More annual reports from Liontown Resources Limited:
2023 Report2022 Annual Report
For the Year Ending 30 June 2022
Liontown Resources Limited
ABN: 39 118 153 825
Fast Charging
towards a low
carbon future
Contents
Acknowledgement of Country
01. Letter from the Chairman
02. Managing Director’s Report
03. Year at a Glance
04. Review of Operations
05. Sustainability Review
06. Ore Reserve and Mineral Resource Statement
07. Tenement Schedule
08. Competent Person Statement
09. Directors’ Report
10. Auditor’s Independence Declaration
11. Financial Report
12. Directors’ Declaration
13.
Independent Auditor’s Report
01
03
07
11
14
34
37
41
42
44
66
68
96
98
14. ASX Additional Information
103
Acknowledgement
of Country
We acknowledge the Traditional
Owners of the land on which we work
and recognise their intricate and deep
connection to country. We pay our
respects to their Elders past and present.
1
Liontown Resources
Corporate
Directory
Directors
Timothy Goyder
Chairman
Antonino Ottaviano
Managing Director & Chief Executive Officer
Auditors
HLB Mann Judd (WA Partnership)
Level 4, 130 Stirling Street, Perth,
Western Australia 6000
Anthony Cipriano
Non-Executive Director
Craig Williams
Non-Executive Director
Jennifer Morris
Non-Executive Director
Shane McLeay
Non-Executive Director
Company Secretary
Clint McGhie
Principal Place of Business
and 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
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace, Perth,
Western Australia 6000
Tel: 1300 557 010
Home Exchange
Australian Securities Exchange Limited
Level 40, Central Park, 152- 158 St Georges
Terrace, Perth, Western Australia 6000
ASX Codes
Share Code: LTR
2022 Annual Report
2
01.
Letter From
The Chairman
Tim Goyder
Chairman
Dear Fellow Shareholders,
It is a great pleasure to present Liontown’s
2022 Annual Report, encompassing one
of the most remarkable years in the
Company’s history.
Building on the significant momentum
established last year, Liontown has been
able to capitalise fully on the massive surge
of investment inflows and interest in the
burgeoning global lithium-ion battery and
electric vehicle (EV) sectors and advance our
flagship asset, the Kathleen Valley Lithium
Project, rapidly towards development.
At the heart of our success is the world-class
quality, scale and location of the deposit –
fundamental Tier-1 attributes that have allowed
Liontown to forge a clear pathway to become a
globally significant provider of battery minerals
for the rapidly growing clean energy market.
The fact that we have been able to retain 100
per cent of this exceptional asset and advance
it so quickly from resource development,
through feasibility, project financing and
now into construction represents a strong
vindication of the strategy we embarked on
five years ago to create a world-class battery
materials business at Liontown.
The past 12 months was also a breakthrough
year for the lithium sector, with the price of
all lithium raw materials hitting new all-time
highs and spodumene concentrate achieving
prices of up to US$7,000 a tonne for SC6.0
product. This compares against the US$1,392
a tonne weighted average assumed in our
DFS. Far from being a flash in the pan, these
remarkable pricing outcomes are being driven
by a systemic shortage of lithium raw materials
through the supply chain and a growing
recognition that demand will continue to grow
significantly out to 2030 and beyond, requiring
3
Liontown Resources
a significant investment in new supply. While
the many achievements of the Liontown team
over the past year are covered in detail in this
report, I would like to briefly recount
them here:
• The on-time delivery of a high-quality
Definitive Feasibility Study that confirmed
Kathleen Valley’s status as a Tier-1 global
mining and processing lithium asset with
exceptional metrics and outstanding
financial returns.
• The signing of a pivotal Native Title
Agreement with the Tjiwarl Native Title
Holders, an agreement that sets a new
benchmark for positive collaboration and
partnership with Traditional Owners in the
Western Australian mining industry.
• The completion of a well-timed A$463
million capital raising, which secured the
equity component of project funding and put
the Company on an incredibly strong footing
to secure our final customer off-takes and
make a Final Investment Decision (FID).
• The execution of binding off-take
agreements with a Tier-1 customer group
comprising LG Energy Solutions, Tesla and
Ford, as a result of which we have locked
away 90 per cent of Kathleen Valley’s
start-up production capacity.
• The execution of a financing facility
agreement with Ford for a A$300 million
debt facility on very attractive terms – a
high-profile funding arrangement that has
attracted global attention and ensured we
have the required funds for the development
of Kathleen Valley.
• The announcement of a Final Investment
Decision (FID) for Kathleen Valley, the
diligent progression of permitting and
Front-End Engineering and Design (FEED)
activities, award of key contracts and the
commencement of site-based construction
activities.
• The completion of our maiden ESG report
and the establishment of a Climate Strategy
Roadmap that puts us on a trajectory as a
company to achieve net-zero emissions
by 2034.
• The Company’s inclusion in the benchmark
S&P ASX-200 Index of the ASX and the MSCI
Australia Index, reflecting the substantial
increase in its market capitalisation, daily
trading volumes and the depth of our
share register.
Letter from the Chairman
This list of achievements is testament to
the single-minded focus, commitment and
dedication of our team, led by our Managing
Director Tony Ottaviano – and received due
recognition with Liontown being awarded
the Best Emerging Company Award at the
prestigious annual Diggers & Dealers Mining
Forum in Kalgoorlie in August.
Turning to corporate matters, Steven Chadwick
announced his retirement from the Liontown
board in July, and, in September, our founding
Director Craig Williams announced that he
was retiring after 17 years of service
following his decision to retire from
all public company boards.
Far from being a flash in the pan,
these remarkable pricing outcomes
are being driven by a systemic
shortage of lithium raw materials
through the supply chain.
The standout contribution of these two
outstanding individuals – both to Liontown
and, more broadly, to the Australian mining
industry – has received appropriate recognition
elsewhere and hence I will not elaborate
on it here. However, on behalf of the board
and shareholders, I would like to extend my
warmest appreciation to both Steven and Craig
and wish them all the best for their retirement.
The evolution of the Liontown Board continued
during the year with the appointments of highly
regarded company director Jennifer Morris
OAM at last year’s AGM and highly respected
mining executive Shane McLeay in May. Both
have already brought significant energy,
fresh ideas and enthusiasm to the Board and
I welcome them and thank them for their
contribution to date.
2022 Annual Report
4
Letter from the Chairman
The process of recruiting additional new
Independent Non-Executive Directors to the
board continues, with an ongoing focus on
board renewal to ensure we have the right
blend of skills and experience to lead the
Company as we take the next exciting
steps on our journey.
As part of the process of renewal, we are
delighted that Adrienne Parker has agreed
to join the Board with effect from 1 October
2022. Adrienne is a highly experienced lawyer
who will bring strong legal, commercial and
corporate experience to the Board.
In conclusion, I would like to warmly
acknowledge everyone who has contributed to
our success – my fellow Directors, our senior
management team, employees, consultants and
advisers and, most importantly, our wonderful
shareholders who continue to support us.
A special thanks to Tony for his strong
leadership, incredible work ethic and vision,
and inclusive approach to building a
world-class mining company.
The coming 12 months will see the Company
continue to move ahead quickly as we build
our team, accelerate construction activity at
Kathleen Valley and deliver on the enormous
potential that this Company now possesses.
It is going to be an exciting journey,
and I look forward to sharing it with you!
Chairman
Tim Goyder
This year was also a breakthrough
year for the lithium sector, with the
price of all lithium raw materials
hitting new all-time highs.
5
Liontown Resources
Letter from the Chairman
At the heart of our success
is the quality, world-class
scale and Tier-1 location
of the deposit.
2022 Annual Report
6
02.
Managing
Director’s Report
Tony Ottaviano
Managing Director/CEO
Dear Fellow Shareholders,
It is an enormous privilege to present my
Managing Director’s Report, covering the
first full year of my tenure at Liontown, and to
recap what has been an incredibly busy year of
success and achievement for our Company.
Over the course of the last twelve months,
Liontown has delivered what many resource
companies take years to achieve – signing a
landmark Native Title Agreement with Tjiwarl
AC, completing a high-quality Definitive
Feasibility Study (DFS), partnering with three
tier-1 customers, raising equity and securing
project debt funding on extremely favourable
terms, progressing permitting, making a Final
Investment Decision (FID) and commencing
initial site construction activities.
Our commitment to move decisively and
rapidly, while never sacrificing the highest
possible standards of technical excellence
and quality, have become the defining
hallmarks of Liontown – combined with a
genuine and fundamental commitment to
7
Liontown Resources
developing a sector-leading Environmental,
Social and Governance (ESG) framework that
encompasses all aspects of our business.
Before going any further, I would like to
recognise the tremendous contribution from
our incredibly hard-working Liontown team,
who have performed magnificently during the
year. Liontown has evolved very quickly from
a junior micro-cap into an emerging mid-tier
miner with market capitalisation touching A$4
billion at the time of writing this report.
It takes time to build-out the people and
systems required to support a world-class
mining company and the team has done a
remarkable job in helping me to oversee this
rapid growth phase and to put in place the key
building blocks that will take us to the next
level.
I would like to briefly touch on some of the
key areas of achievement and progress
during the year.
Managing Director’s Report
Kathleen Valley Definitive
Feasibility Study
After more than 12 months of hard work by our
team and consultants, Liontown completed a
highly successful Definitive Feasibility Study
(DFS) for Kathleen Valley in November 2021,
confirming the potential to develop a leading
second-generation lithium-tantalum mining and
processing operation in Western Australia’s
Northern Goldfields.
Key highlights of the DFS included:
• ~23-year mine life, based on production rate
of 2.5Mtpa at start-up to deliver ~500ktpa
of spodumene concentrate, increasing to
4Mtpa in Year 6 to deliver ~700ktpa
of spodumene;
• Compelling project economics, with
exceptional metrics and outstanding
financial returns;
• Overall planned renewable power is
projected to be 60% at start-up – with
Liontown expected to be one of the first
mining companies in Australia to have this
level of renewables at start-up; and
• First production targeted for end
of H1, 2024.
The DFS outlined a Tier-1 global lithium
project with exceptionally strong financial and
technical merits, combined with a class-leading
sustainability and ESG framework that is being
fully integrated with the Project’s development.
Tjiwarl Native Title Agreement
In November 2021, Liontown and the Tjiwarl
Native Title Holders signed a landmark Native
Title Agreement for the Kathleen Valley
Project. The agreement followed a 2.5-year
collaboration between senior negotiators
representing the Tjiwarl AC and Liontown, with
the outcome cementing the strong and co-
operative working relationship that has been
established between the two parties.
It was a great honour to attend the signing
ceremony for this agreement in Leinster
and, together with our Chairman Tim Goyder
and several other members of our board and
senior management team, to sign this pivotal
agreement in front of the Tjiwarl Traditional
Owners.
The early inclusion of the Tjiwarl Native Title
Holders in the planning process has ensured
that vital cultural and heritage considerations
have been included in the fundamental design
and layout of the Project – a highly successful
collaborative process of which I believe both
parties can be very proud.
As part of the agreement, Liontown has also
committed to a broad range of actions as a
fundamental part of our development strategy
at Kathleen Valley, including land and water
management, Aboriginal heritage management,
cultural awareness and access, social
development, employment and contracting
opportunities and compensation.
We are immensely proud of this agreement and
partnership with the Tjiwarl, which builds from
a genuine give-and-take by both sides
and commitment to deliver mutually
beneficial outcomes.
2022 Annual Report
8
Managing Director’s Report
Offtake, Funding Strategy
and Final Investment Decision
Permitting, Contracts
and Project Development
Liontown’s off-take strategy for Kathleen
Valley was to target Tier-1 customers
diversified by geography and position on the
battery value chain. Pleasingly, the Company
has been able to fully execute this strategy in
FY2022, receiving very strong interest from
a wide range of parties, which culminated in
the execution of off-take agreements with
LG Energy Solution (LGES), Tesla and Ford.
In addition to securing three large foundation
agreements, the Company has retained some
capacity to sell into the rapidly growing spot
market which delivers operational and revenue
flexibility and provides further upside in value
to Liontown shareholders.
Together, the arrangements with LGES, Tesla
and Ford mean that Liontown’s total off-take
commitments now stand at up to 450,000 dry
metric tonnes per annum of SC6.0 spodumene
concentrate, representing approximately
90% of Kathleen Valley’s start-up production
capacity of ~500ktpa. The remaining
production from Kathleen Valley is intended
to be retained for spot volume sales and/or
discrete off-take agreements.
Building from its off-take agreement with Ford,
Liontown also executed a binding funding
facility agreement with a Ford subsidiary for a
A$300 million debt facility, with the proceeds
to be used towards partially funding the
development costs of Kathleen Valley. This
Funding Facility, together with the landmark
A$463 million capital raising undertaken by
Liontown in December 2021, means that the
Company has now secured commitments to
support the full development of the Kathleen
Valley Project through to first production.
Based on the strength of the DFS results, in
June 2022 the Company’s Board endorsed the
full development of Kathleen Valley, paving
the way for the start of construction of a
new, world-class lithium mine.
9
Liontown Resources
Permitting for the Kathleen Valley Project was
significantly progressed during the year, with
all the required primary regulatory approvals
and permitting for the project construction
and operation submitted to the relevant
government agencies.
In May, Ministerial consent was granted under
Section 18(3) of the Aboriginal Heritage Act
1972 for the development of Kathleen Valley,
reflecting Liontown’s ongoing consultation and
strong relationship with the Tjiwarl Traditional
Owners and enabling several other required
permits to progress through to approval.
Following receipt of approval for a Small
Operations Mining Proposal, construction
activities for the new Accommodation Village,
configured in the shape of a dragonfly to
signify and acknowledge an important Tjiwarl
story line, commenced towards the end of
the reporting period and we expect to see a
substantial ramp-up in activity on site over the
next few months.
In preparation for project delivery, the Company
continued to progress a series of major
contracts (including EPCM, Power Purchase
Agreement, freight logistics, bulk earthworks
and open cut mining services) with established
and high-quality contractors. Work has also
progressed across the construction scope and
procurement is advancing for the remaining
project activities in line with the development
plan.
In July, Liontown appointed leading engineering
firm Lycopodium Minerals Pty Ltd (Lycopodium)
to complete the engineering, procurement,
construction management (EPCM) and
commissioning services for the Kathleen
Valley Lithium Project in Western Australia,
building on a strong strategic relationship with
Lycopodium.
And in September, as this report was being
finalised, the Company awarded the contract
for the supply of power to Kathleen Valley to
Zenith Energy on a Build, Own and Operate
(BOO) basis for what is currently expected to be
the largest off-grid wind-solar-battery storage
hybrid power station for a mining project in
Australia and a strong foundation stone for
Liontown’s ESG credentials.
ESG, People and Culture
Conclusion and Outlook
Managing Director’s Report
In November 2021, Liontown released
its inaugural Environmental, Social and
Governance (ESG) Report, summarising
the Company’s strategy and performance
on its most critical ESG issues.
The ESG framework incorporates a strong
focus on positive and meaningful engagement
with Traditional Owners and other local
stakeholders as part of our long-term social
licence to operate, minimising future carbon
emissions, water usage and land disturbance,
and ensuring that our corporate governance is
consistent with industry best-practice.
Following the release of this report, the
Company has been working towards achieving
its key ESG commitments, with key progress
during the reporting period including:
• A self-assessment of the Company’s
performance against the Initiative for
Responsible Mining Assurance (IRMA)
Standard. IRMA provides a third-party
certification and verification against a
comprehensive standard which includes
environmental and social responsibility,
business integrity and planning for positive
legacies. Liontown expects to complete the
self-assessment in the September 2022
Quarter.
• Foundational work to support Liontown’s
Task Force on Climate-Related Financial
Disclosures (TCFD) commitments; and
• Decarbonisation analysis to support
Liontown’s net zero aspirations and
strategy development.
The Company expects to issue a 2021/22
Environmental, Social and Governance (ESG)
Report in the December 2022 Quarter.
Despite significantly increased volatility
experienced at the macro level in global
financial and commodity markets from April
onwards, the past year has been a period of
positive activity, momentum and progress for
Liontown which has paved the way for the start
of construction of Australia’s next major lithium
mining and processing operation.
To say it is ‘all systems go’ at Liontown is an
understatement. There is a huge progress and
optimism across the business and, with new
high-calibre people joining our team every
week, Liontown is a dynamic and exciting place
to work. That said, the external construction
market remains tough and challenging and we
continue to look at improvement opportunities
to mitigate project risk.
I am personally very excited about what
lies ahead for us as construction ramps up
and the world-class Kathleen Valley Project
takes shape. I am also looking forward to
developing our other growth horizons, including
exploration of the Buldania Project and the
progression of our downstream strategy at
Kathleen Valley.
This is a great time to be building a battery
materials business, and I look forward to
sharing in this exciting future with you.
Managing Director
Tony Ottaviano
2022 Annual Report
10
03.
Liontown’s
Year at a Glance
POSITIVE
DFS
THE COMPANY DELIVERED
A ROBUST DFS FOR A MINE
WITH AN INITIAL 23 YEAR LIFE
FEED ENHANCEMENTS
Subsequent studies have improved operational flexibility
and process control with expected cost savings
5 Year offtake
agreement for
100–150Kt
Concentrate p/a
TESLA
5 Year offtake
agreement for
100–150Kt
Concentrate p/a
5 Year offtake
agreement
for 150Kt
Concentrate p/a
11
Liontown Resources $463m
Institutional Placement in December
2021 and Share Purchase Plan in
February 2022
$300m
Ford Financing Facility
executed in June 2022
FID THE BOARD APPROVED
THE KATHLEEN VALLEY
DEVELOPMENT IN JUNE 2022
NATIVE TITLE AGREEMENT
Liontown has signed a Native Title Agreement
with the Tjiwarl Native Title Holders that sets a new
benchmark for positive collaboration and partnership
NET ZERO BY 2034
The company’s climate strategy roadmap sets us on
a trajectory to achieve net zero emissions by 2024
CONSTRUCTION COMMENCED
Construction has commenced on the Kathleen Valley
project, with first production targetted for H1, 2024
12
2022 Annual Report 04.
Review of
Operations
Mt Keith
Cliffs
Kathleen Valley
Lithium Project (100%)
P
o
w
e
r
L
i
n
e
Yakabindie
The Kathleen Valley Lithium Project (Kathleen
Valley or the Project) is located 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.
Significant progress was made on the
development of the Kathleen Valley Lithium
Project in WA during the reporting period.
The positive Definitive Feasibility Study
(DFS) was completed in November 2021,
with front end engineering and design
(FEED) and procurement activities for critical
long-lead items advancing post-DFS.
Underground Mine
Nickel Mine
Greenstone
Gold Mine
10km
With high-calibre foundational offtake
agreements in place with Ford, Tesla and LG
Energy Solution, and financing commitments
secured, the Liontown Board made the Final
Investment Decision (FID) to proceed to
develop Kathleen Valley in June 2022.
Construction of the Project is underway, with
first production of spodumene concentrate
scheduled for Q2 2024. Following positive
results from the Downstream Scoping Study
that investigated the viability of refining the
spodumene concentrate onsite to produce
Lithium Hydroxide, the Company has also
commenced a Pre-Feasibility Study (PFS)
to progress this initiative.
Kathleen Valley
Lithium Project
Cosmos
N
a
t
u
r
a
l
G
a
s
P
i
p
e
l
i
n
e
Leinster
G
o
l
d
fi
e
l
d
s
H
w
y
Bellevue
Geraldton
(600km)
Lawlers
Vivien
Agnew
Leinster
Kalgoorlie
(300km)
Figure 1: Kathleen Valley Project Location Map
Underground Mine
Nickel Mine
Gold Mine
Greenstone
10km
2022 Annual Report
14
Review of Operations
Definitive Feasibility Study
In November 2021, the Company announced
the results of the DFS, confirming Kathleen
Valley’s status as a Tier-1 global mining
and processing lithium project, delivering
outstanding economics and sector-leading
sustainability credentials.
Building on the PFS completed in October
2020, the DFS demonstrated exceptionally
strong financial and technical merits, combined
with a class-leading sustainability and ESG
framework that is being fully integrated with
the Project’s development.
The DFS examined th e establishment of
an initial 2.5Mtpa mining and Whole-of-
Ore Flotation (WOF) processing operation
delivering an annual steady state 511ktpa
of spodumene concentrate at a grade of
6% Li2O (SC6.0) and 428tpa of 30%
tantalum concentrate (inclusive off-site
upgrade) at full production.
Years 1–6
Mining Through Rate
2.5Mtpa
Spodumene Concentrate
511ktpa
Tantalum Concentrate
428tpa
15
Liontown Resources
Production will expand to 4Mtpa during
Year 6, allowing production to scale-up to a
peak production of over 700Ktpa of SC6.0
and 587tpa of 30% tantalum concentrate.
The DFS considered that ore will initially
be sourced from two small open pits,
however from Year 2 of operations ore will
be sourced from underground, with ore
processed to concentrate the lithium and
tantalum before being sold to third parties.
Years 6+
Mining Through Rate
4Mtpa
Spodumene Concentrate
700ktpa
Tantalum Concentrate
587tpa
Review of Operations
Tier-1 global
mining and
processing
lithium project
16
2022 Annual Report Review of Operations
The DFS used Roskill’s October 2021 long-term
forecast prices resulting in a weighted average
price assumption for spodumene concentrate
of US$1,392/t FOB for SC6.0 product.
In addition, several key capital items in both the
mine and processing plant have been scaled at
4Mtpa throughput capacity as part of the initial
upfront capital spend to facilitate the planned
increase in production capacity to 4Mtpa in
Year 6 with minimal impact on the operations
of the Project. The expansion to 4Mtpa will be
funded from cash-flow.
Figure 2: Kathleen Valley Project – Proposed mine site layout
An integrated and value-adding ESG focus
was adopted as part of the DFS, ensuring
that project permitting, social licence and
engineering-related initiatives are permeated
throughout the mine schedule, power usage/
supply mix and project layout. Importantly, an
economic ‘yardstick’ was attached to all ESG
considerations to ensure they add value to
the project.
The sustainability, financial and operational
outcomes demonstrated in the DFS were
significantly enhanced compared to the
October 2020 PFS because of the strong
SC6.0 price outlook, a modified process plant
flowsheet and, importantly, optimised mine
plans which provide early access to higher-
grade mineralisation without significant
capital penalty.
17
Liontown Resources
Updated Ore Reserve
Snowden Mining Industry Consultants (Snowden)
was responsible for the mining component of the
DFS. Snowden prepared the Ore Reserve Estimate
(JORC 2012) for the Kathleen Valley underground
and open pit mines as of November 2021,
which is summarised in Table 1.
The Ore Reserve Estimate is based on
the updated Mineral Resource Estimate
(MRE) of 156Mt at 1.4% Li2O and 130ppm
Ta2O5 reported on 8 April 2021.
The Ore Reserve and Mineral Resource are
reported and classified in accordance with
the guidelines of the 2012 Australasian Code
for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (the JORC Code;
2012). The Mineral Resource is reported
inclusive of the Ore Reserve.
Mineral Resources were converted to Ore
Reserves in line with the material classifications
which reflect the level of confidence within the
Resource estimate. The Ore Reserve reflects that
portion of the Measured and Indicated Mineral
Resource which can be economically extracted by
open pit and underground mining methods.
The Ore Reserve estimate considers the
modifying factors and other parameters,
including geotechnical, mining, metallurgical,
hydrology, capital and operating costs, prices
and recoveries, social, environmental, statutory,
and financial aspects of the Project. Figure 2
shows the proposed open pit and underground
development.
Review of Operations
18
2022 Annual Report
Final Investment Decision
approval was given by the
Board in June 2022 following
the execution of binding
offtake agreements with Tesla,
Ford and LG Energy Solution.
Review of Operations
Table 1: Kathleen Valley Project – Ore Reserve Estimate (November 2021)
Category
Tonnage (Mt)
Li2O (%)
Li2O (T)
Ta2O5 (ppm)
Ta2O5 (T)
Underground
Proved
Probable
Sub-Total
Open Pit
Proved
Probable
Sub-Total
TOTAL
-
65.4
65.4
2.7
0.5
3.2
-
1.34
1.34
1.30
0.93
1.21
-
878,966
878,966
33,581
4,696
38,277
-
119
119
141
148
142
-
7,799
7,799
374
75
449
68.5Mt
1.34%
917,243t
120ppm
8,247t
Notes:
• Tonnages and grades are diluted and reported at Li2O cut-off grade of 0.5% (open pit) and 0.7 -1.2% (Underground)
and use a US$740/ dmt FOB SC6.0 pricing assumption;
• Tonnages and grades have been rounded.
Table 2: Kathleen Valley Project – Mineral Resource Estimate (April 2021)
Cut-off grade Li2O %
Resource Category
Million tonnes
Li2O %
Ta2O5 ppm
0.55
TOTAL
Measured
Indicated
Inferred
20
109
27
156
1.3
1.4
1.3
1.4
145
130
113
130
Notes:
• Reported above a Li2O cut-off grade of 0.55%
• Tonnages and grades have been rounded to reflect the relative uncertainty of the estimate.
Construction of the Project is underway,
with first production of spodumene
concentrate scheduled for Q2 2024.
21
Liontown Resources
Review of Operations
Metallurgy
An extensive metallurgical test work program
completed for the DFS confirmed the ability
to produce a low impurity 6-6.5% Li2O
concentrate while also producing a ~12%
Ta2O5 concentrate onsite. The metallurgical
process developed consists of 2-stage crushing
followed by milling, a sequential magnetic-
gravity circuit for tantalum extraction followed
by whole-ore flotation (WOF) and filtration to
produce a +6% Li2O Concentrate. The plant
design was optimised by Lycopodium to ensure
efficient ramp-up, throughput and recovery
certainty but also provisioning for better
operability and maintenance.
Figure 3: Proposed DFS mine development showing ore stopes by grade
2022 Annual Report
22
Review of Operations
Front End Engineering Design
Following completion of the DFS in November
2021, Liontown immediately commenced front
end engineering design (FEED) to further optimise
engineering and confirm the scope and duty
of key long-lead items, such as the SAG Mill.
Detailed engineering and design for the Project
continues, with key elements progressed during
the reporting period including process flowsheet
optimisation and advanced detailed design to
support procurement of critical, long-lead,
mechanical equipment.
Liontown commenced front end
engineering design to further optimise
engineering and confirm the scope
and duty of key long-lead items.
As part of the process of securing the balance of
funding required for Kathleen Valley and FEED
activities, further work was undertaken to finalise
the engineering of the process plant and complete
a value engineering exercise to optimise scope
across the process plant design.
As a result, Liontown revised its 2021 DFS
pre-production capital cost estimate (including
capitalised pre-production expenses) from
A$473 million to A$545 million. The increase was
driven primarily by optimisation and expansion
of the FEED scope across a range of areas and by
general cost escalation.
The variations to the FEED scope will improve
the Project’s operational flexibility and include
adjustments that, while increasing capital, are
expected to deliver positive improvements on the
Project’s process control and operating costs over
the life of the Project.
Further work is continuing to optimise
underground mine designs and surface layout
ahead of the commencement of mining in 2023.
23
Liontown Resources Review of Operations
Figure 4: Revised Process Plant layout incorporating closed circuit crushing and large fine ore bin
Figure 5: Revised secondary crushing and screening area incorporating lower steel
heights and sacrificial conveyor on primary crushing area
2022 Annual Report
24
Review of Operations
Construction
Liontown has awarded the contract for the
design, build and construction of a high-quality
modern accommodation village to assist in
attracting and retaining employees. Site works
commenced in June following approval of a
Small Operations Mining Proposal. The layout
design of the 407-person camp has been driven
by a key story that is important to the Tjiwarl
Traditional Owners. The first 80 rooms are
expected to be ready for use in early Q4 2022.
Construction activity
is expected to ramp
up on site in Q4 2022.
25
Liontown Resources
Review of Operations
26
2022 Annual Report Review of Operations
Offtake Agreements
Final Investment Decision
In December 2021, Liontown successfully
completed a fully underwritten A$450 million
institutional placement of approximately
272.7 million new fully paid ordinary shares to
new and existing investors at an offer price of
A$1.65 per New Share (Placement) to fund the
development of Kathleen Valley. In addition to
the Placement, the Company also completed
a Share Purchase Plan (SPP) in February
2022 at the same price as the Placement,
with subscriptions from eligible shareholders
totalling A$12.9 million.
In June, the Company and Ford executed a
binding funding facility agreement (Funding
Facility) for a A$300 million debt facility to be
used for the development of Kathleen Valley.
The Funding Facility is a senior-secured debt
facility with a 5-year maturity from supply
commencement date. Interest is payable at
the Bank Bill Swap Rate (BBSW) plus a fixed
margin of 1.5%, with repayments quarterly from
the supply commencement date, including a
balloon repayment on maturity.
The Funding Facility, together with the A$463
million raised in the Placement and SPP, means
that Liontown has secured commitments for the
required funds to support the full development
of the Project through to first production.
Following the execution of the offtake
agreements and finalisation of project funding,
the Company’s Board endorsed the full
development of Kathleen Valley and made
the Final Investment Decision (FID).
In June, Liontown formalised
arrangements with leading
electric vehicle manufacturer
Tesla, executing a definitive
full-form Offtake Agreement.
Liontown’s offtake strategy for Kathleen
Valley was to target three large foundation
agreements whilst retaining some capacity to
sell into the rapidly growing spot market. The
Company received very strong interest from
a range of parties in long-term offtake from
Kathleen Valley, culminating in the execution
of offtake agreements with LG Energy Solution
(LGES), Tesla and Ford.
The Company executed its first definitive full
form Offtake Agreement with LGES in April for
the supply of 100,000 dry metric tonnes (DMT)
of SC6.0 spodumene concentrate (SC6.0) in the
first year of supply, and 150,000 DMT of SC6.0
in years two to five of operations. The initial
5-year term is expected to commence in 2024
and may be extended for a further five years by
mutual agreement. LGES is a major EV battery
supplier for leading global automakers and is
continuing to rapidly expand its business amid
growing demand for lithium-ion batteries from
the EV sector globally.
In June, Liontown formalised arrangements
with leading electric vehicle manufacturer
Tesla, executing a definitive full-form Offtake
Agreement. Tesla will purchase 100,000 DMT of
SC6.0 in the first year of supply, increasing to
150,000 DMT per annum in years two to five.
In late June, the Company also executed a
definitive binding full-form Offtake Agreement
with leading global automaker Ford Motor
Company. Supply to Ford is expected to
commence in 2024, with volumes of 75,000
DMT of SC6.0 in the first year of supply,
increasing to 125,000 DMT in year two and
150,000 DMT for years three to five of the
initial five-year term. The Supply Term may
be extended for a further 5 years by
mutual agreement.
Together the arrangements with LGES, Tesla
and Ford mean that Liontown’s total offtake
commitments stand at up to 450,000 DMT per
annum of SC6.0, representing approximately
90% of Kathleen Valley’s start-up SC6.0
production capacity of ~500ktpa. The
remaining production from Kathleen Valley is
intended to be retained for spot volume sales
and/or discrete offtake agreements.
27
Liontown Resources
Review of Operations
Project Enhancements
- Downstream Scoping Study
The Company released an updated Downstream
Scoping Study (DSS) for Kathleen Valley
following completion of the DFS in November
2021, with the results reinforcing the
exceptional financial and economic returns
that would be generated by the addition of an
on-site, downstream processing plant to
produce a battery-grade precursor product.
In parallel with the DFS, Lycopodium was
engaged to update the previous downstream
scoping study published in October 2020 and
evaluate the impact of integrating the mine,
process plant and a downstream refinery,
that would be built via a staged approach
(Integrated Project) at Kathleen Valley and
produce battery-grade Lithium Hydroxide
Monohydrate (LHM) incorporating SC6.0
production envisaged as part of the DFS.
The DSS provided a strong basis to proceed
with a Downstream Pre-Feasibility Study,
which will further investigate the robust
fundamentals and compelling economics of
a downstream refinery at Kathleen Valley.
The DSS provided a strong basis
to proceed with a Downstream
Pre-Feasibility Study,
2022 Annual Report
28
Review of Operations
By 2030, an estimated
145 million Electric
Vehicles1 will have taken
to the road, a key step
in the transition to a
Low Carbon Future.
1. IEA (2021), Global EV Outlook 2021, IEA, Paris https://www.iea.org/reports/global-ev-outlook-2021
29
Liontown Resources
Review of Operations
Other Projects
Buldania Lithium Project (100%)
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
wholly-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
15Mt @ 1.0% Li2O, containing 140,000t of Li2O.
In March, Liontown released the results
of a drilling program at Buldania, which
comprised 42 reverse circulation (RC) drill
holes (BDRC0179-0220) for a total of 6,338m,
designed to test multiple targets including:
• Shallow extensions to the Anna Deposit,
Shallow lithium mineralisation was defined
immediately east and outside of the current
Anna Mineral Resource Estimate (15Mt at 1.0%
Li2O and 44ppm Ta2O5), with the new zone
extending over a strike length of ~150m and
300m down-dip. Further drilling is planned
prior to the Company updating the Anna
Mineral Resource Estimate.
Liontown has previously identified the
Northwest area of the Buldania Project as
having lithium potential and the recently
completed drilling program has identified
further mineralised zones, with assay
results including:
• 5m at 1.3% Li2O from 32m (BDRC0203);
• 10m at 1.1% Li2O from 48m (BDRC0203);
• 6m at 0.8% Li2O from 12m (BDRC0204);
particularly “up-dip”;
• 3m at 1.1% Li2O from 189m (BDRC0205); and
• Regional geochemical/geological targets
within the north-west part of the project
(“Northwest Prospect”); and
• Multi-element soil anomalies extending
north-east from the Anna Deposit.
At the Anna Deposit, better results included:
• 3m at 1.1% Li2O from 36m (BDRC0189)
• 21m at 0.5% Li2O from 8m (BDRC0190)
including:
• 1m at 2.0% Li2O from 13m
• 17m at 1.1% Li2O from 18m (BDRC0193)
including:
• 7m at 1.4% Li2O from 19m and
• 2m at 1.9% Li2O from 30m
• 15m at 1.0% Li2O from 23m (BDRC0197) and
• 4m at 1.6% Li2O from 45m (BDRC0197)
• 6m at 1.0% Li2O from 70m (BDRC0215).
Significant lithium results were returned over
a strike length of 800m, with the mineralisation
open in all directions
A detailed litho-geochemical review was
completed on all of the available Buldania
drill and surface data. This identified a
number of untested areas with significant
potential for mineralised pegmatites, both
within the Anna and Northwest areas
(Figure 6). Drilling is planned to test these
targets, including diamond drilling to
undertake metallurgical testwork.
2022 Annual Report
30
Review of Operations
Figure 6: Buldania Lithium Project – Local geological interpretation
31
Liontown Resources
Review of Operations
Figure 7: Anna Deposit – Geology interpretation with pegmatite outcrop and drilling
Figure 8: Northwest Prospect – Geology interpretation with pegmatite outcrop and drilling
2022 Annual Report
32
05.
Sustainability
Review
With our Kathleen Valley
Project moving rapidly towards
construction, we have significantly
enhanced our capacity to build a
mine that is not only a Tier-1 global
lithium asset, but one that is built
on excellent ESG credentials.
These strong credentials have provided us
with success in securing off-take agreements
with Tesla, Ford and LG Energy Solution,
multinational corporations with high
expectations that their suppliers are
committed to ESG.
In April of this year, it was our pleasure to
appoint Clair Wilson as ESG Manager to
oversee our ESG program. Clair has led a
number of critical ESG initiatives across
the organisation.
Sustainability Review
34
2022 Annual Report Native Title and Human Rights
As per the Kathleen Valley Lithium-Tantalum
Project Native Title Agreement (NTA) signed
in November 2021, we have continued to
engage with the Tjiwarl Native Title Holders.
We have issued two quarterly compliance
reports for the period January to June 2022
which cover all aspects of NTA compliance,
including communication and consultation,
environmental management, water
management, management of Aboriginal
heritage, cultural awareness, access, social
opportunities and development, employment
and contracting, and compensation.
We are working towards publishing our first
Human Rights Policy which will align with
the International Bill of Human Rights; the
International Labor Organization’s Declaration
on Fundamental Principles and Rights at Work;
the United Nations Declaration on the Rights
of Indigenous Peoples; and the United Nations
Guiding Principles on Business and
Human Rights.
Charters and Policies
In FY22, we conducted a comprehensive review
of our charters and policies, updating many of
the underpinning governance processes with
ESG commitments and responsibilities.
Sustainability Review
Climate risk and pathways
to net zero by 2034
Climate change has not only become a
mainstream investment risk but is also
the reason that Liontown is in business –
our lithium is a critical component for the
electrification technologies that will
contribute to a lower carbon future.
Business responses to decarbonisation
strategies have become increasingly
sophisticated yet are under more scrutiny
than ever before. To achieve our ambition of
net zero emissions by 2034, we are aware that
we need a realistic and meaningful strategy
to provide the direction required to meet our
targets. To this aim, in FY22, we initiated the
process of assessing the climate risks and
opportunities connected with our activities,
which is an integral part of the Task Force on
Climate-related Financial Disclosures’ (TCFD)
recommendations. This will be advanced
during the next year.
We have enlisted the aid of highly credentialed
ESG external consultants to assist us
in identifying climate-related risks and
opportunities and developing a net-zero
emissions pathway for the Kathleen Valley
mine. The pathway report will provide us with a
forecasted greenhouse gas emissions inventory
from CY2022 to CY2046, emission reduction
scenarios, and action plans to reach our
emissions reduction targets, as well as high-
level decarbonisation investment estimates,
derived from a baseline of 60% penetration
of renewable energy, defined as part of our
climate strategy roadmap in FY21.
The report will initially provide us with
emissions reduction pathways for scope 1
and 2 emissions, and in the future, we will
investigate reduction pathways for scope 3
emissions. Four scenarios will be investigated,
each focusing on a unique combination of
emissions reduction measures.
35
Liontown Resources
Initiative for Responsible
Mining Assurance (IRMA)
As part of our commitment to ESG, we have
begun the intensive task of self-assessment
against the draft IRMA-Ready Standard.
The standard is intended for exploration
and development companies that are
not yet operational. We will provide our
recommendations on the draft standards
to IRMA as part of the public comment
process and will continue the process of
self-assessment with the view to IRMA
assurance in future years.
ESG Report
We look forward to sharing the full scope of
Liontown’s ESG initiatives and performance in
our FY22 ESG Report, which will be released
in Q4, 2022. The ESG Report is prepared in
accordance with the GRI Standards 2021,
includes applicable disclosures from the
Sustainability Accounting Standards Board
(SASB) Metals and Mining Standard 2021,
and progresses our reporting on the TCFD.
Climate change has not
only become a mainstream
investment risk but is also
the reason that Liontown
is in business.
Sustainability Review
36
2022 Annual Report
06.
Ore Reserve and
Mineral Resource Statement
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 Project
The Kathleen Valley Project Mineral Resource Estimate:
The Company reported its maiden Mineral Resource estimate for the Kathleen Valley Lithium 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. There was no
change to the Mineral Resource estimate during the year ended 30 June 2022.
Mineral Resource
Category
Measured
Indicated
Inferred
TOTAL
As at 30 June 20221
As at 30 June 20211
Million Tonnes
Li2O %
Ta2O5 ppm
Million Tonnes
Li2O %
Ta2O5 ppm
20
109
27
156
1.3
1.4
1.3
1.4
145
130
113
130
20
109
27
156
1.3
1.4
1.3
1.4
145
130
113
130
1. Reported above a Li2O cut-off grade of 0.55% which is commensurate with the cut-off grade determined during the Ore Reserve estimate.
Tonnages and grades have been rounded to reflect the relative uncertainty of the estimate. Inconsistencies in the totals are due to rounding.
37
Liontown Resources
Ore Reserve and Mineral Resource Statement
The Kathleen Valley Project Ore Reserve:
The Company reported its maiden Ore Reserve estimate for the Kathleen Valley Project on
2 December 2019. The Company has since updated the Ore Reserve as part of the Pre-Feasibility
Study released on 9 October 2020 and the Definitive Feasibility Study released on 11 November 2021.
Mineral Resource
Category
Underground
Proved
Probable
Sub-Total
Open Pit
Proved
Probable
Sub-Total
TOTAL
As at 30 June 20221
As at 30 June 20211
Million Tonnes
Li2O %
Ta2O5 ppm
Million Tonnes
Li2O %
Ta2O5 ppm
-
65.4
65.4
2.7
0.5
3.2
68.5
-
1.3
1.3
1.3
0.9
1.2
1.3
-
119
119
141
148
142
120
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
1. Tonnages and grades are diluted and reported at a Li2O cut-off grade of 0.5% (open pit) and 0.7-1.2% (underground)
and use a US$740/dmt FOB SC6.0 pricing assumption;
2. Tonnages and grades are diluted and reported at a Li2O cut-off grade of 0.7-0.75% (open pit) and 1.2-1.5% (underground).
Tonnages and grades have been rounded.
Our commitment to move decisively and rapidly,
while never sacrificing the highest possible
standards of technical excellence and quality,
have become the defining hallmarks of Liontown.
2022 Annual Report
38
Ore Reserve and Mineral Resource Statement
Buldania Lithium Project
The Anna Deposit, Buldania Project Mineral Resource estimate:
The Company reported its maiden Mineral Resource estimate for the Anna Deposit, Buldania
Lithium Project in Western Australia on 8 November 2019. There was no change during the year
ended 30 June 2022.
Mineral Resource
Category
Indicated
Inferred
Total
As at 30 June 20221
As at 30 June 20211
Million Tonnes
Li2O %
Ta2O5 ppm
Million Tonnes
Li2O %
Ta2O5 ppm
9.1
5.9
15
1.0
1.0
1.0
45
42
44
9.1
5.9
15
1.0
1.0
1.0
45
42
44
1 Reported above a Li2O cut-off grade of 0.5% for open pit potential. Tonnages and grades have been rounded to reflect the relative uncertainty of the
estimate. Inconsistencies in the totals are due to rounding.
Toolebuc Vanadium Project
The Cambridge Deposit, Toolebuc Project Mineral Resource estimate:
The Company reported its maiden Mineral Resource estimate for the Cambridge Deposit, Toolebuc
Vanadium Project in North West Queensland on 30 July 2018. A conditional agreement to divest the
Toolebuc Project was entered during the December 2021 Quarter. The disposal was completed in the
September 2022 Quarter.
As at 30 June 20221
As at 30 June 20211
Mineral Resource
Category
Inferred
Total
Million Tonnes
V2O5%
MoO5 ppm
Million Tonnes
V2O5%
MoO5 ppm
84
84
0.30
0.30
188
188
84
84
0.30
0.30
188
188
1 Reported above a Li2O cut-off grade of 0.5% for open pit potential. Tonnages and grades have been rounded to reflect the relative uncertainty of the
estimate. Inconsistencies in the totals are due to rounding.
39
Liontown Resources
Ore Reserve and Mineral Resource Statement
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 Snowden Mining Industry
Consultants Pty Ltd (now Snowden Optiro)
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 (now Snowden Optiro).
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 statement above
has, as a whole, been approved by Mrs
Christine Standing. Mrs Standing is an
employee of Snowden Optiro and a Member
of the Australian Institute of Mining and
Metallurgy.
• Mrs Standing has provided prior written
consent to the issue of the Mineral Resource
statement in the form and context in which it
appears in this annual report.
• The Ore Reserve statement above has, as a
whole, been approved by Mr Allan Earl. Mr
Earl is an employee of Snowden Optiro and a
Fellow of the Australasian Institute of Mining
and Metallurgy.
• Mr Earl has provided prior written consent to
the issue of the Ore Reserve statement in the
form and context in which it appears in this
annual report.
2022 Annual Report
40
07.
Tenement Schedule
(As at 31 August 2022)
Located in Australia
Project
Tenement
Number
Registered
Holder
Nature
of Interests
Project
Tenement
No.
Registered
Holder
Nature of
Interests
Kathleen
M36/264
Valley
M36/265
M36/459
M36/460
LRL (Aust) Pty Ltd
(wholly owned
subsidiary of Liontown
Resources Limited).
100% - nickel
claw back
rights retained
by other party
M36/696
LRL (Aust) Pty Ltd
100%
E36/879
L36/248
L36/251
L36/236
L36/237
L36/0255
L36/0256
G36/0052
E36/1041
LRL (Aust) Pty Ltd
0% - pending
Buldania
E63/856
Avoca Resources
100% of rights
Pty Ltd
P63/1977
M63/647
M63/676
to lithium and
related metals
secured by
Lithium Rights
Agreement
0% - pending
application
E63/1660
LRL (Aust) Pty Ltd
100%
E63/2165
LRL (Aust) Pty Ltd
0% - pending
E63/2267
E63/2268
E63/2266
application
Monjebup
E70/6042
LBM (Aust) Pty Ltd
100%
E70/6043
E70/6044
application
L36/248
L36/251
L53/253
L53/254
L53/255
L53/256
L36/0261
L36/0262
L36/0263
L53/0263
L53/0264
L53/0265
L36/0264
L36/0265
L36/0266
L36/0267
L36/0268
L53/0266
L53/0267
41
Liontown Resources
08.
Competent
Person Statement
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 8 April 2021 which is available on
www.ltresources.com.au.
The Information in this Report that relates to Production Target and DFS for the
Kathleen Valley Project is extracted from the ASX announcement “Kathleen
Valley DFS confirms Tier-1 global lithium project with outstanding economics and
sector-leading sustainability credentials” released on 11 November 2021 which is
available on www.ltresources.com.au.
The Information in this Report that relates to the DSS for the Kathleen Valley
Project is extracted from the ASX announcement “Updated Downstream Scoping
Study Highlights Next Growth Horizon for Kathleen Valley Project” released on 11
November 2021 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 “Positive Drilling Results
Confirm Growth Potential at Buldania Lithium Project, WA” released on 21 March
2022 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 8 November 2019 which is available on www.ltresources.com.au.
As detailed in the ASX announcement “Liontown Board approves development
of Kathleen Valley Lithium Project” released on 29 June 2022, as part of the
Final Investment Decision, the capital expenditure budget for the Kathleen
Valley Project was increased to $545 million. The Company confirms that it
is not aware of any other new information or data that materially affects the
information included in the original market announcements and the updated
capital expenditure budget referenced in the announcement dated 29 June 2022
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 announcement contains forward-looking statements which involve a number
of risks and uncertainties. These forward-looking statements are expressed
in good faith and believed to have a reasonable basis. These statements
reflect current expectations, intentions or strategies regarding the future and
assumptions based on currently available information. Should one or more
of the risks or uncertainties materialise, or should underlying assumptions
prove incorrect, actual results may vary from the expectations, intentions and
strategies described in this announcement. No obligation is assumed to update
forward looking statements if these beliefs, opinions and estimates should
change or to reflect other future developments.
2022 Annual Report
42
09.
Directors’
Report
Directors’ Report
DIRECTORS’ REPORT
The Directors present their report together with the consolidated 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 2022
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.
Timothy Goyder
Non-Executive Chair
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 Chairman of DevEx
Resources Limited. Mr Goyder was appointed as Non-Executive Chairman on 2
February 2006.
Interest in shares and options at the date of
this report:
328,533,766 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 DevEx Resources Limited, Non-
Executive Director of Minerals 260 Limited, Non-Executive Director of entX Limited
and was previously Non-Executive Chairman of Chalice Mining Limited (resigned
24 November 2021).
Antonino Ottaviano BEng (Mechanical), MBA
Managing Director and Chief Executive Officer
Experience:
Interest in shares and options at the date of
this report:
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.
1,624,692 ordinary shares
5,000,000 unlisted options
2,500,000 unlisted sign-on performance rights
393,866 unlisted short-term incentive (STI) performance rights
1,181,600 unlisted long-term incentive (LTI) performance rights
Special responsibilities:
Directorships held in other listed entities in
the last three years:
None
None
David Richards BSc (Hons), MAIG
Technical Director (resigned 24 November 2021)
Experience:
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 and more recently led the team that discovered Liontown’s
world class Kathleen Valley Lithium and Tantalum deposit. He has held senior
positions with Battle Mountain Australia Inc, Delta Gold Limited, AurionGold
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Directors’ Report
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 to Technical Director and on
1 October 2021 from Technical to Non-Executive Director.
Interest in shares and options at the date of
resignation:
22,661,067 ordinary shares
Special responsibilities:
None
Directorships held in other listed entities in
the last three years at date of resignation:
Mr Richards is a Non-Executive Director of Woomera Mining Limited and
Managing Director of Minerals 260 Limited.
Anthony Cipriano B.Bus, CA, GAICD
Independent Non-Executive Director
Experience:
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
and 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.
Interest in shares and options at the date of
this report:
16,100,000 ordinary shares
Special responsibilities:
Chair of the Audit Committee, Member of the Remuneration Committee, Lead
Independent Director (effective 1 January 2022) and previously Chair of the
Remuneration Committee until 24 November 2021.
Directorships held in other listed entities in
the last three years:
Mr Cipriano is Non-Executive Chairman of Minerals 260 Limited.
Craig Williams BSC (Hons)
Independent Non-Executive Director
Experience:
Mr Williams is a Geologist with over 40 years’ experience in mineral exploration
and development. Mr Williams co-founded Equinox Minerals Limited in 1993 and
was President, Chief Executive Officer and Director prior to Barrick Gold’s
takeover of Equinox. He has been directly involved in several significant
discoveries, including the Ernest Henry Deposit in Queensland and a series of gold
deposits in Western Australia. In addition to his technical capabilities, Mr
Williams also has extensive corporate management and financing experience. Mr
Williams was appointed as a Non-Executive Director on 14 November 2006.
Interest in shares and options at the date of
this report:
29,767,515 ordinary shares
1,000,000 unlisted options
Special responsibilities:
Member of the Audit Committee until 30 June 2022 and Member of the
Remuneration Committee until 30 April 2022.
Directorships held in other listed entities in
the last three years:
Mr Williams is currently Non-Executive Chairman of OreCorp Limited, Non-
Executive Chairman of Solstice Minerals Limited and Non-Executive Director of
Minerals 260 Limited.
Steven Chadwick BAppSc, AusIMM
Independent Non-Executive Director (resigned 4 July 2022)
Experience:
Mr Chadwick has over 40 years’ experience in the mining industry, incorporating
technical, operating and management roles, as well as a strong metallurgical
background. He was a founding Director of BC Iron Limited and a former Managing
Director of Coventry Resources, PacMin Mining Limited and Northern Gold
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Liontown Resources
Directors’ Report
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.
Interest in shares and options at the date of
retirement:
10,047,636 ordinary shares
Special responsibilities:
None
Directorships held in other listed entities in
the last three years at date of resignation:
Mr Chadwick is a Non-Executive Director of Lycopodium Limited and was
previously an Executive Director of Quantum Graphite Limited (resigned 30
November 2020).
Jennifer Morris B.Arts, AICD, INSEAD
Independent Non-Executive Director (appointed 24 November 2021)
Experience:
Ms Morris is an accomplished corporate executive and Non-Executive director,
with key experience in advising corporations and government entities on strategy
development, governance controls, complex large-scale business transformation,
human capital related work, the embedding of environment, social and
governance related policies and the understanding of high-performance
environments learned during her varied career including elite sport. Ms Morris is a
former partner of global professional services firm Deloitte where her career
spanned more than 10 years working across the mining, government and transport
sectors. Ms Morris was also previously a Senior Marketing Analyst for Rio Tinto Iron
Ore.
Interest in shares and options at the date of
this report:
66,210 ordinary shares
500,000 unlisted options
Special responsibilities:
Chair of the Remuneration Committee from 24 November 2021 and Member of
the Audit Committee from 24 November 2021.
Directorships held in other listed entities in
the last three years:
Ms Morris is a Non-Executive Director of Fortescue Metals Group Ltd and Sandfire
Resources Ltd.
Shane McLeay B Eng Mining (Hons) FAusIMM AWASM
Independent Non-Executive Director (appointed 3 May 2022)
Experience:
Mr McLeay is a mining engineer and senior manager in the resource sector with
over 25 years’ experience. He has a strong track record in starting up and operating
mines of varying scale, with a skillset that includes project management, building
highly capable teams and overseeing operational ramp-up to steady-state
production. He has extensive experience in senior operational site management,
predominantly in gold and base metal hard rock mines, prior to founding Entech in
2010.
Interest in shares and options at the date of
this report:
160,000 ordinary shares
Special responsibilities:
Member of the Audit Committee from 1 July 2022.
Directorships held in other listed entities in
the last three years:
None
2.
COMPANY SECRETARY
The name and details of the Company Secretary in office during the financial year and until the date of this report are as follows:
Mr Clint McGhie B.Com, CA, AGIA
Experience:
Mr McGhie is an experienced Chartered Accountant and Company Secretary who
commenced his career at a large international accounting firm and has since been
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Directors’ Report
involved with several ASX and AIM listed exploration and development companies
operating in the resources sector, including Minerals 260 Limited, 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. He was appointed Company
Secretary on 5 May 2021.
3.
DIRECTORS’ MEETINGS
The number of board and committee meetings attended by each Director during the year are as follows:
No. of meetings held:
T Goyder
T Ottaviano
D Richards
C Williams
A Cipriano
S Chadwick
J Morris
S McLeay
Board
Meeting (1)
18
Audit
Committee
2
Remuneration
Committee
2
Attended
Eligible to
attend
Attended
Eligible to
attend
Attended
Eligible to
attend
18
18
7
17
18
18
11
3
18
18
7
18
18
18
11
3
-
-
-
2
2
-
1
-
-
-
-
2
2
-
1
-
2
-
-
-
2
-
2
-
2
-
-
1
2
-
2
-
1. Given the current size and composition of the Board, the Company has not established a separate nomination or risk committee. The role of these committees
are performed by the Board and any matters to be dealt with by these committees are included in board meetings.
4.
PRINCIPAL ACTIVITIES
The principal activities of the Company during the course of the financial year were mineral exploration, evaluation and
development.
5.
REVIEW OF OPERATIONS
The Directors present the operating and financial review of the Company for the year ended 30 June 2022.
Operating performance
The information provided in the review is set out in pages 14 to 32 of this Annual Report and forms part of the Directors’ Report
and provides information to assist users in assessing the operations and activities of the Company.
Financial performance
The Group reported a net profit after tax of $40.9 million for the year compared to the net loss of $10.6 million in 2021. The net
profit includes the gain on the demerger of Minerals 260 Limited of $91.0 million which is partly offset by $38.7 million of
exploration and evaluation expenditure during the period (30 June 2021: $7.1m). Exploration and evaluation expenditure,
excluding $30.25 million relating to the termination of a Kathleen Valley royalty, was $8.4 million being an increase of $1.3
million from 2021. Corporate and administrative costs increased by $8.0 million in 2022 due to an increase in corporate activity
and resources associated with development of the Kathleen Valley Project.
The Company commenced the capitalisation of costs related to the development of the Kathleen Valley Project with $26.2
million of costs capitalised during the year.
Financial position
At balance date net assets were $466.8 million (2021: net assets of $13.5 million), and an excess of current assets over current
liabilities of $434.6 million (2021: excess of current assets over current liabilities of $11.0 million).
Current assets increased from $12.8 million as at 30 June 2021 to $454.5 million at 30 June 2022 due to a significant increase in
cash from proceeds of equity raisings of $516.9 million (before costs). Current liabilities increased from $1.9 million at 30 June
6 | D I R E C T O R S ’ R E P O R T
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2021 to $19.9 million at 30 June 2022 due primarily to an increase in trade and other payables associated with the Kathleen
Valley Lithium Project development activities.
Kathleen Valley Lithium Project development costs of $26.2 million were capitalised during the period and $5.0 million in
borrowing costs associated with the Ford debt facility were capitalised during the period.
Statement of cashflows
Cash and cash equivalents as at 30 June 2022 were $453.1 million (2021: $12.5 million). The net increase in cash of $440.5
million is due primarily to proceeds received from placements and the SPP totalling $514.9 million (before costs). A further $2.0
million was received from the exercise of share options. Key cash outflows included $30.3 million for the termination of the
Kathleen Valley royalty termination, $13.3 million in payments for property, plant and equipment (mainly related to the
Kathleen Valley Lithium Project development), $9.1 million in payments for exploration and evaluation expenditure (including
the Kathleen Valley DFS), and $8.4 million paid to suppliers and employees. The increase in payment to suppliers and employees
was driven by increased corporate activity and resources associated with development of the Kathleen Valley Lithium Project.
Corporate
Equity Capital Raisings and Financing Facility
During the period, Liontown completed two placements and a share purchase plan (SPP) for total proceeds of $514.9 million
(before costs). The Company received strong demand from high-quality domestic and offshore institutions reinforcing the
strength of Liontown’s world-class Kathleen Valley Lithium Project. On 22 July 2021, the Company completed a placement to
raise $52.0 million (before costs) by issuing 68,420,000 fully paid ordinary shares at an issue price of $0.76 per share. On 7
December 2021, the Company completed a placement to raise $450 million (before costs) by issuing 272,727,273 fully paid
ordinary shares at an issue price of $1.65 per share. On 4 February 2022, the Company completed the SPP to raise $12.9 million
(before costs) by issuing 7,819,543 fully paid ordinary shares at an issue price of $1.65 per share.
In June 2022, the Company executed a binding full-form funding facility agreement (Funding Facility) with Ford for a $300 million
debt facility. The senior-secured Funding Facility has a 5-year maturity commencing from the spodumene supply
commencement date and interest is payable at the Bank Bill Swap Rate (BBSW) plus a fixed margin of 1.5%.
Final Investment Decision (FID)
In June 2022, the Company’s Board endorsed the full development of the Kathleen Valley Lithium Project. The FID followed the
execution of the third and final foundational offtake agreement and the $300 million Funding Facility, with leading global
automaker, Ford Motor Company (Ford). Liontown's offtake commitments (representing approximately 90% of Kathleen
Valley’s initial SC6.0 production capacity of ~500ktpa), together with the Funding Facility and the proceeds from Liontown's
capital raisings, supported the Board’s decision to endorse the FID.
Termination of Kathleen Valley Royalty
The Company executed a royalty termination deed with Ramelius Resources Limited (ASX: RMS) with the Company paying $30.3
million to terminate the royalty rights Ramelius Resources Limited held over the Kathleen Valley Lithium Project. Removal of
the royalty obligation aligns clearly with the Company’s stated objective of reducing the operating costs of the Project.
Demerger and IPO of Minerals 260
During the year, the Company completed a demerger of wholly owned subsidiary Minerals 260 Limited, which was subsequently
listed on the ASX as part of an Initial Public Offer (IPO), divesting the non-lithium exploration assets in Western Australia. The
projects divested include Moora, Koojan JV, Dingo Rocks and Yalwest. The demerger was undertaken by way of an in-specie
distribution.
The Minerals 260 IPO successfully raised $30 million and closed heavily subscribed. Minerals 260 commenced trading on the
Australian Securities Exchange on 12 October 2021 under the ASX code “MI6”.
S&P ASX 200 & MSCI Australia Index Inclusion
The Company was included in the benchmark S&P ASX 300 Index of the ASX effective 20 September 2021 and then subsequently
included in the S&P ASX 200 Index of the ASX effective 20 December 2021. This reflected the substantial increase in the
Company’s market capitalisation and increased depth of its share register during the period.
The Company was also included in the MSCI Australia Index with effect from 30 November 2021.
Board Changes
Highly regarded company director Ms Jennifer Morris OAM joined the Company’s Board as an Independent Non-Executive
Director having been elected at the Annual General Meeting in November 2021. Ms Morris is an accomplished corporate
executive and non-executive director and is currently a Non-Executive Director of ASX-listed iron ore producer Fortescue Metals
Group Ltd (ASX: FMG) and copper producer Sandfire Resources Ltd (ASX: SFR).
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Directors’ Report
Experienced mining engineer Shane McLeay joined the Board as an Independent Non-Executive Director on 3 May 2022. Mr
McLeay’s expertise in underground mining and in adopting innovative, technology-led solutions will be extremely valuable
during the development and operational phases of the Kathleen Valley Lithium Project.
Subsequent to the year-end, highly experienced lawyer Ms Adrienne Parker was appointed as Independent Non-Executive
Director effective 1 October 2022. Ms Parker’s experience and her specialisation in the infrastructure and resources sector will
bring strong legal, commercial and corporate experience to the Board.
These appointments add further experience, independence and diversity to the Board as it continues on its rapid growth
trajectory to become a leading global battery materials producer through the development of its world-class Kathleen Valley
Lithium Project in Western Australia.
During the year Mr David Richards retired from his position as a Director and commenced his new role as Managing Director of
Minerals 260 Ltd. Mr Richards retired at the Annual General Meeting in November 2021.
Subsequent to year-end, Mr Steven Chadwick announced his retirement as a Non-Executive Director of the Company and long-
serving Independent Non-Executive Director Mr Craig Williams announced his intention to retire from the Board at the
upcoming Annual General Meeting (AGM) in November 2022.
Mr Williams and Mr Chadwick have played instrumental roles and made enormous contributions to the Company’s growth and
success.
Impact of COVID-19
The COVID-19 pandemic has had an impact on, individuals, communities and businesses globally. Employees at all levels of the
business have changed the way they work and how they interact professionally and socially. Together with the various
Government health measures, the Group implemented controls and requirements to protect the health and safety of its
workforce, their families, local supplies and neighbouring communities while ensuring a safe working environment.
No adjustments have been made to the Company’s results as at 30 June 2022 for the impacts of COVID-19. However, the scale
of duration of the COVID-19 pandemic and possible future Government measures, vaccine rollout and their impact on the
Company’s operations and financial situation necessarily remains uncertain.
The Company is committed to maintaining a safe environment for its employees, contractors, visitors and the communities in
which it works. The Company has implemented a range of measures in response to Covid-19 to ensure the health and safety
of its people and to enable the continuation of its activities without interruption where possible. The Company continues to
monitor Government advice in relation to Covid-19 to update existing protocols.
6.
BUSINESS STRATEGIES AND PROSPECTS FOR FUTURE FINANCIAL YEARS
The strategy of the Group is to create long-term shareholder value, be an environmental, social and governance (ESG) leader
and be a globally significant provider of battery minerals for the rapidly growing clean energy market. To achieve its objective,
the Group currently has the following business strategies and prospects:
(i) Realise the Kathleen Valley Lithium Project’s full potential: by becoming a globally significant supplier of spodumene;
(ii) Downstream Expansion: develop integrated operations to capture higher margins; and
(iii) Expand the portfolio through organic growth (including the Buldania Lithium Project), value accretive merger and
acquisition, and exposure to the circular economy.
The Groups activities have inherent risk and the Board is unable to provide certainty of the expected results of these activities,
or that any or all of these likely activities will be achieved. The material business risks faced by the Group that could influence
the Group’s future prospects, and how the Group manages these risks, are outlined below.
Development risks
As a result of the substantial expenditures involved in mine development projects and the impact on those expenditures from
a high inflation environment, mine developments are prone to material cost overruns, cost inflation, labour shortages and
supply chain interruptions. The capital expenditures and time required to develop new mines are considerable and changes in
cost or construction schedules can significantly increase both the time and capital required to build the project.
Operational risks
The planned schedule for the commissioning and ramp up of the spodumene process plant are subject to operating risks that
could impact the amount and quality of spodumene produced or increase the cost of production for varying lengths of time.
Such difficulties include: changes or variations in ore grade, metallurgical performance; mining, processing and loading
equipment failures and unexpected maintenance problems; limited availability or increased costs of mining, processing and
loading equipment and parts and other materials from suppliers; mine safety accidents; export port infrastructure and capacity
allocation, adverse weather and natural disasters; and a shortage of skilled labour. If any of these or other conditions or events
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Directors’ Report
occur in the future, they may increase the cost of mining or delay or halt planned commissioning, ramp up and production,
which could adversely affect our results of operations or decrease the value of our assets. The Group has in place a framework
for the management of operational risks and an insurance program which provides coverage for a number of these operating
risks.
Sufficient water resources
Securing good quality water sources (less than 3,000 total dissolved solids) has been identified as a key project requirement.
Good progress has been made in securing the necessary water required for commencement and exploration work and
development activity is continuing on numerous identified targets to further define additional water resources. In the event
sufficient locally sourced additional water resources cannot be identified, this may result in an increase in the development cost,
cost of operations or impact planned commissioning, ramp up and/or production.
Lithium prices and foreign exchange
The price of lithium products and other commodities fluctuate and are affected by numerous factors beyond the control of the
Company. Potential future production from the Company’s mineral properties will be dependent upon the price of Lithium
products and other commodities being adequate to make these properties economic. The Company executed binding offtakes
with high quality offtake partners at different levels of the supply chain and across different jurisdictions. Project financing
facilities with Ford are denominated in Australian dollars and most of the planned development and operational activities are
denominated in Australian dollars. Sales revenues will be denominated in US dollars and the Company’s ability to fund activities
and make debt repayments maybe adversely affected if the Australian dollar rises against the US dollar.
The Company’s activities may require further capital
The development of the Company’s projects may require additional funding. The Company has recently raised significant funds
via equity raisings and executed a A$300 million debt financing package with Ford to fund the Kathleen Valley Lithium Project.
Whilst current available funding is expected to fund the Kathleen Valley Lithium Project through to first production, there can
be no assurance that additional capital or other types of financing will be available if needed for development and operations
or that, if available, the terms of such financing will be favourable to the Company.
Native title and Aboriginal Heritage
There are areas of the Company’s projects over which legitimate common law and/or statutory Native Title rights of Aboriginal
Australians exist. Where Native Title rights do exist, the Company must obtain consent of the relevant landowner to progress
the exploration, development and mining phases of its operations. Where there is an Aboriginal Site for the purposes of the
Aboriginal Heritage legislation, the Company must obtain consents in accordance with the legislation. The Company has
executed a Native Title Land Access Agreement with the Native Title Owners for Kathleen Valley and established a framework
for ongoing engagement and obtaining required consents for the continuity of works, but in the event that it is unable to obtain
these consents, its activities may be adversely affected.
The Company’s activities are subject to Government regulations and approvals
The development of the Kathleen Valley Lithium Project is subject to obtaining further key approvals from relevant government
authorities. The Company has an approvals schedule and a management team with significant experience in approvals required
for mining projects in Western Australia. A delay or failure to obtain required permits may affect the Company’s schedule or
ability to develop the project. Any material adverse changes in government policies or legislation in Western Australia and
Australia that affect mining, processing, development and mineral exploration activities, export activities, income tax laws,
royalty regulations, government subsidies and environmental issues may affect the viability and profitability of any planned
development the Kathleen Valley Lithium Project and other projects in the Company’s portfolio. No assurance can be given that
new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could
adversely impact the Group’s mineral properties.
Global financial conditions may adversely affect the Company’s growth and profitability
Many industries, including the mineral resource industry, are impacted by these market conditions. Some of the key impacts of
the current financial market turmoil caused by the COVID-19 pandemic, global geopolitical tensions and inflationary economic
environments may result in contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility
in global equity, commodity, foreign exchange and precious metal markets, and a lack of market liquidity. Due to the current
nature of the Company’s activities, a slowdown in the financial markets or other economic conditions may adversely affect the
Company’s growth and ability to finance its activities. If these increased levels of volatility and market turmoil continue, the
Company’s activities could be adversely impacted and the trading price of the Company’s shares could be adversely affected.
7.
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.
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8.
DIVIDENDS
No dividends were declared or paid during the period and the Directors recommend that no dividend be paid.
9.
EVENTS SUBSEQUENT TO REPORTING DATE
On 21 July 2022, the Company announced that it had appointed Lycopodium Minerals Pty Ltd to complete the engineering,
procurement, construction management and commissioning services for the Kathleen Valley Lithium Project.
On 12 September 2022, the Company announced that it had executed a Letter of Award with Zenith Energy to supply electricity
to its Kathleen Valley Lithium Project in Western Australia for a period of 15 years.
There has not been any other matter or circumstance that has arisen since 30 June 2022 that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial
years.
10.
LIKELY DEVELOPMENTS
Other than the development of the Kathleen Valley Lithium Project, there are no likely developments that will impact on the
Company other than as disclosed elsewhere in this report.
11.
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.
12.
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.
13.
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.
14.
NON-AUDIT SERVICES
During the year HLB Mann Judd, the Company’s auditor, other than review of ASX Quarterly 5B announcements and audit report
of Minerals 260 Limited, performed no other services in addition to their statutory audit duties.
15.
OPTIONS, SERVICE AND PERFORMANCE RIGHTS GRANTED OVER UNISSUED SHARES
(a) Options
At the date of this report 8,500,000 fully paid ordinary shares of the Company are under option on the following terms and
conditions:
Exercisable at $0.1479 each on or before 4 June 2023
Exercisable at $0.2979 each on or before 25 November 2023
Exercisable at $0.5379 each on or before 9 February 2023
Exercisable at $0.5779 each on or before 9 February 2024
Exercisable at $2.45 each on or before 23 November 2024
Total Options
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Liontown Resources
51
Number
2,000,000
1,000,000
2,500,000
2,500,000
500,000
8,500,000
(b) Performance Rights
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:
Directors’ Report
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
16.
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 2022 outlines remuneration arrangements in place for Directors and other
members of the Key Management Personnel (KMP) of the Company 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) Non-Executive Directors
•
•
•
•
•
•
T Goyder - Chair
C Williams - Non-Executive Director
A Cipriano - Lead Independent Non-Executive Director
S Chadwick - Non-Executive Director (resigned 4 July 2022)
J Morris – Non-Executive Director (appointed 24 November 2021)
S McLeay - Non-Executive Director (appointed 3 May 2022)
(ii) Executives
•
•
•
•
T Ottaviano - Managing Director and Chief Executive Officer (CEO)
D Richards - Technical Director (resigned 24 November 2021)
A Smits – Chief Operating Officer (COO)
C Hasson – Chief Financial Officer (CFO)
There were no other changes to KMP after the reporting date and before the date the financial report was authorised for issue.
(b) Remuneration Committee
The Remuneration Committee members are Ms Morris (Chair), Mr Goyder and Mr Cipriano (all non-executive directors) and the
Committee is responsible for advising and making recommendations to the Board regarding the remuneration framework,
policy, vesting of awards and compensation arrangements for the non-executive and executive directors, executives and
employees.
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. During the financial year the Committee has sought
some advice from external consultants in relation to remuneration benchmarking. This did not involve providing the
Remuneration Committee with any remuneration recommendations as defined by the Corporations Act 2001.
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Remuneration Report approval at 2021 Annual General Meeting (AGM)
The Remuneration Report for the financial year ended 30 June 2021 received positive shareholder support at the 2021 Annual
General Meeting with a vote of 82.49% in favour.
(c) Remuneration Framework
The performance of the Company depends upon the quality of the directors and executives. The strategy of the Company in
determining remuneration levels is to set competitive remuneration packages to attract and retain high calibre Directors,
Executives and 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 considered when setting remuneration levels to ensure that the operations
of the Company remain sustainable.
In accordance with best practice corporate governance, the structure of non-executive and executive remuneration is separate
and distinct.
The Company may issue equity securities (i.e. options, service rights or performance rights) under the Employee Securities
Incentive Plan (Plan) to retain and reward short and long term performance of directors, executives and, employees which is
aligned to strategic objectives and shareholder returns. The Plan was last approved by Shareholders at the 2021 AGM.
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 elements of fixed remuneration and variable ‘at
risk’ remuneration (comprising short-term and long-term incentive).
Fixed remuneration
Fixed remuneration is key in attracting and retaining executive talent and it is reviewed on an annual basis by the Remuneration
Committee and the Board. The annual review will generally include a comparison to relevant comparative remuneration in the
market which can be provided by an external consultant or sourced externally. There were no changes to executive fixed
remuneration during FY2022.
Short-term incentives
The Board may consider short-term ‘at risk’ performance related remuneration in the form of cash or share-based payments to
reward performance in relation to shorter term strategic objectives of the Company.
The Company currently has no formal performance related remuneration policy that governs the payment of annual cash
bonuses upon meeting pre-determined performance targets. There were no cash bonuses paid to or received by executives in
the years ended 30 June 2021 and 30 June 2022.
The Company, under the Plan, can issue either share options or rights that focus on aligning the interests of executives and
shareholders. In addition to vesting service periods, performance hurdles are set on performance rights issued to executives.
Short-term performance rights will vest to the extent the Board, using its discretion, determines that the short-term incentive
criteria have been satisfied.
Short-term incentives were issued to executives in May 2021 in relation to FY2022 (refer section (g) of the remuneration report).
Long-term incentives
The Company may issue equity securities (i.e. options or performance rights) under the Plan to reward longer term performance
and retention of Executives that provides an opportunity to participate in the growth of the Company.
The Company, under the Plan, can issue either share options or rights that focus on aligning the interests of executives and
shareholders. In addition to vesting service periods, performance hurdles are set on performance rights issued to executives in
certain circumstances. Options issued to executives can have performance hurdles or non-performance vesting service periods.
Where options are issued the Company believes that by issuing options at a price in excess of the Company’s 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.
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.
Long-term incentives were issued to executives in May 2021 in relation to FY2022 (refer section (g) of the remuneration report).
1 2 | D I R E C T O R S ’ R E P O R T
53
Liontown Resources
Directors’ Report
Link between performance and executive remuneration
The focus of executive remuneration over the financial year was fixed remuneration, options and performance rights under the
Plan (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:
30 June 2018
30 June 2019
30 June 2020
30 June 2021
30 June 2022
Share price ($)
Market Capitalisation ($’000)
0.028
30,912
0.100
153,289
0.105
0.850
1.055
179,685
1,546,243
2,312,798
Targeted remuneration mix
The target maximum remuneration is set each year for executives each year by the Committee that is optimal in response to
market conditions and strategic business objectives.
The table below represents STI and LTI opportunities as a percentage of fixed annual remuneration (FAR) for executives in the
current year.
Position
CEO
COO
CFO
FAR: fixed annual remuneration consisting of base salary and superannuation. This excludes sign-on incentives.
Technical Director David Richards resigned 24 November 2021 and did not receive any at risk remuneration.
80%
70%
At Risk
Total STI and LTI as
% of FAR
Short-Term
Incentive as % of
FAR
Long-Term
Incentive as % of
FAR
100%
25%
20%
17.5%
75%
60%
52.5%
The table below represents the target remuneration mix for executives based on maximum incentive opportunity in the
current year.
Position
CEO
COO
CFO
FAR (1)
50%
55%
60%
At Risk
Short-Term
Incentive
Long-Term
Incentive
12%
12%
10%
38%
33%
30%
1.Refer to section (d) for details of executive fixed remuneration from 1 July 2022.
Non-Executive Director Remuneration
The Board recognises the importance of attracting and retaining talented non-executive directors and aims to align
remuneration with 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 2021 AGM, Shareholders
approved to increase the total aggregate pool amount of fees of $500,000 that was approved in November 2018 to $1,000,000
per annum (including superannuation). The increase in the total fees was to reflect the increase time and commitment of non-
executive directors given the rapid expansion in the scope and nature of the Company’s activities and to ensure that the
Company can attract new directors with the appropriate skills and experience to complement the Board.
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.
1 3 | D I R E C T O R S ’ R E P O R T
2022 Annual Report
54
Directors’ Report
The remuneration of non-executive directors includes of directors’ fees, and board committee fees as outlined below:
Annual board fees
Chair
Lead independent director
Other non-executive directors
Annual committee fees
Chair
Member
At 30 June 2022
$150,000
$100,000
$70,000
$15,000
$7,500
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 Plan (Plan) subject to approvals required by shareholders.
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 $56,000 (2021: $49,000). Refer section (i) of the
remuneration report for further details).
During the year, Mr Cipriano received fees for his consultancy services of $147,500 (2021: $87,500). Refer section (i) of the
remuneration report for further details).
No fees were paid to other non-executive directors under consultancy services agreements.
(d) Executive Remuneration in FY2023
The remuneration committee undertook a comprehensive review of KMP remuneration in late 2022 that included the external
benchmarking of executives to comparator companies. The changes in remuneration are reflective of the Company’s inclusion
in the S&P ASX200, progression from explorer to developer and the laying of foundations for future production. The change in
total fixed remuneration for executives is effective from 1 July 2022 as follows:
Name
T Ottaviano
A Smits
C Hasson
Position
CEO
COO
CFO
1. Includes Base salary plus superannuation.
FAR effective 1 July 2022(1)
$750,000
$420,000
$335,000
The table below represents STI and LTI opportunities as a percentage of FAR for executives for FY2023.
At Risk
Total STI and LTI as
% of FAR
Short-Term
Incentive as % of
FAR
Long-Term
Incentive as % of
FAR
165%
105%
105%
40%
35%
35%
125%
70%
70%
CEO
COO
CFO
1 4 | D I R E C T O R S ’ R E P O R T
55
Liontown Resources
Directors’ Report
(e) Remuneration of Key Management Personnel
The table below shows the fixed and variable remuneration for key management personnel.
2022
Short-Term Benefits
Post-
Employment
Benefits
Long Term Incentives
s
e
e
F
d
n
a
y
r
a
a
S
l
$
Non-Executive Directors
T Goyder
149,886
C Wi l l i a ms
A Ci pri a no (6)
S Cha dwi ck(7)
J Morri s (8)
S McLea y(9)
Executives
T Ottavi a no (4)
D Ri cha rds (5)
A Smi ts
C Ha s s on
Total
64,703
85,470
60,358
55,710
11,402
550,126
79,611
296,804
255,708
s
e
e
F
y
c
n
a
t
l
u
s
n
o
C
$
-
-
147,500
56,000
-
-
-
-
-
-
s
t
h
g
i
R
e
c
i
v
r
e
S
$
-
-
-
-
-
-
-
-
-
-
-
-
r
e
h
t
O
)
1
(
s
t
n
u
o
m
A
e
c
n
a
m
r
o
f
r
e
P
)
2
(
s
t
h
g
i
R
$
$
4,459
-
-
-
-
-
-
-
-
-
-
-
50,442
123,281
(3,640)
34,856
20,187
-
55,744
42,023
n
o
i
t
a
u
n
n
a
r
e
p
u
S
$
14,989
6,470
8,547
-
5,571
1,140
27,500
7,362
29,680
25,571
l
a
t
o
T
e
c
n
a
m
r
o
f
r
e
P
)
2
(
s
t
h
g
i
R
$
$
%
-
-
-
-
-
-
-
-
-
-
169,334
71,173
241,517
116,358
450,430
12,542
-
)
3
(
s
n
o
i
t
p
O
$
-
-
-
-
389,149
-
556,358
794,334
2,102,041
-
59,292
31,891
-
83,333
-
59,367
44,754
535,743
420,134
1,609,778
203,500
106,304
221,048
126,830
1,036,690
898,455
4,202,605
2021
Short-Term Benefits
Post-
Employment
Benefits
Long Term Incentives
s
e
e
F
d
n
a
y
r
a
a
S
l
$
s
e
e
F
y
c
n
a
t
l
u
s
n
o
C
$
s
t
h
g
i
R
e
c
i
v
r
e
S
$
r
e
h
t
O
)
1
(
s
t
n
u
o
m
A
e
c
n
a
m
r
o
f
r
e
P
)
2
(
s
t
h
g
i
R
$
$
n
o
i
t
a
u
n
n
a
r
e
p
u
S
$
)
3
(
s
n
o
i
t
p
O
$
l
a
t
o
T
e
c
n
a
m
r
o
f
r
e
P
)
2
(
s
t
h
g
i
R
$
$
%
Non-Executive Directors
T Goyder
C Wi l l i a ms
A Ci pri a no (6)
S Cha dwi ck(7)
Executives
T Ottavi a no (4)
D Ri cha rds (5)
A Smi ts
C Ha s s on
C McGhi e (10)
Total
34,589
9,278
9,278
8,789
87,519
249,354
207,801
198,451
44,551
-
-
87,500
49,000
133,015
35,677
35,677
30,867
-
-
-
-
-
-
31,031
58,871
32,379
-
6,636
6,636
6,636
6,636
10,193
35,949
35,226
16,833
4,841
-
-
-
-
19,493
-
8,814
6,645
6,495
3,286
-
881
881
-
154,862
154,862
193,577
-
-
-
-
177,526
-
207,334
294,834
288,869
8,314
21,063
19,741
18,853
4,232
709,207
126,223
960,949
-
-
337,397
-
202,143
160,280
-
9,434
7,112
6,951
542,030
440,553
67,070
75
53
67
89
41
40
20
849,610
136,500
357,517
129,586
41,447
77,251
1,574,931
149,720
3,316,562
1 5 | D I R E C T O R S ’ R E P O R T
2022 Annual Report
56
n
o
i
t
a
r
e
n
u
m
e
R
f
o
n
o
i
t
r
o
p
o
r
P
d
e
s
a
B
e
c
n
a
m
r
o
f
r
e
P
86
70
33
28
n
o
i
t
a
r
e
n
u
m
e
R
f
o
n
o
i
t
r
o
p
o
r
P
d
e
s
a
B
e
c
n
a
m
r
o
f
r
e
P
Directors’ Report
1. Other amounts, where applicable, includes the cost to the Company of providing time off in lieu, annual leave, long service leave, fringe benefits and any other
non-cash benefit.
2. 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.
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 Ottaviano commenced as CEO on 1 May 2021 and Managing Director on 5 May 2021.
5. Mr Richards resigned 24 November 2021. Amounts above do not include unused leave entitlements of $74,535 transferred by way of payment to Minerals
260 Ltd.
6. 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 due and payable
under normal payment terms. The consultancy agreement was terminated on 31 December 2021.
7. Mr Chadwick resigned 4 July 2022. Up until retirement he received Directors’ fees and consulting fees via a consultancy agreement with the Company. Amounts
were billed based on normal market rates for such consultancy services and were due and payable under normal payment terms.
8. Ms Morris appointed 24 November 2021.
9. Mr McLeay appointed 3 May 2022.
10. The Company have determined that Mr McGhie is no longer a KMP effective from 1 July 2021. He was appointed Company Secretary on 5 May 2021
(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 2021
Held at
Commencement
Date
Exercise of
Options
Net
Acquisitions/
(Disposals) (1)
Held at
Resignation
Date
Balance
30 June 2022
No. Shares
328,515,585
29,767,515
16,531,343
10,797,636
- 24,695
- 160,000
- - 18,181
-
- -
- 2,000,000
-
- 1,250,000 (2,000,000)
- 41,515
-
-
Non-Executive Directors
T Goyder
C Williams
A Cipriano
S Chadwick(3)
J Morris (4)
S McLeay(5)
Executives
- 1,624,692
T Ottaviano
D Richards (2)
-
- 5,318,079
A Smits
- 1,618,325
C Hasson
-
-
C McGhie
1. Acquisitions and 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 Richards resigned 24 November 2021.
3. Mr Chadwick resigned 4 July 2022.
4. Ms Morris appointed 24 November 2021.
5. Mr McLeay appointed 3 May 2022.
- 1,624,692
- 3,975,000 (1,140,000)
- 6,185,116 (1,640,000)
- 1,818,325 (436,126)
- 328,533,766
- 29,767,515
- 18,531,343
- 10,047,636
- 66,210
- 160,000
-
19,826,067
772,963
236,126
-
- -
22,661,067
-
-
(g) Share-Based Payments
Directors, executives, key employees and consultants may be eligible to participate in equity-based compensation via the
Employee Securities Incentive Plan.
Options
Under the terms and conditions of the Plan, 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.
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.
1 6 | D I R E C T O R S ’ R E P O R T
57
Liontown Resources
Directors’ Report
Options over Equity Instruments granted as Compensation Instruments
Details of unlisted options over ordinary shares that were granted as compensation to each KMP during the year:
No. Options
Fair Value
$
Exercise Price
$
Expiry Date No. Options Vested
during the year
J Morris
500,000
389,149
$2.45
23-Nov-24
500,000
The options have been valued using the Black-Scholes option valuation method and 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
Vesting date
Expiry date
Number
Fair value at grant date
Director
O24
24 Nov-21
Nil
78%
0.99%
3
$2.45
$1.805
24-Nov-21
23-Nov-24
500,000
$0.778
The below table shows a reconciliation of the number of options held by each KMP during the year:
y
l
u
J
1
e
c
n
a
a
B
l
1
2
0
2
n
o
i
t
a
r
e
n
u
m
e
R
s
a
d
e
t
n
a
r
G
No.
No.
e
t
a
D
t
n
a
r
G
2022
d
e
s
i
c
r
e
x
E
s
n
o
i
t
p
O
No.
i
r
e
p
d
a
p
t
n
u
o
m
A
e
r
a
h
s
f
o
e
t
a
D
t
a
d
e
H
l
n
o
i
t
a
n
g
i
s
e
R
No.
e
n
u
J
0
3
e
c
n
a
a
B
l
2
2
0
2
No.
l
d
e
H
–
d
e
t
s
e
V
%
Non-Executive Directors
T Goyder
C Williams
A Cipriano
S Chadwick (2)
J Morris (3)
S McLeay (4)
Executives
T Ottaviano
D Richards (1)(5)
A Smits (6)
C Hasson (7)
-
1,000,000
3,000,000
1,250,000
-
-
7,500,000
5,000,000
10,000,000
4,000,000
-
-
-
-
-
-
-
-
-
-
-
(2,000,000)
(1,250,000)
$0.15
$0.30
500,000
24-Nov-21
-
-
-
-
-
-
-
-
-
-
-
-
(2,500,000)
(5,000,000)
$0.50
$0.15
(6,666,666)
$0.1122
(2,000,000)
$0.15
1. Mr Richards resigned 24 November 2021.
2. Mr Chadwick resigned 4 July 2022.
3. Ms Morris appointed 24 November 2021.
4. Mr McLeay appointed 3 May 2022.
5. Exercised 2,000,000 options under the cashless exercise facility available under the Plan
6. Exercised 3,333,333 options under the cashless exercise facility available under the Plan
7. Exercised 1,000,000 options under the cashless exercise facility available under the Plan
-
-
-
-
-
-
-
-
-
-
-
1,000,000
1,000,000
-
-
100%
100%
-
500,000
100%
-
-
5,000,000
50%
-
3,333,334
2,000,000
-
100%
100%
1 7 | D I R E C T O R S ’ R E P O R T
2022 Annual Report
58
Directors’ Report
Vesting of Options in FY2022
During the year the following KMP options vested:
Grant Date
No. Options Vested
Vesting Date
Expiry Date
T Ottaviano
J Morris
A Smits
C Hasson
10-Feb-21
24-Nov-21
16-Mar-20
6-Nov-19
2,500,000
500,000
3,333,334
1,000,000
C Hasson
The options had no performance conditions other than service periods.
5-Jun-20
666,667
1-May-22
24-Nov-21
16-Mar-22
6-Nov-21
4-Jun-22
9-Feb-23
23-Nov-24
16-Mar-23
28-Nov-22
4-Jun-23
Performance Rights
During the year no performance rights were issued to KMP or employees. At 30 June 2022, 5,324,879 performance rights with
a nil exercise price were on issue to KMP. The performance rights are subject to criteria (including market, non-market based
and employment status conditions) which is required to be met, subject to Board discretion, before vesting, at the discretion of
the Board.
The below table shows a reconciliation of the number of performance rights held by each KMP during the year:
2022
Executives
T Ottaviano
A Smits
C Hasson
y
l
u
J
1
e
c
n
a
a
B
l
1
2
0
2
s
a
d
e
t
n
a
r
G
I
T
S
-
n
o
i
t
a
r
e
n
u
m
e
R
s
a
d
e
t
n
a
r
G
I
T
L
-
n
o
i
t
a
r
e
n
u
m
e
R
Number
s
t
h
g
i
R
e
c
n
a
m
r
o
f
r
e
P
d
e
s
i
c
r
e
x
E
e
n
u
J
0
3
e
c
n
a
a
B
l
2
2
0
2
4,075,466
712,385
537,028
-
-
-
-
-
-
-
-
-
4,075,466
712,385
537,028
Vesting of Rights in FY2022 and Expiry Dates
FY2022 Sign-on Performance Rights
On 1 July 2022, 1,250,000 sign-on performance rights issued 4 May 2021, vested. The performance rights were issued to Mr
Ottaviano the Managing Director and Chief Executive Officer when he commenced with the Company as a sign-on incentive.
The performance rights vest for nil consideration. The remaining 1,250,000 performance rights (expiring 1 July 2024) vest on
continued employment until 1 July 2023 for nil consideration.
STI Performance Rights – FY2022 Measurement
706,219 STI performance rights (expiring 30 June 2023) issued to KMP in May 2021 had a measurement date of 30 June 2022
with vesting subject to Board approval upon an assessment of the non-market conditions outlined below. In August 2022, the
Board assessed the performance against the criteria and determined that the performance conditions had been achieved and
awarded 100% vesting of the performance rights. The rights vested for nil consideration.
1 8 | D I R E C T O R S ’ R E P O R T
59
Liontown Resources
Performance
Conditions
Category
ESG and
Health and
Safety
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;
and
(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; and
(iii) ESG targets.
Board discretion to be applied in allocating
the incentive.
Max
Percentage
Upon
Vesting
15%
25%
Commercial
Achievements
(i) Offtake arrangements;
(ii) Downstream opportunities; and
(iii) Project funding.
Board discretion to be applied in allocating
the incentive.
35%
Shareholder
Return
Milestones
Total Shareholder Return (TSR) will be
assessed on a both an Absolute and Relative
basis.
Absolute Total Shareholder Return (TSR) -
12.5% Allocation
•
•
0% allocation, if Absolute TSR <20%
Pro-rata allocation, if Absolute TSR
between 20% - 50%
100%, allocation if Absolute TSR >50%
•
12.5%
Directors’ Report
Vesting Outcome
The Board assessed the ESG, health and
safety outcomes and determined:
(i) No material incidents resulting in loss
of access or commercial delays;
(ii) Zero fatalities;
(iii) Zero Lost time injury frequency rates;
(iv) No material environmental incidents;
and
(v) Mining Cooperation Agreements
executed.
Based on this assessment, it was assessed
that the maximum award weighting of 15%
was achieved.
The Board assessed the Project Study
Advancement outcomes and determined:
(i) Kathleen Valley DFS was delivered
with strong credentials and within
Board criteria;
(ii) Kathleen Valley Engineering and
to permit
Design well advanced
development to commence; and
(iii) Strong ESG targets established.
Based on this assessment, it was assessed
that the maximum award weighting of 25%
was achieved.
The Board assessed the Commercial
outcomes and determined:
(i) High quality offtake arrangements
executed;
(ii) Commenced downstream
considerations; and
(iii) Project funding secured.
Based on this assessment, it was assessed
that the maximum award weighting of 35%
was achieved.
The Absolute TSR objective is tested by
Company’s
measuring
TSR
the performance
performance over
measurement
against
predetermined targets set by the Board. On
30 June 2022, the absolute TSR portion of
the 2022 STI award was tested. The
Company achieved a TSR of 188%, resulting
in the maximum award weighting of 12.5%
being achieved.
period
the
1 9 | D I R E C T O R S ’ R E P O R T
2022 Annual Report
60
Directors’ Report
Performance
Conditions
Category
Performance Conditions Will Be Assessed
Against Board Criteria Relating To:
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 companies
Max
Percentage
Upon
Vesting
12.5%
Vesting Outcome
The Relative TSR measure compares the
Company’s TSR against that of companies
selected at
in a peer group
the
the performance
commencement of
measurement period. On 30 June 2022, the
relative TSR portion of the 2021 STI award
was tested. The Company was ranked at
the 76th percentile, resulting
in the
maximum award weighting of 12.5% being
achieved.
LTI Performance Rights
2,118,660 LTI performance rights issued to KMP in May 2021 with an expiry of 30 June 2025 have a measurement date of 30
June 2024 with vesting to occur for nil consideration based upon an assessment of the non-market conditions outlined below,
subject to Board discretion.
Performance
Conditions
Category
ESG and
Health and
Safety
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; and
(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 and
Commercial
Achievements
(i) Offtake arrangements;
(ii) Downstream opportunities;
(iii) Project funding; and
(iv) Project advancement.
Board discretion to be applied in allocating this incentive.
Shareholder
Return
Milestones
0%, if Absolute TSR <50%
Pro-rata, if Absolute TSR between 50% - 100%
100% allocation, if Absolute TSR >100%
Total Shareholder Return (TSR) will be assessed on both an Absolute and Relative basis.
Absolute Total Shareholder Return (TSR) - 25% Allocation
•
•
•
Relative Total Shareholder Return* (TSR) - 25% Allocation
•
•
•
TSR measurement period is between 1 May 2021 and 30 June 2024 using 20 day-
VWAP.
*Relative to a comparator group of companies.
Below 50th percentile, 0% allocation
Between 50th and 75th percentile, pro-rata, allocation
At or above 75th percentile, 100% of allocation
Max
Percentage
Upon Vesting
15%
35%
50%
2 0 | D I R E C T O R S ’ R E P O R T
Liontown Resources
61
Details of Equity Incentives affecting Current and Future Remuneration
Details of vesting profiles of unlisted options and performance rights held by each KMP of the Group during the year ended 30
June 2022 are detailed below:
Directors’ Report
No.
Instruments
Grant Date % Vested In
Year
% Forfeited
in Year
Financial
Vesting Year
J Morris
T Ottaviano
T Ottaviano
T Ottaviano
T Ottaviano
A Smits
A Smits
A Smits
C Hasson
C Hasson
C Hasson
Instrument
Options
Options
500,000
24-Nov-21
5,000,000
10-Feb-21
100%
50%
Performance Rights
2,500,000
4-May-21
Performance Rights
393,866
4-May-21
Performance Rights
1,181,600
4-May-21
-
-
-
Options
3,333,334
16-Mar-20
100%
Performance Rights
178,096
4-May-21
Performance Rights
534,289
4-May-21
-
-
Options
666,667
5-Jun-20
100%
Performance Rights
134,257
4-May-21
Performance Rights
402,771
4-May-21
-
-
-
2022
- 2022 and 2023
- 2023 and 2024
-
-
-
-
-
-
-
-
2023
2025
2022
2023
2025
2022
2023
2025
(h) Employment Contracts
Remuneration arrangements for executives are formalised in employment agreements. Details of these contracts are provided
below.
Name
Employment Contract
Duration
T Ottaviano
Unlimited
A Smits
C Hasson
Unlimited
Unlimited
Notice Period
Termination Provisions
6 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
6 months in the event of a material change
6 months in the event of a material change
(i) Other Transactions with Key Management Personnel
Several 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 the reporting period. The terms and conditions of the transactions
with management persons and their related parties were no more favourable than those available, or which might reasonably
be expected to be available, on similar transactions to non-Director related entities on an arm’s length basis.
The Group received database administrative services and field services from related parties to the Technical Director, Mr
Richards. These services were provided on arm’s length commercial terms. The total value of these services was $41,063 (2021:
$120,566) and the amount unpaid as at 30 June 2022 was nil (2021: $1,552).
Mr Chadwick provided general metallurgical and technical advisory services to the Company through a consultancy agreement.
There is no fixed remuneration component under the consultancy agreement for these services and those services are provided
on an “as required basis” at a rate of $2,000 per day. Either party may terminate the agreement by providing one month’s
notice. Consultancy fees are due and payable under normal payment terms. For the reporting period, the amount incurred was
$56,000 (2021: $49,000) and the amount unpaid as at 30 June 2022 was $5,000 (2021:$19,000).
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.
2 1 | D I R E C T O R S ’ R E P O R T
2022 Annual Report
62
Directors’ Report
The consultancy arrangement was terminated effective on 31 December 2021. For the reporting period the amount incurred
was $147,500 (2021: $87,500) and the amount unpaid as at 30 June 2022 was nil (2021: $22,500).
Mr McLeay is the Managing Director of mining consulting company Entech Pty Ltd. The Company used the services of Entech
Pty Ltd prior to the appointment Mr McLeay becoming non-executive director and the Company continues to use Entech Pty
Ltd for mining consulting services, as required. During the reporting period and since Mr McLeay’s appointment, the amount
incurred and unpaid as at 30 June 2022 was $1,040.
End of the Audited Remuneration Report.
17.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration is set out on page 66 and forms part of the Directors’ Report for the year ended 30 June
2022.
18.
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 2022
2 2 | D I R E C T O R S ’ R E P O R T
63
Liontown Resources
2022 Annual Report
64
10.
Auditor’s
Independence
Declaration
Auditor’s Independence Declaration
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Liontown Resources Limited for
the year ended 30 June 2022, 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 2022
D I Buckley
Partner
2022 Annual Report
66
11.
Financial
Report
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
Consolidated Statement of Profit
COMPREHENSIVE INCOME
or Loss and Other Comprehensive Income
FOR THE YEAR ENDING 30 JUNE 2022
FOR THE YEAR ENDED 30 JUNE 2022
Other income
Gain on demerger
Exploration and evaluation expenditure expensed
Corporate administrative expenses
Share based payments
Profit/(loss) before financing and tax
Note
5(a)
5(a), 15
5(d)
5(b)
8
2022
$'000
2021
$'000
1,314
90,960
(38,686)
(10,369)
(3,156)
40,063
600
-
(7,105)
(2,339)
(2,234)
(11,078)
Net financing income
5(e)
1,284
19
Profit/(loss) before income tax
41,347
(11,059)
Income tax (expense)/benefit
6
(492)
492
Net profit/(loss) after tax
40,855
(10,567)
Other comprehensive (loss)/income Items that will not be reclassified
to profit or loss
Net (loss)/gain on fair value of financial assets, net of tax
16
(1,268)
1,148
Total comprehensive income/(loss) for the year attributable to owners
of the Company
39,587
(9,419)
Basic earnings/(loss) per share (dollars per share)
Diluted earnings/(loss) per share (dollars per share)
7
7
$0.020
$0.020
($0.006)
($0.006)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the
accompanying notes.
2 4 | C O N S O L I D A T E D S T A T E ME N T O F P R O F I T O R L O S S A N D O T H E R C O MP R E H E N S I V E I N C O ME
2022 Annual Report
68
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Statement of Financial Position
AS AT 30 JUNE 2022
AS AT 30 JUNE 2022
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Financial assets
Property, plant and equipment
Other 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
Other liabilities
Total liabilities
Net assets
Equity
Share capital
Accumulated losses
Reserves
Total equity
Note
2022
$'000
2021
$'000
9
10
10
11
12
13
14
14
15
16
453,076
1,438
454,514
558
26,985
5,001
32,544
12,545
286
12,831
2,317
242
-
2,559
487,058
15,390
19,464
297
178
19,939
18
53
201
272
1,629
193
49
1,871
5
27
-
32
20,211
1,903
466,847
13,487
576,219
(112,683)
3,311
466,847
77,922
(68,469)
4,034
13,487
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
2 5 | C O N S O L I D A T E D S T A T E ME N T O F F I N A N C I A L P O S I T I O N
Liontown Resources
69
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDING 30 JUNE 2022
FOR THE YEAR ENDED 30 JUNE 2022
Issued capital
$'000
Accumulated
losses
$'000
Share based
payments
reserve
$'000
Investment
revaluation
reserve
$'000
Foreign
currency
translation
reserve
$'000
Total equity
$'000
As at 1 July 2021
77,922
(68,469)
2,747
1,148
139
13,487
Profit for the period
Other comprehensive loss
Total comprehensive profit for
the year
Transactions with owners in
their capacity as owners:
Issue of shares (net of costs)
Share-based payments
Transfer between equity items
Demerger of Minerals 260 Ltd
As at 30 June 2022
-
-
-
40,855
-
40,855
-
-
-
-
(1,268)
(1,268)
501,577
820
-
(4,100)
576,219
-
-
1,791
(86,860)
(112,683)
-
2,336
(1,791)
-
3,292
-
-
-
-
(120)
-
-
-
-
-
-
-
139
40,855
(1,268)
39,587
501,577
3,156
-
(90,960)
466,847
Issued Capital
$'000
Accumulated
Losses
$'000
Share-Based
Payments
Reserve
$'000
Investment
Revaluation
Reserve
$'000
Foreign
Currency
Translation
Reserve
$'000
Total Equity
$'000
As at 1 July 2020
63,219
(58,996)
2,157
-
139
6,519
Loss for the period
Other Comprehensive Income
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 2021
-
-
-
(10,567)
-
(10,567)
-
-
-
14,153
-
550
77,922
-
-
1,094
(68,469)
-
2,234
(1,644)
2,747
-
1,148
1,148
-
-
-
1,148
-
-
-
(10,567)
1,148
(9,419)
-
-
-
139
14,153
2,234
-
13,487
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
2 6 | C O N S O L I D A T E D S T A T E ME N T O F C H A N G E S I N E Q U I T Y
2022 Annual Report
70
CONSOLIDATED STATEMENT OF CASH FLOWS
Consolidated Statement of Cash Flows
FOR THE YEAR ENDING 30 JUNE 2022
FOR THE YEAR ENDED 30 JUNE 2022
Cash flows from operating activities
Cash paid to suppliers and employees
Payments for exploration and evaluation
Interest received
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 plant and equipment
Minerals 260 demerger and IPO costs
Net cash (used in)/from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment for share issue costs
Repayment of lease liabilities
Interest paid
Net cash from financing activities
Note
2022
$'000
2021
$'000
(8,403) (2,076)
(9,136) (6,563)
783 27
389
-
(30,250)
-
(47,006) (8,223)
9
-
1,500
(13,274) (93)
-
(680)
1,407
(13,954)
516,895 14,772
(15,319) (619)
(68) (41)
(17) (9)
501,491 14,103
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
7,287
440,531
-
-
12,545
5,258
453,076 12,545
9
The consolidated statement of cash flows to be read in conjunction with the accompanying notes.
2 7 | C O N S O L I D A T E D S T A T E ME N T O F C A S H F L O WS
Liontown Resources
71
Contents of the Notes to the Financial Statements
CONTENTS OF THE NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDING 30 JUNE 2022
FOR THE YEAR ENDED 30 JUNE 2022
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: Earnings/(loss) per share
SHARE-BASED PAYMENTS
Note 8: Share-based payments
ASSETS
Note 9: Cash and cash equivalents
Note 10: Trade and other receivables, Financial assets
Note 11: Property, plant and equipment
Note 12: Other assets
EQUITY AND LIABILITIES
Note 13: Trade and other payables
Note 14: Employee benefits
Note 15: Capital and capital management
Note 16: Reserves
FINANCIAL INSTRUMENTS
Note 17: Financial instruments
GROUP COMPOSITION
Note 18: List of subsidiaries
Note 19: Parent entity information
OTHER INFORMATION
Note 20: Contingent assets and liabilities
Note 21: Remuneration of auditors
Note 22: Commitments
Note 23: Related party transactions
Note 24: Events occurring after the reporting period
2022 Annual Report
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2022
Notes to the Consolidated Financial Statements
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 2022 was authorised for issue on
28 September 2022.
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 most of its subsidiaries were incorporated and domiciled in
Australia. Refer to note 18 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 18.
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.
All amounts have been rounded to the nearest thousand, unless otherwise stated, in accordance with ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191 and Instrument 2022/519.
(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.
2 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 ME N T S
73
Liontown Resources
Notes to the Consolidated Financial Statements
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 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.
Judgement and estimates that are material to the financial report are found in the following sections:
Other income (note 5)
Share based payments (note 8)
Property, plant and equipment (note 11) - judgements in assessing the viability and timing of assets for capitalisation
- fair value recognition on the gain on demerger of Minerals 260 Ltd
- measurement of share based payment transactions
Employee benefits (note 14)
Rehabilitation liability
(c) Functional currency translation
- judgements in relation to lease extension options
- measurement of long service leave provisions
- measurement of mine closure provisions
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 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 2022, the Directors have reviewed the new and revised Standards and Interpretations issued by the
AASB that are relevant to the Group 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 Group.
Standards and Interpretations on issue not yet effective
Several accounting standards and interpretations have been issued and will be applicable in future periods. While these remain
subject to ongoing assessment, no significant impacts have been identified to date. The Group has not early adopted the
following standards and interpretations:
• AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018-2020 and Other Amendments
– effective date 1 January 2022;
• AASB 2020-1 and AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or
Non-current – effective date 1 January 2023;
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2022 Annual Report
74
Notes to the Consolidated Financial Statements
• AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of
Accounting Estimates – effective date 1 January 2023;
• AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from
a Single Transaction – effective date 1 January 2023;
• AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between Investor and its
Associate or Joint Venture – effective date 1 January 2025.
(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.
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 one reportable operating segment which is exploration and development of minerals in Western Australia. The
Group’s operating segment has been determined with regard to information and reporting provided to the Group’s decision
makers which are used to make strategic decisions regarding the Group’s resources. The Managing Director is considered to be
the chief decision maker. Reports to the Managing Director and the Board are based upon the Group as one segment and the
financial results of this segment are equivalent to the financial statements of the Group as a whole.
5.
OTHER INCOME AND EXPENSES
(a) Other income and gain on demerger
Other income
Gain on demerger 1
1. Fair value gain on demerger of Minerals 260 Limited (refer note 15).
Accounting policy
2022
$’000
1,314
90,960
92,274
Other income is recognised when it is received or when the right to receive payment is established.
(b) Corporate and administration expenses
Administration and general costs
Business development costs
Depreciation and amortisation
Personnel expenses (5(c))
Minerals 260 demerger and IPO costs
2022
$’000
3,446
2,017
226
4,000
680
10,369
2021
$’000
600
-
600
2021
$’000
1,235
-
83
1,021
-
2,339
3 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 ME N T S
Liontown Resources
75
Notes to the Consolidated Financial Statements
(c) Personnel expenses
Directors’ fees, employee wages and salaries
Other associated personnel expenses
Leave entitlements
(d) Exploration and evaluation expenditure
Exploration Expenditure
Kathleen Valley, WA
Buldania, WA
Other (1)
Feasibility Studies and evaluation
Kathleen Valley, WA – Pre-feasibility and other evaluation
Kathleen Valley, WA – Definitive Feasibility Study and other evaluation
Royalty Acquisition (2)
2022
$’000
3,199
608
193
4,000
2022
$’000
3,962
1,549
319
5,830
-
2,606
2,606
30,250
38,686
2021
$’000
623
351
47
1,021
2021
$’000
889
367
1,727
2,983
1,246
2,876
4,122
-
7,105
1. During 1HY2022, the Company demerged the subsidiary Minerals 260 Limited which held the Moora Gold-Nickel-Copper-PGE Project, a right to earn an interest
in the Koojan JV Project, Dingo Rocks Project and the Yalwest Project. Other includes amounts related to these projects prior to demerging.
2.In August 2021 the Company completed an agreement to terminate the lithium royalty (that covered the majority of the Kathleen Valley Lithium Project) owned
by Ramelius Resources Ltd for $30.25M consideration in cash.
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.
(e) Net financing income
Interest income
Interest expense
Accounting policy
2022
$’000
1,302
(18)
1,284
2021
$’000
27
(8)
19
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.
3 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 ME N T S
2022 Annual Report
76
Notes to the Consolidated Financial Statements
6.
INCOME TAX
Components of income tax as follows:
Current tax
Deferred tax
Total income tax (expense)/benefit reported in the statement of profit or
loss and other comprehensive income
Numerical reconciliation between tax expense and pre-tax net loss:
Profit/(loss) before tax
Income tax benefit using the domestic corporation tax rate of 30%
(2021: 30%)
Decrease in income tax benefit due to:
Non-deductible expenses
Non-assessable income
Deferred tax assets and liabilities not recognised
Derecognition of tax assets
Previously unrecognised tax losses to offset DTL on financial assets
Income tax (expense)/benefit on loss before tax
2022
$’000
-
(492)
(492)
2022
$’000
41,347
12,404
954
(27,288)
13,930
(492)
-
(492)
2021
$’000
-
492
492
2021
$’000
(11,059)
(3,318)
675
(18)
2,661
-
492
492
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.
In FY2021 a deferred tax asset and a deferred tax liability of $492,000 resulting from the fair-value gain recorded on financial
assets were netted off.
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
2022
$’000
16,982
11,773
28,755
(142)
(142)
2021
$’000
7,215
976
8,191
(177)
(177)
The unrecognised benefit from temporary differences on capital items amounts to $3,924,412 (2021 $389,162).
Deferred tax liabilities have not been recognised in respect of these taxable temporary differences as the entity is able to control
the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
3 3 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E ME N T S
Liontown Resources
77
Notes to the Consolidated Financial Statements
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which
the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
Liontown and its 100% owned Australian resident subsidiaries have implemented the tax consolidation legislation. Current and
deferred amounts are accounted for in each individual entity as if each entity continued to act as a taxpayer on its own. The
Company recognises its own current and deferred tax amounts and those current tax liabilities, current tax assets and deferred
tax assets arising from unused tax credits and unused tax losses which it has assumed from its controlled entities within the tax
consolidated Group.
7.
EARNINGS/(LOSS) PER SHARE
The calculation of basic earnings per share at 30 June 2022 is based on the loss attributable to ordinary shareholders of the
parent entity and a weighted average number of ordinary shares outstanding during the year ended 30 June 2022.
The weighted average number of ordinary shares outstanding during the financial years comprised the following:
Profit/(loss) attributable to ordinary shareholders for basic earnings ($’000)
Weighted average number of ordinary shares on issue at the end of the year ('000)
Weighted average number of ordinary shares (diluted) on issue at the end of the
year ('000)
Basic earnings/(loss) per share (dollars per share)
Diluted earnings/(loss) per share (dollars per share)
Accounting policy
2022
40,855
2,061,199
2021
(10,567)
1,779,977
2,076,969
1,779,977
$0.020
$0.020
($0.006)
($0.006)
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) divided by the weighted average number of ordinary shares, adjusted for any
bonus element.
Diluted earnings/loss per share is calculated as net profit/loss attributable to members of the parent, adjusted for:
•
•
•
costs of servicing equity (other than dividends) and preference share dividends;
the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised
as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element.
SHARE-BASED PAYMENTS
This section of the notes includes information that must be disclosed to comply with accounting standards and other
pronouncements relating to the provision of services and remuneration of employees and consultants of the Group, but that is
not immediately related to individual line items in the Financial Statements.
8.
SHARE-BASED PAYMENTS
Employee securities incentives
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 Plan (Plan). The Plan was last approved by
Shareholders at the 2021 AGM.
The total expenditure recognised in the consolidated statement of profit and loss and comprehensive income is $3,155,518,
(2021: $2,233,833).
Under the terms of the Plan, 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.
3 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 ME N T S
2022 Annual Report
78
Notes to the Consolidated Financial Statements
Options issued
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 unlisted options were in place at the end of the year:
Series
Number
Grant date
Expiry Date
Exercise Price
(1)
$
Fair Value at
Grant Date
$
Vesting Date
O17
O18
O18
O20
O22
O23
O24
TOTAL
3,333,334
1,333,333
666,667
2,000,000
2,500,000
2,500,000
500,000
12,833,334
16-Mar-20
5-Jun-20
5-Jun-20
25-Nov-20
10-Feb-21
10-Feb-21
24-Nov-21
16-Mar-23
4-Jun-23
4-Jun-23
25-Nov-23
9-Feb-23
9-Feb-24
23-Nov-24
0.1101
0.1479
0.1479
0.2979
0.5379
0.5779
2.4500
0.0501
0.0692
0.0692
0.1549
0.1813
0.2180
0.7783
16-Mar-22
4-Jun-21
4-Jun-22
25-Nov-20
1-May-22
1-May-23
24-Nov-21
1. As a result of the Minerals 260 Demerger and as announced on 26 November 2021, the option exercise price of 12,333,334 options on issue at the date of the
demerger was reduced by $0.0021 per option.
The number and weighted average exercise prices of share options is as follows:
Outstanding at beginning of the year
Granted during the period
Exercised during the period
Lapsed/expired during the period
Adjustment to exercise price for Minerals 260
Demerger 1
Outstanding at the end of the year
Exercisable at the end of the year
Weighted
Average
Exercise Price
2022
$
0.233
2.450
0.185
-
(0.002)
0.411
0.370
Number of
Options
2022
36,900,000
500,000
(24,566,666)
-
-
12,833,334
10,333,334
Weighted
Average
Exercise Price
2021
$
0.082
0.464
0.048
0.150
-
0.233
0.192
Number of
Options
2021
70,150,000
11,000,000
(43,500,000)
(750,000)
-
36,900,000
26,649,999
1. As a result of the Minerals 260 Demerger and as announced on 26th November 2021, the option exercise price of 12,333,334 options on issue at the date of
the demerger was reduced by $0.0021 per option.
The weighted average contractual life remaining as at 30 June 2022 is 1.08 years (2021: 1.72 years).
The weighted average fair value of options granted during the year was $0.778 (2021: $0.182).
Non-market performance conditions are not taken into account in the grant date fair value measurement of the services
received.
3 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 ME N T S
Liontown Resources
79
Notes to the Consolidated Financial Statements
The following share options were exercised during the year:
Series
2022
Exercised
Exercise Date
O15
O15
O15
O15
O15
O15
O15
O15
O17
O19
O20
O21
TOTAL
Number
2,500,000
2,300,000
100,000
1,000,000
1,000,000
2,000,000
3,000,000
2,000,000
6,666,666
250,000
1,250,000
2,500,000
24,566,666
9-Aug-21
16-Jul-21
10-Sep-21
16-Jul-21
10-Sep-21
20-Jul-21
3-Aug-21
26-Aug-21
16-Jul-21
11-Sep-21
13-Sep-21
17-Sep-21
Share Price at
Exercise Date
$
0.790
0.719
1.003
0.719
1.003
0.674
0.843
0.790
0.719
1.003
1.207
1.371
The fair value of the options is estimated at the grant date using a Black Scholes option-pricing model considering 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)
2022
$1.805
$2.45
78%
3
Nil
Nil
0.99%
2021
$0.366
$0.460
96%
2.55
0.85
Nil
0.10%
Refer to the table below for inputs to the Black Scholes option-pricing model for options granted during the year:
Series
Grant Date
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Exercise price ($)
Grant date share price ($)
Performance rights issued
O24
24-Nov-21
-
78%
0.99%
3
2.45
1.805
No performance rights were issued during the year. As at 30 June 2022, the 6,386,948 performance rights were on issue to
certain directors and employees that have certain objectives required to be met (including market, non-market based and
employment status) before they can vest. The performance rights have an expiry date and nil exercise price. The fair value of
the performance rights are calculated as at grant date.
3 6 | N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E ME N T S
2022 Annual Report
80
Notes to the Consolidated Financial Statements
A summary of the number performance rights on issue is as follows:
30 June 2022
Grant date
Opening
Balance
Granted
Vested
Exercised
Outstanding at 30 June
2022
Share Price
at Date of
grant ($)
Unvested
Vested
4-May-21
Total
6,386,948
6,386,948
-
-
-
-
-
-
6,386,948
6,386,948
0.4000
-
-
Other share-based payments
Shares
During the year the Company issued 500,000 shares to a consultant of the Company as consideration for work performed. The
fair value of the shares issued was $820,000.
Options
During the financial year the company issued nil (2021: nil) unlisted share options that were issued outside the Plan (Non-Plan).
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.
There were no Non-Plan unlisted options on issue at the end of the year.
The number and weighted average exercise prices of Non-Plan 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
2022
$
Number of
Options
2022
Weighted
Average
Exercise Price
2021
$
Number of
Options
2021
0.035
-
0.035
-
-
1,500,000
-
(1,500,000)
-
-
0.041
-
0.042
0.035
0.035
7,900,000
-
(6,400,000)
1,500,000
1,500,000
Non-market performance conditions are not taken into account in the grant date fair value measurement of the services
received.
The following Non-Plan share options were exercised during the year:
Series
O14
O14
O14
O16
Total
2022
Exercised
Exercise Date
Number
500,000
500,000
500,000
-
1,500,000
6-Jul-21
29-Jul-21
2-Aug-21
-
Share Price at
Exercise Date
$
0.728
0.750
0.812
-
2021
Exercised
Exercise Date
Number
2,000,000
2,000,000
2,000,000
400,000
6,400,000
20-Oct-20
10-Dec-20
12-Feb-21
29-Jan-21
Share Price at
Exercise Date
$
0.265
0.315
0.445
0.390
3 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 ME N T S
Liontown Resources
81
Notes to the Consolidated Financial Statements
Accounting policy
The cost of equity-settled transactions with employees and KMP and those providing similar services are measured by reference
to the fair value of the share options or performance rights at grant date.
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 arising from 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.
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
Term deposits
Petty cash
2022
$’000
28,057
425,018
1
453,076
2021
$’000
12,544
-
1
12,545
3 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 ME N T S
2022 Annual Report
82
Notes to the Consolidated Financial Statements
Reconciliation of profit/(loss) after income tax to net cash flows from operating activities:
Profit/(loss) for the year
Depreciation and amortisation
Interest expense
Gain on demerger, net of costs
(Gain) from disposal of tenement
Share-based payments
Loss on asset disposal
Changes in operating assets and liabilities:
(Increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Decrease/(increase) in deferred taxes
Increase in provisions
Net operating cash flows
2022
$’000
40,855
226
18
(90,280)
-
3,156
1
(46,024)
(1,152)
(439)
492
117
(47,006)
2021
$’000
(10,567)
83
8
-
(600)
2,234
1
(8,841)
(13)
1,076
(492)
47
(8,223)
Non-cash and financing activities
During the year the Company made additions of $222,614 to right-of-use assets (2021: nil).
Changes in liabilities arising from financing activities
Balance at 30 June 2020
Net cash used in financing activities
Balance at 30 June 2021
Acquisition of leases
Net cash used in financing activities
Balance at 30 June 2022
Accounting policy
Lease Liability
$’000
117
(41)
76
223
(68)
231
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
Trade and other receivables
Prepayments
There was no expected credit loss at balance date.
2022
$’000
1,112
326
1,438
2021
$’000
176
110
286
3 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 ME N T S
Liontown Resources
83
Notes to the Consolidated Financial Statements
2022
$’000
480
78
558
2021
$’000
2,240
77
2,317
Non-current – Financial assets
Investment in equity securities
Other financial assets
Accounting policy
Trade receivables are non-interest bearing and are measured at fair value less any allowance for expected credit losses. 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 recorded through the
Investment Revaluation reserve and Other 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.
These shares have been revalued at year end to market value, based on Lachlan Stars share price on ASX at 30 June 2022. The
Board views the shares as a long-term investment and have elected to designate them as fair value through Other
Comprehensive Income. Change to the fair value of the investment are accounted for through Other Comprehensive Income
and the Investment Revaluation Reserve.
The financial asset is level 1 in the fair value measurement hierarchy.
11. PROPERTY, PLANT AND EQUIPMENT
2022
Cos t
Accumulated depreciation
Net book value
Opening net book value
Additions
Disposals
Depreciation charge
Net book value
2021
Cos t
Accumulated depreciation
Net book value
Opening net book value
Additions
Disposals
Depreciation charge
Net book value
Mine
Properties
$'000
Plant and
equipment
$'000
Right-of-use
assets
$'000
Assets under
construction
$'000
Total
$'000
186
-
186
-
186
-
-
186
-
-
-
-
-
-
-
-
661
(188)
473
181
394
(12)
(90)
473
289
(108)
181
123
93
(1)
(34)
181
369
(221)
148
61
223
-
(136)
148
146
(85)
61
110
-
-
(49)
61
26,178
-
26,178
-
26,178
-
-
26,178
-
-
-
-
-
-
-
-
27,394
(409)
26,985
242
26,981
(12)
(226)
26,985
435
(193)
242
233
93
(1)
(83)
242
At 30 June 2022 the Group had outstanding contractual capital commitments of $62.0 million which are expected to be settled
prior to 30 June 2023.
4 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 ME N T S
2022 Annual Report
84
Notes to the Consolidated Financial Statements
Accounting policy
Mine properties
Mine property assets include costs incurred in accessing the ore body and costs to develop the mine to the production phase
once the technical feasibility and commercial viability of a mining operation has been established. Assets are stated at historical
cost less accumulated amortisation and any accumulated impairment losses recognised. The initial cost of an asset comprises
of its purchase price or construction cost, any costs directly attributable to bringing the asset into operation and the estimate
of the rehabilitation costs.
Plant and equipment
Plant and equipment assets are stated at historical cost less accumulated depreciation and accumulated impairment losses
recognised. Historical cost includes expenditure that is directly attributable to the acquisition of the items and costs incurred in
bringing the asset into use. Items of plant and equipment that were initially recognised are derecognised upon disposal or when
no future economic benefit is expected from its use or disposal. Gains or losses arising on derecognition of the asset are included
in the Consolidated Statement of Profit or Loss when the asset is derecognised.
Right-of-use asset
The Group recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost,
less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at
or before the commencement date less any lease incentives received. The recognised right-of-use assets are depreciated on a
straight-line basis over the lease term. Right-of-use assets are subject to impairment.
Assets under construction
Assets under construction include the cost of developing mine property and plant and equipment assets once the technical
feasibility and commercial viability of a project has been established. When construction is completed, or commercial
production has been determined the asset is reclassified to the relevant category of property, plant and equipment.
Development expenditure includes the direct costs of construction, pre-production costs and qualifying borrowing costs
incurred during the construction phase. These costs are not amortised until the asset is determined to be available for use. The
carrying value is assessed for impairment whenever the facts and circumstances suggest that the carrying amount of the asset
may exceed the recoverable amount.
12. OTHER ASSETS
Borrowing costs
2022
$’000
5,001
2021
$’000
-
Borrowing transaction costs relate to the $300 million debt facility the Company executed in late June 2022 with the Ford Motor
Company. The facility is subject to ordinary conditions precedent which are within the Company’s control. The facility was not
available for use as at 30 June 2022. When the facility funding is drawn down the borrowing costs will be transferred to offset
borrowings liabilities on the consolidated statement of financial position and amortised over the life of the debt facility.
Accounting policy
Borrowings are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition,
these liabilities are measured and amortised at cost using the effective interest method.
4 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 ME N T S
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85
EQUITY AND LIABILITIES
13. TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses
Other payables
Accounting policy
Notes to the Consolidated Financial Statements
2022
$’000
403
18,857
204
19,464
2021
$’000
585
972
72
1,629
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.
14. EMPLOYEE BENEFITS
Current
Annual leave
Provision for long service leave
Other accrued employee entitlements
Non-Current
Provision for long service leave
Accounting policy
2022
$’000
292
-
5
297
18
18
2021
$’000
116
63
14
193
5
5
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.
15. CAPITAL AND CAPITAL MANAGEMENT
Ordinary shares on issue:
On issue at the beginning of the year
Rights issues and placements (1) (2) (3)
Issue of shares for unlisted options (4)
Issue of shares (share purchase plan) (5)
Issue of shares for service rights
Issue of shares for consulting services (6)
Less reduction in share capital (7)
Less share issue costs
Movement during the year
On issue at the end of the year
2022
2021
No. (‘000)
$’000
No. (‘000)
$’000
1,819,110
341,147
23,648
7,820
-
500
-
-
373,115
2,192,225
77,922
501,999
1,993
12,903
-
820
(4,100)
(15,318)
498,297
576,219
1,711,285
54,348
49,642
-
3,835
-
-
-
107,825
1,819,110
63,219
12,500
2,272
-
550
-
-
(619)
14,703
77,922
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Notes to the Consolidated Financial Statements
1. In November 2020, the Company completed a placement to raise $12.5 million by issuing 54,347,826 fully paid ordinary shares at an issue price of $0.23 per
share.
2. On 22 July 2021, the Company completed a placement to raise $52 million (before costs) by issuing 68,420,000 fully paid ordinary shares at an issue price of
$0.76 per share.
3. On 7 December 2021, the Company completed a placement to raise $450 million (before costs) by issuing 272,727,273 fully paid ordinary shares at an issue
price of $1.65 per share.
4. In FY2022, 12,091,666 options were exercised on a cashless basis for 9,673,401 ordinary shares. In FY2021, 3,000,000 options were exercise on a cashless basis
for 2,742,394 ordinary shares.
5. On 4 February 2022, the Company completed a Share Purchase Plan to raise $12.9 million by issuing 7,819,543 fully paid ordinary shares at an issue price of
$1.65 per share.
6.The shares were recognised as share-based payments and were expensed during the year.
7. Refer to the note below and the announcement dated 26 November 2021 for further information regarding reduction in share capital in relation to the demerger
of Minerals 260 Limited.
Demerger of Minerals 260 Limited
On 1 October 2021, by way of an in-specie distribution, the Company completed the demerger of Minerals 260 Limited (a wholly
owned subsidiary). The demerger was undertaken to divest the non-lithium exploration assets in Western Australia. Projects
divested include Moora, Koojan JV, Dingo Rocks and Yalwest.
The fair value of Minerals 260 at the date of demerger was determined to be of $90.96 million calculated using the volume
weighted average price (VWAP) of Mineral 260s’ shares as traded on the ASX over the first five trading days after the IPO date
($0.5685) multiplied by the number of Mineral 260s’ shares on initial listing (160,000,000). The demerger has no tax impact for
the Group and the demerged assets were carried at zero value resulting in the fair value being equal to the gain on demerger.
The demerger distribution is accounted for as a reduction in equity, split between a reduction in share capital of $4.10 million
and a reduction in accumulated losses (Demerger Dividend) of $86.86 million. The amount treated as a reduction in share capital
has been calculated by reference to the market value of Mineral 260 Limited’s shares and the market value of the Company’s
shares post demerger. The difference between the fair value and the capital reduction amount is the Demerger Dividend.
Refer to the announcement dated 26 November 2021 for further information regarding the Australian Tax Office Class Ruling
2021/81 and reduction in share capital in relation to the demerger of Minerals 260 Limited.
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.
16. RESERVES
Share-based payments reserve
Investment revaluation reserve
Foreign currency translation reserve
Total Reserves
Share-based payment reserve
2022
$’000
3,292
(120)
139
3,311
2021
$’000
2,747
1,148
139
4,034
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.
4 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 ME N T S
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87
Notes to the Consolidated Financial Statements
2022
$
2,747
2,336
(1,791)
3,292
2021
$
2,157
2,234
(1,644)
2,747
Balance at beginning of the financial year
Share-based payments
Transfers to Accumulated Losses and Share Capital
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
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
2022
$’000
1,148
(1,760)
492
(120)
2021
$’000
-
1,640
(492)
1,148
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
17. 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 15 and 16, and in the consolidated statement of financial position. A $300 million debt
facility was executed in late June 2022 with the Ford Motor Company. While the facility was not available for use as at 30 June
2022, it will form part of the Company’s capital structure for funding the Kathleen Valley Lithium Project development.
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 or refinancing
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, commodity 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. As part of the Kathleen Valley Lithium Project
development and operations, the Company will have exposure to commodity price 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.
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.
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Notes to the Consolidated Financial Statements
(d) Interest rate risk
Interest rate risk is the risk that changes in deposit or borrowing rates either affects the consolidated entity’s income and future
cash flow from interest income in the cash of deposits or affects the consolidated entity’s expenses and future cash outflow on
interest expenses in the case of borrowings.
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:
2022
<1 Year
$’000
1-5 Years
$’000
Floating
Interest
$’000
Non-
Interest
Bearing
$’000
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Financial liabilities
Trade and other payables
Lease liabilities
-
-
78
-
(178)
-
-
-
-
(53)
453,075
-
-
1
1,438
-
-
-
(19,464)
-
Interest Maturing in:
2021
<1 Year
$’000
1-5 Years
$’000
Floating
Interest
$’000
Non-
Interest
Bearing
$’000
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Financial liabilities
Trade and other payables
Lease liabilities
-
-
77
-
(49)
-
-
-
-
(27)
12,544
-
-
1
286
-
-
-
(1,629)
-
Weighted
Average
Interest Rate
%
1.37
-
0.03
-
8.85
Weighted
Average
Interest Rate
%
0.22
-
1.10
-
8.85
Total
$’000
453,076
1,438
78
(19,464)
(231)
Total
$’000
12,545
286
77
(1,629)
(76)
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 increased the Group’s profit by $2,648,672 (2021: $122,902)
and decreased the Group’s profit by $1,236,836 (2021: $27,947).
In future periods, upon draw down of the Ford financing facility, Company will pay interest costs at the Bank Bill Swap Rate
(BBSW) plus a fixed margin of 1.5%. The Company will have exposure to Interest rate risk on movements in the BBSW rate.
(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 $19,463,680 (2021: $1,628,902) all
of which are due within 60 days and undiscounted lease liabilities of $247,205 (2021: $79,512).
4 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 ME N T S
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Notes to the Consolidated Financial Statements
(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.
18.
LIST OF SUBSIDIARIES
Parent entity
Liontown Resources Limited
Subsidiaries
Liontown Resources (Tanzania) Limited
LRL (Aust) Pty Ltd
ERL (Aust) Pty Ltd (1)
Minerals 260 Limited (1)
Kathleen Valley Holdings Pty Ltd (2)
LTR BM Pty Ltd (2)
LBM (Aust) Pty Ltd (2)
Buldania Holdings Pty Ltd (2)
Buldania Lithium Pty Ltd (2)
Country of
Incorporation
Ownership Interest
2022
%
100%
100%
-
-
100%
100%
100%
100%
100%
2021
%
100%
100%
100%
100%
-
-
-
-
-
Australia
Tanzania
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
1. Demerger with Minerals 260 Limited and its wholly owned subsidiary ERL (Aust) Pty Ltd completed in October 2021 (refer note 15).
2. During the year these companies were incorporated as wholly owned subsidiaries of the Group.
19. 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
Profit/(loss) for the year
Total comprehensive profit/(loss)
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
2022
$’000
77,143
77,143
453,971
84,740
538,711
6,444
106
6,550
2021
$’000
(10,082)
(10,082)
12,891
2,509
15,400
1,170
32
1,202
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Notes to the Consolidated Financial Statements
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
2022
$’000
2021
$’000
532,161
14,198
576,219
3,172
(47,230)
532,161
77,922
3,895
(67,619)
14,198
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.
20. CONTINGENT ASSETS AND LIABILITIES
During the year Liontown reached an agreement with Currie Rose Resources Inc (TSXV: CUI) to dispose of the Toolebuc
Vanadium Project, located in north-west Queensland, in consideration for 12.5 million ordinary shares, 4 million share purchase
warrants at C$0.10 with a two-year expiry and a 2% Net Gross Revenue Royalty. The sale was contingent on CUI receiving
statutory approvals and completing a placement to raise funds. The contingent consideration is valued at approximately $1.16
million as at 30 June 2022.
As at 30 June 2022, the contingent consideration was not recorded as income in the financial statements as it was contingent
upon the outcome of a possible future event, however, the Directors determined, that based on information available, it was
considered probable that the consideration will become due and payable to Liontown. Subsequent to 30 June 2022, the final
conditions were satisfied, the transaction was completed, and contingent consideration was received.
For the year ended 30 June 2022, there are no contingent liabilities (2021: nil).
21. REMUNERATION OF AUDITORS
HLB Mann Judd
Audit and review services
Other services – tax compliance
22. COMMITMENTS
2022
$
40,327
2,200
42,527
2021
$
36,018
-
36,018
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
2022
$’000
590
2,425
3,418
6,433
2021
$’000
968
1,389
3,081
5,438
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.
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 ME N T S
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Notes to the Consolidated Financial Statements
23. 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:
T Goyder - Chair
C Williams - Non-Executive Director
S Chadwick - Non-Executive Director (resigned 4 July 2022)
J Morris – Non-Executive Director (appointed 24 November 2021)
S McLeay - Non-Executive Director (appointed 3 May 2022)
Non-Executive Directors
•
•
• A Cipriano - Lead Independent Non-Executive Director
•
•
•
Executives
•
• D Richards - Technical Director (resigned 24 November 2021)
• A Smits – Chief Operating Officer (COO)
•
C Hasson – Chief Financial Officer (CFO)
T Ottaviano - Managing Director and Chief Executive Officer (CEO)
The key management personnel compensation is as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
2022
$
1,919,582
126,830
2,156,193
4,202,605
2021
$
1,115,696
77,251
2,123,615
3,316,562
(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 few key management personnel, or their related parties, hold positions in other entities that result in them having control or
significant influence over the financial or operating policies of those entities.
A number of these entities transacted with the Company or its subsidiaries in the reporting period. The terms and conditions of
the transactions with key management personnel and their related parties were no more favourable than those available, or
which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities
on an arm’s length basis.
The aggregate amounts recognised during the year relating to key management personnel and their related parties were as
follows:
Corporate services recharge(1)
Minerals 260 Demerger and IPO related costs(2)
Corporate advisory services of KMP(3)
Technical consultancy services of KMP(4)
Mining consulting services (5)
Database management and field services(6)
Accounting services(7)
2022
$
102,965
943,419
147,500
56,000
1,040
41,063
-
1,291,987
2021
$
-
-
87,500
49,000
-
120,566
5,160
262,226
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Notes to the Consolidated Financial Statements
1. The Company supplied office facilities and corporate services to Minerals 260 Limited under a share service agreement. Amounts were billed on a proportionate
share of the costs to the Company of providing the services and are due and payable under normal commercial terms. Mr Richards was concurrently a director of
the demerged Minerals 260 Limited and the Company between October and November 2021.
2. The Company incurred costs related to the Demerger, Initial Public Offer (IPO) and project costs of Minerals 260 Limited which were recharged subsequent to
and conditional on the successful listing on the Australian Securities Exchange (ASX) in October 2021.
3. The Company received corporate, financial advisory 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. The consultancy agreement was terminated on 31 December 2021.
4. The Company’s non-executive director Mr Chadwick provided general metallurgical and technical advisory services to the Company through a consultancy
agreement. There was no fixed remuneration component under the consultancy agreement for these services and those services were 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.
5. The Company’s non-executive director Mr Shane McLeay is Managing Director of Entech Pty Ltd who provide mining consulting services to the Company. The
services are provided on “as required basis" and on normal commercial terms.
6. The Group received database management and field services from related parties of Director, Mr Richards. Amounts paid were on normal commercial terms.
7. In FY2021 the Group received accounting services from a related party of the CFO, Mr Hasson. The amounts paid were on normal commercial terms.
Amounts payable to KMP and related parties at reporting date arising from these transactions was $6,040 (2021: $43,052).
24. EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 21 July 2022, the Company announced that it had appointed Lycopodium Minerals Pty Ltd to complete the engineering,
procurement, construction management and commissioning services for the Kathleen Valley Lithium Project.
On 12 September 2022, the Company announced that it had executed a Letter of Award with Zenith Energy, to supply electricity
to its Kathleen Valley Lithium Project in Western Australia for a period of 15 years.
There has not been any other matter or circumstance that has arisen since 30 June 2022 that has significantly affected, or may
significantly affect the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial
years.
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2022 Annual Report
94
12.
Directors’
Declaration
Directors’ Declaration
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 2022 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 2022.
This declaration is signed in accordance with a resolution of the Directors:
Antonino Ottaviano
Managing Director
Dated this 29th day of September 2022
5 0 | D I R E C T O R S ’ D E C L A R A T I O N
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96
13.
Independent
Auditor’s Report
Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT
To the Members of Liontown Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Liontown Resources Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June
2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the financial 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 2022 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.
2022 Annual Report
98
Independent Auditor’s Report
Key Audit Matter
How our audit addressed the key audit
matter
Accounting treatment – Demerger of Minerals 260 Note 5 & 15
In October 2021, by way of an in-specie distribution,
the Company completed the demerger of its a wholly
owned subsidiary, Minerals 260 Limited (. The
demerger was undertaken to divest the non-lithium
exploration assets of the Group in Western Australia.
This distribution is accounted for at fair value in
accordance with Interpretation 17 Distributions of Non-
cash Assets to Owners
The fair value of Minerals 260 at the date of demerger
was determined to be of $90.96 million. The demerger
distribution is accounted for as a reduction in equity,
split between a reduction in share capital of $4.10
million and an increase in accumulated losses
(Demerger Dividend) of $86.86 million.
We focussed on this matter because of the importance
to readers of the financial report.
Our procedures included but were not
limited to the following:
• We reviewed the Demerger
Implementation Deed and Share Sale
Agreement between Liontown
Recourses Limited, Minerals 260
Limited and ERL (Aust) Pty Ltd.
• We ensured the transaction was
recognised in accordance with
Accounting Standards and
Interpretations;
• We recalculated the distribution and its
split between share capital and
accumulated losses; and
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 2022, 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
99
Liontown Resources
Independent Auditor’s Report
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
−
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
− Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
− Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
− Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
− Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
− Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
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.
2022 Annual Report
100
Independent Auditor’s Report
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included the directors’ report for the year ended 30 June
2022.
In our opinion, the Remuneration Report of Liontown Resources Limited for the year ended 30 June
2022 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
29 September 2022
D I Buckley
Partner
101
Liontown Resources
14.
ASX Additional
Information
ASX Additional Information
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed
elsewhere in this report applicable as at 31 August 2022 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
328,533,766
Percentage of
capital held %
14.96
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
Size of Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Shareholders
Number of Shares
% of Shares
8,035
10,366
4,187
6,670
1,591
30,849
4,795,219
27,880,746
32,414,703
215,455,718
1,915,888,964
2,196,435,350
0.22
1.27
1.48
9.81
87.23
100.00
103
Liontown Resources
Unquoted securities
Unlisted Security 1
Options (expiring 9 February 2023)
Options (expiring 4 June 2023)
Options (expiring 25 November 2023)
Options (expiring 9 February 2024)
Options (expiring 23 November 2024)
Performance rights (expiring 30 June 2023)
Performance rights (expiring 1 July 2023)
Performance rights (expiring 1 July 2024)
Performance rights (expiring 30 June 2025)
ASX Additional Information
Total in Class Number of Holders
2,500,000
2,000,000
1,000,000
2,500,000
500,000
971,736
1,250,000
1,250,000
2,915,212
1
1
1
1
1
5
1
1
5
1. The size of holding for all unlisted options and unlisted performance rights is 100,001 and over
Marketable Parcel
The number of shareholders holding less than a marketable parcel was 646.
TWENTY LARGEST ORDINARY FULLY PAID SHAREHOLDERS
Name
Mr Timothy Goyder
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
BNP Paribas Nominees Pty Ltd ACF Clearstream
Citicorp Nominees Pty Limited
Clement Pty Ltd
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