
L53/255
L53/256
E36/856
P36/1997
M63/647
M63/676
E63/1660
EPM26490
EPM26491
EPM26492
EPM26494
EPM26495
Registered Holder
Nature of Interests
100% - nickel clawback
rights retained by other
party
0% - pending application
100% - all metal rights
LRL (Aust) Pty Ltd (wholly owned
subsidiary of Liontown Resources
Limited).
100%
Avoca Resources Pty Ltd
0% - pending application
100% of rights to lithium
and related metals
secured by Lithium
Rights Agreement
0% - pending application
LRL (Aust) Pty Ltd (wholly owned
subsidiary of Liontown Resources
Limited).
100%
Liontown Resources Limited
100%
1 9 | T E N E M E N T S C H E D U L E
a
DIRECTORS’
REPORT
DIRECTORS’ REPORT
The Directors present their report together with the financial statements of the Group consisting of Liontown Resources
Limited (‘Liontown Resources’ or ‘the Company’) and its controlled entities for the financial year ended 30 June 2021 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 Tim R B Goyder
Non-Executive Chairman
Experience:
Mr Goyder is an experienced mining executive with over 40 years’
experience in the resource industry. He has been involved in the formation
and management of a number of publicly listed companies and is currently
Non-Executive Chairman of Chalice Mining Limited and the Chairman of
DevEx Resources Limited. Mr Goyder was appointed as Non-Executive
Chairman on 2 February 2006.
Interests in shares, options and service
rights at the date of this report:
328,515,585 ordinary shares
Special responsibilities:
Member of the Remuneration Committee.
Directorships held in other listed entities
in the last three years:
Mr Goyder is currently Non-Executive Chairman of Chalice Mining Limited
(formerly Chalice Gold Mines Limited), Non-Executive Chairman of DevEx
Resources Limited and was previously a Non-Executive Director of Strike
Energy Limited (resigned 31 December 2018).
Mr Antonino Ottaviano (Appointed 5 May 2021)
Managing Director
Qualifications:
Experience:
BEng (Mechanical), MBA
Mr Ottaviano is a global mining executive, with over 30 years leading
operations across Australia, the Americas, Asia, Europe and Africa. Prior to
joining Liontown, he held senior executive roles with two of the
world’s largest mining companies, BHP and Rio Tinto, establishing a
successful track record in Operations, M&A, project delivery and business
transformation programs, most recently as Group Performance and
Improvement Officer with BHP Limited.
Interests in shares, options and service
rights at the date of this report:
Nil ordinary shares
1,624,692 ordinary shares
5,000,000 unlisted options
2,500,000 unlisted Sign-on performance rights
393,866 unlisted STI performance rights
1,181,600 unlisted LTI performance rights
Special responsibilities:
Directorships held in other listed entities
in the last three years:
None
None
Mr David R Richards
Technical Director
Qualifications:
Experience:
21 | D I R E C T O R S ’ R EP O R T
BSc (Hons), MAIG
Mr Richards has over 40 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. On 5 May 2021, he transitioned from Managing Director
and to Technical Director.
Interests in shares, options and service
rights at the date of this report:
22,661,067 ordinary shares
Special responsibilities:
None
Directorships held in other listed entities
in the last three years:
Mr Richards is a Non-Executive Director of Woomera Mining Limited
Mr Anthony J Cipriano
Independent Non-Executive Director
Qualifications:
Experience:
B.Bus, CA, GAICD
Mr Cipriano is a Chartered Accountant with over 30 years’ accounting,
corporate and finance experience. Mr Cipriano was formerly a senior
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 in
the resource sector, and in particular dealing with corporate, legal and
financial matters. Mr Cipriano was appointed as a Non-Executive Director
on 1 July 2014.
Interests in shares, options and service
rights at the date of this report:
18,531,343 ordinary shares
1,000,000 unlisted options
Special responsibilities:
Chairman of the Audit Committee, Chairman of the Remuneration
Committee.
Directorships held in other listed entities
in the last three years:
None
Mr Russell C (Craig) Williams
Independent Non-Executive Director
Qualifications:
Experience:
BSc (Hons)
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, Mr Williams also has extensive corporate
management and financing experience. Mr Williams was appointed as a
Non-Executive Director on 14 November 2006.
Interests in shares, options and service
rights at the date of this report:
29,767,343 ordinary shares
1,000,000 unlisted options
Special responsibilities:
Member of the Audit Committee, Member of the Remuneration Committee.
Directorships held in other listed entities
in the last three years:
Mr Williams is currently Chairman of OreCorp Limited.
Mr Steven J M Chadwick
Independent Non-Executive Director
Qualifications:
Experience:
22 | D I R E C T O R S ’ R EP O R T
BAppSc, AusIMM
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 was appointed as a Non-Executive Director on 10 January 2019.
Interests in shares, options and service
rights at the date of this report:
10,047,636 ordinary shares
Special responsibilities:
None
Directorships held in other listed entities
in the last three years:
Mr Chadwick is a Non-Executive Director of Lycopodium Limited and was
previously an Executive Director of Quantum Graphite Limited (resigned 30
November 2020).
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:
Mr Clinton W McGhie (appointed 5 May 2021)
Qualifications:
Experience:
B.Com, CA, AGIA
Mr McGhie is an experienced Chartered Accountant and Company
Secretary who commenced his career at a large international accounting
firm and has since been involved with a number of ASX and AIM listed
exploration and development companies operating in the resources sector,
including Salt Lake Potash Limited, Berkeley Energia Limited and Sovereign
Metals Limited. Mr McGhie is a Fellow of the Governance Institute of
Australia (Chartered Secretary), and a Fellow of the Financial Services
Institute of Australasia.
Mr C E Hasson resigned as Company Secretary on 6 May 2021.
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:
Directors’
Meetings
Audit
Committee
Risk
Committee(1)
Remuneration
Committee
Nomination
Committee(1)
No. of meetings
held:
No. of meetings
attended:
T R B Goyder
T Ottaviano (2)
D R Richards
C R Williams
A J Cipriano
S J M Chadwick
9
9
1
9
9
9
9
2
-
-
-
2
2
-
-
-
-
-
-
-
-
3
3
-
-
3
3
-
-
-
-
-
-
-
-
(1) Given the current size and composition of the Board, the Company has not established a separate risk 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.
(2) Appointed as Managing Director on 5 May 2021 and was only eligible to attend one meeting.
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
The Directors present the Operating and Financial Review of the Group for the year ended 30 June 2021. The information
provided in this review forms part of the Director’s Report and provides information to assist users in assessing the
operations, financial position and business strategies of the Group.
23 | D I R E CT O R S ’ R EP O R T
OPERATING PERFORMANCE
Kathleen Valley Lithium & Tantalum Project:
An Updated Pre-Feasibility Study (PFS), which builds on the previous study completed in December 2019, confirmed the
technical and financial viability of a standalone 2Mtpa mining and processing operation.
A Downstream Scoping Study (DSS) leveraging off the PFS demonstrated the significant financial upside of an integrated
mining, processing and refining operation based on the production of lithium hydroxide (LHM) or lithium sulphate (LSM) using
SC6.0 from Kathleen Valley as feedstock.
Following the positive results from the PFS, Liontown commenced a Definitive Feasibility Study (DFS) focussed on SC6.0
production which is due for completion in Q4 2021. As part of the DFS, the Company investigated, and continues to
investigate, a number of opportunities to enhance the financial metrics of the Project including Downstream Testwork and
optimising mine scheduling and processing.
Buldania Lithium Project
Soil sampling undertaken during the year defined extensive, high-order anomalism for lithium and related metals adjacent to
the existing Anna lithium deposit, highlighting a pipeline of exploration and growth opportunities in the area. Subsequent to
year end a drilling program commenced designed to test the future resource potential of the broader area.
Moora and Koojan JV Gold-PGE*- Nickel-Copper Projects
The Moora Project and Koojan JV Projects, which are in the Julimar Region of southwest W.A., will form the cornerstone of
Minerals 260 Limited – a new gold-PGE*-nickel-copper focused exploration company, proposed to be demerged from
Liontown (Liontown shareholder approval obtained on 22 September 2021) and then as part on an Initial Public Offering
(IPO) scheduled to be listed on the ASX in Q4 2021.
Maiden drilling at the Moora Project intersected gold plus a number of other significant intersections confirming potential for
an economic discovery.
Initial geochemical sampling on previously unexplored Koojan JV Project defined multiple high order gold and/or PGE
anomalies.
*PGE: Platinum Group Elements - palladium and platinum
Corporate
In May 2021 Senior mining executive Antonino Ottaviano commenced as Chief Executive Officer and Managing Director.
During the year, Liontown successfully raised $12.5 million via a placement of 54,347,826 fully ordinary shares at an issue
price of $0.23 per share. In addition, subsequent to year end, $52 million was raised via a placement of 68,420,000 fully
ordinary shares at an issue price of $0.76 per share. The proceeds have been and will continue to be used to advance
activities at Liontown’s projects.
In July 2020 Liontown received A$1.5 million (receivable at 30 June 2020), for the sale of the Bynoe Lithium Project in the
Northern Territory (see LTR: ASX release 14th September 2017).
During the year, Liontown received 40,000,000 ordinary Shares in Lachlan Star Resources (LSA) along with a 1% net
smelter return (NSR) for all minerals produced by LSA for the sale of the Killaloe Gold Project in Western Australia (see
LSA: ASX release 9 April 2021 and LTR: ASX release 27 January 2021).
RESPONSE TO COVID
Due to the impact of COVID-19, Liontown continued to assess its strategic objectives and funding position to ensure that it
can continue to maintain the development momentum at Kathleen Valley and other projects.
In line with its commitments to safeguard the health and well-being of its employees and contractors, Liontown introduced
company-wide protocols consistent with the ongoing advice from the Government and health authorities. Liontown continues
to monitor the advice to ensure its protocols remain relevant.
FINANCIAL PERFORMANCE
The Group reported a net loss from continuing operations of $10.6 million for the year compared to the net loss of $12.8
million in 2020. Exploration and evaluation expenditure decreased by $4.1 million.
STATEMENT OF CASHFLOWS
Cash and cash equivalents as at 30 June 2021 were $12.5 million (2020: $5.3 million). The net increase in cash of $7.2
million is primarily due to proceeds of $12.5 million received from a placement of 54,347,826 fully ordinary shares, combined
with a decrease in exploration and evaluation expenditure payments and final receipt of $1.5m from the sale of the Bynoe
Lithium Project.
24 | D I R E C T O R S ’ R EP O R T
FINANCIAL POSITION
At balance date the group had net assets of $13.5 million (2020: net assets of $6.5 million), and an excess of current assets
over current liabilities of $11.0 million (2020: excess of current assets over current liabilities of $6.3 million).
Current assets increased by 83% from $7.0 million as at 30 June 2020 to $12.8 million at 30 June 2021 due to an increase
in cash from proceeds of capital raisings offset by a decrease in receivables largely due to the $1.5 million now received
from Core Lithium. Current liabilities increased by 151% from $0.7 million at 30 June 2020 to $1.9 million at 30 June 2021
primarily due to an increase in trade payables, which have also increased by $1.1 million.
Outlook
The rising demand in the global market for lithium-ion batteries continues with consensus forecasts predicting exponential
growth in battery demand driven by high environmental targets and incentivised transition to electric vehicles. Liontown is
well-positioned to become a significant source of lithium supply and has accelerated the Kathleen Valley Project
development timeline to take advantage of the rapid upturn in the lithium market and expected deficit in supply.
The Company’s primary objectives in the coming year at Kathleen Valley are the:
•
•
•
•
•
•
Completion of a Definitive Feasibility Study in Q4 2021;
Optimising mine planning and processing to ensure maximum economic benefits;
Further progress Downstream Studies;
Advancing commercial offtake and funding arrangements;
Final Investment Decision; and
Committing to longer lead items and processes as soon as possible to enable production to begin within 3 years.
Consistent with it its corporate strategy to focus on battery metals, the Company will also continue to advance the Buldania
Lithium Project in southeast Western Australia where new drill targets have been defined with the potential to expand the
current resource base.
Exploration during the year confirmed the potential for the Moora and Koojan JV Projects located in the Julimar region of
southwest Western Australia to host economic precious and base metal mineralisation. Given the Company’s focus of its
advanced lithium projects, Liontown has decided to demerge its non-lithium assets into a new Company – Minerals 260
Limited – and together with an IPO seek a separate listing on the ASX. This will enhance the potential for Liontown
shareholders to receive maximum value from the current non-lithium asset portfolio while ensuring adequate resourcing and
prioritisation is directed towards the Moora and Koojan JV Projects.
Liontown is also strongly committed to maintaining high ESG standards with a focus on returning a positive financial outcome
while:
•
•
•
Minimising carbon emissions, water usage and land disturbance;
Engaging meaningfully with the Traditional Owners and other local stakeholders; and
Ensuring corporate governance is consistent with industry best practices.
The Company’s Climate strategy is expected to be announced prior to a Final Investment Decision (FID) for the Kathleen
Valley development.
6.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes to the state of affairs other than those 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
On 5 July 2021, the Company announced new exploration targets at the Buldania project following soil sampling which
defined extensive, high-order anomalisms for lithium (and related metals) adjacent to the existing Anna lithium deposit.
On 14 July 2021 the Company announced the issue 68,420,000 ordinary shares at $0.76 to raise $52 million to fund
accelerated development of the Kathleen Valley Project, strategies to optimise operating and capital costs, advancement of
downstream strategy, further exploration and drilling at Buldania and general working capital.
25 | D I R E C T O R S ’ R EP O R T
On 14 July 2021, the Company announced that a second phase of geochemical sampling at the Koojan JV had confirmed
previously identified PGE and gold anomalies and also defined a number of new targets. These latest results will optimize
planning of ground geophysical surveys designed to prioritise targets for drill testing.
On 31 July 2021, the Company entered into a royalty termination agreement with Ramelius Resources for payment of
$30.25m cash to terminate the Kathleen Valley Royalty held by Ramelius. The termination of the royally will further enhance
the Project’s future operating costs.
On 10 August 2021, the Company announced that it completed the transaction with Lachlan Star (ASX: LSA) which gives
the Company the right to acquire 51% interest in the Koojan Project. The Company can acquire 51% equity in the Koojan
Project by spending $4m on exploration within 5 years with a minimum commitment of $500,000 before having the right to
withdraw.
On 19 August 2021, the Company announced that, subject to conditions precedent, it will Demerge its subsidiaries Minerals
260 Ltd and ERL Pty Ltd from the Company via an in-specie distribution (Demerger). These subsidiaries currently hold
100% of the Moora Gold-Nickel-Copper-PGE Project, an option to earn a 51% interest in the Koojan Gold-Nickel-Copper-
PGE Project, the Dingo Rocks Project and tenement applications at Yalwest. On 19 August 2021, a prospectus was lodged
with ASIC in relation to the proposed IPO of Minerals 260 (following its Demerger), seeking to raise a minimum of
$15,000,000 and a maximum of $30,000,000. On 22 September 2021, shareholder approval was obtained to proceed with
the Demerger. The proposed transactions are planned to be completed in October 2021.
No other matters or circumstances have arisen since 30 June 2021 that have significantly affected, or may significantly
affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future
financial years.
9.
LIKELY DEVELOPMENTS
There are no likely developments that will impact on the Company other than as disclosed elsewhere in this report.
10.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, the Company paid a premium under a contract insuring all Directors and Officers of the Company
against liability incurred in that capacity. Disclosure of the nature of liabilities insured and the premium is subject to a
confidentiality clause under the contract of insurance.
11. PROCEEDINGS ON BEHALF OF 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.
12. ENVIRONMENTAL REGULATIONS
The Company is subject to material environmental regulation in respect to its exploration and evaluation 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.
13. NON-AUDIT SERVICES
During the year HLB Mann Judd, the Company’s auditor, other than review of ASX Quarterly 5B announcements, performed
no other services in addition to their statutory audit duties.
14. OPTIONS, SERVICE AND PERFORMANCE RIGHTS GRANTED OVER UNISSUED
SHARES
(a) Options
At the date of this report 12,333,334 fully paid ordinary shares of the Company are under option on the following terms and
conditions:
Exercisable at $0.1122 each on or before 16 March 2023
Exercisable at $0.15 each on or before 4 June 2023
Exercisable at $0.30 each on or before 25 November 2023
Exercisable at $0.54 each on or before 9 February 2023
26 | D I R E C T O R S ’ R EP O R T
Number
3,333,334
2,000,000
2,000,000
2,500,000
Exercisable at $0.58 each on or before 9 February 2024
Total Options
(b) Performance Rights
Number
2,500,000
12,333,334
At the date of this report 6,386,948 fully paid ordinary shares of the Company are under performance rights on the following
terms and conditions:
Sign on Performance Rights Expire on 1 July 2023, with a nil exercise price
Sign on Performance Rights Expire on 1 July 2024, with a nil exercise price
Short Term Incentive Performance Rights Expire 30 June 2023, nil exercise price
Long Term Incentive Performance Rights Expire 30 June 2025, nil exercise price
Total Performance Rights
(c) Service Rights
At the date of this report, Nil service rights were on issue.
15. REMUNERATION REPORT - AUDITED
(a) Introduction
Number
1,250,000
1,250,000
971,736
2,915,212
6,386,948
This remuneration report for the year ended 30 June 2021 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. KMP’s during or since year end were:
(i) Directors
•
•
•
•
•
•
T Goyder (Chairman)
T Ottaviano (CEO and Managing Director - appointed CEO on 1 May 2021 and Managing Director on 5 May 2021)
D Richards (Technical Director)
C Williams (Non-executive Director)
A Cipriano (Non-executive Director)
S Chadwick (Non-executive Director)
(ii) Executives
•
•
•
A Smits (COO)
C Hasson (CFO)
C McGhie (Company Secretary) (appointed 5 May 2021)
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 calibre 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 Remuneration Committee consists of Mr Cipriano (Chairman), Mr Goyder and Mr Williams (all Non-Executive Directors).
Prior to this date, the Board performed the role of the Remuneration Committee. The Remuneration Committee is
27 | D I R E C T O R S ’ R EP O R T
responsible for determining and reviewing compensation arrangements for the Directors, the Managing Director, and any
Executives.
Details of the Remuneration Committees Charter can be found at the Company’s website www.ltresources.com.au.
Use of Remuneration consultants
To ensure the Remuneration committee is fully informed when making remuneration decisions, the Remuneration
Committee may seek external advice, as it requires, on remuneration policies and practices. Remuneration consultants can
be engaged by, and report directly to, the Committee. In selecting remuneration consultants, the committee would consider
potential conflicts of interest and independence from the Group’s KMP and other executives. Given the recent growth in the
company, the Remuneration Committee has sought some advice from external consultants in relation to remuneration
benchmarking for Executives and Non-executive directors as well as the structure and design of incentive based
remuneration. This did not involve providing the Remuneration Committee with any remuneration recommendations as
defined by the Corporations Act 2001. As a result, the Remuneration committee recommended changes as to the quantum
and structure of KMP remuneration which become effective in May 2021.
Remuneration Report approval at 2020 Annual General Meeting
The Remuneration Report for the financial year ended 30 June 2020 received positive shareholder support at the 2020
Annual General Meeting with a vote of 99.84% in favour.
(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 calibre, 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. Given the current stage of development of the company’s operations and planned future direction
the Board will seek to increase the non-executive pool at the 2021 AGM.
The remuneration of non-executive directors consists of directors’ fees, consulting fees (where applicable) and an
entitlement to an additional fee of $5,475 (inclusive of superannuation) per annum for members of the Audit Committee to
recognise additional time commitment required for the Audit Committee. The members of the Remuneration Committee do
not receive any additional fees.
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 approvals required by shareholders.
The Board considers it may be appropriate to issue options to Non-Executive Directors given the current nature 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.
Use of Non-Executive Directors as consultants
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 $49,000 (30 June 2020: $47,600).
During the year, Mr Cipriano received fees for his consultancy services of $87,500 (30 June 2020: $Nil).
No fees were paid to other Non-Executive Directors under consultancy services agreements.
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).
2 8 | D I R E C T O R S ’ R E P O R T
Fixed remuneration
Fixed remuneration is reviewed on an annual basis by the Remuneration Committee and 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
Variable remuneration is reviewed on an annual basis by the Remuneration Committee and 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.
Short-term incentive schemes
The Company may issue equity securities (i.e., options, service rights 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 last approved by Shareholders at the
2018 AGM.
Under the Scheme, the Company can issue either share options or rights, and generally, the Company believes that the
issue of share options or rights in the Company aligns the interests of Directors, employees and shareholders alike. In
addition to vesting service periods, performance hurdles are set on performance rights issued to Executives in certain
circumstances. No performance hurdles are set on options issued to executives, other than vesting service periods in certain
circumstances, 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 performance rights will vest to the extent the Board, using its discretion, determines that the short-term incentive
criteria have been satisfied.
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 based payments when they consider these to be warranted. There were no
bonuses paid to or received by executives in the years ended 30 June 2021 and 30 June 2020.
Long-term incentive Schemes
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 last approved by Shareholders at the 2018 AGM.
Under the Scheme, the Company can issue either share options or rights, and generally, the Company believes that the
issue of share options or rights in the Company aligns the interests of Directors, employees and shareholders alike. In
addition to vesting service periods, performance hurdles are set on performance rights issued to executives in certain
circumstances.
Long-term performance rights will vest to the extent the Board, using its sole discretion, determines that the long-term
incentive criteria have been satisfied.
Service Rights
During the year service rights were issued to certain KMP in lieu of the payment of a portion of the cash salary or fees
otherwise payable. Service rights were used as a measure to conserve cash in light of the COVID-19 pandemic. Service
rights vested at the end of relevant quarter.
Link between performance and executive remuneration
The focus of executive remuneration over the financial year was fixed remuneration, options and performance rights 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 performance over the last 5 years is as follows:
Share price ($)
Market
Capitalisation ($)
30 June 2017
30 June 2018
30 June 2019
30 June 2020
30 June 2021
0.009
0.028
0.100
0.105
0.850
8,913,066
30,911,649
153,288,520
179,684,946
1,382,523,586
29 | D I R E C T O R S ’ R E P O R T
s
e
e
f
y
c
n
a
t
l
u
s
n
o
C
$
s
e
e
f
&
y
r
a
l
a
S
$
34,589
87,519
249,354
9,278
-
-
-
-
(e) Remuneration of Key Management Personnel
The table below shows the fixed and variable remuneration for key management personnel.
2021
Short-term benefits
Post-
employment
benefits
Long term incentives
i
s
t
h
g
R
e
c
i
v
r
e
S
$
)
2
(
s
t
n
u
o
m
a
r
e
h
t
O
$
e
c
n
a
m
r
o
f
r
e
P
)
9
(
s
t
h
g
R
i
$
n
o
i
t
a
u
n
n
a
r
e
p
u
S
$
e
c
n
a
m
r
o
f
r
e
P
)
9
(
s
t
h
g
R
i
$
)
3
(
s
n
o
i
t
p
O
$
d
e
s
a
b
e
c
n
a
m
r
o
f
r
e
p
f
o
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
%
l
a
t
o
T
$
Directors
T Goyder
T Ottaviano(7)
D Richards
C Williams
A Cipriano(8)
S Chadwick(1)
Executives
A Smits(4)
C Hasson(5)
C McGhie(7)
Total
133,015
6,636
-
3,286
-
-
177,526
-
10,193
19,493
8,314
709,207
126,223
960,949
31,031
35,949
35,677
6,636
9,278
87,500
35,677
6,636
8,789
49,000
30,867
6,636
-
-
-
-
21,063
-
881
881
154,862
154,862
-
193,577
-
-
-
-
337,397
207,334
294,834
288,869
207,801
198,451
44,551
-
-
-
58,871
35,226
32,379
16,833
-
4,841
8,814
6,645
6,495
19,741
202,143
9,434
542,030
18,853
160,280
7,112
440,553
4,232
-
6,951
67,070
849,610
136,500
357,517
129,586
41,447
77,251
1,574,931
149,720
3,316,562
-
89
-
75
53
67
41
40
20
-
2020
Short-term benefits
Post-
employment
benefits
Long term
incentives
s
e
e
f
y
c
n
a
t
l
u
s
n
o
C
$
s
e
e
f
&
y
r
a
l
a
S
$
i
s
t
h
g
R
e
c
i
v
r
e
S
$
)
2
(
s
t
n
u
o
m
a
r
e
h
t
O
$
103,767
243,150
27,832
27,832
-
-
-
-
49,402
3,381
44,022 15,317
13,251
3,381
13,251
3,381
26,368
47,000
11,464
3,381
50,000
12,235
-
-
-
-
40,807 41,936
10,016
398
-
3,141
n
o
i
t
a
u
n
n
a
r
e
p
u
S
$
9,858
23,099
2,644
2,644
-
4,750
1,162
-
)
3
(
s
n
o
i
t
p
O
$
l
a
t
o
T
$
138,021
304,429
230,034
555,622
92,014
92,014
92,014
139,122
139,122
180,227
239,916
377,409
13,694
84,027
37,505
87,168
491,184
47,000
182,213 74,316
44,157
981,734
1,820,604
Directors
T Goyder
D Richards
C Williams
A Cipriano
S Chadwick(1)
Executives
A Smits(4)
C Hasson(5)
R Hacker(6)
Total
d
e
s
a
b
e
c
n
a
m
r
o
f
r
e
p
f
o
n
o
i
t
r
o
p
o
r
P
n
o
i
t
a
r
e
n
u
m
e
r
%
45
41
66
66
51
64
37
96
-
3 0 | D I R E C T O R S ’ R E P O R T
(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. Either party may terminate the agreement by providing one months’
notice.
(2) Other amounts, where applicable, includes the cost to the Company of providing time off in lieu, annual leave, long service leave, fringe benefits and the
attributable non-cash benefit applied by virtue of the Company’s Directors and Officers Liability policy.
(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) Mr Smits commenced as COO on 16 March 2020.
(5) Mr Hasson commenced as CFO on 4 June 2020.
(6) Mr Hacker did not receive any salary and wages for the 2020 financial year as Mr Hacker is remunerated by Chalice Mining Limited and his services are
recovered through a corporate services agreement between the Company and Chalice Mining Limited. Mr Hacker ceased as CFO on 4 June 2020.
(7) Mr Ottaviano commenced as CEO on 1 May 2021 and Managing Director on 5 May 2021 and Mr McGhie was appointed Company Secretary on 5 May 2021.
(8) Mr Cipriano entered into a consultancy agreement with the Company to provide corporate , financial advisory and general support services through a
consultancy agreement (as disclosed to ASX on 12 May 2021). Amounts are billed on normal market rates for such consultancy services are were due and
payable under normal payment terms. Either party may terminate the agreement by providing one months’ notice.
(9) The fair value of performance rights was calculated by an Independent expert and allocated to each reporting period starting from the grant date to vesting
date.
(f) Key Management Personnel Shareholdings
The relevant interest of each of the key management personnel in the share capital of the Company was:
Balance
1 July 2020
No. shares
Held at
commencement
date (5)
No. shares
On
exercise
of options
No.
shares
Net
Acquisitions/
(Disposals) (1)
No. shares
On exercise
of Service
Rights
No. Shares
Balance
30 June
2021
No. shares
Directors
T Goyder
T Ottaviano (5)
D Richards
C Williams
A Cipriano
309,188,646
-
5,367,800
21,964,080
10,477,908
S Chadwick
8,100,328
Executives
A Smits
C Hasson
C McGhie (5)
40,000
100,000
-
-
-
-
-
-
-
-
-
-
3,000,000
15,195,652
1,131,287
328,515,585
-
-
-
-
15,000,000
(1,256,522)
714,789
19,826,067
7,500,000
5,500,000
2,000,000
-
303,435
29,767,515
250,000
303,435
16,531,343
434,783
262,525
10,797,636
-
-
-
-
732,963
(250,000)
386,126
-
-
772,963
236,126
-
Balance
1 July 2019
No. shares
Held at
commencement
date (2)(3)(4)
No. shares
On
exercise
of options
No. shares
Net
Acquisitions/
(Disposals) (1)
No. shares
Held at
resignation
date (4)
No. shares
Balance
30 June 2020
No. shares
Directors
T Goyder
281,421,980
D Richards
5,117,800
C Williams
A Cipriano
S Chadwick
Executives
A Smits (2)
C Hasson (3)
R Hacker (4)
20,095,747
9,144,575
6,766,995
-
-
6,250,000
-
-
-
-
-
40,000
100,000
-
10,000,000
17,766,666
250,000
1,868,333
1,333,333
1,333,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
309,188,646
5,367,800
21,964,080
10,477,908
8,100,328
40,000
100,000
-
(871,893)
5,378,107
(1) Acquisitions/ Disposals 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.
(2) Mr Smits commenced as COO on 16 March 2020.
(3) Mr Hasson commenced as CFO on 4 June 2020.
(4) Mr Hacker ceased as CFO on 4 June 2020.
(5) Mr Ottaviano was appointed CEO on 1 May 2021 and Managing Director on 5 May 2021 and Mr McGhie was appointed Company Secretary on 5 May 2021.
3 1 | D I R E C T O R S ’ R E P O R T
(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”).
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 expiry will lapse on the expiry date.
During the reporting period, 10,750,000 options were granted to Directors and other KMP and those options have been
valued using the Black-Scholes option valuation method. The following table lists the inputs to the model:
Option class:
Grant date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of options
(years)
Exercise price
Grant date share price
Expiry date
Number
Fair value at grant date
Director
O20
Executive
O21
Executive
O22
Executive
O23
25 November 2020
10 February 2021
10 February 2021
10 February 2021
Nil
93%
0.11%
3
$0.30
$0.275
Nil
98%
0.09%
2
$0.50
$0.410
Nil
98%
0.09%
2
$0.54
$0.410
Nil
98%
0.10%
3
$0.58
$0.410
25 November 2023
9 February 2023
9 February 2023
9 February 2024
3,250,000
$0.155
2,500,000
$0.189
2,500,000
$0.181
2,500,000
$0.218
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 the number of options held by each KMP during the year:
t
n
e
m
e
c
n
e
m
m
o
c
.
o
N
t
a
d
l
e
H
e
t
a
d
n
o
i
t
a
r
e
n
u
m
e
r
s
a
d
e
t
n
a
r
G
.
o
N
0
2
0
2
y
l
u
J
1
e
c
n
a
l
a
B
.
o
N
e
t
a
d
t
n
a
r
G
.
o
N
f
o
e
t
a
d
t
a
d
l
e
H
n
o
i
t
a
n
g
i
s
e
r
.
o
N
1
2
0
2
e
n
u
J
0
3
e
c
n
a
l
a
B
.
o
N
d
e
t
s
e
V
%
d
e
s
i
c
r
e
x
E
s
n
o
i
t
p
O
.
o
N
2021
Directors
T Goyder
T Ottaviano (4)
3,000,000
N/A
D Richards
20,000,000
C Williams
A Cipriano
7,500,000
7,500,000
S Chadwick
2,000,000
Executives
A Smits(1)
C Hasson(2)
C McGhie(4)
10,000,000
4,000,000
N/A
-
-
-
-
-
-
-
-
-
-
-
(3,000,000)
7,500,000
10/2/2021
-
-
-
(15,000,000)
1,000,000
25/11/2020
(7,500,000)
1,000,000
25/11/2020
(5,500,000)
1,250,000
25/11/2020
(2,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,500,000
5,000,000
1,000,000
3,000,000
1,250,000
10,000,000
4,000,000
-
33%
100%
100%
100%
100%
67%
58%
-
3 2 | D I R E C T O R S ’ R E P O R T
2020
9
1
0
2
y
u
J
l
1
e
c
n
a
l
a
B
.
o
N
Directors
T Goyder
10,000,000
D Richards
15,000,000
C Williams
5,500,000
A Cipriano
5,500,000
t
n
e
m
e
c
n
e
m
m
o
c
.
o
N
t
a
d
e
H
l
e
t
a
d
-
-
-
-
n
o
i
t
a
r
e
n
u
m
e
r
s
a
d
e
t
n
a
r
G
.
o
N
e
t
a
D
t
n
a
r
G
.
o
N
i
d
e
s
c
r
e
x
E
s
n
o
i
t
p
O
.
o
N
f
o
e
t
a
d
t
a
d
e
H
l
n
o
i
t
a
n
g
s
e
r
i
.
o
N
0
2
0
2
e
n
u
J
0
3
e
c
n
a
l
a
B
.
o
N
d
e
t
s
e
V
%
3,000,000 27/11/2019
(10,000,000)
-
3,000,000 100%
5,000,000 27/11/2019
2,000,000 27/11/2019
2,000,000 27/11/2019
S Chadwick
Executives
A Smits(1)
C Hasson(2)
R Hacker(3)
-
-
-
-
2,000,000 27/11/2019
- 10,000,000 16/03/2020
2,000,000
2,000,000
5/06/2020
6,000,000
-
2,000,000 27/09/2019
-
-
-
-
-
-
-
- 20,000,000 100%
-
-
-
7,500,000 100%
7,500,000 100%
2,000,000 100%
- 10,000,000
33%
-
4,000,000
0%
8,000,000
n/a
75%
(1) Mr Smits commenced as COO on 16 March 2020.
(2) Mr Hasson commenced as CFO on 4 June 2020.
(3) Mr Hacker ceased as CFO on 4 June 2020.
(4) Mr Ottaviano was appointed CEO on 1 May 2021 and Managing Director on 5 May 2021 and Mr McGhie was appointed Company Secretary on 5 May 2021.
Service Rights
During the year service rights were issued to the KMP listed below, in lieu of the payment of a portion of the cash salary or
fees otherwise payable. Service rights have been used as a measure to conserve cash in light of the COVID-19 pandemic.
Service rights vest at the end of the quarter in which they are issued. The fair value of the service rights granted has been
determined using the share price at the grant date.
The below table shows a reconciliation of the number of service rights held by each KMP during the year:
2021
Directors
T Goyder
T Ottaviano(4)
D Richards
C Williams
A Cipriano
S Chadwick
Executives
A Smits(1)
C Hasson(2)
C McGhie(4)
2020
Directors
T Goyder
D Richards
C Williams
Balance
1 July 2020
Held at
commencement
date
Granted as
remuneration
Service Rights
Exercised
Balance
30 June 2021
470,497
-
419,255
126,197
126,197
109,183
340,062
170,031
Balance
1 July 2019
-
-
-
-
-
-
-
-
-
-
-
-
-
660,790
(1,131,287)
-
295,534
177,238
177,238
153,342
392,901
216,095
-
-
(714,789)
(303,435)
(303,435)
(262,525)
(732,963)
(386,126)
-
-
-
-
-
-
-
-
-
-
Held at
commencement
date
Granted as
remuneration
Service Rights
Exercised
Balance
30 June 2020
-
-
-
470,497
419,255
126,197
-
-
-
470,497
419,255
126,197
3 3 | D I R E C T O R S ’ R E P O R T
2020
A Cipriano
S Chadwick
Executives
A Smits(1)
C Hasson(2)
R Hacker(3)
Balance
1 July 2019
Held at
commencement
date
Granted as
remuneration
Service Rights
Exercised
Balance
30 June 2020
-
-
-
-
-
-
-
-
170,031
-
126,197
109,183
340,062
-
-
-
-
-
-
-
126,197
109,183
340,062
170,031
-
(1) Mr Smits commenced as COO on 16 March 2020.
(2) Mr Hasson commenced as CFO on 4 June 2020.
(3) Mr Hacker ceased as CFO on 4 June 2020.
(4) Mr Ottaviano was appointed CEO on 1 May 2021 and Managing Director on 5 May 2021 and Mr McGhie was appointed Company Secretary on 5 May 2021
(h) Performance Rights
During the year, 2,500,000 sign-on performance rights (vesting subject only to remaining employed at vesting date), 971,736
STI performance rights and 2,915,212 LTI performance rights were issued to the KMP listed below, and other executives.
As at 30 June 2021, the 6,386,948 performance rights were on issue to certain directors and employees with certain
objectives required to be met (including both market, non-market based and employment status) in order to vest, at the
discretion of the Board, have expiry dates as listed below and a nil exercise price.
STI and LTI Opportunities as a Percentage of FAR
CEO
COO
Other Executive KMP
From 1 May 2021
Total STI and LTI
% of FAR
STI
% of FAR
100%
80%
70%
25%
20%
17.5%
LTI
% of FAR
75%
60%
52.5%
FAR: Fixed Annual Remuneration consisting of base salary plus superannuation.
In valuing the performance rights, the company engaged an Independent expert to determine the fair value of these rights
at grant date. The determining non-market criteria are listed below, probabilities were applied to meeting these criteria. The
Board monitors the relative STI and LTI criteria relative to KMP and other executives’ performance in determining the
ongoing probability of what portion of LTI and STI are expected to vest.
Refer to the below table for the inputs to the Black Scholes option-pricing model for performance rights granted during the
year:
Grant date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of options
(years)
Exercise price
Grant date share price
Expiry date
Number
Fair value at grant date
Sign on
Performance
Rights - Tranche 1
Sign on
Performance Rights
- Tranche 2
STI Performance
Rights
LTI Performance
Rights
4 May 2021
4 May 2021
4 May 2021
4 May 2021
Nil
90%
0.080%
2.16
Nil
$0.400
1 July 2023
1,250,000
$0.400
Nil
90%
0.080%
3.16
Nil
$0.400
Nil
90%
0.080%
2.16
Nil
$0.400
Nil
90%
0.105%
4.16
Nil
$0.400
1 July 2024
1,250,000
30 June 2023
30 June 2025
971,736
2,915,212
$0.400
$0.218 -$0.400
$0.264 - $0.400
All performance rights, once vested have a nil exercise price. All performance rights that do not vest will lapse. Where a
holder of performance rights ceases to be an employee of the group, any unvested performance rights will lapse, except in
limited circumstances that are approved by the Board on a case-by-case basis.
3 4 | D I R E C T O R S ’ R E P O R T
There are no participating rights or entitlements inherent in the performance rights and the holders will not be entitled to
participate in new issues of capital offered to shareholders during the currency of the performance rights. All shares allotted
upon the exercise of performance rights will rank pari passu in all respect with other shares.
The below table shows a reconciliation of the number of performance rights held by each KMP during the year:
i
d
e
s
c
r
e
x
E
s
t
h
g
R
i
e
c
n
a
l
a
B
0
2
0
2
y
u
J
l
1
t
a
d
e
H
l
t
n
e
m
e
c
n
e
m
m
o
c
e
t
a
d
s
a
d
e
t
n
a
r
G
–
n
o
i
t
a
r
e
n
u
m
e
r
s
t
h
g
i
r
n
o
n
g
S
i
s
a
d
e
t
n
a
r
G
-
n
o
i
t
a
r
e
n
u
m
e
R
I
T
S
s
a
d
e
t
n
a
r
G
I
T
L
-
n
o
i
t
a
r
e
n
u
m
e
r
e
c
n
a
m
r
o
f
r
e
P
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500,000
393,866
1,181,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
178,096
534,289
134,257
402,771
131,260
393,781
2021
Directors
T Goyder
T Ottaviano(1)
D Richards
C Williams
A Cipriano
S Chadwick
Executives
A Smits
C Hasson
C McGhie(1)
e
c
n
a
l
a
B
1
2
0
2
e
n
u
J
0
3
-
-
-
-
-
-
-
-
-
-
4,075,466
-
-
-
-
712,375
537,028
525,041
(1) Mr Ottaviano was appointed CEO on 1 May 2021 and Managing Director on 5 May 2021 and Mr McGhie was appointed Company Secretary on 5 May 2021
Short Term Rights Incentive Details – 1 May 2021 to 30 June 2022
Performance
Conditions
Category
ESG and H&S
Objectives
Performance Conditions will be assessed against Board criteria relating to:
(i) No material incidents resulting in loss of access or commercial delays
(ii) Zero fatalities
(iii) Lost time injury frequency rates
(iv) No material environmental incidents
(v) Mining Cooperation Agreements
In the event there is one or more breaches of assessed objectives, Board discretion
will be applied to reduce the allocation of any incentive commensurate with the
nature and severity of any breach.
Project Study
Advancements
(i) Kathleen Valley DFS against Board criteria
(ii) Advancement of Kathleen Valley Engineering and Design
(iii) ESG targets
Board discretion to be applied in allocating the incentive.
Commercial
Achievements
(i) Offtake arrangements
(ii) Downstream opportunities
(iii) Project funding
Board discretion to be applied in allocating the incentive.
Max
Percentage
Upon Vesting
15%
25%
35%
3 5 | D I R E C T O R S ’ R E P O R T
Total Shareholder Return (TSR) will be assessed on a both an Absolute and
Relative basis.
Absolute Total Shareholder Return (TSR) - 12.5% Allocation
Shareholder
Return
Milestones
•
•
•
0% allocation, if Absolute TSR <20%
Pro-rata allocation, if Absolute TSR between 20% - 50%
100%, allocation if Absolute TSR >50%
Relative Total Shareholder Return* (TSR) - 12.5% Allocation
•
•
•
Below 50th percentile, 0% allocation
Between 50th and 75th percentile, pro-rata allocation
At or above 75th percentile, 100% of allocation
TSR measurement period is between 1 May 2021 and 30 June 2022 using 20 day-
VWAP
*relative to a comparator group of 21 companies
Long-Term Rights Incentive Details – 1 May 2021 – 30 June 2024
Performance
Conditions
Category
ESG and
H&S
Milestones
Performance Conditions will be assessed against Board criteria relating to:
(i) Permits and licences for commencement of Kathleen Valley operation
(ii) Lost time injury frequency rates
(iii) ESG objectives
In the event there is one or more breaches of the stated objectives, the Board will
exercise its discretion to reduce the allocation of any incentive commensurate with
the nature and severity of any breach.
Strategic &
Commercial
Achievements
(i) Offtake arrangements
(ii) Downstream opportunities
(iii) Project funding
(iv) Project advancement
Board discretion to be applied in allocating this incentive.
Total Shareholder Return (TSR) will be assessed on both an Absolute and Relative
basis.
Absolute Total Shareholder Return (TSR) - 25% Allocation
Shareholder
Return
Milestones
•
•
•
0%, if Absolute TSR <50%
Pro-rata, if Absolute TSR between 50% - 100%
100% allocation, if Absolute TSR >100%
Relative Total Shareholder Return* (TSR) - 25% Allocation
•
•
•
Below 50th percentile, 0% allocation
Between 50th and 75th percentile, pro-rata, allocation
At or above 75th percentile, 100% of allocation
TSR measurement period is between 1 May 2021 and 30 June 2024 using 20 day-
VWAP.
*Relative to a comparator group of 21 companies.
25%
Max
Percentage
Upon Vesting
15%
35%
50%
Comparator Group
The Comparator Group of companies against which the TSR of Liontown (as at 1 May 2021) are to be measured against
are:
Company
Ticker
Company
AVZ Minerals Limited
ASX:AVZ
Core Lithium Limited
Critical Elements Lithium Corp
TSXV:CRE
European Lithium Limited
European Metal Holdings Limited
ASX:EMH
Galaxy Resources Limited
IGO Limited
Ioneer Limited
Lithium Australia NL
Neometals Limited
3 6 | D I R E C T O R S ’ R E P O R T
ASX:IGO
Infinity Lithium Corporation Limited
ASX:INR
Lepidico Limited
ASX:LIT
Mincor Resources Limited
ASX:NMT
Orocobre Limited
Ticker
ASX:CXO
ASX:EUR
ASX:GXY
ASX:INF
ASX:LPD
ASX:MCR
ASX:ORE
Piedmont Lithium Inc
ASX:PLL
Pilbara Minerals Limited
Prospect Resources Limited
ASX:PSC
Sayona Mining Limited
Sigma Lithium Resources Corp
TSXV:SGMA Syrah Resources Limited
ASX:PLS
ASX:SYA
ASX:SYR
Vulcan Energy Resources Limited
ASX:VUL
The Comparator Group of Companies will be reviewed on an annual basis.
Vesting of Rights and Expiry Dates
Sign-on Performance Rights
Sign-on performance rights will vest upon the following condition:
•
•
1,250,000 performance rights (expiring 1 July 2023) vest on continued employment of the CEO/Managing Director until
1 July 2022 for nil consideration; and
1,250,000 performance rights (expiring 1 July 2024) vest on continued employment of the CEO/Managing Director until
1 July 2023 for nil consideration.
STI Performance Rights
The 917,736 STI performance rights (expiring 30 June 2023) vest upon non-market conditions disclosed in the above tables
and upon board discretion for nil consideration.
LTI Performance Rights
The 2,915,212 LTI performance rights (expire 30 June 2025) vest upon non-market conditions disclosed in the above tables
and upon board discretion for nil consideration.
(i) Employment Contracts
Remuneration arrangements for KMP are generally formalised in employment agreements. Details of these contracts are
provided below.
Name and job title
T Ottaviano
Employment
contract duration
Unlimited
Notice period
Termination provisions
6 months by the Company
and employee
D Richards
A Smits
C Hasson
C McGhie
Unlimited
3 months by the Company
and employee
Unlimited
Unlimited
Unlimited
3 months by the Company
and employee
3 months by the Company
and employee
3 months by the Company
and employee
12 months in the event of a
change of control event
6 months in the event of a
material change
12 months in the event of a
change of control event
6 months in the event of a
material change
6 months in the event of a
material change
6 months in the event of a
material change
6 months in the event of a
material change
(j) 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 received database administrative services and field services from related parties to the Technical Director, Mr
Richards. These services are provided on arm’s length commercial terms. The total value of these services was $120,566
(2020: $159,751) and the amount unpaid as at 30 June 2021 was $1,552 (2020: $2,581).
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
3 7 | D I R E C T O R S ’ R E P O R T
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 incurred was $49,000 (2020: $47,000) and the amount unpaid as at 30 June 2021 was $19,000 (2020:$2,000).
Mr Cipriano provides corporate, financial advisory services and general support services to the Company through a
consultancy agreement (as disclosed to ASX on 12 May 2021). 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 $2,500 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 incurred was $87,500 (2020: nil) and the amount unpaid
as at 30 June 2021 was $22,500 (2020: nil).
The Group received accounting services from related party of the CFO, Mr Hasson. The total value of these services was
$5,160 (2020: 613) and the amount unpaid as at 30 June 2021 was nil (2020: nil).
This is the end of the audited information.
16. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 21 and forms part of the Directors’ Report for the year ended 30
June 2021.
17. 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 Company website at http://www.ltresources.com.au/corporate-governance.
This report is made with a resolution of the Directors:
Antonino Ottaviano
Managing Director
Dated at Perth the 29th day of September 2021
3 8 | D I R E C T O R S ’ R E P O R T
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 2021, 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
29 September 2021
D I Buckley
Partner
3 9 | A U D I T O R ’ S I N D EP E N D E N C E D E C L A R A T I O N
Financial Report
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Continuing operations
Revenue
Other income
Exploration and evaluation expenditure expensed
Corporate administrative expenses
Share based payments
Loss from continuing operations
Note
5(b)
5(e)
5(c)
8
2021
$
2020
$
-
600,000
(7,104,887)
(2,339,274)
(2,233,833)
(11,077,994)
538
1,500,000
(11,247,727)
(1,805,018)
(1,380,033)
(12,932,240)
Net financing income
5(f)
18,888
99,250
Loss before income tax
(11,059,106)
(12,832,990)
Income tax benefit
Net loss after tax
6
492,000
-
(10,567,106)
(12,832,990)
Other comprehensive loss Items that will not be reclassified to
profit or loss
Net gain on fair value of financial assets, net of tax
14
1,148,000
-
Total comprehensive loss for the year attributable to owners of
the Company
(9,419,106)
(12,832,990)
Earnings per share attributable to the owners of Liontown
Resources Limited
Basic and diluted loss per share (dollars per share)
7
($0.006)
($0.008)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the
accompanying notes.
4 1 | C O N S O L I D A T E D S T A T E M E N T O F P R O F I T OR LO S S A N D OT H E R C O M P R E H E N S I V E I N C O M E
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Financial assets
Property, plant and equipment
Right-of-use assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Lease liabilities
Total current liabilities
Non-current liabilities
Employee benefits
Lease liabilities
Total liabilities
Net assets
Equity
Share capital
Accumulated losses
Reserves
Total equity
, Note
2021
$
2020
$
9
10
10
11
12
12
13
14
12,545,059
285,847
12,830,906
5,257,849
1,773,070
7,030,919
2,316,813
180,977
60,946
2,558,736
76,812
123,146
109,703
309,661
15,389,642
7,340,580
1,628,902
192,914
48,933
1,870,749
4,999
26,619
31,618
553,101
148,980
43,076
745,157
1,512
74,237
75,749
1,902,367
820,906
13,487,275
6,519,674
77,922,263
(68,469,455)
4,034,467
13,487,275
63,219,270
(58,996,115)
2,296,519
6,519,674
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
4 2 | C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
-
-
-
-
-
-
(10,567,106)
1,148,000
(9,419,106)
14,152,874
2,233,833
-
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
Issued
capital
$
Accumulated
losses
$
Share
based
payments
reserve
$
Investment
revaluation
reserve
$
Foreign
currency
translation
reserve
$
Total equity
$
As at 1 July 2020
63,219,270
(58,996,115)
2,157,428
-
139,091
6,519,674
Loss for the period
Other Comprehensive
Income
Total comprehensive loss
for the year
-
-
-
(10,567,106)
-
(10,567,106)
-
-
-
-
1,148,000
1,148,000
Transactions with owners
in their capacity as
owners:
Issue of shares (net of costs) 14,152,874
Share-based payments
-
Transfer between equity
550,119
items
As at 30 June 2021
77,922,263
-
-
1,093,766
-
2,233,833
(1,643,885)
-
-
-
(68,469,455)
2,747,376
1,148,000
139,091
13,487,275
Issued
capital
$
Accumulated
losses
$
Share
based
payments
reserve
$
Investment
revaluation
reserve
$
Foreign
currency
translation
reserve
$
Total equity
$
As at 1 July 2019
45,228,551
(46,591,731)
1,206,001
Loss for the period
Total comprehensive loss
for the year
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 2020
-
-
(12,832,990)
(12,832,990)
-
-
17,990,719
-
-
-
-
428,606
-
1,380,033
(428,606)
63,219,270
(58,996,115)
2,157,428
-
-
-
-
-
-
139,091
(18,088)
-
-
(12,832,990)
(12,832,990)
-
-
-
17,990,719
1,380,033
-
139,091
6,519,674
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
4 3 | C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S IN E Q U I T Y
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
Cash flows from operating activities
Cash paid to suppliers and employees
Payments for exploration and evaluation
Interest received
Interest paid
Government Grants and Incentives
Acquisition of royalty rights
Net cash (used in) operating activities
Cash flows from investing activities
Proceeds from the sale of exploration and evaluation tenements
Payments for property, plant and equipment
Net cash (used in) / from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share application monies held on trust
Payment for share issue costs
Repayment of lease liabilities
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 the beginning of the financial year
Cash and cash equivalents at the end of the financial year
Note
2021
$
2020
$
(2,075,644)
(6,563,176)
27,165
(8,299)
389,089
-
(8,230,865)
(2,177,183)
(12,191,190)
107,820
(8,588)
362,864
(1,850,000)
(15,756,277)
1,500,000
(93,029)
1,406,971
-
(122,314)
(122,314)
14,772,000
-
(619,126)
(41,761)
-
14,111,113
7,287,219
(9)
5,257,849
12,545,059
18,900,250
(163,750)
(911,944)
(28,957)
(22,413)
17,773,186
1,894,595
(15)
3,363,269
5,257,849
9
9
The consolidated statement of cash flows to be read in conjunction with the accompanying notes.
4 4 | C O N S O L I D A T E D S T A T E M E N T O F C A S H FL O W S
CONTENTS OF THE NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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: Other income and expenses
Note 6: Income tax
Note 7: Loss per share
SHARE BASED PAYMENTS
Note 8: Share-based payments
ASSETS
Note 9: Cash and cash equivalents
Note 10: Trade and other receivables
EQUITY AND LIABILITIES
Note 11: Trade and other payables
Note 12: Employee benefits
Note 13: Capital and capital management
Note 14: Reserves
FINANCIAL INSTRUMENTS
Note 15: Financial instruments
GROUP COMPOSITION
Note 16: List of subsidiaries
Note 17: Parent entity information
OTHER INFORMATION
Note 18: Contingent assets and liabilities
Note 19: Remuneration of auditors
Note 20: Commitments
Note 21: Related party transactions
Note 22: Events occurring after the reporting period
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
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 Consolidated 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 2021 was authorised for issue
on 29 September 2021.
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 16 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 16.
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 where certain financial assets
and liabilities 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.
Any non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of
profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of
financial position respectively.
(b) Significant accounting judgements and key estimates
The preparation of a financial report requires management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying
4 6 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates.
Key estimates and assumptions may have a significant risk of causing a material adjustment to the carrying amounts of
certain assets and liabilities within the next annual reporting period.
Specific key estimates and assumptions are described in the relevant notes.
In preparing this report, the significant judgements made by management in applying the Group’s accounting policies and
the key sources of estimation uncertainty were the same as those that applied to the financial report for the year ended 30
June 2020, except for the impact of the new Standards and Interpretations effective 1 July 2020 as disclosed in note 3(e).
(c) Functional currency translation
The functional currency of the Company is Australian dollars and the functional currency of the controlled entity based in
Tanzania is United States dollars (US$). The presentation currency of the Group is Australian dollars.
Transactions in foreign currencies are translated to the Group’s functional currency at exchange rates at the date of the
transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency
spot rates of exchange at the reporting date. Foreign currency differences arising on retranslation are recognised in profit or
loss as incurred. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated at
exchange rates at the date of the initial transaction.
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.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign
operation is recognised in profit or loss.
(d) 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 consolidated statement of financial
position.
Cash flows are included in the consolidated 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.
(e) Adoption of new and revised Accounting Standards
In the year ended 30 June 2021, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current annual reporting period. It has been
determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the
Company.
Standards and Interpretations in issue not yet effective
In the year ended 30 June 2021, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company’s operations for future annual reporting periods. It has been determined
that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Company.
(f) Going concern
The financial report has been prepared on a going concern basis, which contemplates continuity of normal business activities
and the realisation of assets and settlements of liabilities in the ordinary course of business.
4 7 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
PERFORMANCE FOR THE YEAR
This section provides additional information about those individual line items in the consolidated statement of profit or loss
and other 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 and evaluation
costs. Results of both segments are reported to the Board of Directors at each Board meeting.
Exploration and Evaluation
Corporate
Total
2021
$
2020
$
-
-
600,000
1,500,000
(7,104,887)
(11,247,727)
2021
$
2020
$
2021
$
2020
$
-
-
-
538
-
538
-
-
600,000
1,500,000
(7,104,887)
(11,247,727)
-
-
-
-
-
-
(2,339,274)
(2,233,833)
18,888
(1,805,018)
(1,380,033)
99,250
(2,339,274)
(2,233,833)
18,888
(1,805,018)
(1,380,033)
99,250
(6,504,887)
(9,747,727)
(4,554,219)
(3,085,263)
(11,059,106)
(12,832,990)
105,055
58,836
256,796
1,859,632
1,039,073
412,856
863,294
408,050
Other income
Proceeds on the sale of
exploration tenements
Exploration and
evaluation expenses
Corporate and
administration expenses
Share based payments
Net financing income
Loss from continuing
operations before
income tax
Segment assets
Unallocated assets
Total assets
Segment liabilities
Total liabilities
5. OTHER INCOME AND EXPENSES
(a) Other Income
Other
(b) Proceeds from the sale of exploration and evaluation tenements
Killaloe Gold Project
Bynoe Lithium Project
361,851
15,027,791
15,389,642
1,918,468
5,422,112
7,340,580
1,902,367
1,902,367
820,906
820,906
2021
$
-
2020
$
538
2021
$
600,000
-
2020
$
-
1,500,000
During the 2021 year, the company received 40,000,000 ordinary shares in Lachlan Star Resources (ASX: LSA) as
settlement of the sale of the Killaloe Gold Project as announced to ASX on 27 January 2021. The movement in value of this
investment has been recognised in an Investment Revaluation Reserve (note 10 and 14), as it is the Board’s intention to
retain these shares as a long-term investment.
During the 2020 year, the conditions were satisfied for the $1.5 million contingent consideration payment pursuant to the
sale agreement entered with Core Lithium Limited in 2017 for the sale of the Bynoe Lithium Project (received in July 2020).
Accounting Policy
Other income is recognised when it is received or when the right to receive payment is established.
4 8 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
(c) Corporate and administration expenses
Depreciation and amortisation
Insurance
Legal fees
Office costs
Personnel expenses (5(d))
Promotions and Investor relations
Conferences and travel
Regulatory and compliance
Fixed assets written off
Consultants – Corporate Advisory
ESG, Community and Government Relations
IT and software
Other
(d) Personnel expenses
Directors’ fees, employee wages and salaries
Other associated personnel expenses
Leave entitlements
(e) Exploration and evaluation expenditure
Exploration Expenditure
Toolebuc, QLD
Kathleen Valley, WA
Buldania, WA
Moora, WA
Koojan, WA
Dingo Rocks, WA
Yalwest, WA
Feasibility Studies(1)
Kathleen Valley, WA – Pre-feasibility and Scoping Studies
Kathleen Valley, WA – Defined Feasibility Study and other evaluation
Royalty acquisition
Acquisition of revenue and production royalties
2021
$
82,632
66,287
148,144
47,032
1,020,912
68,217
36,091
294,274
1,323
187,604
51,678
115,784
219,296
2,339,274
2021
$
623,372
350,119
47,421
1,020,912
2020
$
60,861
43,514
36,166
162,062
736,132
166,199
106,956
233,063
19,300
12,778
-
70,530
157,457
1,805,018
2020
$
549,442
117,432
69,258
736,132
2021
$
2020
$
35,549
889,410
367,353
1,397,152
254,492
27,521
11,580
2,983,057
1,246,001
2,875,829
4,121,830
-
-
7,104,887
206,497
6,407,768
1,029,260
308,306
-
-
-
7,951,831
3,195,896
-
3,195,896
100,000
100,000
11,247,727
(1) During the reporting period the Company completed an updated Pre-feasibility Study, Downstream Supply Study and commenced a Defined Feasibility Study
at the Kathleen Valley Lithium Project.
Accounting Policy
Costs incurred in the exploration and evaluation stages of specific areas are expensed in the consolidated statement of
profit or loss and other comprehensive income as incurred. All exploration and evaluation expenditure, including general
permit activity, geological and geophysical costs, project generation and drilling costs, are expensed as incurred. In addition,
costs associated with acquiring interests in new exploration licences and study related costs are 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 consolidated statement of financial position.
4 9 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
(f) Net financing income
Interest income
Interest expense
Accounting Policy
2021
$
27,187
(8,299)
18,888
2020
$
107,838
(8,588)
99,250
Net financing costs comprise interest receivable on funds invested and the finance costs associated with the lease liabilities
for right-of-use assets.
Interest income is recognised in the consolidated statement of profit or loss and other comprehensive income as it accrues,
using the effective interest method. The interest expense component of lease liabilities is recognised in the consolidated
statement of profit or loss and other comprehensive income using the effective interest method.
6.
INCOME TAX
Components of income tax as follows:
Current tax
Deferred tax
Total income tax benefit/(expense) reported in the statement of profit or
loss and other comprehensive income
Numerical reconciliation between tax expense and pre-tax net loss:
2021
$
-
492,000
492,000
2021
$
2020
$
-
-
-
2020
$
Loss before tax
Income tax benefit using the domestic corporation tax rate of 30%
(2020: 27.5%)
Decrease in income tax benefit due to:
Non-deductible expenses
Non-assessable income
Deferred tax assets and liabilities not recognised
Previously unrecognised tax losses to offset DTL on financial assets
Income tax benefit on loss before tax
(11,059,106)
(12,832,990)
(3,317,732)
(3,529,072)
674,705
(18,102)
2,661,129
492,000
492,000
380,942
(71,188)
3,219,318
-
-
Income tax in the consolidated statement of profit or loss and other comprehensive income comprises current and deferred
tax. Income tax is recognised in the consolidated statement of profit or loss and other 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 asset and a Deferred tax liability of $492,000 (2020: nil) resulting from the fair-value gain recorded on financial
assets (Note 10) have been netted off.
5 0 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Unrecognised deferred tax assets and liabilities for the Group are attributable to the following:
Assets
Revenue Losses available to offset against future taxable income
Other deferred tax assets
Liabilities
Other deferred tax liabilities
2021
$
7,214,610
976,267
8,190,877
2020
$
6,438,562
347,040
6,785,602
(177,136)
(177,136)
(175,934)
(175,934)
The unrecognised benefit from temporary differences on capital items amounts to $389,162 (2020: $312,282).
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 it has assumed from its controlled entities
within the tax consolidated Group.
7.
LOSS PER SHARE
The calculation of basic loss per share at 30 June 2021 is based on the loss attributable to ordinary shareholders of the
parent entity and a weighted average number of ordinary shares outstanding during the year ended 30 June 2021.
The weighted average number of ordinary shares outstanding during the financial years comprised the following:
Loss attributable to ordinary shareholders for basic earnings
Weighted average number of ordinary shares on issue at the end of the year
Basic and diluted loss per share (dollars per share)
2021
2020
$10,567,106
1,779,976,597
($0.006)
$12,832,990
1,675,915,484
($0.008)
Diluted loss per share has not been shown as the impact from options and performance rights is anti-dilutive.
Accounting Policy
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.
5 1 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M EN T S
8.
SHARE BASED PAYMENTS
Employee Securities Incentive Scheme (“EIS”)
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 total expenditure recognised in the consolidated statement of profit and loss and comprehensive income is $2,233,833
(2020: $1,380,033).
Under the terms of the Scheme, the Board may offer equity securities (i.e. options, performance or service 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 following EIS unlisted options were in place at the end of the year:
Series
Number
Grant date
Expiry date
O15
O15
O15
O15
O17
O17
O17
O18
O18
O19
O20
O21
O22
O23
TOTAL
4,900,000
1,000,000
1,000,000
7,000,000
3,333,333
3,333,333
3,333,334
1,333,333
666,667
250,000
3,250,000
2,500,000
2,500,000
2,500,000
36,900,000
27/09/2019
6/11/2019
6/11/2019
27/11/2019
16/03/2020
16/03/2020
16/03/2020
5/06/2020
5/06/2020
6/10/2020
25/11/2020
10/02/2021
10/02/2021
10/02/2021
28/11/2022
28/11/2022
28/11/2022
28/11/2022
16/03/2023
16/03/2023
16/03/2023
4/06/2023
4/06/2023
5/10/2023
25/11/2023
09/02/2023
09/02/2023
09/02/2024
Exercise
price
$
Fair value at
grant date
$
Vesting date
0.15
0.15
0.15
0.15
0.1122
0.1122
0.1122
0.15
0.15
0.30
0.30
0.50
0.54
0.58
0.0613
0.0593
0.0593
0.0460
0.0501
0.0501
0.0501
0.0692
0.0692
0.1094
0.1549
0.1891
0.1813
0.2180
27/09/2020
6/11/2020
6/11/2021
27/11/2019
16/03/2020
16/03/2021
16/03/2022
5/06/2021
5/06/2022
5/10/2021
25/11/2020
05/05/2021
05/02/2022
05/02/2023
The number and weighted average exercise prices of EIS share options under the Scheme is as follows:
Weighted
average
exercise
price
2021
$
Number of
options
2021
Weighted
average
exercise
price
2020
$
Number of
options
2020
0.082
0.464
0.048
0.150
0.233
0.192
70,150,000
11,000,000
(43,500,000)
(750,000)
36,900,000
26,649,999
0.030
0.139
0.031
-
0.082
0.066
57,500,000
33,650,000
(21,000,000)
-
70,150,000
53,833,333
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
Exercisable at the end of the year
The weighted average contractual life remaining as at 30 June 2021 is 1.72 years (2020: 2.55 years).
The weighted average fair value of options granted during the year was $0.182 (2020: $0.052).
5 2 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Non-market performance conditions are not taken into account in the grant date fair value measurement of the services
received.
The following EIS share options were exercised during the year:
Series
Exercised
2021
Exercise date
OP5
OP5
OP5
OP6
OP6
OP6
OP6
OP7
OP7
OP8
O13
O13
O13
O13
O15
O15
O15
TOTAL
Number
2,000,000
3,000,000
800,000
4,000,000
700,000
8,000,000
2,000,000
-
-
-
2,500,000
5,500,000
5,000,000
3,000,000
2,000,000
2,000,000
3,000,000
43,500,000
16/07/2020
22/07/2020
22/10/2020
22/07/2020
22/10/2020
16/11/2020
10/05/2021
-
-
-
22/07/2020
22/10/2020
16/11/2020
10/05/2021
22/10/2020
11/12/2020
24/02/2021
Share price
at exercise
date
$
0.120
0.125
0.275
0.125
0.275
0.265
0.435
-
-
-
0.125
0.275
0.265
0.435
0.275
0.325
0.405
Exercised
2020
Exercise date
Number
1,500,000
2,000,000
-
4,000,000
-
-
-
2,500,000
2,500,000
750,000
1,750,000
2,000,000
4,000,000
-
-
-
-
21,000,000
9/07/2019
18/05/2020
-
18/05/2020
-
-
-
9/07/2019
5/12/2019
9/07/2019
9/07/2019
5/12//2019
18/05/2020
-
-
-
-
Share price
at exercise
date
$
0.105
0.105
-
0.105
-
-
-
0.105
0.082
0.105
0.105
0.082
0.105
-
-
-
-
The fair value of the EIS options is estimated at the grant date using a Black Scholes option-pricing model taking into account
the terms and conditions upon which the options were granted. Refer to the table below for weighted average inputs to the
Black Scholes option-pricing model:
Share price at grant date (weighted average)
Exercise price (weighted average)
Expected volatility (weighted average)
Expected life (weighted average years)
Vesting period (weighted average years)
Expected dividends
Risk-free interest rate (weighted average)
2021
$0.366
$0.460
96%
2.55
0.85
Nil
0.10%
2020
$0.088
$0.139
112%
3
0.64
Nil
0.61%
Refer to the table below for inputs to the Black Scholes option-pricing model for EIS options granted during the year:
Series
Grant Date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Exercise price (cents)
Grant date share price
O19
O20
O21
O22
O23
06/10/2020
-
90%
0.17%
3
0.30
0.220
25/11/2020
10/02/2021
10/02/2021 10/02/2021
-
-
-
-
93%
0.11%
3
0.30
0.275
98%
0.09%
2
0.50
0.410
98%
0.09%
2
0.54
0.410
98%
0.10%
3
0.58
0.410
Service Rights issued under Employee Securities Incentive Scheme
On 3 July 2020, 1,253,619 service rights were granted to Directors and KMP in lieu of payment of cash salary or fees
otherwise payable. The service rights had an expiry date of 30 September 2022, vested 30 September 2020 and had a nil
exercise price. The fair value of the service rights granted was determined using the share price at grant date of $0.105.
On 6 October 2020, 612,273 service rights were granted to certain Directors and KMP in lieu of payment of cash salary or
fees otherwise payable. The service rights had an expiry date of 31 December 2022, vested 31 December 2020 and had a
nil exercise price. The fair value of the service rights granted was determined using the share price at grant date of $0.220.
5 3 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
On 31 January 2021, 207,246 service rights were granted to certain Directors in lieu of payment of cash salary or fees
otherwise payable. The service rights had an expiry date of 31 March 2023, vested 31 March 2021 and had a nil exercise
price. The fair value of the service rights granted was determined using the share price at grant date of $0.44.
There are no voting or dividend rights attached to the service rights. There are no voting rights attached to the unissued
ordinary shares. Voting rights will be attached to the unissued ordinary shares when the service rights have been exercised.
Total service rights on issue at the beginning of the year of 1,761,422 and 2,073,138 issued during the year were converted
to ordinary shares during the year. There were no service rights on issue at 30 June 2021 (2020: 1,761,422).
Other Share Based Payments (“Non-EIS”)
Options
During the financial year the company issued nil (2020: nil) unlisted (Non-EIS) share options.
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 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 following Non-EIS unlisted options were in place at the end of the year:
Series
Number
Grant date
Expiry date
Exercise
price
$
Fair value at
grant date
$
Vesting date
O14
TOTAL
1,500,000
1,500,000
28/03/2019
28/03/2022
0.035
0.015
28/03/2019
The number and weighted average exercise prices of Non-EIS options is as follows:
Outstanding at beginning of the year
Granted during the period
Exercised during the period
Outstanding at the end of the year
Exercisable at the end of the year
Weighted
average
exercise
price
2021
$
Number of
options
2021
Weighted
average
exercise
price
2020
$
Number of
options
2020
0.041
-
0.042
0.035
0.035
7,900,000
-
(6,400,000)
1,500,000
1,500,000
0.035
0.150
0.035
0.041
0.035
14,900,000
400,000
(7,400,000)
7,900,000
7,500,000
The weighted average contractual life remaining as at 30 June 2021 0.74 years (2020: 1.78 years).
Non-market performance conditions are not taken into account in the grant date fair value measurement of the services
received.
The following Non-EIS share options were exercised during the year:
Series
Exercised
2021
Exercise date
O14
O14
O14
O16
TOTAL
Number
2,000,000
2,000,000
2,000,000
400,000
6,400,000
20/10/2020
10/12/2020
12/02/2021
29/01/2021
Share price
at exercise
date
$
0.265
0.315
0.445
0.390
Exercised
2020
Exercise date
Number
100,000
7,300,000
-
-
7,400,000
9/8/2019
18/05/2020
-
-
Share price
at exercise
date
$
0.115
0.105
-
-
5 4 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
The fair value of the Non-EIS options is estimated at the grant date using a Black Scholes option-pricing model taking into
account the terms and conditions upon which the options were granted. Refer to the table below for weighted average
inputs to the Black Scholes option-pricing model:
Share price at grant date (weighted average)
Exercise price (weighted average)
Expected volatility (weighted average)
Expected life (weighted average)
Vesting period (weighted average)
Expected dividends
Risk-free interest rate (weighted average)
2021
-
-
-
-
-
-
-
2020
$0.098
$0.15
114%
3
1
Nil
0.70%
Performance Rights issued under Employee Securities Incentive Scheme
2,500,000 Sign-on performance rights (vesting subject only to remaining employed at vesting date), 971,736 Short-term
performance rights (STI) and 2,915,212 Long-term performance rights (LTI) were issued during the year. As at 30 June
2021, the 6,386,948 performance rights were on issue to certain directors and employees with certain objectives required
to be met (including market, non-market based and employment status) in order to vest, have expiry dates as listed below
and nil exercise price. The fair value of the performance rights are calculated as at grant date.
1,000,000 performance rights that were on issue at 30 June 2020 lapsed on 13 September 2020.
A summary of performance rights on Issue is as follows:
Opening
Balance
Granted
Vested
Lapsed/forfeited
Closing
Balance
Share price
at date of
issue ($)
1,000,000
-
1,000,000
-
6.386,948
6,386,948
-
-
-
(1,000,000)
-
(1,000,000)
-
6,386,948
6,386,948
0.0268
0.4000
30 June 2021
Grant date
14 Sep 2018
4 May 2021
TOTAL
30 June 2020
Grant date
Opening
Balance
Granted
Vested
Lapsed/forfeited
Closing
Balance
14 Sep 2018
TOTAL
1,000,000
1,000,000
-
-
-
-
-
-
1,000,000
1,000,000
Share price
at date of
issue ($)
0.0268
Details of the issue of Performance rights during the year:
Series
Number
Grant date
Expiry date
Exercise
price
$
Fair value at
grant date
$
Vesting date
PR1
PR2
PR3
PR4
TOTAL
1,250,000
1,250,000
971,736
2,915,212
6,386,948
4 May 2021
4 May 2021
4 May 2021
4 May 2021
1 July 2023
1 July 2025
30 June 2023
30 June 2025
Nil
Nil
Nil
Nil
$0.40
$0.40
Various (1)
Various (1)
1/7/2022
1/7/2023
30/6/2022
30/6/2024
(1)
Fair value at grant date varies as is determined by each individual non- market driven segment. The rights were valued by an independent expert.
The weighted average contractual life remaining as at 30 June 2021: 3.15 years.
5 5 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Refer to the below table for the inputs to the Monte Carlo simulation (market based conditions) and Black Scholes option-
pricing model (non-market based conditions) for performance rights granted during the year:
Sign on
Performance
Rights - Tranche 1
Sign on
Performance Rights
- Tranche 2
STI Performance
Rights
LTI Performance
Rights
4 May 2021
4 May 2021
4 May 2021
4 May 2021
Nil
90%
0.080%
2.16
Nil
$0.400
1 July 2023
1,250,000
$0.400
Nil
90%
0.080%
3.16
Nil
$0.400
Nil
90%
0.080%
2.16
Nil
$0.400
Nil
90%
0.105%
4.16
Nil
$0.400
1 July 2024
1,250,000
30 June 2025
30 June 2025
971,736
2,915,212
$0.400
$0.218 -$0.400
$0.264 - $0.400
Grant date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of options
(years)
Exercise price
Grant date share price
Expiry date
Number
Fair value at grant date
Accounting Policy
The cost of equity-settled transactions with Employees, Directors and those providing similar services is measured by
reference to the fair value at the date at which they are granted.
In valuing equity-settled transactions, account is taken of any performance conditions, conditions linked to the price of the
shares of the Company (‘market conditions’) and non-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.
Significant accounting judgements and key estimates
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 or another appropriate valuation methodology taking into account the terms and conditions upon which
the instruments were granted and the assumptions outlined in this Note.
The expected life of the share-based payments is based on historical data and is not necessarily indicative of exercise
patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future
trends, which may also not necessarily be the actual outcome.
The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
5 6 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
ASSETS
This section provides additional information about those individual line items in the consolidated 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
2021
$
12,543,938
1,121
12,545,059
Reconciliation of loss after income tax to net cash flows from operating activities:
Loss for the period
Depreciation and amortisation
(Gain) from disposal of tenement
Foreign exchange (gain)/losses
Share-based payments
Deferred Tax
Fixed assets written off
Changes in operating assets and liabilities:
(Increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in provisions
Net operating cash flows
Non-cash investing and financing activities
2021
$
(10,567,106)
82,632
(600,000)
7
2,233,833
(492,000)
1,323
(9,341,311)
(12,777)
1,075,802
47,421
(8,230,865)
2020
$
5,256,820
1,029
5,257,849
2020
$
(12,832,990)
60,861
(1,500,000)
100
1,380,033
-
19,300
(12,872,696)
141,915
(3,039,971)
14,475
(15,756,277)
During the year the Company made additions of $Nil (2020: $146,270) to right-of-use assets.
Changes in liabilities arising from financing activities
Balance at 1 July 2019
Issue of Shares
Acquisition of leases
Net cash used in financing activities
Balance at 30 June 2020
Net cash used in financing activities
Balance at 30 June 2021
Accounting Policy
Lease Liability
$
-
-
146,270
(28,957)
117,313
(41,761)
75,552
Other
payables
$
163,500
(163,500)
-
-
-
-
-
Total
$
163,500
(163,500)
146,270
(28,957)
117,313
(41,761)
75,552
Cash and cash equivalents comprise cash balances and term deposits with an original maturity of three months or less,
which are subject to an insignificant risk of changes in value. The carrying value of cash and cash equivalents is considered
to approximate fair value.
10. TRADE AND OTHER RECEIVABLES, FINANCIAL ASSETS
Current
Trade and other receivables
Prepayments
5 7 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
2021
$
176,322
109,525
285,847
2020
$
1,686,969
86,101
1,773,070
Other receivables in 2020 included an amount receivable of $1.5 million from Core Lithium Limited pursuant to the contingent
conditions met in relation to the sale of the Bynoe Lithium Project in November 2017. This amount was received in July
2020.
There was no expected credit loss at balance date.
Financial Assets
Non-Current
Investment in Equity Securities
Other Financial Assets
Accounting Policy
2021
$
2,240,000
76,813
2,316,813
2020
$
-
76,812
76,812
Trade and other receivables are initially recognised at fair value and subsequently at the amounts considered recoverable.
Trade receivables are generally due for settlement within periods ranging from 30 to 60 days. Any expected credit loss is
provided for.
The value of equity securities held as an investment are initially measured at fair value. These are assessed at reporting
date to ensure their separate carrying values represents their holding value. Any movements (net of tax) are recoded
through the Investment Revaluation reserve and therefore Comprehensive Income.
Investments held in Equity Securities
The Company received 40,000,000 shares in Lachlan Star Limited (ASX: LSA) in April 2021 for the sale of the Killaloe Gold
Project. The initial consideration was deemed and recorded as income. These shares have been revalued at year end to
market value at Balance Date, based on Lachlan Stars share price on ASX at 30 June 2021. The Board views these shares
as a long-term investment and as such the Fair-value adjustment is classified as Equity in Investment revaluation reserve.
EQUITY AND LIABILITIES
11. TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other payables
Accounting Policy
2021
$
584,715
972,587
71,600
1,628,902
2020
$
241,958
290,869
20,274
553,101
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost. Trade and
other payables are presented as current liabilities unless payment is not due within 12 months.
12. EMPLOYEE BENEFITS
Current
Annual leave
Provision for long service leave
Other accrued employee entitlements
Non-Current
Provision for long service leave
Accounting Policy
2021
$
116,082
62,579
14,253
192,914
4,999
4,999
2020
$
56,780
52,513
39,687
148,980
1,512
1,512
Liabilities for employee benefits for annual leave and other current entitlements 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.
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.
5 8 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
13. CAPITAL AND CAPITAL MANAGEMENT
Ordinary shares on issue:
2021
2020
No.
$
No.
$
On issue at the beginning of the year
Rights issues and placements (1) (2)
Issue of shares for unlisted options
Issue of shares for service rights
Share issue costs
Movement during the year
On issue at the end of the year
45,228,551
1,711,285,201
18,000,000
54,347,826
49,642,394(3)
900,250
-
3,834,560
(909,531)
-
17,990,719
107,824,780
63,219,270
1,819,109,981
(1) In November 2020, the Company completed a placement to raise $12,500,000 by issuing 54,347,826 fully paid ordinary shares at an issue price of $0.23
per share.
(2) In September 2019, the Company completed a placement to raise $18,000,000 by issuing 150,000,000 fully paid ordinary shares at an issue price of $0.12
per share.
(3) 3,000,000 options were exercise on a cashless basis for 2,742,394 shares
1,532,885,201
150,000,000
28,400,000
-
-
178,400,000
1,711,285,201
63,219,270
12,500,000
2,272,000
550,119
(619,126)
14,702,993
77,922,263
Accounting Policy
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.
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to
shareholders.
14. RESERVES
Share-based payments reserve
Investment revaluation reserve
Foreign currency translation reserve
Total Reserves
Nature and purpose of reserves:
Share-based payments
Balance at beginning of the financial year
Share based payments
Transfers to Accumulated Losses and Share Capital
2021
$
2,747,376
1,148,000
139,091
4,034,467
2021
$
2,157,428
2,233,833
(1,643,885)
2,747,376
2020
$
2,157,428
-
139,091
2,296,519
2020
$
1,206,001
1,380,033
(428,606)
2,157,428
The share-based payments 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. Refer to note 8 for further details of
share-based payment plans.
5 9 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Investment revaluation reserve
The investment revaluation reserve is used to record the value of financial assets held at balance date. Refer to note 10
for further details.
Balance at beginning of the financial year
Realised gain/losses on sale of financial assets
Fair value movement on revaluation of financial assets
Tax effect on investment revaluations and disposals
Balance at the end of the financial year
Foreign currency translation reserve
2021
$
-
-
1,640,000
(492,000)
1,148,000
2020
$
-
-
-
-
-
The foreign currency translation reserve is used to record the exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
FINANCIAL INSTRUMENTS
15. FINANCIAL INSTRUMENTS
(a) Capital risk management
The capital structure of the Group consists of equity attributable to equity holders, comprising issued capital, reserves and
accumulated losses as disclosed in notes 13 and 14, and in the consolidated 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 (where appropriate), 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.
The Group currently has exposure to both equity price risk and interest rate risk. The Board reviews the exposure to these
risks on a regular basis to ensure that the Group is not adversely affected by movements in these exposures.
(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 currently hedge this exposure. The Group currently has no significant exposure to foreign
exchange rates.
(d) 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:
Interest maturing in:
2021
<1 year
$
1-5 years
$
Financial assets
Bank balances
Trade and other
receivables
Financial assets
Financial liabilities
Trade and other payables
Lease liabilities
-
-
76,813
-
-
-
-
(48,933)
-
(26,619)
Floating
interest
$
Non-
interest
bearing
$
Total
$
Weighted
average
interest
rate
%
12,543,938
-
1,121
285,847
12,545,059
285,847
-
-
-
-
76,813
(1,628,902)
-
(1,628,902)
(75,552)
0.22
-
1.10
-
8.85
6 0 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Interest maturing in:
2020
<1 year
$
1-5 years
$
Floating
interest
$
Non-
interest
bearing
$
Total
$
Weighted
average
interest
rate
%
Financial assets
Bank balances
Trade and other receivables
Financial assets
Financial liabilities
Trade and other payables
Lease Liabilities
-
-
76,812
- 5,256,820
-
-
-
-
1,029
1,773,070
-
5,257,849
1,773,070
76,812
-
(43,076)
-
(74,237)
-
-
(553,101)
-
(553,101)
(117,313)
1.10
-
1.10
-
8.85
A change of 100 basis points in interest rates (other than where a decrease would result in negative interest rates) on bank
balances and term deposits over the reporting period would have reduced the Group’s loss by $122,902 (2020: $97,597)
and increased the Group’s loss by $27,947 (2020: $97,597).
(e) 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.
(f) 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 $1,628,902 (2020: $553,101) all
of which are due within 60 days and undiscounted lease liabilities of $79,512 (2020:129,572).
(g) Net fair values of financial instruments
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.
16. LIST OF SUBSIDIARIES
Parent entity
Liontown Resources Limited
Subsidiaries
Liontown Resources (Tanzania) Limited
LRL (Aust) Pty Ltd
ERL (Aust) Pty Ltd
Minerals 260 Limited (1)
(1) Incorporated on 4 June 2021.
Country of
incorporation
Ownership interest
2021
%
100%
100%
100%
100%
2020
%
100%
100%
100%
-
Australia
Tanzania
Australia
Australia
Australia
6 1 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
17. 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.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries are accounted for at cost less impairment in the parent entity’s financial statements.
Statement of profit and loss and other comprehensive income
Loss for the year
Total comprehensive loss
Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
2021
$
2020
$
(10,081,942)
(10,081,942)
(22,757,725)
(22,757,725)
12,890,906
2,509,251
15,400,157
1,170,527
31,617
1,202,144
7,030,919
309,662
7,340,581
519,583
75,750
595,333
14,198,013
6,745,248
77,922,263
3,895,376
(67,619,626)
14,198,013
63,219,270
2,157,428
(58,631,450)
6,745,248
OTHER INFORMATION
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.
18. CONTINGENT ASSETS AND LIABILITIES
For the year ended 30 June 2021, there are no contingent assets (30 June 2020: nil).
For the year ended 30 June 2021, there are no contingent liabilities (30 June 2020: nil).
19. REMUNERATION OF AUDITORS
Audit and review services
HLB Mann Judd
2021
$
36,018
2020
$
30,300
6 2 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
20. COMMITMENTS
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. The approximate minimum level of expenditure to retain current tenements which are not provided for in the
consolidated financial statements are detailed below:
Within 1 year
1-5 years
>5 years
In relation to:
2021
$
968,495
1,388,564
3,080,579
5,437,638
2020
$
939,556
2,224,228
3,398,381
6,562,165
•
•
Yalwest and Dingo Rocks tenements nil commitment as they are under application and were not granted as at 30
June 2021.
Koojan tenements has a minimum commitment in relation to the Farm-In of $500,000 within 18 months of
settlement, which has not yet occurred.
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.
21. 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 Goyder
T Ottaviano (appointed CEO on 1 May 2021 and Managing Director on 5 May 2021)
D Richards
C Williams
A Cipriano
S Chadwick
Executives
•
•
•
A Smits (COO)
C Hasson (CFO)
C McGhie (Company Secretary) (appointed 5 May 2021)
The key management personnel compensation is as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
2021
$
1,115,696
77,251
2,123,615
3,316,562
2020
$
794,713
44,157
981,734
1,820,604
(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.
6 3 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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:
2021
$
2020
$
Corporate service charge and provision of KMP services(1)
Corporate advisory services of KMP(2)
Technical consultancy services of KMP(3)
Database management and field services(4)
Accounting services (5)
241,845
-
47,000
159,751
613
449,209
(1) In the prior year the Group received corporate services including office rent and facilities, KMP services, management and accounting services under a
Corporate Services Agreement with Chalice Mining Limited. Messrs Hacker is a KMP of Chalice Mining Limited and was a KMP of the Company until 4 June
2020. Amounts invoiced are based on a proportionate share of the cost to Chalice Mining Limited of providing the services and have normal payment terms.
(2) The Company received corporate, financial advisory services and general support services through a consultancy agreement (as disclosed to ASX on 12
May 2021) from Mr Cipriano at a rate of $2,500 per day and are payable under normal payment terms. Either party may terminate the agreement by providing
one months’ notice.
(3) 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 and are payable on normal payment terms. Either party may terminate the agreement by providing one months’ notice.
(4) The Group receives database management and field services from related parties of the Managing Director, Mr Richards. Amounts paid are on normal
commercial terms.
(5) The Group received accounting services from a related party of the CFO, Mr Hasson. Amounts paid are on normal commercial terms.
-
87,500
49,000
120,566
5,160
262,226
Amounts payable to KMP and related parties at reporting date arising from these transactions was $43,052 (2020: $15,808).
22. EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 5 July 2021, the Company announced new exploration targets at the Buldania project following soil sampling which
defined extensive, high-order anomalisms for lithium (and related metals) adjacent to the existing Anna lithium deposit.
On 14 July 2021 the Company announced the issue of 68,420,000 ordinary shares at $0.76 to raise $52 million to fund
accelerated development of the Kathleen Valley Project, strategies to optimise operating and capital costs, advancement of
downstream strategy, further exploration and drilling at Buldania and general working capital.
On 14 July 2021, the Company announced that a second phase of geochemical sampling at the Koojan JV had confirmed
previously identified PGE and gold anomalies and also defined a number of new targets. These latest results will optimize
planning of ground geophysical surveys designed to prioritise targets for drill testing.
On 31 July 2021, the Company entered into a royalty termination agreement with Ramelius Resources for payment of
$30.25m cash to terminate the Kathleen Valley Royalty held by Ramelius. The termination of the royally will further enhance
the Projects future operating costs.
On 10 August 2021, the Company announced that it completed the transaction with Lachlan Star (ASX: LSA) which gives
the Company the right to acquire 51% interest in the Koojan Project. The Company can acquire 51% equity in the Koojan
Project by spending $4m on exploration within 5 years with a minimum commitment of $500,000 before having the right to
withdraw.
On 19 August 2021, the Company announced that, subject to conditions precedent, it will Demerge its subsidiaries Minerals
260 Ltd and ERL Pty Ltd from the Company via an in-specie distribution (Demerger). These subsidiaries currently hold the
100% of the Moora Gold-Nickel-Copper-PGE Project, an option to earn a 51% interest in the Koojan Gold-Nickel-Copper-
PGE Project, the Dingo Rocks Project and tenement applications at Yalwest. On 19 August 2021, a prospectus was lodged
with ASIC in relation to the proposed IPO of Minerals 260 (following its Demerger) seeking to raise a minimum of
$15,000,000 and a maximum of $30,000,000. On 22 September 2021, shareholder approval was obtained to proceed with
the Demerger. The proposed transactions are planned to be completed in October 2021.
No other matters or circumstances have arisen since 30 June 2021 that have significantly affected, or may significantly
affect the consolidated entity’s operations, the results of those operations, or the consolidated entity’s state of affairs in future
financial years
6 4 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
DIRECTORS’ DECLARATION
1.
In the opinion of the Directors of Liontown Resources Limited (‘the Company’):
(a)
the financial statements, notes and additional disclosures of the Group are in accordance with the Corporations
Act 2001 including:
i.
ii.
(b)
(c)
giving a true and fair view of the financial position of the Group as at 30 June 2021 and of its performance
for the year then ended; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001;
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
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 2021.
This declaration is signed in accordance with a resolution of the Directors:
Antonino Ottaviano
Managing Director
Dated this 29th day of September 2021
6 5 | D I R E C T O R S ’ D E C L A R A T I O N
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 2021, the consolidated statement of profit or loss and other comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the 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 2021 and of its
financial performance for the year then ended; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We have determined the matters described below to
be the key audit matters to be communicated in our report.
6 6 | I N D E P E N D EN T A U D I T O R ’ S R EP O R T
Key Audit Matter
Share Based Payments
Refer to Note 8
During the year the Group had numerous share-based
payments recording an expense to profit or loss of
$2,233,833.
The performance rights issued required different
accounting methodologies and valuation techniques.
Valuation of share-based payments was a key audit
matter due to the complex nature of the valuation
principles, the subjectivity involved with the vesting on
non-market based performance conditions and the
material amount of the resulting expense.
We focused on this area as a key audit matter due to
the audit effort required and the degree of estimation
involved.
How our audit addressed the key audit
matter
Our procedures included but were not limited
to:
- We assessed management’s valuation,
classification and calculation of each
category of share-based payments;
- We
evaluated
management’s
assessment of the expected vesting
date of the non-market based vesting
conditions
- We considered if the accounting and
valuations were in accordance with
AASB 2 Share-based Payment; and
- We assessed the adequacy of the
Group’s disclosures in the financial
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 2021, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
6 7 | I N D E P E N D EN T A U D I T O R ’ S R EP O R T
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.
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 within the directors’ report for the year ended
30 June 2021.
In our opinion, the Remuneration Report of Liontown Resources Limited for the year ended 30 June
2021 complies with section 300A of the Corporations Act 2001.
6 8 | I N D E P E N D EN T A U D I T O R ’ S R EP O R T
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
29 September 2021
D I Buckley
Partner
6 9 | I N D E P E N D EN T A U D I T O R ’ S R EP O R T
a
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in
this report applicable as at 6 October 2021 is set out below.
SHAREHOLDINGS
Substantial shareholders
The number of shares held by substantial shareholders and their associated interests were:
Shareholder
Mr Timothy Goyder
Voting Rights
Number of ordinary shares held
328,515,585
Percentage of
capital held %
17.19
The voting rights to the ordinary shares set out in the Company’s Constitution are:
“Subject to any rights or restrictions for the time being attached to any class or Classes of shares -
(a) at meetings of members or classes of members each member entitled to vote in person or by proxy or attorney;
and
(b) on a show of hands every person who is a member has one vote and on a poll every person in person or by
proxy or attorney has one vote for each ordinary share held.”
Holders of options 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
Distribution
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Shareholders
1,616
3,541
1,731
3,809
1,507
12,204
Number of Shares
979,298
9,816,411
13,642,178
138,340,066
1,748,400,429
1,911,178,382
% of Shares
0.05
0.51
0.71
7.24
91.49
100.00
The Company has 12,333,334 unlisted options and 6,386,948 unlisted Performance rights on issue, all of which were issued
under the Employee Securities Incentive Scheme. There were 5 holders of unlisted options and 5 holders of performance
rights. All holdings of unlisted options and performance rights are greater than 100,000 units.
Marketable Parcel
The number of shareholders holding less than a marketable parcel was 346.
7 0 | A S X A DD I T I O N A L
I N F O R M A T I O N
a
TWENTY LARGEST ORDINARY FULLY PAID SHAREHOLDERS
Name
Mr Timothy Goyder
HSBC Custody Nominees (Australia) Limited
BNP Paribas Nominees Pty Ltd ACF Clearstream
J P Morgan Nominees Australia Pty Limited
Clement Pty Ltd
Citicorp Nominees Pty Limited
GKCF Super Pty Ltd
Invia Custodian Pty Limited
The Universal Zone Pty Ltd
Mr David Ross Richards + Mrs Wan Lai Richards
Anisimoff Super Fund Pty Limited
Soderholme Co Pty Ltd
Mr Anthony Cipriano
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
BNP Paribas Noms Pty Ltd
GKCF Super Pty Ltd
Gremlyn Pty Ltd
National Nominees Limited
Double Eagle Pty Ltd
David Groom Ewan + Jennie Bar Goyder-Ewan
Total Top 20
Others
Total
Number of ordinary
shares held
328,515,585
100,873,744
90,883,314
56,446,060
45,190,000
31,226,434
29,405,998
26,764,080
26,290,000
22,661,067
22,068,578
19,081,838
18,531,343
15,194,495
14,948,225
14,100,002
14,000,000
13,136,377
11,529,352
9,953,017
910,799,509
1,000,378,873
1,911,178,382
Percentage of
capital held %
17.19
5.28
4.76
2.95
2.36
1.63
1.54
1.40
1.38
1.19
1.15
1.00
0.97
0.80
0.78
0.74
0.73
0.69
0.60
0.52
47.66
52.34
100.00
CORORATE GOVERNANCE STATEMENT
Liontown has adopted a Corporate Governance Manual which forms the basis of a comprehensive system of control and
accountability for the administration of corporate governance. The Board is committed to administering the policies and
procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company’s
needs.
In establishing the Company's corporate governance framework, to the extent they are applicable to the Company, the
Board has referred to the recommendations set out in the ASX Corporate Governance Council's ‘Corporate Governance
Principles and Recommendations – 4th Edition’.
The Company’s Corporate Governance Statement 2021, which explains how Liontown complies with the ASX Corporate
Governance Council’s ‘Corporate Governance Principles and Recommendations – 4th Edition’ in relation to the year ended
the Company’s website,
30
www.ltresources.com.au/corporate-governance and will be lodged with ASX together with an Appendix 4G at the same time
that this Annual Report is lodged with ASX.
the Corporate Governance
is available
June 2021,
section of
in
71 | A S X A DD I T I O N A L
I N F O R M A T I O N
a
7 2 | A S X A D D I T I O N A L I N F O R M A T I O N