ABN 38 119 992 175
A N N U A L R E P O R T
for th e year en d ed 30 J u n e 2 02 1
C O R P O R A T E D I R E C T O R Y
Directors
Mr Michael Bowen
Mr Keith Bowes
Mr Grant Davey
Mr Mark Hanlon
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Company Secretary
Mr Stuart McKenzie
Principal Place of Business and
Registered Office
Emerald House, 1202 Hay Street
West Perth, Western Australia, 6005
Telephone: +61 8 9278 2441
Website Address
www.lotusresources.com.au
Auditor
Solicitor
Share Registry
Securities Exchange
RSM Australia Partners
Level 32, Exchange Tower,
2 The Esplanade,
Perth WA 6000
Thompson Geer
Level 27, Exchange Tower
2 The Esplanade
Perth, Western Australia, 6000
Computershare Investor Services Pty Ltd
Level 2, Reserve Bank Building
45 St George's Terrace
Perth, Western Australia, 6000
Telephone: + 61 8 9323 2000
Facsimile: + 61 8 9323 2033
ASX Limited
Level 40
Central Park, 152-159
St Georges Terrace
Perth, Western Australia, 6000
ASX Code: LOT
2
C O N T E N T S
Letter from the Chairman
Directors' Report
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-
-
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Annual review of activities
Sustainability and ESG
Directors’ profiles and meetings schedule
Annual statement of ore reserves and mineral resources
Auditor’s Independence Declaration
Audited Remuneration Report
Corporate Governance Statement
Financial Statements
Directors' Declaration
Independent Auditor’s Report
ASX Additional Information
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64
65
69
L E T T E R F R O M T H E C H A I R M A N
Dear Shareholders
2021 has without a doubt been the most pivotal year for the uranium industry in more than a decade. The markets, politicians
and corporations appear to have recognized that without nuclear power being a part of the energy conversation, a sustainable,
zero carbon emission future will be near impossible to achieve.
This recognition, coupled with multiple other factors including; major supply deficits, the exponential growth of the EV industry
and its increasing power requirements and, more recently, the emergence of the Sprott Physical Uranium Trust (SPUT), has
helped the spot uranium price hit near decade long highs. We believe the current cycle is in its infancy, as it is unlikely new
production will come online during the next 12 months and further price increases will be necessary for brownfield and almost
all greenfield projects to commence.
Whilst the recovery of the industry has been pleasing, it has been the Company’s ability to significantly advance the Kayelekera
Project over the past 12 months that has been the most satisfying. The team has worked hard to position Kayelekera to be one
of the first projects to recommence uranium production in the future through our focused attention on:
•
•
•
•
•
•
Reducing our care and maintenance costs to direct as much funding as possible into our development work.
Release of the results of our Re-Start Scoping Study to the market in October 2020.
Initiation of a series of key technical studies that we believe are the key value drivers for the project.
Increased Lotus’ ownership of the Kayelekera asset to 85 percent with the purchase of the minority shareholder. The
remaining 15 percent is held by the Government of Malawi.
Renewal of our mining licence for another 15 years.
Embarkation on the first exploration drill program at Kayelekera in the last 15 years .
• Working up the potential value of the rare earth discovery two kilometres north of the existing pit.
•
Announced the start of our Definitive Feasibility Study.
The Re-Start Scoping Study released last October highlighted Kayelekera as a project that can restart quickly with a potential
14-year life of mine producing more than 23Mlbs U3O8 and more importantly has one of the lowest initial capital costs (US$50
million) to recommence production. This envious position of low capital costs will be a major differentiator for Lotus going
forward, as in the coming years cost escalation across the resources sector is likely to become a significant obstacle in the
industry. It also is important to note that there is still potential for significant upside for the Project with the initial results from
our technical studies indicating the possibility of increased production rates and/or reduced operating costs from our Definitive
Feasibility Study.
A key area for the Company in the subsequent redevelopment of Kayelekera, and which will be incorporated in the Definitive
Feasibility Study, is a strong focus on Environmental, Social and Governance (ESG) aspects. The Company aspires to not only
be a responsible uranium producer, but also build and ensure a lasting positive legacy for the people of Malawi into the future.
The Company is already making significant progress regarding this having appointed an ESG advisor to help the Company
develop an ESG strategy and communication plan and appointing an ESG leader onsite to support this initiative. A number of
reporting targets including greenhouse gas emissions, water utilisation and community programs are already in place and the
Company is working on its first Sustainability Report and plans to release this to the market later this year.
It is important to highlight that a restart of operations will also provide significant benefits to the local communities and Malawi
as a whole through employment, development of local communities, taxes, royalty streams and profit share to the Government
of Malawi, as a 15% owner of the Project.
I would also like to acknowledge the appointment of Mr Keith Bowes as Managing Director earlier this year and for the work
he has done for the Company. Whilst Keith was only recently appointed, he has been working for the Company since the
original acquisition of the asset and has been instrumental in guiding the Company in attaining its achievements over the last
7 months.
4
5 On behalf of the Lotus Board, I would also like to thank the Malawi government, most notably the Minister of Mines, The Honourable Mr Rashid Gaffar, for their continued support and faith they have shown in the Kayelekera Project. Finally, I would like to thank all shareholders for their continued support. Without this, none of the above can be achieved. This is an exciting time for your Company, and we look forward to keeping you updated as we continue our progress at Kayelekera in the future. Mr Michael Bowen Non-Executive Chairman D I R E C T O R S ’ R E P O R T
The Directors present their report, including the remuneration report, together with the Corporate Governance Statement and
financial report of Lotus Resources Limited (the Company or Lotus Resources) and its subsidiaries (the consolidated entity or
Group) for the year ended 30 June 2021 and the auditor’s report thereon.
REVIEW OF ACTIVITIES
Project Overview
The Kayelekera Uranium Project (“Kayelekera” or the “Project”) is located in northern Malawi, southern Africa, 52km west by
road from the town of Karonga. The Project hosts a current Mineral Resource Estimate of 37.5Mlbs U3O8 (see page 19), and
historically produced ~11MIb over a five-year period from 2009-2014, before ceasing production in 2014 and entering into care
and maintenance due to low uranium prices.
Image 1: Location Kayelekera Uranium Mine
6
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
The 2021 financial year was a pivotal one for Lotus, as they made significant progress in positioning Kayelekera to be one of the
first brownfield uranium projects to recommence production so as to meet the future impending shortfall in uranium supply.
Image 2: Kayelekera Processing Facility
Major achievements by the Company during 2021 included the following:
•
Increased Project ownership from 65% to 85%. The remaining 15% is owned by the Malawi Government
•
•
•
Strengthened the Board and management team with the appointment of high calibre independent directors that
comprise 50% of the Board and the appointment of Keith Bowes, a highly experienced mine developer with African and
uranium experience, as Managing Director.
Released a robust Restart Scoping Study which outlined a 8-year operation with average production of 2.4Mlbs U3O8 pa.
Owing to the significant existing infrastructure at Kayelekera, the Project has one of the lowest initial capital costs
(~US$50m) in the industry to recommence production.
Commenced multiple technical studies that will provide the basis of design for the Feasibility Study that are expected to
be completed by mid-2022.
• Ore sorting test work, part of the technical study work, exceeded expectations with significant increases in plant feed
grade achieved that could significantly improve the Project’s economics through either increased annual production rates
and / or extension of the mine life and reducing operating costs.
•
•
•
•
•
•
Commenced discussions with multiple major global utilities to re-introduce the Project. These discussions have been led
by Dr Robert Rich, the Company’s Uranium Marketing and Sales Executive based in the USA.
Commenced the first uranium exploration drill program in more than 15 years with a reverse circulation (RC) drilling
program of approximately 5,000 metres.
Discovery of high-grade rare earth oxide (REO) mineralisation with grades of up to 16% total REO and 3.4% critical REO,
located 2km from the Kayelekera Mine.
Engagement of an Environmental, Social and Governance (ESG) consultant to assist in developing an ESG strategy for the
Company that will define performance measurements, reporting methods and communication plans.
Entered into an agreement to divest its non-core Hylea Cobalt Project to Sunrise Energy Metals Limited (ASX.SRL) (Sunrise)
for a total consideration of A$2.5 million.
Completed capital raisings to Australian and international institutional investors which strengthened the Company’s share
register and sees it fully funded through to 2023
7
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
The work completed during 2021 has set the Company up in the future with the focus on being
“A responsible uranium producer, building strong local communities, a safe and healthy work environment and make a
positive contribution to a carbon free future”
Development Studies – Restart Scoping Study and Technical Studies
During 2021, the Company completed a positive Restart Scoping Study (Study) and subsequent technical studies that assessed
the potential for the Project to recommence uranium production in the near future.
The Restart Scoping Study was underpinned by a mineral resource of 37.5M lbs U3O8 and a significant body of information and
data (including operating costs) from the prior five-year operating period that ended in May 2014 and was supplemented by
current information in specific areas.
The Study demonstrated that Kayelekera has the capacity to be one of the first operations globally to recommence uranium
production to meet the impending and growing shortfall in supply.
The Projects existing infrastructure and mineral resources represent a considerable advantage, providing for a low restart
capital expenditure and significant long-term production. The Study assessed two scenarios:
•
•
Scenario 1: 8-year life of mine, producing 16.4Mlbs U3O8 with average head grade of ~900ppm U3O8.
Scenario 2: 14 years life of mine, producing 23.8Mlbs U3O8 with treatment of stockpiles from year 8 (average head
grade ~680ppm U3O8)
The results of the Study are shown in Table 1 below – see ASX announcement dated 21 October 2020 for further information
on the Study.
Table 1: Summary of production and cost data (estimated)
General
Mine Life (Years)
Total Material Mined (Mt)
Strip Ratio
Total U3O8 Mined (Mlbs)
Production
Plant Feed (Mt)
Plant Feed Grade (ppm U3O8)
Plant Recovery (%)
Av. Annual Production (Mlbs)
Max Annual Production
LOM Production (Mlbs)
Operating costs
Mining Costs (US$ / t mined)
Processing Costs (US$ / t ore)
G&A Costs (US$M pa)
Steady-state1 Cash costs (US$ / lb)
Steady-state2 AISC (US$ / lb)
Capital costs
Initial Capital (US$M)
Plant Sustaining Capital (US$M)
TSF Sustaining Capital (US$M)
Closure Costs (US$M)
High-grade ore only
With Medium-grade stockpiles
LOM total / Avg.
8
47.1
3.5
18.9
LOM total / Avg.
9.6
898
86.7%
2.3
3.0
16.4
LOM total / Avg.
2.87
37.84
12.4
32.75
39.83
LOM total / Avg.
50.2
28.0
36.1
31.5
LOM total / Avg.
14
47.1
1.8
27.5
LOM total / Avg.
18.4
679
86.7%
1.8
3.0
23.8
LOM total / Avg.
2.87
35.47
12.4
32.06
39.07
LOM total / Avg.
50.2
48.0
36.12
31.5
1 Production Years 2 to 6 after ramp-up; 2 Assumes in-pit tailings disposal will be possible otherwise this could increase to
US$65.4M
8
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Whilst the results of this Study outlined a robust uranium operation, a number of areas were identified that have the potential
to improve the Project’s returns by reducing operating and increasing production. Prior to commencing the Feasibility Study,
the Company started work on multiple technical studies including:
1. Ore sorting;
2. Power supply options;
3. Acid recovery; and
4. Optimisation of tailings facilities.
Each study was nearing completion towards the end of the financial year with the phase one ore sorting results had been
received (see below). Ore sorting has the potential to be a potential game-changer for the project having the greatest positive
impact on economic returns.
Ore Sorting test work
Two samples of run of mine ore (~500kg) were sent to STEINERT’s testing facility in Perth. STEINERT was selected in part due
to the testing facility being a commercial scale ore sorting unit (Image 3) which is similar to the facility that may be installed at
Kayelekera. The estimated capital cost for an ore sorting unit is US$2 million to US$3 million.
Image 3: Ore sorting facility used during testwork is the same size proposed for use at Kayelekera
The ore sorting assessment tested two sensors, colour and density. The tests were run such that a total of three products were
produced from each test:
1. A concentrate sample that represented a high-grade product;
2. A middlings sample that represented a high recovery option; and
3. A tailings sample.
The results show that colour is the main sorting criteria and indicate an upgrade ratio in the feed of 1.7 at recoveries of 86% or
an upgrade ratio of 1.5 with 92% recovery can be achieved (Table 2). This means more uranium in the same mass, which would
allow increased production rates for the same tonnage treated.
9
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Ore sorting test work is continuing, with current test work including combined sensor evaluations and testing additional
samples which are being sent from site and represent a wider range of lithologies and feed grades.
Table 1: Colour and Density Ore Sorting Results
Sample
Fines (-20mm)
Ore sorter (+20mm)
Concentrate
Middlings
Tails
Products
Conc + Fines
Conc + Midds + Fines
Head Sample
Mass Split
16.5
83.5
33.5
10.6
39.4
50.0
60.6
100
Upgrade Ratio
1.0
1.0
2.1
0.6
0.2
1.7
1.5
1.0
Distribution
16.2
83.8
69.9
5.7
8.2
86.0
91.8
100
The Company is considering a number of different scenarios that can utilise the effectiveness of ore sorting, including:
• Maximising annual production rates to the nominal production rate of the back-end circuit (i.e., drying and packing)
of ~3Mlbs/annum
•
•
Focusing on the lower grade materials (stockpile and mineralised waste) and converting them from marginal ores to
highly economic feed material for the main process plant
Further assessment of the option to reduce acid consumption and mill power draw through rejection of barren calcite
and silicate materials
Image 4: ROM feed to the ore sorter before separating into product and tailings
10
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Care and Maintenance
Health & Safety
Kayelekera mine (KM) achieved 2,552 Lost Time Injury (LTI) free days with a total 3,097,933 manhours worked as at 30 June
2021 (156,879 for the 12-month period ending 30 June 2021). No reportable incidents and only one Covid-19 related case and
28 Malaria cases at the site were observed during the 12-month period. The 12-month rolling Total Recordable Injury Frequency
Rate (TIFR) is 5.1, while the Lost Time Injury Frequency Rate (LTIFR) remains at zero. A total of 71 minor incidents were reported
during the period, mainly small safety and environmental incidents.
KM continued with pro-active approach in incident/accident prevention through implementation of work permit system, Take-
5 risk assessments and daily safety toolbox talks.
Care and maintenance costs
The Company continues to undertake reviews of all activities and associated costs at the Project site to ensure we optimise the
site care and maintenance programs and costs.
The review has ensured that the primary focus for the ongoing activities are the core requirements of:
1) Maintaining a high level of security and safety at site;
2) Ensuring compliance with all regulatory requirements; and
3) On-going maintenance of critical equipment.
The actual 2021 care and maintenance operating costs were US$1.65M versus a budget of US$1.72M. Additional costs
associated with in-country general and administration costs including insurance premiums, tenements fees were US$0.55M for
the year. The single largest cost item for the year is the treatment of run-off water collected in the site dams prior to discharge
to the environment. Costs for FY2021 water treatment were US$0.5M. A similar care and maintenance cost is budgets for
2022.
Government Relations
Mining License and Mine Development Agreement
On 2 April 2007, the Ministry of Energy, Mines and Natural Resources of Malawi issued a 15-year Mining License to the
Company’s subsidiary in Malawi – Paladin Africa Limited for the Kayelekera Uranium Project in accordance with the Malawi
Mines and Minerals Act of 1981. A Mine Development Agreement providing for a stable fiscal, royalty and equity regime
amongst other terms for the Project development was executed between the Malawi Ministry of Energy, Mines and Natural
Resources and Ministry of Finance and Paladin Africa Limited and a former owner of the Project - Paladin Energy Minerals
(Australia) on 22 February 2007.
11
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
SUSTAINABILITY AND ESG
At Lotus, we recognise that we are part of a global community. As part of this community, we are committed to operating our
business in a sustainable manner that ensures our people are safe and well-supported, local communities prosper and the
environment is well cared for so that it benefits future generations. Companies can be courageous and innovative in their
approach to sustainability, and Lotus has both the opportunity and the capacity to be a key participant in this approach. We
are committed to continuously improving the way we do business.
The mining sector remains a significant local and international industry as global demand for resources continues to improve
living standards and assist economic growth. The industry is facing complex challenges, such as lower commodity prices, climate
change impacts, community acceptance, environmental concerns and the need for companies to show leadership and
stewardship of natural resources. However, these challenges can also be opportunities – and the industry is in a unique position
to respond. Uranium in particular has a large role to play in the transition to a low carbon future as the only sustainable baseload
power option with zero carbon emissions.
This year marks an important milestone for Lotus as we publish our first Sustainability Report. We are proud of our
achievements and developments in this area, and we are pleased to outline them for you in this report. We have created a
sustainability project team & new sustainability champion, our Human Resources Officer, Leonard Kazembe.
Despite our Kayelekera mine currently being in care and maintenance, we still aim to maximise opportunities to create value
for our stakeholders. While financial and operational success is important, we never lose sight of the vital role that our people,
including our contractors, play in driving sustainable performance. Their safety will always be our greatest priority.
We have also worked hard to support the local communities in the region surrounding the Kayelekera mine so they receive real
benefit from our activities. We are committed to working closely with the local communities as real partners so when Lotus
thrives, they do too. Lotus also upholds high standards of environmental responsibility and we have kicked off projects to
reduce our use of natural resources.
Strategy
Lotus Resources is committed to the goal of sustainable development which is reflected in its corporate values. The Company’s
values include the promotion and creation of shared wealth, becoming a significant uranium supplier, operating at global best
practice, safety and environmental stewardship, employee welfare and recognition, and the contribution and response to the
attitudes and expectations of local communities in the country in which the Company operates.
Lotus is also cognisant of the extra diligence that is required by those in the uranium industry and emphasises acting with
integrity, honesty and cultural sensitivity in all its dealings.
In implementing its sustainable development program, Lotus aims to achieve a balance between economic, environmental and
social needs in all phases of its operation, and takes into consideration its employees, communities, shareholders and other
key stakeholders.
Sustainability Statement
Sustainability at Lotus is currently governed directly through the Board and focuses on the Company’s performance in the areas
of health, safety, radiation, environment, social responsibilities and sustainable development.
ESG Activities
It is the intention of the Company that a Sustainability (or ESG) Committee be developed as the Company moves closer towards
the restart of its Kayelekera asset. The Committee will comprise of a minimum of three Board members and will provide
feedback to the Board on activities and results associated with Sustainability and ESG, including reports related to significant
accidents, environmental incidents, community concerns, policy breaches or systems failures, and reviews internal and external
audit reports to ensure that Lotus’ operations are in compliance with relevant legislation.
12
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
With the committee established a program of work will be created that will initially include:
•
•
•
Initiating an ESG reporting protocol that aligns with established international practices
Setting up the reporting standards on key ESG criteria as part of the company’s ongoing continuous disclosure plans
Identifies areas for improvement and establishes programs or processes to address these issues. Each program will
have a nominated champion who will be responsible for the program
In order to support the formation of this Committee and the program of work the Company has engaged with a number of
expert consultants to review all relevant policies and guidelines to ensure that they reflect current and emerging international
standards. All Policies will be approved by the Board and then be rolled out to all personnel through comprehensive briefings
and interactive sessions that addressed each policy in detail.
Kayelekera Mine Site Performance
The main safety, health, environment and radiation (SHER) activities undertaken were:
•
•
•
•
•
•
Continued the implementation of Response Plan for COVID-19, with all employees having their first dose of the
vaccine and 75% of the workforce having now received their second vaccination.
Mandated that no employee is permitting on the mine site without proof of full vaccination or a negative COVID
test received in the prior 72 hours.
The Atomic Energy Regulatory Authority (AERA) inspected KM site during the reporting period. KM also
submitted application for the renewal to possess and use radioactive sources to AERA.
Firefighting training and reviews of Emergency Response Plan and Safety Management Plans with updates to
comply with current C&M activities
Monthly inspections on camp hygiene, process plant and tailings / water dams
Vector control programs were conducted for rodent, termite and fly control.
The following monitoring programs were also undertaken during the reporting period:
•
•
•
•
Radiation monitoring for positional dust was conducted in multiple locations. Radiometric and gravimetric
analysis was performed on the samples collected by the High-Volume Air Samplers (HVAS) during the reporting
period. The radiometric and gravimetric concentration on the samples analyzed are well below the
recommended Occupational Exposure Limits (OELs).
Radon Decay Products (RDP) sampling was conducted on four monitoring stations. Trends of the RDP
concentrations in all four locations were dependent on the external weather conditions with higher values see
at the onset of the dry season. However, all mean concentrations for RDP sampling remain very low compared
to the DLI (7.00µJm3)
Scheduled inspections and prism survey on the TSF embankments including the Decant Pond were completed
for the reporting period. No deviations were noted on the TSF North Wall. The largest movements were recorded
on the southern edge of the TSF and on the southern wail of the Decant Pond. Movements were within the
norms expected for the areas.
Prism ground movements monitoring at the Plant site continue to show reduction in ground movement intensity
around KM as the dry season moves in. The largest ground movements were mapped on slopes to the west of
the plant and at around Acid Plant stack. A comprehensive program of work is being planned to develop a
strategy to mage this issue prior to start-up.
Site water management continues with the water treatment program being conducted over a period of fifty-two days
discharging 549,252m³ treated water into the Sere River at a cost of US$0.85/m³.
13
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Water pond monitoring surveys were undertaken weekly during the rainy season and monthly during the dry season. Pond
levels and volumes obtained at the end of June 2021 are given below.
Water Storage Facility
Return Water Pond (RWP1)
Return Water Pond (RWP2)
Decant Pond
Seepage Pond
Tailings Storage Facility (mRSL)
June 2020
28.9%
69.4%
68.9%
76.8%
798.239
June 2021
36.6%
61.9%
67.4%
89.0%
798.558
The current number of persons employed by the Company are shown in the table below. Permanent Staff turnover is zero,
with no separations or new appointments made during the reporting period.
Employees
Permanent staff (Expat)
Permanent staff (National)
Contractors – FTE
Contractor Security
Third Party Contractors
June 2020
2
17
17
19
4
June 2021
2
17
18
20
3
Stakeholder consultation is an ongoing activity with communications focused on current activities onsite (e.g., exploration
work), temporary contract job opportunities, future plans for the mine and general discussions around community
development ideas.
Consultees
Paramount Chief
Group Village Headman
Community Leaders
CSO
Government Ministries
FY2021
3
2
6
1
7
Training forms an important part of our ongoing activities with our staff and contractors with training program undertaken on
firefighting, emergency response, COVID management and safety issues.
The Company has applied for the extension of the Mining License in advance of its expiration date of 2 April 2022 and has
developed a Community Development Agreement to support the application process as defined by the new Malawian Mines
and Minerals Act, No 8 of 2019. The Company will also review the Mine Development Agreement terms with the Ministry of
Finance and Ministry of Mining such that a revised agreement can be in place prior to the restart of the mine.
ENVIRONMENTAL REGULATION
The Group’s exploration and mining activities are governed by a range of environmental legislation and regulations.
As the Group is still in the development phase of its interests in exploration projects, Lotus Resources is not yet subject to the
public reporting requirements of environmental legislation and regulations. To the best of the directors’ knowledge, the Group
has adequate systems in place to ensure compliance with the requirements of the applicable environmental legislation and is
not aware of any breach of those requirements during the financial year and up to the date of the Directors’ Report.
14
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
DIRECTORS
The Directors of the Company at any time during or since the end of the financial year are:
Mr Michael Bowen
Non-Executive Chairman – Appointed 22 February 2021
Experience and expertise
Mr Bowen is a partner of the national law firm Thomson Geer Lawyers. He practices
primarily corporate, commercial and securities law with over 40 years of experience and
emphasis on mergers, acquisitions, capital raisings and resources.
He is also a Non-Executive Director of ASX listed company Omni Bridgeway Limited, where
he is chair of the remuneration committee and a member of the audit and risk, corporate
governance and nomination committees.
Mr Bowen holds a Bachelor of Laws, Jurisprudence and Commerce from the University of
Western Australia. He has been admitted as a barrister and solicitor of the Supreme Court
of Western Australia since 1979 and is also admitted as a solicitor of the High Court of
Australia. He is a Certified Public Accountant and member of the Australian Society of
Accountants.
Omni Bridgeway Limited (Non-Executive Director)
Trek Metals Limited (Non-Executive Director)
Nil
Ordinary shares
Unlisted Options
2,250,000
3,000,000
Mr Davey is an entrepreneur with 30 years of senior management and operational
experience in the development, construction and operation of precious metals, base
metals, uranium and bulk commodities throughout the world. More recently, he has been
involved in venture capital investments in several exploration and mining projects and has
been instrumental in the acquisition and development of the Panda Hill niobium project
in Tanzania, the Cape Ray gold project in Newfoundland and recently the acquisition of
the Kaylekera Uranium mine in Malawi from Paladin Energy LTD. He is s currently a
Company Director for Cradle Resources Limited (ASX:CXX), Superior Lake Resources
(ASX:SUP), and is a member of the Australian Institute of Company Directors (AICD)
Cradle Resources Limited (Executive Director)
Superior Lake Resources Limited (Non-Executive Director)
Boss Resources Limited (Non-Executive Director)
Matador Mining Limited (Non-Executive Director)
Nil
Ordinary shares
Unlisted Options
193,058,115
2,000,000
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Mr Grant Davey
Non-Executive Director
Experience and expertise
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
15
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Mr Mark Hanlon
Non-Executive Director – Appointed 22 February 2021
Experience and expertise
Mr Hanlon has over 25 years of experience in the resources and resource services sector,
as well as in commercial and merchant banking.
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
He has a broad background of senior executive experience across a wide range of
industries including mining and mining services. Mr Hanlon is currently a Non-Executive
Director with ASX listed company Red River Resources Limited where he also chairs the
audit and risk committee. He is also Non-Executive Chair of ASX listed company, Copper
Strike Limited.
Red River Resources Limited (Non-Executive Director)
Coper Strike Limited (Non- Executive Chairman)
Nil
Nil
Ordinary shares
Unlisted Options
3,675,946
2,824,054
Mr Keith Bowes
Managing Director – Appointed 15 February 2021
Experience and expertise
Mr Bowes is a highly regarded mining executive with over 20 years of experience working
on project development and operations in Africa, South America and Australia across a
range of commodities and processes.
He was previously the project manager for the Panda Hill niobium project in Tanzania and
the Sovereign Metals graphite project in Malawi.
Mr Bowes project managed the Boss Resources’ redevelopment program for the
Honeymoon Uranium Mine including all study phases and commercial trials of the new
processing technology. As part of the study he led the development in the application of
two new technologies that have redefined the Honeymoon opportunity (leach chemistry
and IX resins).
Nil
Other current directorships
Former directorships in the last 3 years
Matador Mining Limited (Executive Director)
Special responsibilities
Interests in shares and options
Managing Director
Ordinary shares
Unlisted Options
2,250,000
7,750,000
Mr Stuart McKenzie
Non-Executive Director -Resigned 19 February 2021
Experience and expertise
Mr McKenzie has over 30 years of experience in senior commercial roles. He was
previously Company Secretary with Anvil Mining Limited for six years, prior to which he
held senior positions with Ok Tedi Mining Limited, Ernst and Young and HSBC. Mr
McKenzie is the current company secretary of Matador Mining Limited, Lotus Resources
Limited, Superior Lake Resources Limited and Tanga Resources Limited.
Other current directorships
Nil
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Nil
Nil
Ordinary shares
Unlisted Options
16
475,000
2,000,000
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Mr John Sibley
Non-Executive Chairman – Resigned 19 February 2021
Experience and expertise
John Sibley has extensive board, special committee and executive experience with a
particular focus on mining, financing, regulatory compliance and corporate governance in
Canada and internationally.
Other current directorships
Aldebaran Resources Inc. (Non-executive Director)
Stillwater Canada Limited (Non-executive Director)
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Qtrade Canada Inc.
Chairman
Ordinary shares
Unlisted Options
Nil
Nil
Mr Eduard Smirnov
Managing Director – Resigned 10 February 2021
Experience and expertise
Eduard Smirnov has significant international executive experience in the mining and
metals industry with a focus on operations, corporate development and strategy
developed through his over 15-year career in the resources and financial industries.
Other current directorships
Nil
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Uranium One Inc.
Managing Director
Ordinary shares
Unlisted Options
COMPANY SECRETARY
Mr Stuart McKenzie
See page 16.
Nil
Nil
17
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
DIRECTORS’ MEETINGS
The number of directors’ meetings (including meetings of committees of directors) and the number of meetings attended by
each of the directors of the Company during the financial year are:
Director
Board Meetings
Held
Attended
Mr Michael Bowen(i)
Mr Keith Bowes(ii)
Mr Grant Davey
Mr Mark Hanlon(i)
Mr Stuart McKenzie(iii)
Mr John Sibley(iv)
Mr Eduard Smirnov(v)
4
4
19
4
15
15
15
4
4
17
4
15
14
15
(i)Appointed 22 February 2021
(ii)Appointed 15 February 2021
(iii)Resigned 19 February 2021
(iv)Resigned 19 February 2021
(v)Resigned 10 February 2021
Committee membership
As at the date of this report, there is no audit and risk committee or remuneration committee. The Board has determined that
given the size and composition of the Board and the scale of the Company’s activities, the functions of those committees ought
to be performed by the Board. For further information, please see the Company’s Corporate Governance Statement.
PRINCIPAL ACTIVITY
The principal activity of the Group during the year was the exploration and development of the Group’s Kayelekera Uranium
Project, in Malawi.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant or material changes to the Group’s state of affairs not otherwise disclosed in this report.
18
RESULTS
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
The Group incurred a loss after income tax of $5,897,844 for the financial year after income tax (2020: loss $16,569,943).
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
In the opinion of the Directors, there is nothing material further to report, except as outlined in the Directors’ Report, which
relates to likely developments in the operations of the Group and the expected results of those operations in financial years
subsequent to 30 June 2021.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Subsequent to the end of the financial year:
• On the 23 September 2021, the Company announced it had completed the sale of its Cobalt tenements in New South
Wales to Sunrise Energy Metals limited (Sunrise). The transaction involved the sale of tenement EL8520, EL8641 and
EL8801 for $1 million in cash and $1.5 million in Sunrise shares based on a 5 day volume weighted average price.
•
•
•
The Company issued 226.4 million shares to Kayelekera Resources Pty Ltd for the purchase of an additional 20%
interest in the Company’s Kayelekera Uranium. This increases the Company ownership of the project from 65% to
85%, with the Malawi government holding the remaining 15%.
2,389,381 unlisted options were exercised at $0.04 per options for gross proceeds before costs of $79,289.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has had no significant impact on the
consolidated entity up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative,
after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian
and Malawi Governments, such as vaccinations, maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
• On the 14 September 2021 the Company announced the renewal of its mining license ML0152 for a further 15 years
and the renewal of its exploration permits.
ANNUAL STATEMENT OF ORE RESERVES AND MINERAL RESOURCES
Table 1. Kayelekera Mineral Resource March 20201 (Reported above a 300ppm U3O8 lower cut-off for in situ material; and a
200ppm U3O8 lower cut-off for the low-grade stockpiles).
Measured
Measured - RoM Stockpile1
Indicated
Inferred
Total
Inferred - LG Stockpile2
Total All Material
Mt
0.7
1.6
18.7
3.7
24.6
2.4
27.1
Grade (U3O8 ppm)
1,010
760
660
590
660
290
630
U3O8 (M kg)
0.7
1.2
12.3
2.2
16.3
0.7
17.0
U3O8 (M Lb)
1.5
2.6
27.1
4.8
36.0
1.5
37.5
1 RoM stockpile has been mined and is located near mill facility.
2 Low-grade has been mined and placed on low-grade stockpile and are considered potentially feasible for blending or beneficiation,
with studies planned to further assess this option.
Figures have been rounded. Grade has been determined from a combination of XRF and downhole logging derived eU3O8 grades. In
situ Mineral Resources are depleted for mining to 31 December 2013, when mining ceased, with stockpiles depleted to the end of
processing in June 2014. Metal content is based on contained metal in the ground and takes no account of mining or metallurgical
recoveries, mining dilution or other economic parameters. An in-situ bulk density of 2.29g/cm3 was applied for Arkose material and
2.20g/cm3 for mudstone material to all blocks within the model.
19
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
Mineral Resources
The information in this document that relates to Mineral Resources for Kayelekera at the project was first reported by the
Company in an announcement to the ASX on 26 March 2020. The Company confirms that it is not aware of any new
information or data that materially affects the information included in the original market announcements, and in the case of
estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the
relevant market announcement 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 announcement.
Ore Reserves and Mineral Resources Governance
Lotus reviews its Mineral Resource and Ore Reserve (if applicable) estimates on an annual basis. The Annual Statement of
Mineral Resources and Ore Reserves is prepared in accordance with the JORC Code 2012 and the ASX Listing Rules.
Competent Persons named by the Company are members of the Australian Institute of Mining and Metallurgy and/or the
Australian Institute of Geoscientists and qualify as Competent Persons as defined under the JORC Code 2012.
The Company engages external consultants and Competent Persons to prepare and calculate estimates of its Mineral Resources
and Ore Reserves. These estimates and underlying assumptions are reviewed by the Directors and management for
reasonableness and accuracy. The results of the Mineral Resource and Ore Reserve estimates are then reported in accordance
with the JORC Code 2012 and the ASX Listing Rules. Where material changes occur to a project during the period, including the
project’s size, title, exploration results or other technical information, previous resource estimates and market disclosures are
reviewed for completeness. The Company reviews its Mineral Resources and Ore Reserves as at 30 June each year and where
a material change has occurred in the assumptions or data used in previously reported Mineral Resources and Ore Reserves, a
revised estimate will be prepared as part of the annual review process.
SHARES AND OPTIONS ON ISSUE
At the date of this report, the Company has 1,188,800,828 (2020: 738,264,828) fully paid ordinary shares on issue.
The following options over ordinary shares in the Company were on issue at the date of this report:
Number
Unlisted Options
Issue Date
Exercise Price
Expiry Date
6,000,000
6,000,000
7,000,000
5,000,000
2,500,000
2,500,000
14,634,653
1,393,102
8,064,305
5,580,007
58,672,067
26 August 2021
26 August 2021
26 August 2021
23 October 2020
23 October 2020
23 October 2020
13 March 2020
4 October 2019
12 September 2019
25 September 2019
$0.00
$0.00
$0.00
$0.04
$0.06
$0.08
$0.04
$0.04
$0.04
$0.04
1 January 2024
10 February 2024
22 February 2024
23 October 2023
23 October 2023
23 October 2023
13 March 2023
4 October 2022
12 September 2022
25 September 2022
20
D I R E C T O R S ’ R E P O R T ( c o n t ’ d )
OPTIONS EXPIRED
There were no options that expired during the year and no further options have expired since the end of the year.
OPTIONS LAPSED
21,000,000 options lapsed unexercised during the year.
DIVIDENDS
No dividends were paid to members during the financial year and the Directors do not recommend the payment of a dividend.
INDEMNIFICATION OF OFFICERS AND AUDITORS
Indemnification
The Company has agreed to indemnify the current Directors and Executives of the Company against all liabilities to another
person (other than the Company or a related body corporate) that may arise from their position as Directors and Executives of
the Company, except where the liability arises out of conduct involving a lack of good faith or gross misconduct.
The agreement stipulates that the Company will meet to the maximum extent permitted by law the full amount of any such
liabilities, including costs and expenses.
INSURANCE PREMIUMS
The Company paid a premium during the year in respect of a director and officer liability insurance policy, insuring the directors
of the Company, the company secretary, and all executive officers of the Company against a liability incurred as such a director,
secretary or executive officer to the extent permitted by the Corporations Act 2001. The directors have not included details of
the nature of the liabilities covered in respect of the directors’ and officers’ liability and legal expenses’ insurance contracts, as
such disclosure is prohibited under the terms of the contract.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of
the Company, or to 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. No proceedings have been brought or intervened in on behalf of
the Company with leave of the Court under section 237 of the Corporations Act 2001.
NON-AUDIT SERVICES
Details of amounts paid or payable to the Company’s auditor, RSM Australia Partners (RSM), for audit and non-audit services
provided during the year are set out in note 4.
The Board is satisfied that the provision of the non-audit services is compatible with general standard of independence for
auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the
auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
(a) all non-audit services have been reviewed by the Board to ensure they do not impact the impartiality and objectivity of the
auditor; and
(b) none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants.
REMUNERATION REPORT
The Remuneration Report set out on pages 25 to 31 forms part of the Directors’ Report and is signed as part of it.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration as required under Section 307C of the Corporations Act 2001 is set out immediately
after this Directors’ Report.
21
22 DIRECTORS’ REPORT (cont’d) AUDITOR RSM Australia Partners continues in office in accordance with Section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. Dated at Perth, Western Australia this 30th day of September 2021. Signed in accordance with a resolution of the directors: Mr Michael Bowen Non-Executive Chairman 30 September 2021 RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Lotus Resources Limited for the year ended 30 June 2021,
I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 September 2021
ALASDAIR WHYTE
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
T E N E M E N T S C H E D U L E
Lotus Resources Limited Tenement Schedule as at 30 September 2021
Project
Tenement
Area (km2)
Status
Registered Holder
Ownership
Lotus Africa
Limited
Lotus Africa
Limited
Lotus Africa
Limited
Lotus Africa
Limited
Paladin Africa
Limited
85%
85%
85%
85%
85%
Malawi
Kayelekera
ML152
55.50
Nthalire
EPL489
137.04
Granted
Granted
Uliwa
Rukuru
EPL418
348.80
Granted
EPL417
146.30
Juma-Miwango
EPL502
28.65
Granted
Granted
24
A U D I T E D R E M U N E R A T I O N R E P O R T
This Remuneration Report outlines the director and executive remuneration arrangements of the Group 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.
For the purposes of this report, key management personnel (KMP) of the Group are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly,
including any director (whether executive or otherwise) of the Group.
KEY MANAGEMENT PERSONNEL
The following were key management personnel of the Group at any time during the financial year and unless otherwise
indicated were key management personnel for the entire financial year:
Name
Mr Michael Bowen
Position held
Non-Executive – Appointed 22 February 2021
Mr Keith Bowes
Managing Director – Appointed 15 February 2021
Mr Grant Davey
Non-Executive
Mr Mark Hanlon
Non-Executive – Appointed 22 February 2021
Mr Stuart McKenzie
Non-Executive – Resigned 19 February 2021
Mr John Sibley
Chairman Non-Executive – Resigned 19 February 2021
Mr Eduard Smirnov Managing Director – Resigned 10 February 2021
NOMINATION & REMUNERATION COMMITTEE
The Board of Directors of the Company are responsible for determining and reviewing remuneration policies for the directors
and executives as the Board is of the opinion that given the size of the Board, sub-committees would largely include the
entire Board. If necessary, the Board obtains independent advice on the appropriateness of remuneration packages given
trends in comparable companies and in accordance with the objectives of the Group. No such advice was obtained during
the year. However, the Board regularly assess remuneration in light of market conditions and peer companies.
Further information on the Boards role, responsibilities and membership is set out in Corporate Governance Statement in
this Annual Report.
PRINCIPLES OF REMUNERATION
The remuneration structures explained below are competitively set to attract and retain suitably qualified and experienced
candidates, reward the achievement of strategic objectives and achieve the broader outcome of creation of value for
shareholders. The remuneration structures take into account:
o
o
o
the capability and experience of the key management personnel;
the key management personnel’s ability to control the achievement of strategic objectives;
the Group’s performance including:
▪
▪
the growth in share price; and
the amount of incentives within each key management person’s compensation.
Given the evaluation and developmental nature of the Group’s principal activity, the overall level of compensation does not
have regard to the earnings of the Group.
REMUNERATION STRUCTURE
In accordance with best practice corporate governance, the structure of non-executive directors’ remuneration is clearly
distinguished from that of executives.
25
A U D I T E D R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
REMUNERATION STRUCTURE (cont’d)
EMPLOYMENT AND CONSULTANCY AGREEMENTS
The Company has entered into employment or contractual agreements with its executive directors. The employment
agreements outline the components of remuneration paid to the executives and are reviewed on an annual basis.
Fixed remuneration
Fixed remuneration consists of base compensation (which is calculated on a total cost basis and includes any fringe benefits
charges related to employee benefits including motor vehicles) as well as employer contributions to superannuation funds.
Fixed remuneration is reviewed annually by the Board through a process that considers individual and overall performance
of the Group. As noted above, the Board has access to external advice independent of management.
Executive remuneration
Remuneration for executives is set out in employment agreements. Details of these employment agreements are provided
below.
Component
Fixed remuneration
Contract duration
Termination
Other Equity incentives
Component
Fixed remuneration
Contract duration
Termination
Sign on incentive
Managing Director - Keith Bowes – Appointed 15 February 2021
$220,000 Inclusive of superannuation
No fixed term
Statutory entitlements will be paid as required by law. Three months written notice.
The Executive is eligible to receive an Equity Incentive Award at the Board’s discretion
and subject to the Executive’s performance against agreed KPI’s for the relevant
performance-based period.
Managing Director – Eduard Smirnov – Resigned 10 February 2021
$300,000 USD Inclusive of superannuation
No fixed term
Statutory entitlements will be paid as required by law.
•
•
•
6,000,000 zero priced options that vest subject to raising capital at such timing and
prices as approved by the Board
6,000,000 zero priced Options that vest subject to:
o
The appointment of independent Directors and/or advisers, African Govt
relations, and other positions to attract institutional investment and ensure
corporate Governance and independence as approved by the board.
Completion of a restart study showing the viability of restarting the Mine
including but not limited to letters of intent with respect to offtake
agreements.
o
6,000,000 zero priced Options that vest on the earlier of three continuous years of
service or the Company’s market capitalisation exceeds a value of A$200million for
30 consecutive trading days on the ASX (based on the VWAP of the Company’s
shares on the ASX)
Other Equity incentives
(All option were cancelled upon resignation)
The Executive is eligible to receive an Equity Incentive Award at the Board’s discretion
and subject to the Executive’s performance against agreed KPI’s for the relevant
performance-based period.
Executive directors may receive performance related compensation but do not receive any retirement benefits, other than
statutory superannuation.
26
A U D I T E D R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
REMUNERATION STRUCTURE (cont’d)
Non-executive director remuneration
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be
determined from time to time by a general meeting. Total remuneration for all non-executive directors, last voted upon by
shareholders at the 2007 General Meeting, is not to exceed $500,000 per year. Directors’ fees cover all main board activities
and membership of committees.
Non-executive Directors do not receive any retirement benefits, other than statutory superannuation.
Non-Executive Director arrangements
Details of the agreements are provided below.
Component
Fixed remuneration
Contract duration
Termination
Sign on incentive
Other Equity incentives
Non-Executive Chairman – John Sibley – Resigned 19 February 2021
$100,000 Inclusive of superannuation
No fixed term
Statutory entitlements will be paid as required by law.
3,000 zero priced Options that vest to 18 months of continued service
(All option were cancelled upon resignation)
The Chairman is eligible to receive an Equity Incentive Award at the Board’s discretion
and subject to the Chairman’s performance against agreed KPI’s for the relevant
performance-based period.
Other Non-executive Directors
Non-executive director fees are reviewed annually by the Board taking into account comparable roles and market data.
Fees for the financial year are as follows:
Name
Base Salary/fees (Annual)
Term of Agreement Notice Period
Mr Michael Bowen(i)
Mr Grant Davey
Mr Mark Hanlon(i)
Mr Stuart McKenzie(iii)
Mr John Sibley(iv)
(i)Appointed 22 February 2021
(ii)Appointed 15 February 2021
(iii)Resigned 19 February 2021
(iv)Resigned 19 February 2021
(v)Resigned 10 February 2021
$75,000
$50,000
$50,000
$-
$100,000
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
Statutory
Statutory
Statutory
Statutory
Statutory
Non-Executive Directors have no entitlement to termination payment in the event of removal for misconduct or gross
negligence.
Short-term and Long-term incentive
The Group adopted an incentive option plan on 28th November 2019.The Group considers performance based remuneration
to be a critical component of the overall remuneration framework, by providing remuneration structure that rewards
employees for achieving goals that are aligned to the Group’s strategy and objectives. Both STI’s and LTI’s will be issued
under the Lotus Resources Limited Option Plan in the 2022 financial year.
27
A U D I T E D R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
REMUNERATION STRUCTURE (cont’d)
Short-term incentives
As at the date of this report the Company has only recently implemented its share-based payment (SBP) incentive scheme
which will relate to the 2022 and subsequent financial years. The scheme operates to link performance and reward with key
measurable financial and performance indicators to provide employees with clear and understandable targets that are
aligned with the Group’s objectives and shareholder value.
The board will also set non-financial objectives for the Managing Director and these are then cascaded down through the
organisation to ensure alignment of objectives. The employee will then have up to three years in which to exercise the
options for nil consideration. Each vested SBP option represents a right to be issued one Lotus share. STI’s will be issued
under the new incentive scheme and will vest on completion of a one year period and satisfaction of a number of key
measurable financial and non-financial performance indicators as assessed by the Managing Director and the Board.
A one-off set of SBP’s for calendar years 2021 and 2022 were set to align the KMPs with the directors as part of the board
restructure that are in the form of zero exercise price options and which vest on two sets of criteria:
•
•
Continuous employment to 31 December 2021 and achieving a share price of $0.25 or above for five consecutive
days; and
Continuous employment to 31 December 2022 and achieving a share price of $0.35 of above for five consecutive
days.
For non-executive directors, the SBP’s for 2022 will be in the form of zero exercise price options which vest upon 18 months
of continuous service from 22 February 2021.
Long-term incentives
The KMP remuneration structure currently being implemented by the Board will also seek to drive performance and align
with shareholder interests through LTI equity-based remuneration. LTI’s will also be in the form of zero exercise price options
and which vest on completion of a three-year period and satisfaction of a number of key measurable financial and non-
financial performance indicators as assessed by the Managing Director and the Board. The performance measure will also
align to longer term shareholder value with a direct link to share price growth.
LTI’s will be issued under the new incentive scheme.
21,000,000 options were issued to Directors as sign on incentive during the year. The options have fully lapsed unexercised
during the year due to the resignation of those Directors.
Consequences of performance on shareholder wealth
Due to the Group currently being in an evaluation and developmental phase, the Group’s earnings are not considered to be
a principal performance indicator. However, the overall level of key management personnel remuneration takes into account
the achievement of strategic objectives, service criteria and growth in share price.
There were no performance related remuneration transactions during the financial year other than what has been stated
above (2020: nil).
28
A U D I T E D R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Details of the nature and amount of each major element of the remuneration of each key management person of the Group
are:
SHORT TERM
POST-EMPLOYMENT
SHARE-BASED
PAYMENTS
Non-
Monetary
$
Salary & fees
$
Termination
$
Superannuation
$
Options
$
Total
$
Fixed
Remuneration
%
Performance
Based
Remuneration
%
24,258
-
50,000
3,288
16,172
-
68,561
1,644
-
10,000
-
6,223
-
46,500
-
42,333
91,530
-
-
1,265
238,882
-
-
346,038(x)
489,403
457,291
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
253,571
-
-
-
253,571
-
2,305
-
-
-
1,536
-
-
156
-
950
-
-
-
-
-
4,022
-
-
-
-
-
-
-
23,750
3,841
28,878
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,563
-
50,000
3,288
17,708
-
68,561
1,800
-
10,950
-
6,223
-
46,500
-
46,355
91,530
-
-
1,265
492,453
-
-
369,788
746,815
486,169
100%
-
100%
100%
100%
-
100%
100%
-
100%
-
100%
-
100%
-
100%
100%
-
100%
100%
100%
-
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Directors
Non-executive
Mr M Bowen (xi)
Mr Grant Davey(vii)
Mr M Hanlon (xi)
Mr J Sibley (i)
Mr J Eggins(vi)
Mr A Mirco (vi)
Mr M Milazzo(iv)
Mr T Kestell(v)
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Executive
Mr K Bowes
Mr E Smirnov(ii)
2021
2020
Mr Stuart McKenzie(iii) 2021
2020
2021
2020
2021
2020
2021
2020
Total, all directors
and executive
Mr S Andrew (viii)
(i) Appointed 24 June 2020 - resigned 19 February 2021
(ii) Appointed 29 June 2020 - resigned 10 February 2021
(iii) Appointed 22 June 2020 – resigned 19 February 2021
(iv) Resigned 23 June 2020
(v) Resigned 31 May 2020
(vi) Appointed 15 May 2020 - resigned 23 June 2020
(vii) Appointed 22 June 2020
(viii) Resigned 19 May 2020
(ix) Resigned 2 January 2019
(x) Includes a termination payment of $149,038. The Company has disputed this payment and is of the view that no amount will be payable.
The matter is yet to be formally resolved.
(xi) Appointed 22 February 2021
(xii) Appointed 15 February 2021
SHARE-BASED COMPENSATION
21,000,000 options were issued to Directors as sign on incentive during the year. The options have fully lapsed unexercised
during the year due to resignation of Directors.
29
A U D I T E D R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
USE OF REMUNERATION CONSULTANTS
During the year, the Group did not use any remuneration consultants.
VOTING AND COMMENTS MADE AT THE COMPANY’S 2020 ANNUAL GENERAL MEETING
Lotus Resources Limited received 99.42% of “yes” votes on its remuneration report for the 2020 financial year. The
remuneration report resolution received a “no” vote from 0.52% of shareholders voting at the meeting, either personally or
by proxy. The Company has made certain changes to the structure of the Board and its remuneration, as noted above, since
the AGM results. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration
practices.
OPTIONS HOLDINGS OF KEY MANAGEMENT PERSONNEL
2021
Mr Michael Bowen(i)
Mr Keith Bowes (ii)
Mr Grant Davey
Mr Mark Hanlon(i)
Mr Stuart
McKenzie(iii)
Mr J Sibley (iv)
Mr E Smirnov(v)
Held at
1 July 2020
-
-
13,049,542
-
175,000
-
-
Held at the
date of
appointment
-
1,750,000
-
824,054
-
-
-
Granted as
compensation
Exercised
Other
changes
Held at
date of
resignation
Held at
30 June
2021
Vested
during the
year
-
-
-
-
-
-
-
-
-
(13,049,542)
-
(175,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,750,000
-
824,054
-
-
-
-
-
-
-
-
-
-
(i)Appointed 22 February 2021
(ii)Appointed 15 February 2021
(iii)Resigned 19 February 2021
(iv)Resigned 19 February 2021
(v)Resigned 10 February 2021
SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
Held at
1 July 2020
-
-
26,099,084
-
300,000
-
-
Held at date
of
appointment
2,250,000
2,250,000
-
3,175,946
-
-
-
Received on
exercise of
options
-
-
13,049,542
-
175,000
-
-
Purchases
-
-
1,000,000
-
-
-
-
Held at date
of
resignation
-
-
-
-
-
-
-
Held at
30 June
2021
2,250,000
2,250,000
16,148,626
3,175,946
475,000
-
-
Disposal
-
-
(24,000,000)
-
-
-
-
2021
Mr Michael Bowen(i)
Mr Keith Bowes (ii)
Mr Grant Davey
Mr Mark Hanlon(i)
Mr Stuart McKenzie(iii)
Mr J Sibley (iv)
Mr E Smirnov(v)
(i)Appointed 22 February 2021
(ii)Appointed 15 February 2021
(iii)Resigned 19 February 2021
(iv)Resigned 19 February 2021
(v)Resigned 10 February 2021
30
A U D I T E D R E M U N E R A T I O N R E P O R T ( c o n t ’ d )
Other key management personnel transactions with the Group
Mr Michael Bowen, who is a Non-Executive Director of the Company is a Partner of national law firm Thompson Geer
Lawyers (Thomson Geer). The Company used Thompson Geer for general legal services and also transactional support.
The services provided by Thompson Geer were done so at an arm’s length basis and on normal commercial terms. During
the year the Company incurred costs under this arrangement totalling $115,464.
Mr Grant Davey, who was a Non-Executive Director of the Company is a Director and shareholder of Matador Capital Pty
Ltd (Matador Capital). The Company made payments to Matador Capital under a Shared Services Agreement in which
Matador Capital provides office space and general office costs to the Company at cost plus 2%. The Company also uses
Matador Capital’s technical and project management expertise. During the year the Company incurred costs under this
arrangement totalling $269,008. These services provided by Matador Capital were done so at an arm’s length basis and
on normal commercial terms. In addition to Mr Davey’s Director payment of $50,000 disclosed in the remuneration table
above, he was also paid a consulting fee of $100,000 in relation to government liaison and on country services.
Mr McKenzie was an Executive Director of the Company is also KMP and employee of Marvel Gold Limited (Marvel), an
ASX gold exploration company. Marvel provided Company Secretary services to the Company to the value of $48,163
and the other services of $46,767.
There were no other related party transactions with key management personnel during the year.
Amounts owed to related parties
Mr Simon Andrew is owed $160,913 in salary and superannuation and termination entitlements. This includes a termination
payment of $149,038. The Company has disputed this payment and is of the view that no amount will be payable. The matter
is yet to be formally resolved.
Thomson Geer, an entity associated with Mr Michael Bowen, is owed $11,572.
Matador Capital, an entity associated with Mr Grant Davey, is owed $17,358.
There were no other key management personnel transactions other than as disclosed above.
Additional Information
The earnings of the Group for the five years to 30 June 2021 are summarised below:
2021
$
2020
$
2019
$
2018
$
2017
$
EBITDA
EBIT
(5,872,822)
(16,487,057)
(813,199)
(2,149,968)
(1,858,796)
(5,897,844)
(16,550,494)
(821,364)
(2,171,217)
(1,885,394)
Loss after Income Tax
(5,897,844)
(16,569,943)
(821,364)
(2,171,217)
(1,873,559)
The factors that are considered to affect total shareholders return are summarised below:
2021
2020
2019
2018
2017
Share price at end of the
year
Basis loss per share
19 cents
7 cents
4.5 cents
0.7 cents
0.5 cents
0.72 cents
4.58 cents
0.82 cents
0.14 cents
0.90 cents
[This is the end of the audited remuneration report.]
31
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
Lotus and the Board are committed to achieving and demonstrating the highest standards of corporate governance. Lotus
has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (4th
edition) published by the ASX Corporate Governance Council.
The 2021 corporate governance statement is dated as at 30 June 2021 and reflects the corporate governance practices in
place throughout the 2021 financial year. The 2021 corporate governance statement was approved by the Board on 30
September 2021. A description of the Group's current corporate governance practices is set out in the Group's corporate
governance statement which can be viewed on the Company’s website at www.lotusresources.com.au/corporate-
governance/.
32
S T A T E M E 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 M P R E H E N S I V E I N C O M E
for th e year en d ed 30 J u n e 2 02 1
Other income
Corporate and administrative expenses
Exploration and evaluation salary and general expenses
Care and maintenance costs
Exploration and evaluation impairment
Loss before income tax
Income tax expense
Loss after income tax
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Total other comprehensive income
Note
Consolidated
2021
$
Consolidated
2020
$
3(a)
3(b)
3(c)
9
187,630
(2,472,253)
(242,403)
(3,370,818)
-
160,324
(1,978,085)
-
(1,970,565)
(12,781,617)
(5,897,844)
(16,569,943)
5
-
-
(5,897,844)
(16,569,943)
(697,835)
(697,835)
(726,132)
(726,132)
Total comprehensive loss for the year
(6,595,679)
(17,296,075)
Loss attributable to:
Non-controlling interests
Members of the parent
Total comprehensive loss attributable to:
Non-controlling interests
Members of the parent
(883,354)
(5,014,490)
(5,897,844)
(647,723)
(15,922,220)
(16,569,943)
(1,144,495)
(5,451,184)
(6,595,679)
(660,220)
(16,635,855)
(17,296,075)
Loss per share
Basic and diluted loss per share (cents)
21
(0.72)
(4.58)
The statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
33
S T A T E M E N T O F F I N A N C I A L P O S I T I O N
as at 30 J u n e 20 21
Current Assets
Cash and cash equivalents
Other assets
Total Current Assets
Non-Current Assets
Plant and equipment
Exploration and evaluation assets
Right-of-use assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Lease liabilities
Other liabilities
Total Current Liabilities
Non-Current Liabilities
Other liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Equity attributable to owners of the Company
Non-controlling interest
Total Equity
Note
Consolidated
2021
$
Consolidated
2020
$
6
7
8
9
10
11
12
13
14
28,324,395
739,003
16,496,834
611,441
29,063,398
17,108,275
1,409
59,798,200
-
-
65,056,336
24,402
59,799,609
65,080,738
88,863,007
82,189,013
625,023
13,907
-
2,671,220
3,310,150
1,385,645
-
27,284
1,456,134
2,869,063
14
15
7,006,832
56,201,656
10,280,670
61,427,529
63,208,488
71,708,199
66,518,638
74,577,262
22,344,369
7,611,751
16
17
18
78,142,783
257,145
(56,441,844)
21,958,084
386,285
57,157,521
350,804
(51,427,354)
6,080,971
1,530,780
22,344,369
7,611,751
The above statement of financial position should be read in conjunction with the accompanying notes.
34
S T A T E M E N T O F C H A N G E S I N E Q U I T Y
for th e year en d ed 30 J u n e 2 02 1
Consolidated
2021
Contributed
Equity
Share Based
Payment
Reserve
Option
Premium
Reserve
Foreign
exchange
reserve
Accumulated
Losses
Non-
controlling
interest
Total
Equity
$
57,157,521
$
46,040
$
1,018,399
Balance at 1 July 2020
Loss after income tax
Other comprehensive income
Total comprehensive loss for the
year
-
-
-
Placement of shares
Shares issued on exercise of
options
Share based payments expense
Share issue costs
17,404,000
4,822,541
60,861
(1,302,140)
$
(713,635)
-
(436,694)
$
(51,427,354)
$
$
1,530,780
7,611,751
(5,014,490)
(883,354)
(5,897,844)
-
(261,141)
(697,835)
(436,694)
(5,014,490)
(1,144,495)
(6,595,679)
-
-
-
-
-
-
-
-
-
-
-
-
17,404,000
4,822,541
403,896
(1,302,140)
-
-
-
-
-
-
-
-
-
-
-
-
343,035
-
Balance at 30 June 2021
78,142,783
46,040
1,361,434
(1,150,329)
(56,441,844)
386,285
22,344,369
Contributed
Equity
Share
Based
Payment
Reserve
Option
Premium
Reserve
$
43,790,848
$
46,040
$
1,018,399
Consolidated
2020
Balance at 1 July 2019
Loss after income tax
Other comprehensive income
Total comprehensive loss for the year
-
-
-
NCI at acquisition date
Placement of shares
Shares issued on exercise of options
Shares issued on conversion of con
notes
Shares consideration on acquisition of
subsidiary
Share issue costs
-
8,000,701
2,284,681
500,696
3,060,000
(479,405)
Foreign
exchange
reserve
$
-
-
(713,635)
Accumulated
Losses
Non-
controlling
interest
Total
Equity
$
(33,314,134)
$
$
-
11,541,153
(15,922,220)
(647,723)
(16,569,943)
-
(12,497)
(726,132)
(713,635)
(15,922,220)
(660,220)
(17,296,075)
-
-
-
-
-
-
(2,191,000)
-
-
2,191,000
-
-
-
-
-
-
-
-
-
8,000,701
2,284,681
500,696
3,060,000
(479,405)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2020
57,157,521
46,040
1,018,399
(713,635)
(51,427,354)
1,530,780
7,611,751
The above statement of changes in equity should be read in conjunction with the accompanying notes
35
S T A T E M E N T O F C A S H F L O W S
for th e year en d ed 30 J u n e 2 02 1
Cash flows from operating activities
Receipts from customers
Government stimulus measures received
Interest received
Payments to suppliers and employees
Payments for care and maintenance
Interest paid
Note
Consolidated
2021
$
Consolidated
2020
$
-
55,950
4,566
(2,655,490)
(3,911,311)
-
131,850
44,000
6,607
(1,714,258)
(2,298,648)
(19,450)
Net cash outflow from operating activities
24
(6,506,285)
(3,849,899)
Cash flows from investing activities
Payments for plant and equipment
Payments for exploration expenditure – acquisition costs
Payments for exploration expenditure – capitalised costs
Cash acquired on acquisition of subsidiary
(2,029)
(1,315,478)
-
-
(2,954)
(3,393,358)
(1,074,141)
14,643,349
Net cash (outflow)/inflow from investing activities
(1,317,507)
10,172,896
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from the conversion of option
Share issue transaction costs
Repayment of loan
Repayment of lease liabilities
17,404,000
4,822,541
(1,302,139)
-
(27,284)
10,786,080
-
(479,405)
(150,000)
(55,684)
Net cash inflow from financing activities
20,897,118
10,100,991
Net increase in cash held
Cash and cash equivalents at the beginning of the financial year
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
13,073,326
16,423,988
16,496,834
72,846
(1,245,765)
-
28,324,395
16,496,834
6
6
The above statement of cash flows should be read in conjunction with the accompanying notes.
36
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
This financial report includes the financial statements and notes of Lotus Resources Limited and controlled entities
(consolidated entity or the Group). The separate financial statements and notes of Lotus Resources Limited as an individual
parent entity (Company or Lotus Resources) have not been presented within this financial report as permitted by the
Corporations Act 2001.
The financial report was authorised for issue on 30 September 2021 by the Directors of the Company.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (AASB) that are mandatory for the current reporting period. The adoption of these Accounting
Standards and Interpretations has not resulted in a significant or material change to the Group’s accounting policies.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of Preparation
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board (“AASB”) and the Corporations Act 2001.
The financial report covers Lotus Resources and its subsidiaries and has been prepared in Australian dollars. Lotus Resources
is a listed public company, incorporated and domiciled in Australia.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with
Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial
Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below.
They have been consistently applied unless otherwise stated.
The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by
the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in Note 27.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Lotus Resources as at 30 June
2021 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Company has control. The Company controls an entity when they are
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 Company. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
37
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity. Losses incurred by the
consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.
Where the Company loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Company
recognises the fair value of the consideration received and the fair value of any investment retained together with any gain
or loss in profit or loss.
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and
estimates on historical experience and on other various factors it believes to be reasonable under the circumstances.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in the financial statements are outlined below:
Share based payments transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using an appropriate valuation
model taking into account the terms and conditions upon which the instruments were granted. 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.
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that activities in the area have not yet reached a stage
that permits reasonable assessment of the existence of economically recoverable reserves. Key judgements are applied in
considering costs to be capitalised which includes determining expenditures directly related to these activities and allocating
overheads between those that are expensed and capitalised.
Rehabilitation provision
A provision has been made for the anticipated costs for future rehabilitation of land explored or mined. The consolidated
entity's mining and exploration activities are subject to various laws and regulations governing the protection of the
environment. The consolidated entity recognises management's best estimate for assets retirement obligations and site
rehabilitations in the period in which they are incurred. Actual costs incurred in the future periods could differ materially
from the estimates. Additionally, future changes to environmental laws and regulations could affect the carrying amount of
this provision.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have,
on the consolidated entity based on known information. This consideration extends to the nature of the products and
services offered, customers, supply chain, staffing and geographic regions in which the consolidated entity operates. Other
than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial
statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity
unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
Summary of Significant Accounting Policies
Foreign currency
Functional and presentation currency
Both the functional and presentation currency of Lotus and the Group is Australian Dollars ($), with the exception of Lotus
Africa Limited whose functional currency is USD.
38
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Foreign currency transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange ruling at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value was determined.
Segment reporting
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and
incur expenses, whose operating results are regularly reviewed by the consolidated entity's chief operating decision maker
to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial
information is available. This includes start up operations which are yet to earn revenues. Management will also consider
other factors in determining operating segments such as the level of segment information presented to the Board of
Directors.
Operating segments have been identified based on the information provided to the chief operating decision makers – being
the Board of Directors.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes,
cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the
statement of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Revenue recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled
in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity:
identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction
price which takes into account estimates of variable consideration and the time value of money; allocates the transaction
price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or
service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts
the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration
is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a
significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues
until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject
to the constraining principle are recognised as a refund liability.
39
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Earnings per share
Basic earnings per share
Basic earnings per share are calculated by dividing:
•
•
The profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary
shares.
By the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account:
•
The after-income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares, and
The weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of
all dilutive potential ordinary shares.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either
amortised cost or fair value depending on their classification. Classification is determined based on both the business model
within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting
mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as
financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where
they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii)
designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity
intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured
at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon
the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk
has increased significantly since initial recognition, based on reasonable and supportable information that is available,
without undue cost or effort to obtain.
40
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where
it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within
other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
Exploration and evaluation expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest.
These costs are only carried forward to the extent that they are expected to be recouped through the successful development
of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence
of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against
profit in the year in which the decision to abandon the area is made. A regular review is undertaken of each area of interest
to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.
Provisions
A provision has been made for the anticipated costs for future rehabilitation of land explored or mined. Provisions are
recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past event, it is
probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made of the amount
of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the
time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase
in the provision resulting from the passage of time is recognised as a finance cost.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled
wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are
settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated
future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Plant and equipment
Recognition and measurement
Items of plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes
expenditures that are directly attributable to the acquisition of the asset.
Subsequent costs
The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is probable
that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The
costs of day-to-day servicing of plant and equipment are recognised in profit or loss as incurred.
41
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Depreciation
Items of plant and equipment are depreciated using the diminishing value method over their estimated useful lives of each
part of an item of plant and equipment. The depreciation rates used for each class of asset for the current period are as
follows:
Plant and Equipment
Fixtures and Fittings
▪
▪
▪ Motor Vehicles
33%
25%
25%
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
Income tax
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
(a)
(b)
except where the deferred income tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, except where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
(a)
(b)
except where the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will be available against
which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.
Lotus Resources Limited has unused tax losses. However, no deferred tax balances have been recognised, as it is considered
that asset recognition criteria have not been met at this time.
42
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Goods and Services Tax
Revenues, 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 Australian Tax Office (ATO). In these circumstances the GST is recognised as part
of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable
to, the ATO is included as a current asset or liability in the Statement of Financial Position.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at
the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit
or loss as incurred.
Trade and other payables
Liabilities are initially recognised at fair value and subsequently measured at cost for amounts to be paid in the future for
goods or services received, whether or not billed to the Group. Trade accounts payable are normally settled within 60 days.
Loans and borrowings
Loans are recognised at their principal amount, subject to set-off arrangements. Borrowing costs are recognised as an
expense when incurred.
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a
business are not included in the cost of the acquisition as part of the purchase consideration.
If the Company reacquires its own equity instruments, for example as a result of a share buy-back, those instruments are
deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the
consideration paid including any directly attributable incremental costs (net of income taxes) is recognised directly in equity.
Share-based payment transactions
Equity-settled and cash-settled share-based compensation benefits are provided to Key Management Personnel and
employees.
43
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying an
appropriate valuation model, taking into consideration the terms and conditions on which the award was granted. The
cumulative charge to profit or loss until settlement of the liability is calculated as follows:
•
•
During the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied
by the expired portion of the vesting period.
From the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at
the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition
is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments comprise
of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is
reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on
an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee;
lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is
made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully
written down.
44
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within
12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is
no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other
liabilities are classified as non-current.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit
or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated
entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying amount
is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest
in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment in the
acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair value
of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly
in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and measurement
of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred and the
acquirer's previously held equity interest in the acquirer.
45
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2021. The
consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
2. FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from their use of financial instruments:
▪ credit risk
▪ liquidity risk
▪ market risk
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes
for measuring and managing risk, and the management of capital. There has been no change from prior year in relation to
all of the exposures. Further quantitative disclosures are included in Note 19.
46
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
2. FINANCIAL RISK MANAGEMENT (cont’d)
The Group’s risk management framework is supported by the Board and management. The Board is responsible for
approving and reviewing the Group’s risk management strategy and policy. Management are responsible for monitoring
that appropriate processes and controls are in place to effectively and efficiently manage risk. The Board is responsible for
identifying, monitoring and managing significant business risks faced by the Group and considering the effectiveness of its
internal control system.
The Board has established an overall Risk Management Policy which sets out the Group’s system of risk oversight,
management of material business risks and internal control.
Financial risk management objectives
The overall financial risk management strategy focuses on the unpredictability of the finance markets and seeks to minimise
the potential adverse effects on financial performance and protect future financial security.
Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group’s cash and cash equivalents. For the Company, it arises from receivables
due from subsidiaries.
The Group does not hold any credit derivatives to offset its credit exposure.
Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and the Group’s subsequent ability to meet their obligations to
repay their financial liabilities as and when they fall due.
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Board has determined an
appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding
and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and
continuously monitoring budgeted and actual cash flows and matching the maturity profiles of financial assets, expenditure
commitments and liabilities.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and commodity prices will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters, while optimising return.
Foreign currency risk
The Group is exposed to fluctuations in foreign currencies arising from costs incurred in currencies other than the
functional currency of the Company and Group entities.
The Group operates internationally and is primarily exposed to foreign exchange risk arising from currency exposures
to the United States dollar and Malawi Kwacha.
Interest rate risk
The Group’s exposure to interest rates primarily relates to the Group’s cash and cash equivalents and held to maturity
investments. The Group manages market risk by monitoring levels of exposure to interest rate risk and assessing market
forecasts for interest rates.
Fair value measurements
The fair values of financial assets and liabilities are determined in accordance with generally accepted pricing models based
on estimated future cash flows. The Directors consider that the carrying amounts of financial assets and financial liabilities
recorded in the financial statements approximate their fair values.
47
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
3. OTHER INCOME AND EXPENSES
(a) Other income
Interest income
Australian tax office COVID relief
Other
(b) Corporate and administrative expenses
Employee benefits and director fees
Depreciation - Plant and equipment
Depreciation - Right-of-use asset
Accounting fees
Interest expense
Legal fees
Other administrative costs
(c) Care and maintenance costs
Processing costs
Engineering fees
Site services costs
Safety, health, environment and radiation (SHER)
Maintenance
Security fees
Admin, HR, Corporate and Expatriates
Consolidated
2021
$
Consolidated
2020
$
4,566
55,950
127,114
187,630
921,800
620
24,402
179,210
-
135,889
1,210,332
2,472,253
235,425
1,100,265
116,121
513,727
376,272
205,052
823,956
6,607
44,050
109,667
160,324
483,737
4,871
58,564
169,913
19,449
479,900
761,651
1,978,085
219,101
865,172
181,602
153,431
171,852
223,758
155,649
3,370,818
1,970,565
4. AUDITOR’S REMUNERATION
The following amounts were paid or payable for services provided by the auditors of the Group and its related practices.
Audit services:
RSM Australia Partners
- audit and review of financial reports
Ernst & Young Malawi
- audit of financial reports
PriceWaterhouseCoopers Malawi
- audit of financial reports
50,000
19,236
-
69,236
50,000
-
26,776
76,776
5. TAXATION
The prima facie tax on loss before income tax is reconciled to the income tax expense as follows:
Income tax expense
-
-
48
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
At 30 June 2021, the Group had net operating loss-forward totalling $381,744,458 (2020: $351,302,061). No deferred tax
assets have been recognized with respect to these operating or capital losses. The deferred tax asset has not been bought
to accounts at reporting date because the Directors do not believe it is appropriate to regard realisation of the deferred
tax asset as probable at this point in time. This benefit will only be obtained if:
•
•
•
The Group derives future assessable income of a nature and of an amount sufficient to enable the benefits from
the deduction for the losses to be realised;
the Group continues to comply with the conditions for deductibility imposed by tax legislation; and
no changes in tax legislation adversely affect the company in realising the benefit from the deduction for the losses.
6. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Restricted cash1
Consolidated
2021
$
Consolidated
2020
$
14,751,569
13,572,826
28,324,395
1,935,494
14,561,340
16,496,834
1 As at 30 June 2021, restricted cash consists of a collateral deposit in the form of a bond issued for rehabilitation
obligations of the Kayelekera Uranium Project in Malawi in the amount of US$10,000,000. The security for environmental
protection, rehabilitation and closure costs has been provided in the form required by the relevant Malawian authorities.
The bond was transferred to the Company as part of the Kayelekera Uranium Project acquisition.
The Company acquired the bond as part of the acquisition of the Kayelekera Uranium Project. This is restricted cash that
cannot be used to fund operations whilst the environmental performance bond is in place.
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note
19.
7. OTHER ASSETS
Other receivables
Prepayments
Other asset
GST
Security bond
30,312
397,007
30,783
250,901
30,000
739,003
41,545
340,677
-
199,219
30,000
611,441
The Group’s exposure to credit risk related to other receivables is disclosed in Note 19.
Allowance for expected credit losses
The Group did not recognise any losses (2020: Nil) in profit or loss in respect of the expected credit losses for the year
ended 30 June 2021.
49
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
8. PLANT AND EQUIPMENT
At 30 June 2021 (Consolidated)
Cost
Accumulated depreciation
Net carrying amount
Year ended 30 June 2021 (Consolidated)
At 1 July 2020, net of accumulated depreciation
Additions
Depreciation charge for the year
At 30 June 2021, net of accumulated depreciation
At 30 June 2020 (Consolidated)
Cost
Accumulated depreciation
Net carrying amount
Year ended 30 June 2020 (Consolidated)
At 1 July 2019, net of accumulated depreciation
Additions
Depreciation charge for the year
At 30 June 2020, net of accumulated depreciation
Furniture &
Fixtures
$
Plant &
Equipment
$
Motor
Vehicles
$
Total
$
80,880
(79,471)
1,409
-
2,029
(620)
1,409
78,850
(78,850)
-
1,917
2,954
(4,871)
-
13,941
(13,941)
26,000
(26,000)
-
-
-
-
-
-
-
-
-
-
120,821
(119,412)
1,409
-
2,029
(620)
1,409
13,941
(13,941)
26,000
(26,000)
118,791
(118,791)
-
-
-
-
-
-
-
-
-
-
-
1,917
2,954
(4,871)
-
As outlined in note 26 the Company acquired the Kayelekera Uranium Project in the financial year ended 30 June 2020. As
part of the acquisition the Company acquired a significant amount of infrastructure, property plant and equipment. Given
the mine is currently in care and maintenance, these assets have been assessed to have a nil fair value.
9. EXPLORATION AND EVALUATION ASSETS
Consolidated
2021
$
Consolidated
2020
$
Exploration and evaluation expenditure carried forward in respect of areas of
interest (net of amounts written off)
59,798,200
65,056,336
Reconciliation
Carrying amount at the beginning of the year
Exploration and evaluation expenditure
Assets acquired 1
Provision for impairment 2
Movement in exchange rates
Carrying amount at the end of the year
65,056,336
-
-
-
(5,258,136)
59,798,200
11,789,470
3,978,327
62,070,156
(12,781,617)
-
65,056,336
1Refer to Note 26 for acquisition.
2On 13 March 2020 the Company completed the acquisition of the Kayelekera Project which completed a changed in strategic
direction for the Company. The amount of $12,781,617 held on the statement of financial position related to exploration
tenements in Australia including its cobalt tenements in New South Wales. Given that the Group is not expected to allocate
its resources to these tenements in the near future and their decrease in value due to a decline in the cobalt price, the Group
has impaired the entire amount previously capitalised in relation to these tenements.
50
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
10. RIGHT-OF-USE ASSETS
Head office space - right-of-use
Less: accumulated depreciation
Consolidated
2021
$
Consolidated
2020
$
-
-
-
82,966
(58,564)
24,402
The Company’s lease on its previous office premises was agreed to be terminated effective 30 September 2020.
11. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
268,144
356,879
625,023
448,375
937,270
1,385,645
The Group’s exposure to credit and liquidity risks related to trade and other payables are disclosed in Note 19.
12. PROVISIONS - CURRENT
Employee annual leave provision
13,907
-
13. LEASE LIABILITIES
Head office space - lease liability
14. OTHER LIABILITIES
-
-
27,284
27,284
Environmental bond - current
2,671,220
1,456,134
Environmental bond - non - current
Deferred shares consideration to be issued on the date that is 3 years after
completion – non-current
Environmental bonds
1 July 2020
Repayment of environmental bond
Reclassification of liability to current
Foreign currency movement
30 June 2021
4,006,832
7,280,670
3,000,0001
7,006,832
Current
1,456,134
(1,315,478)
2,671,220
(140,656)
2,671,220
3,000,0001
10,280,670
Non-current
7,280,670
-
(2,671,220)
(602,618)
4,006,832
1 $3,000,000 worth of Shares to be issued on the 13 March 2023 calculated using the lower of;
•
•
the price at which Shares were issued under the most recent capital raising undertaken by the Company within
90 days prior to issue; and
30-day VWAP for Shares up to and including the business day prior to issue (Deferred Consideration).
As disclosed in Note 26, the Group entered into an agreement with ASX listed Paladin Energy Limited (ASX: PDN) to
acquire a 65% interest in the Kayelekera Uranium Project (Kayelekera), located in Malawi. The acquisition was completed
on 13 March 2020.
51
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
14. OTHER LIABILITIES (cont’d)
In addition to the consideration, Paladin Africa must repay (or procure that the Company repays on its behalf) the amount
of US$10,000,000 which had previously been advanced by Paladin to Paladin Africa to fund the environmental bond in
favour of the Government of Malawi (Environmental Bond). The following amounts will be payable to Paladin in respect
of the environmental bond advance:
US$4,000,000 on completion (completion occurred 13 March 2020);
US$1,000,000 (2020: $1,456,134 AUD) on the date that is 1 year after Completion (paid prior to 13 March 2021);
i.
ii.
iii. US$2,000,000 (2020: $2,912,268 AUD) on the date that is 2 years after Completion; and
iv. US$3,000,000 (2020: $4,368,402 AUD) on the date that is 3 years after Completion.
15. PROVISIONS – NON-CURRENT
Mine closure provision
Rehabilitation provision
Reconciliation – Non-current Provisions
1 July 2020
Additional provision recognised
Foreign currency movements
30 June 2021
Consolidated
2021
$
Consolidated
2020*
$
6,661,276
49,540,380
56,201,656
7,280,670
54,146,859
61,427,5291
61,427,529
-
(5,225,873)
56,201,656
1Refer to Note 26 for acquisition which includes the acquisition of the above end of mine provisions.
A mine closure plan for Kayelekera was prepared in September 2021 and presented various options for rehabilitation.
Following a review of the different options presented in the mine closure plan, management decided on the option that was
the most likely to be implemented at Kayelekera which resulted in the provision stated above.
The Company also has in place a cash backed environmental performance bond of $13,572,826 (US$10,000,000) as outlined
in Note 6. The bond is restricted cash to cover closure and rehabilitation costs of the project. The bond is the minimum
amount required to be maintained in accordance with the terms of the Mine Development Agreement for the Kayelekera
Uranium Project and relevant local regulations.
52
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
16. CONTRIBUTED EQUITY
Fully paid ordinary shares
Consolidated
2021
$
Consolidated
2020
$
78,142,783
57,157,521
2021
Number of
Shares
2020
Number of
Shares
2021
$
2020
$
Movements during the year:
Opening balance
Shares issued for acquisition
of Kayelekera Uranium
Project
Shares issued via placement
of shares
Shares issued to staff for the
payment of accrued leave
Exercise of options
Issue of shares on
conversion of convertible
note
Share issue costs
Closing balance
672,326,050
100,139,194
57,157,521
43,790,848
-
90,000,000
-
3,060,000
161,300,000
400,035,033
17,404,000
8,000,701
529,224
120,563,515
-
57,117,025
60,861
4,822,541
-
25,034,798
-
-
954,718,789
-
672,326,050
(1,302,140)
78,142,783
-
2,284,681
500,696
(479,405)
57,157,521
Ordinary shares entitle the holder to participate in dividends and the proceeds from winding up of the Company in
proportion to the number and amounts paid on the shares held.
On a show of hands every holder of ordinary securities present at a shareholder meeting in person or by proxy is, entitled
to one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
53
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
17. RESEREVES
Share based payment reserve
Option premium reserve
Foreign exchange reserve
Movement in reserves
Share based payment reserve
Opening balance
Movement during the year
Closing balance
Option premium reserve
Opening balance
Movement during the year
Closing balance
Foreign exchange reserve
Opening balance
Exchange rate differences on translating foreign operations
Closing balance
Movement in options:
Opening balance
Granted
Exercised
Expired
Lapsed
Closing balance
Weighted average exercise price of outstanding options (Cents)
Weighted average remaining life of outstanding options (Years)
Share - based payments reserve
Consolidated
2021
$
Consolidated
2020
$
46,040
1,361,434
(1,150,329)
257,145
46,040
1,018,399
(713,635)
350,804
46,040
-
46,040
1,018,399
343,035
1,361,434
(713,635)
(436,694)
(1,150,329)
Number
155,417,981
31,000,000
(120,563,518)
-
(21,000,000)
44,854,463
2021
4.33
1.65
46,040
-
46,040
1,018,399
-
1,018,399
-
(713,635)
(713,635)
Number
7,678,571
212,535,006
(57,117,025)
(7,678,571)
-
155,417,981
2020
4.00
2.48
This reserve is used to record the value of equity-settled share-based payments provided to employees and directors as
part of their remuneration.
Option premium reserve
This reserve is used to record the value of monies raised from issue of options and from issue of incentive options.
Option lapsed
21,000,000 options lapsed unexercised during the year due to resignation of Directors.
Option expired
No option expired during the year.
Foreign currency translation reserve
The foreign currency translation reserve records exchange rate differences on translating foreign operations.
54
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
18. ACCUMULATED LOSSES
Accumulated losses at the beginning of the year
Loss for the year
NCI on acquisition of Kayelekera Uranium Project (Note 26)
Accumulated losses at the end of the year
Consolidated
2021
$
Consolidated
2020
$
(51,427,354)
(5,014,490)
-
(33,314,134)
(15,922,220)
(2,191,000)
(56,441,844)
(51,427,354)
19. FINANCIAL INSTRUMENTS
For financial risk exposure and management objectives please refer to note 2.
Credit risk
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure.
The Group’s maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Other assets (excluding prepayments and GST receivables)
Liquidity risk
Carrying Amount
Consolidated
2021
$
Consolidated
2020
$
28,324,395
60,312
28,384,707
16,496,834
71,545
16,568,379
The following are the contractual maturities of financial liabilities on an undiscounted basis, including estimated interest
payments. Cash flows for assets and liabilities without fixed amount or timing are based on conditions existing at year
end.
Consolidated
30 June 2021
Carrying
amount
Contractual
cash flows
1 year
2-5 years
>5 years
Financial Liabilities
Trade and other payables
Other liabilities
(625,023)
(9,691,959)
(625,023)
(9,691,959)
(625,023)
(2,685,127)
(10,316,982)
(10,316,982)
(3,310,150)
-
(7,006,832)
(7,006,832)
-
-
-
Consolidated
30 June 2020
Carrying
amount
Contractual
cash flows
1 year
2-5 years
>5 years
Financial Liabilities
Trade and other payables
Lease liabilities
Other liabilities
(1,385,645)
(27,284)
(11,736,804)
(1,385,645)
(27,284)
(11,736,804)
(1,385,645)
(27,284)
(1,456,134)
(13,149,733)
(13,149,733)
(2,869,063)
-
-
(10,280,670)
(10,280,670)
-
-
-
-
55
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
19. FINANCIAL INSTRUMENTS DISCLOSURE (CONT’D)
Interest rate risk
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Variable rate instruments
Financial assets
Financial liabilities
Carrying Amount
Consolidated
2021
$
Consolidated
2020
$
28,324,395
-
16,496,834
-
28,324,395
16,496,834
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at reporting date would have increased/(decreased) equity and profit or
loss by the amounts shown below. The Board assessed a 100-basis point movement as being reasonably possible based
on short term historical movements. This analysis assumes that all other variables remain constant. The analysis is
performed on the same basis for 2020.
Financial instruments with interest rate
Financial assets
Financial liabilities
Financial instruments with interest rate
Financial assets
Financial liabilities
Consolidated
2021
+100 basis points
-100 basis points
Profit
$
283,244
-
Equity
$
Profit
$
Equity
$
283,244
-
(283,244)
-
(283,244)
-
Consolidated
2020
+100 basis points
-100 basis points
Profit
$
1,650
-
Equity
$
1,650
-
Profit
$
(1,650)
-
Equity
$
(1,650)
-
The weighted average effective interest rate on variable rate instruments was 0.52% (2020: 0.30%).
20. COMMITMENTS
Exploration Project commitments
Commitments for mining license/tenement rentals due within one year: $13,736 (2020: $17,329)
Commitments for purchase of spares and other suppliers due within one year: Nil (2020: $2,177)
56
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
21. LOSS PER SHARE
a.
Reconciliation of earnings to profit or loss:
Loss
Loss used to calculate basic EPS
Loss used in the calculation of dilutive EPS
b.
Weighted average number of ordinary shares outstanding
during the year used in calculating basic EPS
Weighted average number of dilutive options outstanding
Weighted average number of ordinary shares outstanding
Consolidated
2021
$
Consolidated
2020
$
(5,897,844)
(5,897,844)
(5,897,844)
(16,569,943)
(16,569,943)
(16,569,943)
No.
No.
820,577,319
361,566,438
-
-
during the year used in calculating dilutive EPS
820,577,319
361,566,438
22. SEGMENT REPORTING
In the current year, the Group operated in two geographical and business segments, being Africa (Uranium) and Australia
(Minerals).
Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating decision
maker (CODM), which has been identified by the Group as the board of Directors.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other
components.
At 30 June 2021, the Group had the following segments
Operating Profit/(Loss)
30/6/2021
$
30/6/2020
$
Total Assets
Total Liabilities
30/6/2021
$
30/6/2020
$
30/6/2021
$
30/6/2020
$
Uranium (Africa)
(3,495,892)
(1,850,637)
88,518,481
82,164,611
63,047,460
70,715,596
Minerals (Australia)
-
(12,781,617)
-
-
3,000,000
3,000,000
Corporate
(2,401,952)
(1,937,689)
344,526
24,402
471,178
861,666
(5,897,844)
(16,569,943)
88,863,007
82,189,013
66,518,638
74,577,262
57
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
23. RELATED PARTY DISCLOSURES
(a) Ultimate parent
Lotus Resources Limited is the ultimate Australian entity.
(b) Subsidiaries
Interests in subsidiaries are set out in note 28.
(c) Key management personnel compensation
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set
out below:
Short-term employee benefits
Post-employment benefits
Termination benefits
2021
$
489,403
3,841
253,571
746,815
2020
$
457,291
28,878
-
486,169
(d) Loans to related parties
No loans were advanced to related parties during the reporting year (2020: Nil).
(e) Amounts owed to related parties
As at the reporting date, $34,898 were owing to related parties (2020: $118,530) as disclosed in detail below.
(f) Other key management personnel transactions with the Group
Mr Michael Bowen, who is a Non-Executive Director of the Company is a Partner of national law firm Thompson Geer
Lawyers (Thomson Geer). The Company used Thompson Geer for general legal services and also transactional support.
The services provided by Thompson Geer were done so at an arm’s length basis and on normal commercial terms. During
the year the Company incurred costs under this arrangement totalling $115,464. There is a balance of $11,572 (2020:
$Nil) owing to Thomson Geer as at 30 June 2021 in relation to the provision of these services.
Mr. Grant Davey, who was a Non-Executive Director of the Company is a Director and shareholder of Matador Capital
Pty Ltd (Matador Capital). The Company made payments to Matador Capital under a Shared Services Agreement in which
Matador Capital provides office space and general office costs to the Company at cost plus 2%. The Company also uses
Matador Capital’s technical and project management expertise. During the year the Company incurred costs under this
arrangement totalling $269,008 (2020: $213,663). In addition to Mr Davey’s Director payment of $50,000 disclosed in
the remuneration table above, he was also paid a consulting fee of $100,000 in relation to government liaison and on
country services. These services provided by Matador Capital were done so at an arm’s length basis and on normal
commercial terms. There is a balance of $17,358 (2020: $60,293) owing to Matador Capital as at 30 June 2021 in relation
to the provision of these services.
Mr McKenzie was an Executive Director of the Company is also KMP and employee of Marvel Gold Limited (Marvel), an
ASX gold exploration company. Marvel provided Company Secretary services to the Company to the value of $48,163
and the other services $46,767. There is a balance of $5,968 outstanding at year end.
In the financial year ended 30 June 2020, Mr. Davey was a Director of Graphex Mining Limited (Graphex) (now Marvel
Gold Limited) (resigned 25 September 2020) and former Director of Matador Mining Ltd (Matador Mining) (resigned 2
June 2020), ASX listed Companies that are also parties to the Shared Services Agreement with the Company. Under this
arrangement Graphex and Matador Mining provide company secretarial, accounting and administration services. The
Company incurred costs from Graphex and Matador Mining of $53,344 and $4,893 respectively. These amounts were
outstanding as at 30 June 2020 and has been fully repaid in current financial year.
58
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
23. RELATED PARTY DISCLOSURES (cont’d)
On 23 July 2019, the Company entered into a convertible loan agreement with Matador Capital Ltd for $500,696.
Matador Capital subsequently converted the loan to equity on 24 October 2019, with 25,034,800 fully paid shares being
issued at a share price for $0.02 along with one free attaching option for every two shares issued.
On 29 April 2019, the Company entered into a loan agreement with Neon Capital Ltd (Neon Capital) for $150,000. The
terms of the loan were for the loan to be repaid by 30 September 2019 and interest to be accrued at 8% per annum.
Neon Capital has subsequently participated in the rights issue and the loan was repaid on 23 September 2019. Tim Kestell
(resigned as director of Lotus at 31 May 2020) is a director of Neon Capital.
There were no other related party transactions with key management personnel during the year.
24. RECONCILIATION OF CASH FLOWS USED IN OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the year
Adjustments for:
Depreciation
Share based payments – contractors
Share based payments – employers
Impairment
Foreign currency translated difference
Operating loss before changes in working capital
Change in other assets
Change in trade and other payables
Net cash used in operating activities
25. CONTINGENT LIABILITIES
Bank Guarantee
Consolidated
2020
$
Consolidated
2020
$
(5,897,844)
(16,569,943)
25,022
343,035
60,861
-
(163,080)
(5,632,006)
(127,564)
(746,715)
(6,506,285)
63,437
-
-
12,781,617
(726,132)
(4,451,021)
(547,763)
1,148,885
(3,849,899)
The Company has given a bank guarantee of $20,000 (2020: $20,000) to the Department of Mines and Petroleum for a
tenement bond.
Hylea Project
On 5 February 2018, the Company completed the acquisition of the Hylea project. As part of the purchase consideration, the
Company assumed a contingent liability for a royalty payable.
Royalty
1.5% net smelter return royalty is payable on the gross sales of all future metals obtained from the tenements acquired and
sold on an arm’s length basis.
Kayelekera Uranium Project
At 30 June 2021, the Company had three agreements providing for royalty payments to local government and former owners
for production from the Kayelekera Uranium Project. Royalties payable on production comprise an uncapped 3.0% royalty
on revenue to the Malawi Government, a 3.5% royalty on revenue capped at US$5.0 million to Paladin Energy and an
uncapped 0.75% royalty on revenue to Power Resources Limited.
59
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
26. ACQUISITION OF KAYELEKERA URANIUM PROJECT
On 24 June 2019, the Group entered into an agreement with ASX listed Paladin Energy Limited (ASX: PDN) to acquire a 65%
interest in the Kayelekera Uranium Project (Kayelekera), located in Malawi. The acquisition was completed on 13 March
2020.
Management has determined that this acquisition meets the definition of a business within AASB 3 Business Combinations.
This transaction has been accounted for as a business combination.
Acquisition Agreement
The consideration payable for the Acquisition is as follows:
o
o
o
o
o
o
$200,000 in cash, plus 90,000,000 Shares to be issued on Completion (Initial Consideration);
a royalty of 3.5% of gross returns at the Kayelekera mine up to a maximum of $5M in favour of the Vendor (Royalty);
and
$3,000,000 worth of Shares to be issued on the third anniversary of Completion, calculated using the lower of;
o
o
the price at which Shares were issued under the most recent capital raising undertaken by the Company
within 90 days prior to issue; and
30-day VWAP for Shares up to and including the business day prior to issue (Deferred Consideration).
the issue of the Deferred Consideration Shares is subject to Shareholder approval;
the Company must convene a meeting of its Shareholders to be held in the 90 day period prior to the issue date,
to seek shareholder approval to issue the Deferred Consideration Shares; and
if Shareholders fail to approve the issue prior to the issue date, the Company must pay the cash equivalent of the
Deferred Consideration Shares (calculated using the applicable deemed issue price referred to above) within 60
days after the relevant issue date.
Environmental Bond
In addition to the Consideration, Paladin Africa must repay (or procure that the Company repays on its behalf) the amount
of US$10,000,000 which had previously been advanced by Paladin to Paladin Africa to fund the environmental bond in favour
of the GoM (Environmental Bond). The following amounts will be payable to Paladin in respect of the environmental bond
advance:
i.
ii.
iii.
iv.
US$4,000,000 on Completion;
US$1,000,000 on the date that is 1 year after Completion;
US$2,000,000 on the date that is 2 years after Completion; and
US$3,000,000 on the date that is 3 years after Completion.
Details of the purchase consideration and the net assets acquired are as follows:
Purchase consideration paid by Lotus Resources Limited to acquire Kayelekera Uranium Project:
Cash paid1
Ordinary Shares2
Ordinary shares issued on third anniversary3
Total purchase consideration
2020
$
200,000
3,060,000
3,000,000
6,260,000
1 Cash payment of $200,000 (AUD) (Initial Consideration)
2 90,000,000 Shares issued on Completion (Initial Consideration)
3 $3,000,000 worth of Shares to be issued on the third anniversary of Completion, calculated using the lower of;
o
o
the price at which Shares were issued under the most recent capital raising undertaken by the Company within 90
days prior to issue; and
30-day VWAP for Shares up to and including the business day prior to issue (Deferred Consideration).
60
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
26. ACQUISITION OF KAYELEKERA URANIUM PROJECT (CONT’D)
The fair value of assets and liabilities recognised as a result of the acquisition are outlined below.
Cash and cash equivalents1
Trade and other receivables
Exploration and evaluation asset
Trade and other payables
Environmental bond payable
Rehabilitation and mine closure provision
Net assets acquired
Net assets acquired attributable to Lotus Resources Limited
Net assets acquired attributable to non-controlling interest
2020
Fair value
$
14,643,349
262,091
62,070,156
(551,263)
(8,736,804)
(61,427,529)
6,260,000
4,069,000
2,191,000
6,260,000
1 The Company acquired a $14,561,340 (out of the total $14,643,349) (USD $10,000,000) cash-backed environmental
performance bond as part of the acquisition of the Kayelekera Uranium Project. This is restricted cash that cannot be used
to fund operations whilst the environmental performance bond is in place. The Company is currently working with its bank
and insurance company to put insurance in place that would allow the Company to access the funds currently restricted by
the bond.
Business combinations were initially accounted for on a provisional basis for the year ended 30 June 2020. The acquirer
retrospectively adjusts the provisional amounts recognised and also recognises additional assets or liabilities during the
measurement period, based on new information obtained about the facts and circumstances that existed at the acquisition
date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine fair value.
Purchase price allocation was completed during the year ended 30 June 2021. No adjustment to the provisional amounts
recognised are required for the year ended 30 June 2021.
61
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
27. PARENT ENTITY DISCLOSURES
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive loss
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2021
$
2020
$
(13,891,899)
(13,891,899)
(16,812,014)
(16,812,014)
15,094,684
2,202,833
18,096,093
11,050,185
(471,177)
(861,666)
(3,471,177)
(3,861,666)
14,624,916
7,188,519
78,142,781
1,407,475
(64,925,340)
57,157,521
1,064,439
(51,033,441)
14,624,916
7,188,519
Guarantees
Lotus Resources Limited has no guarantees other than as disclosed in note 25.
Other Commitments and Contingencies
Lotus Resources Limited has no other commitments and contingencies other than as disclosed in note 20.
Plant and Equipment Commitments
Lotus Resources Limited has no commitments to acquire property, plant and equipment.
Significant Accounting Policies
Lotus Resources Limited accounting policies do not differ from the consolidated entity as disclosed in the notes to the
financial statements.
62
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S ( c o n t ’ d )
28. INTEREST IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned
subsidiaries in accordance with the accounting policy described in note 1:
Name
Westview Resources Pty Ltd
Providence Metals Pty Ltd
Lily Resources Pty Ltd
Lotus (Africa) Limited
Country of
incorporation
Australia
Australia
Australia
Africa
Ownership
Interest
2021
%
100%
100%
76.5%1
65%
Ownership
Interest
2020
%
100%
100%
76.5%
65%
1Subsequent to year end the Company increased its shareholding in Lily Resources Pty Ltd to 100% and Lotus Africa Limited
to 85%.
29. EVENTS OCCURING AFTER THE REPORTING DATE
No matter or circumstance has arisen since the end of the financial year, which will significantly affect, or may significantly
affect, the state of affairs or operations of the consolidated entity in future financial periods other than the following:
• On the 23 September 2021, the Company completed the sale of its Cobalt tenements in New South Wales to
Sunrise Energy Metals limited (Sunrise). The transaction involved the sale of tenement EL8520, EL8641 and EL8801
for $1 million in cash and $1.5 million in Sunrise shares based on a 5 day volume weighted average price.
•
•
The Company issued 226.4 million shares to Kayelekera Resources Pty Ltd for the purchase of an additional 20%
interest in the Company’s Kayelekera Uranium. This increases the Company ownership of the project from 65% to
85%, with the Malawi government holding the remaining 15%.
2,389,381 unlisted options were exercised at $0.04 per options for gross proceeds before costs of $79,289.
• On the 14 September 2021 the Company announced the renewal of its mining license ML0152 for a further 15
years and the renewal of its exploration permits.
•
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has had no significant impact on the
consolidated entity up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative,
after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the
Australian and Malawi Governments, such as vaccinations, maintaining social distancing requirements, quarantine,
travel restrictions and any economic stimulus that may be provided.
63
64 DIRECTORS’ DECLARATION In the directors' opinion: ● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; ● the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as stated in Note 1 to the financial statements; ● the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and ● there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors Mr Michael Bowen Non-Executive Chairman Dated at Perth, Western Australia this 30th day of September 2021. RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
LOTUS RESOURCES LIMITED
Opinion
We have audited the financial report of Lotus Resources Limited (the Company) and its subsidiaries (the Group),
which comprises the statement of financial position as at 30 June 2021, the statement of profit or loss and other
comprehensive income, the statement of changes in equity and the 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:
(i)
Giving a true and fair view of the Group's financial position as at 30 June 2021 and of its financial
performance for the year then ended; and
(ii)
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 confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
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.
Key Audit Matter
How our audit addressed this matter
Exploration and Evaluation Assets
Refer to Note 9 in the financial statements
As at the reporting date, the Group had exploration
the
and evaluation expenditure capitalised on
statement of financial position of $59,798,200.
Our audit procedures included:
Ensuring that the right to tenure of the area of
interest was current;
We considered this to be a key audit matter due to the
in
significant management
assessing the carrying value of the asset including:
judgments
involved
Determination of whether the expenditure can be
associated with finding specific mineral resources,
and the basis on which that expenditure is
allocated to an area of interest;
Determination of whether exploration activities
have progressed to the stage at which the
existence of an economically recoverable mineral
reserve may be assessed; and
Assessing whether any indicators of impairment
are present, and if so, judgments applied to
determine and quantify any impairment loss.
Provision for mine closure and rehabilitation
Refer to Note 15 in the financial statements
As at the reporting date, the Group had a provision of
$56,201,656 relating to the estimated future cost of
mine closure and rehabilitation.
The provision for mine closure and rehabilitation was
considered a key audit matter due to the materiality of
the balance, the significant judgements and estimation
uncertainty, and the complexity involved in the
quantification of the liability.
Assessing
and
evaluating management’s
assessment of whether indicators of impairment
existed as at 30 June 2021;
Enquiring with management and
reviewing
budgets and other supporting documentation as
evidence that active and significant operations in,
or relation to, the area of interest will be continued
in the future; and
Assessing management’s determination
that
exploration and evaluation activities have not yet
reached a stage where the existence or otherwise
of economically recoverable reserves may be
reasonably determined.
Our audit procedures included:
Reviewing
and
assessing
the
critically
methodology and key assumptions in the Group’s
mine closure and rehabilitation provision
in
137 Provisions,
accordance with AASB
Contingent Liabilities and Contingent Assets and
agreeing key inputs to supporting documentation.
This
the work
performed by management’s expert, including the
competency and objectivity of the expert;
included an assessment of
Reviewing the component auditors’ audit working
papers; and
Assessing the appropriateness of the disclosures
included in the financial statements in relation to
the provision for mine closure and rehabilitation.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2021
but does not include the financial report and the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report for the year ended 30 June 2021.
In our opinion, the Remuneration Report of Lotus Resources Limited, for the year ended 30 June 2021, 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.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 September 2021
ALASDAIR WHYTE
Partner
A S X A D D I T I O N A L I N F O R M A T I O N
Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current as at 29 September 2021.
(a) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Rank
Name
KAYELEKERA RESOURCES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SACHEM COVE SPECIAL OPPORTUNITIES FUND LP
PERPETUAL CORPORATE TRUST LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
TR NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
39,823,313
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
SANDHURST TRUSTEES LTD
38,702,821
31,273,664
29,837,356
CS THIRD NOMINEES PTY LIMITED
20,295,665
MRS PAMELA JULIAN SARGOOD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MCNEIL NOMINEES PTY LIMITED
NETWEALTH INVESTMENTS LIMITED
MR DARREN CRAIG GLOVER
MR BENJAMIN LEIGH HARPER
NETWEALTH INVESTMENTS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DAVEY HOLDINGS (AUS) PTY LTD
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
The names of the twenty largest holders of unlisted options are:
Units
% Units
175,509,489
14.77
90,750,501
60,305,832
50,954,438
44,094,284
40,000,000
17,200,000
14,578,380
13,358,336
12,320,241
11,904,762
11,904,762
11,868,521
10,252,071
7.64
5.07
4.29
3.71
3.37
3.35
3.26
2.63
2.51
1.71
1.45
1.23
1.12
1.04
1.00
1.00
1.00
0.86
9,917,399
734,851,835
453,548,992
0.83
61.84
38.16
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
16
18
19
20
Rank
Name
Units
% Units
1
2
3
4
5
6
7
7
7
TR NOMINEES PTY LTD
MR KEITH BOWES
GREENSEA INVESTMENTS PTY LTD
MR SAMUEL MCCARDEL
MR MICHAEL PHILLIP BOWEN
WEXFORD RISE PTY LTD
DAVEY HOLDINGS (AUS) PTY LTD
MR TIMOTHY M HANLON
MR ADAM LEE KILEY
10,000,000
6,000,000
3,223,215
3,125,001
3,000,000
2,008,929
2,000,000
2,000,000
2,000,000
16.93
10.16
5.46
5.29
5.08
3.40
3.39
3.39
3.39
69
Rank
Name
Units
% Units
7
7
12
13
14
15
16
17
18
18
20
20
20
20
MR CHRISTOPHER BRUCE KNEE
2,000,000
MRS RUTH MARY MCKENZIE + MR STUART ANDREW MCKENZIE
2,000,000
SANDHURST TRUSTEES LTD
HAWTHORN GROVE INVESTMENTS PTY LTD
MIKENTY PTY LTD
PROVIDENCE GOLD AND MINERALS PTY LTD
PERSHING AUSTRALIA NOMINEES PTY LTD
JET GLOBAL FUND PTY LTD
1,625,001
1,375,000
1,125,000
1,000,001
785,713
756,250
INVIA CUSTODIAN PTY LIMITED
750,000
NETWEALTH INVESTMENTS LIMITED
MR LINDSAY BETTIOL
BUPRESTID PTY LTD
MR CARLO CHIODO
MX NOMINEES PTY LTD
750,000
625,001
625,001
625,001
625,001
3.39
3.39
2.75
2.33
1.90
1.69
1.33
1.28
1.27
1.27
1.06
1.06
1.06
1.06
Totals: Top 20 holders of Unlisted Options
Total Remaining Holders Balance
(b) Distribution of equity security holders
Ordinary Shares
Range
Total holders
Units
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
572
823
658
1,511
550
4,114
201,103
2,673,674
5,115,892
53,140,444
1,127,269,714
94.86
1,188,400,827
100.00
There are 733 holders of a less than marketable parcel of shares (as at 29 September 2021, a less than marketable parcel is
2,041 shares), representing a total of 472,017 shares.
Unlisted Options
Range
Total holders
Units
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
37
67
20
58
61
243
% of
Issued
Capital
0.02
0.22
0.43
4.47
% of
Issued
Capital
0.02
0.33
0.25
3.54
14,696
197,402
144,932
2,090,641
56,624,397
95.86
59,072,068
100.00
70
(c) Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
Name
Kayelekera Resources Pty Ltd
Sachem Cove Special Opportunities Fund
(d) Restricted Securities
There 226,463,927 restricted securities as at 29 September 2021.
(e) Voting Rights
The voting rights attaching to ordinary shares are:
Number of Shares
175,509,489
60,305,832
%
14.77
5.07
On a show of hands, every member present in person or by proxy shall have one vote, and upon a poll, each share shall
have one vote.
Options do not carry any voting rights.
(f) On Market Buy Back
There is no current on market buy-back.
(g) Unquoted securities (as at 29 September 2021)
CLASS
UNL OPTS EXP 01/01/2024
UNL OPTS EXP 04/10/2022, EXERCISABLE AT $0.04
UNL OPTS EXP 10/02/2024
UNL OPTS EXP 12/09/2022, EXERCISABLE AT $0.04
TOTAL HOLDINGS
6,000,000
1,393,102
6,000,000
7,242,878
UNL OPTS EXP 13/03/2023, EXERCISABLE AT $0.04
14,715,010
UNL OPTS EXP 22/02/2024
UNL OPTS EXP 23/10/2023, EXERCISABLE AT $0.04
UNL OPTS EXP 23/10/2023, EXERCISABLE AT $0.06
UNL OPTS EXP 23/10/2023, EXERCISABLE AT $0.08
UNL OPTS EXP 25/09/2022, EXERCISABLE AT $0.04
7,000,000
5,000,000
2,500,000
2,500,000
6,721,078
(h) Unquoted Securities >20% Holders (as at 29 September 2021)
Class
Holder
Number
%
UNL OPTS EXP 01/01/2024
MR ADAM LEE KILEY
UNL OPTS EXP 04/10/2022, EXERCISABLE AT $0.04 MR SAMUEL LEWIS MCCARDEL
MR CHRISTOPHER BRUCE KNEE
MR STUART ANDREW MCKENZIE
2,000,000
33.33
2,000,000
33.33
2,000,000
33.33
500,000
35.89
HAWTHORN GROVE INVESTMENTS PTY LTD
375,000
26.92
SANDHUIRST TRUSTEES LTD
375,000
26.92
71
Class
Holder
UNL OPTS EXP 10/02/2024
MR KEITH BOWES
Number
%
6,000,000
100.00
UNL OPTS EXP 12/09/2022, EXERCISABLE AT $0.04
UNL OPTS EXP 13/03/2023, EXERCISABLE AT $0.04
UNL OPTS EXP 22/02/2024
MR MICHAEL BOWEN
DAVEY HOLDINGS (AUS) PTY LTD
MR TIMOTHY M HANLON
UNL OPTS EXP 23/10/2023, EXERCISABLE AT $0.04
TR NOMINEES PTY LTD
UNL OPTS EXP 23/10/2023, EXERCISABLE AT $0.06
TR NOMINEES PTY LTD
UNL OPTS EXP 23/10/2023, EXERCISABLE AT $0.08
TR NOMINEES PTY LTD
3,000,000
42.86
2,000,000
28.57
2,000,000
28.57
5,000,000
100.00
2,500,000
100.00
2,500,000
100.00
UNL OPTS EXP 25/09/2022, EXERCISABLE AT $0.04
GREENSEA INVESTMENTS PTY LTD
3,223,215
47.96
(i)
Interest in Mining Tenements
As at 29 September 2021, the Company’s tenement interests are shown in the table below.
Tenement
Ownership
Project
Location
ML 0152/2007 - Kayelekera
EPL418 - Chilumba
EPL489 - Nthalire
EPL502 - Juma-Miwanga
EPL417 - Rukuru
EPL225 - Mapambo
100%
100%
100%
100%
100%
100%
Kayelekera
Kayelekera
Kayelekera
Kayelekera
Kayelekera
Kayelekera
Malawi
Malawi
Malawi
Malawi
Malawi
Malawi
72