ABN 38 119 992 175
A N N U A L R E P O R T
fo r t h e ye ar en d ed 30 J u ne 2 02 2
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
Ms Dixie Marshall
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company Secretary
Mr Brian Scott
Principal Place of Business and
Registered Office
Level 20, 140 St Georges Terrace
Perth, Western Australia, 6000
Telephone: +61 8 9200 3427
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
Thomson 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
OTCQB
Level 12, 300 Vesey Street
New York, NY 10282
OTC Code: LTSRF
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C O N T E N T S
Letter from the Chairman
Directors' Report
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Review of Activities
Sustainability and ESG
Directors’ Profiles
Annual Statement of Ore Reserves and Mineral Resources
Audited Remuneration Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Statements
Directors' Declaration
Independent Auditor’s Report
ASX Additional Information
3
L E T T E R F R O M T H E C H A I R M A N
Dear Shareholders
On behalf of the Board of Directors for Lotus Resources Limited, I am delighted to present the Annual Report for the financial
year ended 30 June 2022.
This past year has seen further improved sentiment in the nuclear and uranium industries, as the world continues to look to
transition away from fossil fuels to a zero-carbon emission future. Uranium is increasingly becoming a part of this
conversation and is central to most countries long-term energy strategy, with Australia possibly being one of the few
exceptions to this. The standout for nuclear is that it is the only energy source that provides zero carbon emissions twenty-
four hours of the day, irrespective of location or the prevailing conditions.
The positive sentiment for the sector has been reflected in the reported uranium spot price during the past 12 months which
has increased from US$35/lb (1 September 2021) to approximately US$50/lb currently (30 September 2022). Whilst this
increase is very encouraging for the market, we believe higher pricing is not only likely but essential to incentivise new
production entering the market to match the forecasted demand.
In readiness for this, the Company has continued to advance the Kayelekera uranium mine for a quick re-start when these
conditions prevail. The major achievement during the past year was the release of our Definitive Feasibility Study (DFS),
which not only confirmed Kayelekera as one of the lowest capital cost uranium projects (US$88 million) globally, which can
also recommence production quickly (15 months development for construction/refurbishment) once a Final Investment
Decision (FID) is made.
In addition, the DFS also highlighted annual production of 2.4Mlbs U3O8 per annum (first seven years), with a 10-year life-of-
mine producing a total of 19.3Mlbs U3O8. Cash Operating Costs of US$29.10/lb (All in Sustaining Cost of US$36.20/lb) were
also determined for the first seven years of operation prior to the commencement of production from the lower grade
stockpiles. Considering this was one of the first Studies in the sector to be released during the current high inflationary
environment, which has been fully accounted for in the Study, this was an excellent achievement and puts the Company in
a strong position going forward.
Lotus also significantly strengthened its balance sheet with a strongly supported A$25 million capital raising completed in
September 2022. This raising has the put the Company in a sound financial position, allowing it to continue the advancement
of the Kayelekera Project, whilst ensuring we remain funded through to 2024.
The most satisfying achievement however was the release of our inaugural Sustainability Report back in December 2021.
This report puts a line in the sand regarding the Company’s current positioned and future ambitions regarding ESG. The
Company is now busy preparing its 2022 Sustainability Report which will provide a more quantitative analysis of our ESG
position. The Company is committed to becoming a leader in the industry regarding ESG as we are committed to leave a
lasting positive legacy in Malawi long after the mine is gone.
On behalf of the Lotus Board and management team, I would like to thank the Malawi government, most notably the Minister
of Mines, The Honourable Dr Albert Mbawala, and the Minister of Finance, the Honourable Mr Sosten Gwengue, for their
continued support and the faith they have shown in the Kayelekera Project. We look forward to continue working closely
together in the years ahead.
Finally, I would like to thank all shareholders for their continued support. 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
4
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 2022 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, 52 kilometres
(km) west by road from the town of Karonga. The Project hosts a current Mineral Resource Estimate of 51.1 million pounds
(Mlbs) U3O8 including the inaugural resource at Livingstonia (see page 20), and historically produced approximately 11 Mlbs
U3O8 equivalent 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
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D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
REVIEW OF ACTIVITIES (continued)
Project Overview (continued)
The 2022 financial year has seen significant progress made by Lotus Resources in positioning Kayelekera to be able to
recommence production quickly once the uranium price has recovered to meet the future impending shortfall in uranium
supply.
Image 2: Kayelekera Processing Facility
Major achievements by the Company during the 2022 financial year included the following:
Increased the Company’s uranium Mineral Resource to 51.1 Mlbs through exploration drill programs at the Kayelekera
mining lease and at the Livingstonia uranium deposit, which was acquired during the financial year.
Completion of multiple technical studies to improve project returns, the results of which have been incorporated in
the Restart Definitive Feasibility Study.
Continued discussions with multiple major global utilities to re-introduce the Project and discuss potential offtake
agreements. These discussions have been led by Dr Robert Rich, the Company’s Uranium Marketing and Sales Executive
based in the USA and have involved in person meetings between Company Management and utilities in North America
and Europe.
Further strengthened the Board and management team with the appointment of high calibre independent non-
executive director Dixie Marshall and experienced resources CFO Michael Ball.
Multiple visits to Malawi to meet with Government Ministers and representatives to progress the Mine Development
Agreement and visit the Kayelekera mine site.
Continued 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.
This resulted in the release of the inaugural annual Sustainability Report in December 2021, with the 2022 report due
later this year.
Completion and release of the Restart Definitive Feasibility Study which confirmed Kayelekera as a low cost, quick
restart uranium operation.
The work completed during the 2022 financial year has focused on setting the Company in line with its vision to be
“A responsible uranium producer, building strong local communities, a safe and healthy work environment and make a
positive contribution to a carbon free future”
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D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
REVIEW OF ACTIVITIES (continued)
Expansion of Uranium Mineral Resource Base
During the 2022 financial year, Lotus Resources completed multiple exploration drilling programs seeking to increase the
mineral resource base for the Kayelekera Uranium Project. These programs resulted in the reporting of an increase in the
uranium mineral resource at Kayelekera and an inaugural resource at Livingstonia, leading to a mineral resource estimate of
49.4 million tonnes (Mt) at 475 parts per million (ppm) U3O8 for 51.1 Mlbs U3O8.
A 35 hole (4,533 meter) reverse circulation (RC) program successfully expanded the known mineralised zone surrounding
Kayelekera by extending the footprint by up to 100 meters from the existing resource drilling. Results from the drilling
program, coupled with a revised cut-off grade following the positive ore sorting test work, resulted in a 23% increase in the
Mineral Resource Estimate at Kayelekera to 46.3 Mlbs U3O8. Refer to ASX announcements dated 27 January 2022 and 15
February 2022 for more details.
A 29 hole RC drilling program was performed at the Livingstonia prospect shortly after the acquisition in October 2021. The
prospect has the potential to be a satellite deposit being located 90 kilometers from Kayelekera. The drilling program was
designed to convert the historic mineral resource estimate into a JORC 2012 compliance mineral resource and to test for
potential extensions. The program was successful culminating in the release of an inaugural mineral resource estimate for
Livingstonia providing for 6.9Mt at 320ppm for 4.8Mlbs U3O8. Refer to ASX announcements dated 12 April 2022 and 9 June
2022 for more details.
An exploratory 7 hole (1,140 meter) RC drilling program was carried out at the Chilumba prospect, which is located 8km from
the Livingstonia uranium resource, to test surface radiometric anomalies. Assays have been received and results are being
processed with initial results indicating that further work is warranted.
Exploration activities performed at the Millenje rare earth prospect during the year included additional geophysics, mapping,
trenching and a small RC drilling program. Assays have been received and results are being processed.
Refer to the Annual Statement of Mineral Resources and Ore Reserves on page 20 for details.
Restart Definitive Feasibility Study
Following completion of the positive Restart Scoping Study (refer to ASX announcement 20 October 2020) the company
undertook multiple technical studies that were identified as having the potential to improve Kayelekera’s returns by reducing
operating costs, sustaining capital costs, extending life of mine, and by increasing annual production rates. The studies
performed included reviews of ore sorting, power supply options, acid recovery and optimisation of tailings facilities. The
studies were completed during the first half of the financial year with the results being incorporated into the Restart Definitive
Feasibility Study (the Restart DFS or the Study) released on 11 August 2022.
The Restart DFS has confirmed Kayelekera ranks as one of the lowest capital cost uranium projects globally whilst also having
the ability to quickly recommence production once a Final investment Decision (FID) has been made.
The project is capable of a quick restart with the Study estimating a 15 month development period incorporating front end
engineering and design, refurbishment of the existing plant and construction and installation of items of new plant.
The mine plan extends over a six-year mining period at the existing open pit using a multi-stage approach, followed by a
further four years of production sourced from stockpile rehandle. The plan is for approximately 14.3Mt of ore to be mined
at a strip ratio of 1.8:1.0 (ratio of waste tonnes to ore tonnes) which will be supplemented by 4.1Mt of ore already stockpiled
at site from the previous operational phase.
Life of mine production is estimated at 19.3Mlbs of U3O8 over a 10-year life-of-mine, with average production of 2.4Mlbs
U3O8 per annum over the first 7 years before mining finishes and production is sourced from stockpiles. The low initial capital
cost of US$88 million ranks the Project as one of the lowest capital cost uranium projects globally with an Initial Capital
Intensity of US$37/lb1. Included in the initial capital cost is US$35.8 million for new plant and infrastructure to improve the
project economics and plant reliability which were not considered in the Restart Scoping Study2.
1 Initial Capital Intensity = Initial Capital Cost (US$88 million) / Steady State Average Production (2.4Mlbs U3O8)
2 Refer ASX Announcement dated 20 October 2020.
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D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
REVIEW OF ACTIVITIES (continued)
Restart Definitive Feasibility Study (continued)
Cash Costs3 are forecast at US$29.1/lb with All in Sustaining Cash Cost (AISC)4 forecast at US$36.2/lb during the first 7 years
of production, excluding ramp-up. Life of mine cash costs3 are forecast at US$30.1/lb and AISC4 at US$37.7/lb.
Despite the current high inflation environment, operating costs are lower compared to the historical operations and Re-Start
Scoping Study estimates due to:
Increased feed grades from ore sorting;
Lower power costs from grid power; and
Improved acid utilisation from nanofiltration.
Table 1: Key Project Outputs5
Production
LOM total / Avg.
Mine Life (Years)
Total Material Mined (Mt)
Strip Ratio
Ore Tonnes (Mt)
Ave Mined Grades (ppm U3O8)
Total U3O8 Mined (Mlbs)
Existing Stockpiles
Tonnes (Mt)
Grade (ppm U3O8)
Plant
Crusher Feed (Mt)
Crusher Feed Grade (ppm U3O8)
Ave Feed Upgrade factor
Ave Ore Sorting Recovery (%)
Mill Feed (Mt)
Average Mill Feed Grade (ppm U3O8)
Process Plant Recovery (%)
Av. Annual Production (Mlbs)
Steady State Annual Production (Mlbs)
LOM Production (Mlbs)
Operating costs
Mining Costs (US$ / t mined)
Processing Costs6 (US$ / t ore)
G&A Costs (US$M pa)
Cash costs7 (US$ / lb)
AISC8 (US$ / lb)
Initial Capital costs
Initial Capital (US$M)
Contingency (US$M)
Pre-Production (US$M)
9.5
40.5
1.8
14.3
648
20.5
4.1
470
18.4
609
1.30
77.8
12.8
792
86.7
2.03
2.42
19.3
3.04
27.60
11.10
30.10
37.70
78.3
9.5
11.5
3 Cash Costs include all mining and stockpile rehandling, processing, maintenance, and general and administrative costs.
4 AISC refers to All in Sustaining Costs which include Cash Costs plus product transport, insurance and conversion costs, Government and
third-party royalties and sustaining capital (including TSF costs).
5 The key outputs are presented for the Project on a 100% ownership basis. Lotus Resources owns 85% of the Project with the remaining
15% held by the Government of Malawi.
6 Includes maintenance costs and power costs.
7 Cash Costs include all mining and stockpile rehandling, processing, maintenance, and general and administrative costs.
8 AISC refers to All in Sustaining Costs which include Cash Costs plus product transport, insurance and conversion costs, Government and
third-party royalties and sustaining capital (including TSF costs).
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D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
REVIEW OF ACTIVITIES (continued)
Restart Definitive Feasibility Study (continued)
The Project plan has significantly reduced power generation related carbon dioxide emissions by approximately 72% (or
21,000tpa) compared to the historical operation through a number of initiatives, including the planned sourcing of power
for the operation from connection to the local power grid, solar power and battery, supplemented by diesel generators.
The Company’s focus is now on completing the Mine Development Agreement with the Government of Malawi and
accelerating engagement with the various nuclear energy utilities and securing offtake agreements with the necessary
volumes and pricing mechanisms to support the restart of Kayelekera. Alongside this the Company will be taking steps to
explore and develop various financing options to fund the restart.
Discussions with Offtake Partners
A total of 10.9 Mlbs of uranium (U3O8 equivalent) was successfully produced, marketed and delivered from the Kayelekera
Project during the period from 2009 to 2014 to conversion facilities located in the United States, Canada and France operated
by Honeywell, Cameco, and Orano, respectively.
Given the long-term nature of supply contracts with nuclear utilities – on average, no more than ten percent of utility
requirements are left open to spot purchasing – it is typical to engage in supply contracting discussions with utilities and
other nuclear fuel market participants long before production at a uranium mine commences.
The Group’s engagement with potential offtake partners who understand the Kayelekera product is a central element of the
Group’s strategy to position the Project for an efficient and cost-effective restart of operations.
During the year the Company continued to engage with potential offtake partners and was invited to participate in a number
of requests for proposal (RFP’s) for supply contracts. Discussions have been led by Dr Robert Rich, the Company’s Uranium
Marketing and Sales Executive based in the USA and have involved in person meetings between Company Management and
utilities in North America. Further meetings with utilities including European and Asian utilities and traders occurred in
London in September.
Uranium Market
The uranium market has continued to improve over the financial year with the spot U3O8 price increasing from approximately
US$31/lb to US$50/lb, peaking at US$64/lb in April 2022. Positive sentiment within the uranium market driven primarily by
zero-carbon emissions targets and the energy crises have provided the most optimistic outlook for uranium producers for
many years. New nuclear reactors builds, life extensions to existing reactors as well as advancements in small modular
reactors (SMRs) and advanced reactor design all indicate growing demand for uranium supply moving forward. Companies
such a Lotus which have assets that have previously produced and can come back on-line relatively quickly are the ones most
likely to benefit in the near term for the new demand anticipated.
Care and Maintenance Activities at Kayelekera
Health & Safety
The Kayelekera mine has achieved 2,917 Lost Time Injury (LTI) free days with a total 3,346,987 manhours worked as at 30
June 2022 (249,054 for the 12-month period ending 30 June 2022). During the financial year there were no reportable health
and safety incidents, while 30 Malaria cases at the site were observed. The 12-month rolling Total Recordable Injury
Frequency Rate (TIFR) has reduced from 5.71 to 0.71, while the Lost Time Injury Frequency Rate (LTIFR) remains at zero.
The Kayelekera mine continued to take a pro-active approach in relation to incident/accident prevention through
implementation of work permit system, Take-5 risk assessments and daily safety toolbox talks.
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D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
REVIEW OF ACTIVITIES (continued)
Care and Maintenance Activities
The Company continues to critically review activities and associated costs at the Project site to ensure the site care and
maintenance programs and costs are optimised.
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;
3) Managing the site water balance in the various storage facilities including water treatment and discharge following
the wet season; and
4) On-going maintenance of critical equipment.
Government and Community Relations
Mine Development and Community Development Agreements
The Company is securing a Mine Development Agreement that will set the fiscal regime in which the Project will operate and
will include other provisions for contractual protections as are customary for such concession agreements. The key items being
finalised under the agreement are critical to support the investment to restart operations and the financial returns for the
Project. Over the course of the financial year various meetings were held between Company Management and the
Government of Malawi in Malawi and Australia to progress the agreement.
As part of the updated Malawian Mines and Minerals Act (2019), a company that has a large-scale mining licence, such as the
Company holds for Kayelekera, is required to enter into a Community Development Agreement (CDA) with the local “qualified
communities” as defined in the Act. This agreement provides for 0.45% of the gross revenues generated from the mine to be
spent on projects or activities selected by the qualified communities. The objective of the CDA aligns with Lotus Resources’
aim to achieve a balance between economic, environmental and social needs.
The Company’s commitment includes:
Adhering to the laws and regulations of host countries;
Respecting and responding to local customs, traditions and cultures;
Contributing to local economic development of communities;
Being open and transparent in all communications;
Investing in projects that are of mutual benefit to the company and the community;
Embracing principles of local procurement and employment; and
Undertaking activities in a manner that is conducive to ensuring that the local operating company is, and remains,
a responsible member of the community.
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.
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D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
REVIEW OF ACTIVITIES (continued)
Sustainability and ESG (continued)
In December 2021, Lotus reached an important milestone with the publishing of our first Sustainability Report. Lotus is proud
of our achievements and developments in this area and is pleased to outline them in this report, which will become part of
the Company’s annual reporting suite.
Furthermore, to support the sustainability project team established previously, Lotus has recently established an ESG Board
Sub-Committee to further ensure that the Company continues to improve on this solid foundation and meet its objectives.
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 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 with global good
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 Board Sub-Committee
The Board recently established an ESG Sub-Committee to assist the Board to fulfill its responsibilities in relation to
environmental, social and governance matters arising out of the Company’s activities and sustainability reporting. This Sub-
Committee’s responsibilities include
reviewing and monitoring sustainability policies, practices and disclosures that conform with the Company’s ESG
strategy;
supporting the development and implementation of a contemporary and sophisticated framework for ESG
reporting based on an agreed multi-year roadmap;
reviewing measurable objectives and targets against the sustainability strategy ensuring an evidence-based
approach to reporting and data collection with best-in-class benchmarks;
reviewing and making recommendations to the Board for approval of the Sustainability Report and other related
information regarding sustainability matters;
reviewing public positions on key sustainability issues and non-financial governance issues in light of the risk
appetite set by the Board; and
reviewing and making recommendations to the Board for approval the ASX Corporate Governance Statement of
the Company, the Company’s Modern Slavery Statement (which is to be adopted), and Codes and Policies
published on the Company’s website and other related information regarding sustainability matters.
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D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
REVIEW OF ACTIVITIES (continued)
Sustainability and ESG (continued)
Kayelekera Mine Site Performance
The main safety, health, environment and radiation (SHER) activities undertaken during the period were:
Continued implementation of the Response Plan for COVID-19 with the full workforce having received at least two
vaccine doses.
The Atomic Energy Regulatory Authority (AERA) inspected Kayelekera during the reporting period. Lotus also
submitted an 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 care and maintenance activities.
Regular review of the site risk register and risk mitigation controls.
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 tailings storage facility (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 processing plant site continue to show reduction in ground movement
intensity around Kayelekera 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 was detailed as part of
the DFS providing a strategy to manage this issue prior to start-up.
Site water management continues with the water treatment program being conducted over a period of sixty five days
discharging 765,361m³ treated water into the Sere River in accordance with license conditions.
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 2022 are given below.
Water Storage Facility
Return Water Pond (RWP1)
Return Water Pond (RWP2)
Decant Pond
Seepage Pond
Tailings Storage Facility (mRSL)
June 2022
26.9%
60.7%
67.9%
19.5%
798.425
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 2022
2
17
18
20
3
June 2021
2
17
18
20
3
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D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
REVIEW OF ACTIVITIES (continued)
Sustainability and ESG (continued)
Kayelekera Mine Site Performance (continued)
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 discussions around community development
ideas as Lotus progresses the Community Development Agreement.
RISK MANAGEMENT
Lotus is committed to the active management of the risks to its activities. Risk management plays a key role in ensuring the
Company achieves its goals. The Board is responsible for setting the “risk appetite” for the Company and is responsible for
establishing, overseeing and approving the Company’s risk management framework, strategy and policies, internal
compliance and internal control. The Board plans to delegate to the audit and risk committee responsibility for implementing
sub-committee.
the
recent establishment of
the Audit and Risk
risk management
system with
the
The Lotus Resources Risk Management Policy is the overarching document that provides the foundation which supports the
framework and processes for the integration of risk management into the Company’s business activities. Lotus is
implementing an organisational framework for the management of risks which ensures that a formal and consistent process
of risk management is carried out. The objective of risk management is to explicitly and clearly manage risks through sound
management and continual review.
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 evaluation phase of its interests in exploration projects, Lotus 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.
REFERENCE TO PREVIOUS ASX ANNOUNCEMENTS
The information in this announcement that relates to the Mineral Resource Estimate at Kayelekera was announced on 9 June
2022 and 15 February 2022. The Company confirms that it is not aware of any new information or data that materially affects
the information included in the announcements of 9 June 2022 and 15 February 2022 and that all material assumptions and
technical parameters underpinning the Mineral Resource Estimate in that announcement continue to apply and have not
materially changed.
The information in this announcement that relates to the Ore Reserve Estimate at Kayelekera was announced on 11 August
2022. The Company confirms that it is not aware of any new information or data that materially affects the information
included in the announcement of 11 August 2022 and that all material assumptions and technical parameters underpinning
the Ore Reserve Estimate in that announcement continue to apply and have not materially changed.
In relation to the exploration results included in this announcement, the dates of which are referenced, the Company
confirms that it is not aware of any new information or data that materially affects the information included in those
announcements.
13
D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
FORWARD LOOKING STATEMENTS
This Directors Report includes “forward-looking statements” within the meaning of securities laws of applicable jurisdictions.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that are in some cases beyond
Lotus Resource Limited’s control. These forward-looking statements include, but are not limited to, all statements other than
statements of historical facts contained in this announcement, including, without limitation, those regarding Lotus Resource
Limited’s future expectations. Readers can identify forward-looking statements by terminology such as “aim,” “anticipate,”
“assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,”
“project,” “risk,” “should,” “will” or “would” and other similar expressions. Risks, uncertainties and other factors may cause
Lotus Resource Limited’s actual results, performance, production or achievements to differ materially from those expressed
or implied by the forward-looking statements (and from past results, performance or achievements). These factors include,
but are not limited to, the failure to complete and commission the mine facilities, processing plant and related infrastructure
in the time frame and within estimated costs currently planned; variations in global demand and price for uranium; fluctuations
in exchange rates between the U.S. Dollar and the Australian Dollar; uncertainty in the estimation of mineral resources and
mineral reserves; the failure of Lotus Resource Limited’s suppliers, service providers and partners to fulfil their obligations
under construction, supply and other agreements; the inherent risks and dangers of mining exploration and operations in
general; environmental risks; unforeseen geological, physical or meteorological conditions, natural disasters or cyclones;
changes in government regulations, policies or legislation; the inability to enter into a mine development agreement with the
Government of Malawi on acceptable terms; foreign investment risks in Malawi; breach of any of the contracts through which
the Company holds property rights; defects in or challenges to the Company’s property interests; uninsured hazards; industrial
disputes, labour shortages, political and other factors; the inability to obtain additional financing, if required, on commercially
suitable terms; reliance on key personnel and the retention of key employees; the impact of the Covid-19 pandemic on the
Company’s business and operations; and global and regional economic conditions. Readers are cautioned not to place undue
reliance on forward-looking statements. The information concerning possible production in this announcement is not intended
to be a forecast. They are internally generated goals set by the board of directors of Lotus Resource Limited. The ability of the
Company to achieve any targets will be largely determined by the Company’s ability to secure adequate funding, implement
mining plans, resolve logistical issues associated with mining and enter into any necessary off take arrangements with
reputable third parties. Although Lotus Resource Limited believes that its expectations reflected in these forward-looking
statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results
will be consistent with these forward-looking statements.
14
D I R E C T O R S ’ R E P O R T ( c o n t i n u e 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 – Since appointment 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 (ASX:
OBL), where he is chair of the remuneration committee and a member of the audit and
risk, corporate governance and nomination committees. He is also a Non-Executive
Director of ASX listed company’s Genesis Minerals Limited (ASX: GMD) and Emerald
Resources NL (ASX: EMR).
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.
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Omni Bridgeway Limited (Non-Executive Director)
Genesis Minerals Limited (Non-Executive Director)
Emerald Resources NL (Non-Executive Director)
Trek Metals Limited (Non-Executive Director)
Board Chairman
Ordinary shares
Unlisted Options
5,250,000
-
Mr Grant Davey
Non-Executive Director - Since appointment 22 June 2020
Experience and expertise
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 Kayelekera Uranium mine in Malawi from Paladin Energy
Limited. He is currently a Company Director for Cradle Resources Limited (ASX: CXX),
Frontier Energy Limited (ASX: FHE), Metallum Resources Inc. (TSXV: MZN) and is a member
of the Australian Institute of Company Directors (AICD).
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Cradle Resources Limited (Executive Director)
Frontier Energy Limited (Executive Chairman)
Metallum Resources Inc. (non-Executive Director)
Boss Resources Limited (Non-Executive Director)
Matador Mining Limited (Non-Executive Director)
Nil
Ordinary shares
Unlisted Options
179,459,0311
-
1 Following shareholder approval on 20 July 2021, 226,463,927 shares were issued to Kayelekera Resources Pty Ltd, an entity related
to non-executive director Mr Grant Davey, in consideration for the Project interest acquired. The shares were subject to a 12-month
escrow period which expired on 16 August 2022. As advised to the ASX on 26 July 2021, the Company has been made aware of a claim
by a third party to a 22.5% interest in the aforementioned shares issued. As such, 50,954,438 are being held on trust until the matter
is resolved and are not reflected in the balance reported above.
15
D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
DIRECTORS (continued)
Mr Mark Hanlon
Non-Executive Director – Since appointment 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.
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 (ASX: RVR) where he also
chairs the audit and risk committee. He is also Non-Executive Chair of ASX listed company,
Copper Strike Limited (ASX: CSE).
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Red River Resources Limited (Non-Executive Director)
Copper Strike Limited (Non- Executive Chairman)
Nil
Chair of Audit and Risk Committee (from 1 July 2022)
Chair of Remuneration and Nomination Committee (from 1 July 2022)
Ordinary shares
Unlisted Options
6,500,000
-
Ms Dixie Marshall
Non-Executive Director – Appointed 1 April 2022
Experience and expertise
Ms Marshall has over 38 years’ experience in media, advertising, government relations
and communications. She has worked across a range of platforms, including television,
radio, newspapers, and digital. Ms Marshall has an advanced knowledge of data and digital
innovation as applied to communications, marketing and policy development. She has
won awards for journalism, and more recently advertising.
Ms Marshall is currently the Chief Growth Officer of Marketforce, WA’s oldest advertising
agency, and previously worked from the Western Australian Government Premier’s Office
for six years as the Director of Strategic Communications giving a unique insight into
government policy.
Ms Marshall is the Deputy Chair of the WA Football Commissioner, member of the
Australian Sports Commission and a former Commissioner of Tourism WA and currently a
Non-Executive Director of Frontier Energy Limited (ASX: FHE).
Other current directorships
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Frontier Energy Limited (Non-Executive Director)
Marketforce (Chief Growth Officer)
WA Football Commission (Deputy Chair)
Member Australian Sports Commission
Nil
Chair of Environment, Social and Governance Committee (from 1 July 2022)
Ordinary shares
Unlisted Options
Nil
2,000,000
16
D I R E C T O R S ’ R E P O R T ( C O N T I N U E D )
DIRECTORS (continued)
Mr Keith Bowes
Managing Director – Since appointment 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).
Other current directorships
Nil
Former directorships in the last 3 years
Special responsibilities
Interests in shares and options
Matador Mining Limited (Executive Director)
Managing Director
Ordinary shares
Unlisted Options
2,875,0002
9,003,000
2 Mr Keith Bowes has a beneficial interest in 226,463,927 shares (in addition the number reported above) by virtue of him holding an
interest in Kayelekera Resources Pty Ltd, an entity related to non-executive director Mr Grant Davey, and from which the Project
interest was acquired.
COMPANY SECRETARY
Mr Brian Scott
Company Secretary – Appointed 24 March 2022
Experience and expertise
Mr Scott has previously worked as a partner in a leading global law firm specialising in
M&A, project development, commercial contracts and capital raisings. Mr Scott holds an
LLB (Honours), First Class, from Edinburgh University and has been admitted to practice in
England & Wales. Mr Scott is also the current company secretary of Cradle Resources
Limited and is joint company secretary of Matador Mining 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
Nil
Nil
17
D I R E C T O R S ’ R E P O R T ( c o n t i n u e 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
Mr Michael Bowen
Mr Keith Bowes
Mr Grant Davey
Mr Mark Hanlon
Ms Dixie Marshall (i)
Board Meetings
Held
Attended
6
6
6
6
2
6
6
5
6
2
(i)
Appointed 1 April 2022
Committee membership
The Board has established sub-committees for Audit and Risk, Nomination and Remuneration, and Environmental, Social and
Governance. The Board sub-committees were established effective 1 July 2022 in recognition of the increasing complexity
in the Company’s activities as it progresses towards a restart of operations at Kayelekera, and in recognition of the increased
size of the Lotus Resources Board facilitating appropriate memberships for each committee.
There were no sub-committees formed during the financial year ended 30 June 2022.
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, other than as disclosed below:
Completion of the increase in the Group’s ownership interest 65% to 85% in Lotus (Africa) Limited, the holding
company for the Kayelekera Uranium Project, occurred during the financial year. The purchase consideration
consisted of 226,463,927 ordinary shares in Lotus Resources Limited. Refer to note 29 for details.
The rehabilitation and closure cost estimate for the Kayelekera Uranium Mine was revised during the financial year
resulting in a reduction to the provision and the exploration and evaluation asset of $18,455,993. Refer to note 15
for details.
The scheduled US$2,000,000 environmental bond repayment was made during the year. Refer to note 29 for
details.
Completion of the sale of non-core Hylea Project for gain on sale of $2,375,763. Refer to note 3 for details.
RESULTS
The Group incurred a loss after income tax and non-controlling interest of $11,996,177 for the financial year (2021: loss after
income tax and non-controlling interest of $5,014,490).
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 2022.
18
D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Subsequent to the end of the financial year:
The Group released the Restart Definitive Feasibility Study in relation to the Kayelekera Uranium Project. Refer to
the Directors Report and ASX announcements dated 11 August 2022.
On 2 September 2022, the Company completed an institutional placement issuing 104,166,667 new shares to raise
$25,000,000 (before costs) to provide funding to progress the development of the Kayelekera Uranium Project,
including finalising the Mine Development Agreement, advancing offtake negotiations, Front End Engineering and
Design (FEED) and project financing prior to a final investment decision. The capital raise will also provide funding
for the final instalment of the rehabilitation bond repayment in March 2023, for care and maintenance activities
at Kayelekera and corporate costs for a period of at least 18 months, for general working capital purposes and to
fund the costs of the offer.
8,076,408 unlisted options were exercised at $0.04 per options for gross proceeds before costs of $323,056.
7,000,000 unlisted zero exercise price options held by non-Executive Directors vested and were exercised post
reporting date. 625,000 options held by the Managing Director at an exercise price of $0.04 were exercised post
balance date. A further 3,000,000 zero exercise priced options held by the Managing Director vested post balance
date.
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 2022, it is not practicable to estimate the potential impact, positive or negative,
after the reporting date. The situation continues to change 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.
ANNUAL STATEMENT OF ORE RESERVES AND MINERAL RESOURCES
Mineral Resources Governance
Lotus Resources reviews its Mineral Resource and Ore Reserve (where 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.
Mineral Resources Estimate
The information in this document that relates to Mineral Resources for Kayelekera at the project was reported by the
Company in announcements to the ASX dated 15 February 2022 and 9 June 2022. 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.
19
D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
ANNUAL STATEMENT OF ORE RESERVES AND MINERAL RESOURCES (continued)
Mineral Resources Estimate (continued)
Table 2 - Lotus Resources Mineral Resource Inventory – June 2022
Project
Category
Kayelekera
Measured
Kayelekera
Measured – RoM Stockpile9
Kayelekera
Indicated
Kayelekera
Inferred
Kayelekera
Total
Kayelekera
Inferred – LG Stockpiles10
Kayelekera
Total – Kayelekera
Livingstonia
Inferred
Total
All uranium resources
Ore Reserves
Mt
0.9
1.6
29.3
8.3
40.1
2.4
42.5
6.9
49.4
Grade
U3O8
U3O8
(U3O8 ppm)
(M kg)
(M lbs)
830
760
510
410
510
290
500
320
475
0.7
1.2
15.1
3.4
20.4
0.7
21.1
2.2
23.3
1.6
2.6
33.2
7.4
44.8
1.5
46.3
4.8
51.1
The Ore Reserve estimate has been developed using the 9 June 2022 Mineral Resource Estimate for Kayelekera only (i.e.
excluding the Livingstonia Resource Estimate) and is based on the optimised mine plan and production schedule prepared
as part of the Restart Definitive Feasibility Study reported in ASX announcements dated 11 August 2022 and referred to in
the Directors Report.
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 Ore Reserves, 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.
Table 3 - Lotus Resources Ore Reserve Inventory – July 2022
Project
Category
Mt
Kayelekera
Open Pit - Proved
Kayelekera
Open Pit - Probable
Kayelekera
RoM Stockpile – Proved
Kayelekera
Total - Kayelekera
0.6
13.7
1.6
15.9
Grade
U3O8
U3O8
(U3O8 ppm)
(M kg)
(M lbs)
902
637
760
660
0.5
8.7
1.2
10.4
1.2
19.2
2.6
23.0
Ore Reserves are reported based on a dry basis. Proved Ore Reserves are inclusive of RoM stockpiles and are based on a
200ppm cut-off grade for arkose and a 390ppm cut-off grade for mudstone. Ore Reserves are based on a 100% ownership
basis of which Lotus Resources has an 85% interest.
9 The RoM stockpile has been mined and is located near mill facility.
10 Low grade stockpiles have been mined and placed on the medium-grade stockpile and are considered potentially
feasible for blending or beneficiation, with initial studies to assess this optionality already completed.
20
D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
SHARES AND OPTIONS ON ISSUE
At the date of this report, the Company has 1,326,008,228 (2021: 1,188,800,828) fully paid ordinary shares on issue.
The following options over ordinary shares in the Company were on issue at the date of this report:
Unlisted Options - Number
Issue Date
Exercise Price
Expiry Date
1,406,000
1,885,000
648,000
1,230,000
3,000,000
6,000,000
2,000,000
5,000,000
2,500,000
2,500,000
4,434,278
643,102
14 December 2021
14 December 2021
29 November 2021
29 November 2021
26 August 2021
26 August 2021
1 April 2022
23 October 2020
23 October 2020
23 October 2020
13 March 2020
4 October 2019
31,246,380
Total Unlisted Options
OPTIONS EXERCISED, EXPIRED AND LAPSED
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.04
$0.06
$0.08
$0.04
$0.04
14 December 2024
14 December 2026
29 July 2024
29 November 2026
1 January 2024
10 February 2024
31 March 2025
23 October 2023
23 October 2023
23 October 2023
13 March 2023
4 October 2022
The number of shares that were issued during the year on the conversion of options was 22,846,721 (2021: 120,563,518).
The weighted average price exercise price of these options was 3.47 cents (2021: 4.00 cents).
There were no options that expired during the year. 1,853,954 options have expired since the end of the year.
There were no options that 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 of Officers
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.
Indemnification of Auditor
To the extent permitted by law, Lotus Resources has agreed to indemnify its auditor, RSM Australia Partners (RSM), as part
of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). The Directors have not provided RSM with any indemnities. No payment has been made to indemnify RSM during
or since the financial year.
21
D I R E C T O R S ’ R E P O R T ( c o n t i n u e d )
INSURANCE PREMIUMS
The Company paid a premium during the year in respect of a Director and Officer liability insurance policy, insuring the
Directors and Officers of the Company against a liability incurred as such a Director or 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, for audit and non-audit services
provided during the year are set out in note 23.
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 23 to 28 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.
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 2022.
Signed in accordance with a resolution of the directors:
Mr Michael Bowen
Non-Executive Chairman
30 September 2022
22
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 Chairman
Mr Keith Bowes
Managing Director
Mr Grant Davey
Non-Executive Director
Mr Mark Hanlon
Non-Executive Director
Ms Dixie Marshall
Non-Executive Director – Appointed 1 April 2022
Mr Michael Ball
Chief Financial Officer – Appointed 5 January 2022
Mr Brian Scott
Company Secretary – Appointed 24 March 2022
Mr Stuart McKenzie
Company Secretary – Resigned 24 March 2022
NOMINATION & REMUNERATION COMMITTEE
The Board of Directors of the Company are responsible for determining and reviewing remuneration policies for the directors
and executives. The Board was of the opinion that given the size of the Board for the majority of the financial year ended 30
June 2022, 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.
Effective 1 July 2022, the Board has resolved to establish a nomination and remuneration committee in recognition of the
increasing complexity in the Company’s activities as it progresses towards a restart of operations at Kayelekera, and in
recognition of the increased size of the Lotus Resources Board facilitating appropriate memberships for sub-committees.
Further information on the Boards role, responsibilities and membership is set out in Corporate Governance Statement.
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.
23
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 i n u e d )
REMUNERATION STRUCTURE (continued)
Employment and Consultancy Agreements
The Company has entered into employment or contractual agreements with its executives. 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 excludes any fringe benefits
charges related to employee benefits) 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. Executives do not receive any retirement benefits, other than statutory superannuation.
Component
Fixed remuneration
Managing Director - Keith Bowes – Appointed 15 February 2021
$400,000 Inclusive of superannuation effective 1 April 2022
(revised from $220,000 Inclusive of superannuation)
Contract duration
No fixed term
Termination
Statutory entitlements will be paid as required by law. Three months written notice.
If there is a material diminution in the Executives position within the Company, the
Executive is entitled to payment in lieu of twelve months’ notice in addition to statutory
entitlements and any unvested incentives will vest immediately in full.
Other benefits
A car park and mobile phone is provided in addition to statutory leave provisions.
Equity incentives
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. In the event of a change of control event, all unvested equity
incentives will immediately vest in full.
Component
Fixed remuneration
Chief Financial Officer – Michael Ball – Appointed 5 January 2022
$275,000 Inclusive of superannuation
Contract duration
No fixed term
Termination
Statutory entitlements will be paid as required by law. Three months written notice.
If there is a material diminution in the Executives position within the Company, the
Executive is entitled to payment in lieu of twelve months’ notice in addition to statutory
entitlements, subject to the limits imposed under the Corporations Act, and any
unvested incentives will vest immediately in full.
Other benefits
A car park and mobile phone is provided in addition to statutory leave provisions.
Other Equity incentives
The Executive is eligible to receive 250,000 zero exercise price options which vest upon
completion of 12 months service period and a further 250,000 zero exercise price
options which vest upon completion of 24 months service period.
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. In the event of a change of control event, all unvested equity
incentives will immediately vest in full.
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 ( c o n t i n u e d )
REMUNERATION STRUCTURE (continued)
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 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)
Mr Michael Bowen
Mr Grant Davey
Mr Mark Hanlon
Ms Dixie Marshall(i)
$75,000
$50,000
$50,000
$50,000
(i)
(ii)
Appointed 1 April 2022
Vested and exercised post reporting date.
Term of
Agreement
No fixed term
Notice
Period
Statutory
Options
3,000,000(ii)
No fixed term
Statutory
2,000,000(ii)
No fixed term
Statutory
2,000,000(ii)
No fixed term
Statutory
2,000,000
Non-Executive Directors have no entitlement to termination payment in the event of removal for misconduct or gross
negligence.
Zero exercised price options, as set out in the table above, were granted to non-executive directors as a joining bonus to
assist the company in securing candidates of the highest calibre and to assist in minimising the cash fees payable. The options
vest upon completion of 18 months service period and are not subject to any performance criteria.
Short-term and Long-term incentive
The Group adopted an incentive option plan on 28 November 2019 which was approved by shareholders at the 2019 Annual
General Meeting. 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 and seek to generate long term shareholder value.
Both short term incentives and long-term incentives were issued under the Lotus Resources Limited Option Plan in the 2022
financial year.
A one-off set of options were issued to the Managing Director, Executives and Senior Management during the 2022 financial
year 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.
Short-term incentives
A cash bonus payment was granted by the Board to the Managing Director and senior management relating to performance
for the 2021 financial year. The bonus related to the achievement of pre-determined performance targets for the
management of care and maintenance costs, growth in mineable resource and Restart Scoping Study results.
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 i n u e d )
REMUNERATION STRUCTURE (continued)
Short-term incentives (continued)
The Managing Director, Key Management Personnel and other employees were issued zero exercise priced options as part
of the short-term incentive (STI) for financial year 2022. Vesting for the options is contingent upon pre-determined
measurable financial and non-financial performance indicators over the twelve-month performance period ended 30 June
2022. A service vesting condition must also be met. Performance and the associated number of options to vest will be
assessed by the Board after the completion of the statutory audit.
Employees at Lotus (Africa) Limited will be rewarded under the short-term incentive by cash payment instead of options.
Long-term incentives
The Managing Director, Key Management Personnel and Senior Management were issued zero exercise priced options as
part of the long-term incentive (LTI) for financial year 2022. Vesting for the options is contingent upon pre-determined
measurable financial and non-financial performance indicators over a three-year performance period ending 30 June 2024.
A service vesting condition must also be met. Performance and the associated number of options to vest will be assessed by
the Board after the completion of the statutory audit for the financial year ended 30 June 2024.
REMUNERATION OF KEY MANAGEMENT PERSONNEL
Details of the nature and amount of the remuneration of the key management personnel of the Group are:
SHORT TERM
POST-EMPLOYMENT
SHARE-BASED
PAYMENTS
Salary &
fees
$
Non-
Monetary
$
Cash
Bonus
S
Termination
$
Superannuation
$
Options
$
Total
$
Fixed
Remuneration
%
Performance
Based
Remuneration
%
6,818
2,305
-
-
4,545
1,536
1,136
-
-
-
-
-
-
-
434,917
-
289,944
-
289,944
-
121,533
-
-
-
841,989
-
-
-
12,302
-
24,801
3,841
-
-
1,978,327
-
509,917
26,563
339,944
50,000
339,944
17,708
134,033
-
-
68,561
1,159,127
91,530
-
492,453
138,756
-
2,621,721
746,815
15%
100%
15%
100%
15%
100%
9%
-
-
100%
23%
100%
-
100%
100%
-
23%
100%
85%
-
85%
-
85%
-
91%
-
-
-
77%
-
-
-
-
-
77%
-
Non-Executive Directors
2022
Mr M Bowen (i)
2021
Mr Grant Davey
Mr M Hanlon (i)
Ms D Marshall (ii)
Mr J Sibley (iii)
Executive Directors
Mr K Bowes (iv)
Mr E Smirnov (v)
Other KMP
Mr M Ball (vi)
Total KMP
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
68,182
24,258
50,000
50,000
45,455
16,172
11,364
-
-
68,561
265,000
91,530
-
238,882
123,016
-
563,017
489,403
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,438
-
-
-
3,438
-
6,876
-
48,700
-
-
-
-
-
48,700
-
-
-
-
253,571
-
-
-
253,571
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Appointed 22 February 2021
Appointed 1 April 2022
Appointed 24 June 2020 - resigned 19 February 2021
Appointed 15 February 2021
Appointed 29 June 2020 - resigned 10 February 2021
Appointed 5 January 2022
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 i n u e d )
USE OF REMUNERATION CONSULTANTS
During the year, the Group did not use any remuneration consultants.
VOTING AND COMMENTS MADE AT THE COMPANY’S 2021 ANNUAL GENERAL MEETING
Lotus Resources Limited received 99.41% of “yes” votes on its remuneration report for the 2021 financial year. 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
2022
Held at
1 July 2021
Held at the
date of
appointment
Granted as
compensation
Exercised
Other
changes
Held at
date of
resignation
Held at
30 June
2022
Vested
during the
year
Mr Michael Bowen
Mr Keith Bowes
Mr Grant Davey
Mr Mark Hanlon
Ms Dixie Marshall(i)
Mr Stuart McKenzie(iii)
Mr Michael Ball(ii)
-
1,750,000
-
824,054
-
-
-
(i)
(ii)
(iii)
Appointed 1 April 2022
Appointed 5 January 2022
Resigned 24 March 2022
-
-
-
-
-
-
-
3,000,000
7,878,000
2,000,000
2,000,000
2,000,000
2,283,000
-
-
-
-
(824,054)
-
(1,000,000)
-
-
-
-
-
-
(1,283,000)
-
-
-
-
-
-
-
3,000,000
9,628,000
2,000,000
2,000,000
2,000,000
-
-
-
-
-
-
-
SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
2022
Mr Michael Bowen
Mr Keith Bowes
Mr Grant Davey
Mr Mark Hanlon
Ms Dixie Marshall(i)
Mr Stuart McKenzie(iii)
Mr Michael Ball(ii)
Held at
1 July 2021
2,250,000
2,250,000
16,148,626
3,175,946
-
475,000
-
(i)
(ii)
(iii)
Appointed 1 April 2022
Appointed 5 January 2022
Resigned 24 March 2022
Held at the
date of
appointment
Acquired at
market value
Received on
exercise of
options
-
-
-
-
-
-
-
-
-
1,400,000
500,000
-
-
-
-
-
824,054
-
-
-
Disposal
-
-
(15,599,084)
-
-
-
-
Other
Changes
Held at
30 June 2022
-
-2
175,509,4891
-
-
(475,000)
-
2,250,000
2,250,000
177,459,031
4,500,000
-
-
-
1 Following shareholder approval on 30 July 2021, 226,463,927 shares were issued to Kayelekera Resources Pty Ltd, an entity
related to non-executive director Grant Davey, in consideration for the Project interest acquired The shares were subject to
a 12 month escrow period which expired on 16 August 2022. As advised to the ASX on 26 July 2021, the Company has been
made aware of a claim by a third party to a 22.5% interest in the aforementioned shares issued. As such, 50,954,438 are
being held on trust until the matter is resolved and are not reflected in the balances reported above.
2 Mr Keith Bowes has a beneficial interest in 226,463,927 shares (in addition the number reported above) by virtue of him
holding an interest in Kayelekera Resources Pty Ltd, an entity related to non-executive director Mr Grant Davey, and from
which the Project interest was acquired.
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 $28,734 (30 June 2021: $115,464).
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 i n u e d )
Other key management personnel transactions with the Group (continued)
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 5%. The Company also uses Matador
Capital’s technical and project management expertise. During the year the Company incurred costs under this arrangement
totalling $290,064 (30 June 2021: $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 fees payment of $50,000 (30 June 2021: $50,000)
disclosed in the remuneration table above, he is paid a consulting fee of $100,000 (30 June 2021: $100,000) in relation to
government liaison and in country services.
There were no other related party transactions with key management personnel during the year.
Amounts owed to related parties
Mr Simon Andrew, former Managing Director of Lotus Resources Ltd, has asserted a claim in relation to salary and
superannuation and termination entitlements. The matter was settled post reporting date.
Thomson Geer, an entity associated with Mr Michael Bowen, was owed at reporting date $4,056 (30 June 2021: $11,572).
Matador Capital, an entity associated with Mr Grant Davey, was owed at reporting date $75,347 (30 June 2021: $17,358).
There were no other key management personnel transactions other than as disclosed above.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Additional Information
The Company aims to align Executive remuneration to the Company’s strategic and business objectives and the creation of
shareholder wealth. The table below shows measures of the Group’s financial performance over the last 5 years as required
by the Corporations Act 2001. However, these are not necessarily consistent with the specific measures in determining the
variable amounts of remuneration to be awarded to Key Management Personnel. As a consequence, there may not always
be a direct correlation between the statutory key performance measures and the variable remuneration rewarded.
2022
$
2021
$
2020
$
2019
$
2018
$
EBITDA
EBIT
(12,961,673)
(5,872,822)
(16,487,057)
(813,199)
(2,149,968)
(12,962,890)
(5,897,844)
(16,550,494)
(821,364)
(2,171,217)
Loss after Income Tax
(12,962,890)
(5,897,844)
(16,569,943)
(821,364)
(2,171,217)
The factors that are considered to affect total shareholders return are summarised below:
2022
2021
2020
2019
2018
Share price at end of the
year
Basic loss per share
21.5 cents
19 cents
7 cents
4.5 cents
0.7 cents
1.03 cents
0.72 cents
4.58 cents
0.82 cents
0.14 cents
[This is the end of the audited remuneration report.]
28
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 2022,
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 2022
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
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 Resources and the Board are committed to achieving and demonstrating the highest standards of corporate
governance. Lotus Resources has reviewed its corporate governance practices against the Corporate Governance Principles
and Recommendations (4th edition) published by the ASX Corporate Governance Council.
The 2022 corporate governance statement is dated as at 30 June 2022 and reflects the corporate governance practices in
place throughout the 2022 financial year. The 2022 corporate governance statement was approved by the Board on 30
September 2022. 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/.
30
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
fo r t h e ye ar en d ed 30 J u ne 2 02 2
Other gains
Corporate and administrative expenses
Care and maintenance costs
Exploration and evaluation expenses
Impairment charges
Depreciation charges
Share based payments expense
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
2022
$
Consolidated
2021
$
3
4(a)
4(b)
9
8
8
22
2,580,303
(2,818,023)
(3,542,955)
(4,695,630)
(1,242,547)
(1,217)
(3,242,821)
187,630
(2,310,140)
(3,370,818)
-
-
(620)
(403,896)
(12,962,890)
(5,897,844)
5
-
-
(12,962,890)
(5,897,844)
1,076,551
1,076,551
(697,835)
(697,835)
Total comprehensive loss for the year
(11,886,339)
(6,595,679)
Loss attributable to:
Non-controlling interests
Members of the parent
Total comprehensive loss attributable to:
Non-controlling interests
Members of the parent
(966,713)
(11,996,177)
(12,962,890)
(995,866)
(10,890,473)
(11,886,339)
(883,354)
(5,014,490)
(5,897,844)
(1,144,495)
(5,451,184)
(6,595,679)
Loss per share
Basic and diluted loss per share (cents)
26
(1.03)
(0.72)
The statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
31
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 Ju n e 20 2 2
Current Assets
Cash and cash equivalents
Other assets
Total Current Assets
Non-Current Assets
Plant and equipment
Exploration and evaluation assets
Other financial assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Other liabilities
Total Current Liabilities
Non-Current Liabilities
Other liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Note
Consolidated
2022
$
Restated
Consolidated
2021
$
6
7
8
9
10
12
13
14
4,876,370
894,801
14,751,569
739,003
5,771,171
15,490,572
4,230
46,279,048
14,552,735
1,409
59,798,200
13,572,826
60,836,013
73,372,435
66,607,184
88,863,007
1,746,244
6,731
7,351,143
9,104,118
625,023
13,907
2,671,220
3,310,150
14
15
-
42,728,847
7,006,832
56,201,656
42,728,847
63,208,488
51,832,965
66,518,638
14,774,219
22,344,369
Contributed equity
Reserves
Accumulated losses
Equity attributable to owners of the Company
Non-controlling interest
16
17
18
114,923,546
(30,991,816)
(68,391,981)
15,539,750
(765,530)
78,142,783
257,145
(56,441,844)
21,958,084
386,285
Total Equity
14,774,219
22,344,369
The above statement of financial position should be read in conjunction with the accompanying notes.
32
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
fo r t h e ye ar en d ed 30 J u n e 2 02 2
Consolidated
2022
Contributed
Equity
Share Based
Payment
Reserve
Option
Premium
Reserve
Foreign
Exchange
Reserve
Accumulated
Losses
Capital
Reserves
Non-Controlling
Interest
$
$
$
$
$
$
$
Total
Equity
$
Balance at 1 July 2021
78,142,783
46,040
1,361,434
(1,150,329)
(56,441,844)
Loss after income tax
Other comprehensive income
Total comprehensive loss for
the year
Transactions with equity
holders in their capacity as
equity holders
Shares issued to non-
controlling interest
Exercise of options
Expiry of employee share
scheme options
Share based payments
Placement of shares
-
-
-
35,101,909
898,869
-
605,485
174,500
-
-
-
-
-
(46,040)
2,637 335
-
-
-
-
-
-
-
-
-
-
(11,996,177)
1,105,704
-
1,105,704
(11,996,177)
-
-
-
-
386,285
22,344,369
(966,713)
(12,962,890)
(29,153)
1,076,551
(995,866)
(11,886,339)
-
-
-
-
-
-
-
(34,945,960)
-
(155,949)
-
46,040
-
-
-
-
-
-
-
-
-
898,869
-
3,242,820
174,500
Balance at 30 June 2022
114,923,546
2,637,335
1,361,434
(44,625)
(68,391,981)
(34,945,960)
(765,530)
14,774,219
The above statement of changes in equity should be read in conjunction with the accompanying notes.
33
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
fo r t h e ye ar 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
$
$
$
$
$
$
$
Balance at 1 July 2020
57,157,521
46,040
1,018,399
(713,635)
-
-
-
-
(436,694)
(51,427,354)
(5,014,490)
1,530,780
(883,354)
7,611,751
(5,897,844)
-
(261,141)
(697,835)
(436,694)
(5,014,490)
(1,144,495)
(6,595,679)
Loss after income tax
Other comprehensive income
Total comprehensive loss for
the year
Transactions with equity
holders in their capacity as
equity holders
Placement of shares
Exercise of options
Share based payments
Share issue costs
-
-
-
17,404,000
4,822,541
60,861
(1,302,140)
-
-
-
-
-
-
-
-
-
343,035
-
-
-
-
-
-
-
-
-
-
-
-
-
17,404,000
4,822,541
403,896
(1,302,140)
Balance at 30 June 2021
78,142,783
46,040
1,361,434
(1,150,329)
(56,441,844)
386,285
22,344,369
The above statement of changes in equity should be read in conjunction with the accompanying notes.
34
S T A T E M E N T O F C A S H F L O W S
fo r t h e ye ar en d ed 30 J u ne 2 02 2
Note
Consolidated
2022
$
Restated
Consolidated
2021
$
Cash flows from operating activities
Other income
Government stimulus measures received
Interest received
Payments to suppliers and employees
Payments for care and maintenance
Finance costs
Interest paid
Net cash (outflow) from operating activities
27
Cash flows from investing activities
Proceeds from sale of tenements
Payments for plant and equipment
Deferred acquisition costs
Other financial assets
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from the exercise of options
Share issue transaction costs
Repayment of lease liabilities
Net cash inflow from financing activities
249,008
-
37,606
(6,225,038)
(3,887,106)
(137,760)
(4)
(9,963,294)
2,196,001
(1,047,065)
(2,707,123)
(44,826)
(1,603,013)
174,500
898,869
-
-
1,073,369
-
55,950
4,566
(2,655,490)
(3,911,311)
-
-
(6,506,285)
-
(2,029)
(1,315,478)
-
(1,317,507)
17,404,000
4,822,541
(1,302,139)
(27,284)
20,897,118
Net (decrease)/increase in cash held
(10,492,938)
13,073,326
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
6
6
14,751,569
1,853,483
617,739
(175,240)
4,876,370
14,751,569
The above statement of cash flows should be read in conjunction with the accompanying notes.
35
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 2022 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.
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 2022. The
Consolidated Entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
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.
Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards. The principal accounting policies adopted in the preparation of the financial
report are set out either in the respective notes or below. They have been consistently applied unless otherwise stated.
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.
Historical cost convention
The financial report has been prepared under the historical cost convention, except for, where applicable, the revaluation of
financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other comprehensive
income, investment properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial report requires the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements,
are disclosed in note 19.
Going Concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business
activities and the realisation of assets and discharge of liabilities in the normal course of business.
As disclosed in the financial statements, the consolidated entity incurred a loss of $12,962,890 and had net cash outflows
from operating activities and investing activities of $9,963,294 and $1,603,013 respectively for the year ended 30 June 2022.
As at that date the consolidated entity had net current liabilities of $3,332,947.
The Directors believe that it is reasonably foreseeable that the consolidated entity will continue as a going concern and that
it is appropriate to adopt the going concern basis in the preparation of the financial report after consideration of the following
factors:
As disclosed in Note 32, on 2 September 2022, the Company completed an institutional placement to raise
$25,000,000 (before costs) to provide funding for the final instalment of the rehabilitation bond repayment in
March 2023, for care and maintenance activities at Kayelekera and corporate costs for a period of at least 18
months, for general working capital purposes and the costs of the offer; and
As disclosed in Note 14, deferred consideration of $3,000,000 included in other current liabilities, will be settled
by the issue of ordinary shares in Lotus Resources Limited on 13 March 2023.
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 ( c o n t i n u e d )
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 31.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Lotus Resources as at 30 June
2022 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.
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.
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.
Deferred tax assets and liabilities are always classified as non-current.
Foreign currency
Functional and presentation currency
Both the functional and presentation currency of the parent entity and the Group is Australian Dollars ($), with the exception
of Lotus Africa Limited whose functional currency is United State Dollars (US$).
Foreign currency transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates prevailing
at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
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 i n u e d )
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currency (continued)
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
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, its’ 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.
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.
Goods and Services Tax (and other similar taxes)
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 tax authority. 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 tax authority 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 tax authority are classified as operating cash flows. Commitments
and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
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 i n u e d )
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
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
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 i n u e d )
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Business combinations (continued)
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.
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.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
2. 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. 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.
During the financial year, the consolidated entity operated in two business segments and two geographical locations, being
the exploration, evaluation and development of Uranium assets in Africa, and exploration and evaluation of Other Minerals
in Australia.
Consolidated
30 June 2022
Uranium
Other Minerals
Corporate
Consolidated
30 June 2021
Uranium
Other Minerals
Corporate
Operating
Profit/(Loss)
$
(9,250,229)
2,375,763
(6,088,424)
(12,962,890)
Operating
Profit/(Loss)
$
(3,495,892)
-
(2,401,952)
(5,897,844)
Total
Assets
$
Total
Liabilities
$
61,309,485
-
5,297,699
66,607,184
50,221,699
-
1,611,266
51,832,965
Total
Assets
$
88,518,481
-
344,526
88,863,007
Restated
Total
Liabilities
$
66,047,460
-
471,178
66,518,638
Restatement
A $3,000,000 liability has been reclassified from the Other Minerals segment to the Uranium segment in the comparative
information for the period ended 30 June 2021.
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 i n u e d )
3. OTHER GAINS
Interest income
Australian tax office COVID relief
Gain on sale of tenement1
Other losses
Other income
Consolidated
2022
$
Consolidated
2021
$
37,606
-
2,375,763
(229,970)
396,904
2,580,303
4,566
55,950
-
-
127,114
187,630
1 During the period, the Company sold 100% of its non-core Hylea Project for consideration of $1,000,000 cash payment plus
shares in ASX listed company Sunrise Energy Metals Limited at fair value on receipt of $1,375,763. The sale resulted in a gain
on disposal of $2,375,763.
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.
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.
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 i n u e d )
4. EXPENSES
(a) Corporate and administrative expenses
Director fees and salaries
Accounting and company secretarial fees
Finance costs
Legal fees
Other administrative costs
(b) Care and maintenance costs
Processing costs
Engineering fees
Site services costs
Safety, health, environment and radiation
Maintenance costs
Security fees
Administration, corporate and expatriate expenditures
Consolidated
2022
$
Consolidated
2021
$
736,518
273,460
137,764
181,809
1,488,472
2,818,023
383,052
1,370,373
142,533
267,810
147,182
293,250
938,755
921,800
179,210
-
135,889
1,073,241
2,310,140
235,425
1,100,265
116,121
513,727
376,272
205,052
823,956
3,542,955
3,370,818
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the
period in which they are incurred.
5. TAXATION
Consolidated
2022
$
Consolidated
2021
$
The prima facie tax on loss before income tax is reconciled to the income tax
expense as follows:
Income tax expense
-
-
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting nor taxable profits; or
when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
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 i n u e d )
5. TAXATION (continued)
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
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 (the ‘head entity’) and its wholly owned Australian subsidiaries have formed an income tax
consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group
continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the ‘separate
taxpayer within group’ approach in determining the appropriate amount of taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither
a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
At 30 June 2022, the Group had significant unused tax losses predominately relating to the operating losses incurred under
Malawian tax law by subsidiary Lotus (Africa) Limited, the owner of the Kayelekera Uranium Mine. The availability of the
losses for utilisation to offset against future taxable incomes is subject to negotiation with the Malawian Government under
the Mine Development Agreement. No deferred tax assets have been recognised with respect to these losses because the
Directors do not believe it is appropriate to recognise the deferred tax asset at this point in time. This benefit will only be
obtained if:
the Group expects to derive 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
Consolidated
2022
$
Restated
Consolidated
2021
$
Cash at bank and on hand
4,876,370
14,751,569
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.
Restatement
Refer to note 11 for details of a restatement of the 30 June 2021 balance to reclassify restricted cash consisting 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 (30 June 2021: US$10,000,000).
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 i n u e d )
7. OTHER ASSETS
Prepayments
GST receivable
Security bond
Other receivables
Other assets
Consolidated
2022
$
Consolidated
2021
$
418,559
288,377
74,826
106,193
6,846
894,801
397,007
250,901
30,000
30,312
30,783
739,003
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.
The Group’s exposure to credit risk related to other receivables is disclosed in note 20.
Allowance for expected credit losses
The Group did not recognise any losses (2021: Nil) in profit or loss in respect of the expected credit losses for the year ended
30 June 2022.
8. PLANT AND EQUIPMENT
Furniture &
Fixtures
$
Plant &
Equipment
$
Motor
Vehicles
$
Total
$
At 30 June 2022 (Consolidated)
Cost
Accumulated depreciation and impairment
Net carrying amount
Year ended 30 June 2022 (Consolidated)
At 1 July 2021, net of accumulated depreciation
Additions
Depreciation charge for the year
Impairment charge for the year
At 30 June 2022, net of accumulated depreciation
At 30 June 2021 (Consolidated)
Cost
Accumulated depreciation and impairment
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
84,918
(80,688)
4,230
1,409
4,038
(1,217)
-
4,230
80,880
(79,471)
1,409
-
2,029
(620)
1,409
1,169,348
(1,169,348)
113,140
(113,140)
1,367,406
(1,363,176)
-
-
4,230
-
1,155,407
-
(1,155,407)
-
-
87,140
-
(87,140)
-
1,409
1,246,585
(1,217)
(1,242,547)
4,230
13,941
(13,941)
26,000
(26,000)
-
-
-
-
-
-
-
-
-
-
120,821
(119,412)
1,409
-
2,029
(620)
1,409
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 i n u e d )
8. PLANT AND EQUIPMENT (continued)
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.
Depreciation
Items of plant and equipment are depreciated using the straight line method over their estimated useful lives of each part
of an item of plant and equipment. The useful lives for each class of asset for the current period are as follows:
Camp furniture and vehicles
Motor vehicles
Furniture and equipment
IT Equipment
Tailings storage facility
Mine plant and equipment
3–5 years
5 years
3–5 years
3 years
9 years
9 years
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any
revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
As outlined in note 29 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 mine related 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.
Capital expenditures made whilst the mine is on care and maintenance are immediately impaired in full.
9. EXPLORATION AND EVALUATION ASSETS
Consolidated
2022
$
Consolidated
2021
$
Exploration and evaluation expenditure carried forward in respect of areas of
interest (net of amounts written off)
46,279,048
59,798,200
Reconciliation
Carrying amount at the beginning of the year
Assets acquired
Exploration and evaluation expenditures
Provision for impairment
Change in estimates provision for rehabilitation and closure costs (note 15)
Movement in exchange rates
Carrying amount at the end of the year
59,798,200
33,843
4,695,630
(4,695,630)
(18,455,993)
4,902,998
46,279,048
65,056,336
-
-
-
-
(5,258,136)
59,798,200
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.
As a result of the previously recorded impairment upon placing the mine on care and maintenance, any new exploration and
evaluation expenditures are being impaired. Expenditures in the current year include $2,600,412 of expenditures on the
various technical studies and Restart Definitive Feasibility Study.
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 i n u e d )
10. OTHER FINANCIAL ASSETS
Security deposits
Consolidated
2022
$
Consolidated
2021
$
14,552,735
13,572,826
Security deposits consist 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 (30 June 2021: 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.
Restatement
Refer to note 11 for details of a restatement of the 30 June 2021 balance to reclassify restricted cash consisting 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 (30 June 2021: US$10,000,000).
11. RESTATEMENT
Current Assets – Cash and Cash Equivalents
Balance Reported
Reclassification of restricted cash
Restated balance
Non-Current Assets – Other Financial Assets
Balance reported
Reclassification of restricted cash
Restated balance
Consolidated
2021
$
28,324,395
(13,572,826)
14,751,569
Consolidated
2021
$
-
13,572,826
13,572,826
The balances above were restated to reclassify restricted cash consisting 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 (30 June 2021:
US$10,000,000).
12. TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
Consolidated
2022
$
Consolidated
2021
$
495,263
1,250,981
1,746,244
268,144
356,879
625,023
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
The Group’s exposure to credit and liquidity risks related to trade and other payables are disclosed in note 20.
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 i n u e d )
13. PROVISIONS – CURRENT
Annual leave provision
Consolidated
2022
$
Consolidated
2021
$
6,731
13,907
Provisions
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.
14. OTHER LIABILITIES
Environmental bond – current
Deferred consideration – current1
Total current
Environmental bond – non – current
Deferred consideration – non-current
Total non-current
Environmental bonds
Opening balance – 1 July
Repayment of environmental bond
Reclassification of liability to current
Foreign currency movement
Closing balance – 30 June
Consolidated
2022
$
Consolidated
2021
$
4,351,143
3,000,000
7,351,143
-
-
-
2,671,220
-
2,671,220
4,006,832
3,000,000
7,006,832
Current
Non-current
2,671,220
(2,740,916)
4,006,832
414,007
4,351,143
4,006,832
-
(4,006,832)
-
-
1Deferred consideration of $3,000,000 worth of ordinary shares in Lotus Resources Limited to be issued on the 13 March
2023. In addition, Lotus (Africa) Limited 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 Lotus (Africa) Limited to fund the environmental bond in
favour of the Government of Malawi (Environmental Bond). The repayment schedule is set out in note 29.
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 i n u e d )
15. PROVISIONS – NON-CURRENT
Consolidated
2022
$
Consolidated
2021
$
Rehabilitation and closure provision
42,728,847
56,201,656
Reconciliation – Non-current provisions
Opening balance – 1 July
Additional provision recognised
Decrease in provision for closure cost
Foreign currency movements
Closing balance – 30 June
56,201,656
-
(18,455,993)
4,983,184
42,728,847
61,427,529
-
-
(5,225,873)
56,201,656
The Group has obligations to dismantle and remove certain items of property, plant and equipment and to restore and
rehabilitate the land on which they sit. 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.
A provision is raised for the estimated cost of settling the rehabilitation and restoration obligations existing at balance date,
discounted to present value using an appropriate pre-tax discount rate. Where the obligation is related to an item of
property, plant and equipment, its cost includes the present value of the estimated costs of dismantling and removing the
asset and restoring the site on which it is located. Costs that relate to obligations arising from waste created by the
production process are recognised as production costs in the period in which they arise.
The provisions are reassessed at least annually. A change In any of the assumptions used to determine the provisions could
have a material impact on the carrying value of the provision.
As part of the work performed for the Kayelekera Restart Definitive Feasibility Study (DFS), a new closure cost estimate was
prepared. The cost estimate was prepared by expert consultants considering the closure and rehabilitation costs of the
Kayelekera mine using the base case mine design and mine plan detailed in the DFS, and managements estimate of the likely
timing of the expenditures. Costs were inflated using long term inflation rates applicable to the expected currency
denomination that the outflows are expected to be influenced by. The future value was then discounted to present value
using the long-term risk-free rate that best matched the currency and timing of the expected outflows.
The resulting adjustment to the provision was adjusted against the related exploration and evaluation asset.
The Company also has in place a cash backed environmental performance bond of $14,552,735 (US$10,000,000) as outlined
in note 10. 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.
16. CONTRIBUTED EQUITY
Fully paid ordinary shares
Consolidated
2022
$
Consolidated
2021
$
114,923,546
78,142,783
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 i n u e d )
16. CONTRIBUTED EQUITY (continued)
2022
Number of
Shares
2021
Number of
Shares
2022
$
2021
$
Movements during the year:
Opening balance
Issue of shares – capital raising
Issue of shares to employees
Issue of shares to consultant
Exercise of options
Exercise of options – share based
payments
Transaction with minority
interest
Share issue costs
Closing balance
954,718,792
1,900,000
535,713
300,000
19,846,721
3,000,000
226,463,927
-
1,206,765,153
672,326,050
161,300,000
529,224
-
120,563,518
-
-
-
954,718,792
78,142,783
174,500
101,785
90,000
898,869
413,700
35,101,909
-
114,923,546
57,157,521
17,404,000
60,861
-
4,822,541
-
-
(1,302,140)
78,142,783
Ordinary shares are classified as equity. 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.
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.
17. RESERVES
Share based payment reserve
Capital reserve
Option premium reserve
Foreign exchange reserve
Movement in reserves
Share based payment reserve
Opening balance
Share based payment expense
Transferred to share capital
Transferred to retained losses
Closing balance
Capital reserve
Opening balance
Shares issued to non-controlling interest
Closing balance
49
Consolidated
2022
$
Consolidated
2021
$
2,637,335
(34,945,960)
1,361,434
(44,625)
(30,991,816)
46,040
-
1,361,434
(1,150,329)
257,145
46,040
3,242,281
(604,946)
(46,040)
2,637,335
-
(34,945,960)
(34,945,960)
46,040
-
-
-
46,040
-
-
-
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 i n u e d )
17. RESERVES (continued)
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)
Consolidated
2022
$
Consolidated
2021
$
1,361,434
-
1,361,434
1,018,399
343,035
1,361,434
(1,150,329)
1,105,704
(44,625)
Number
44,854,463
26,169,000
(22,846,721)
-
-
48,176,742
2022
2.39
1.47
(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
Share-based payments reserve
This reserve is used to record the value of equity-settled share-based payments provided to employees and directors as part
of their remuneration.
Capital reserve
This reserve is used to record the value of equity instruments issued to a non-controlling interest as part of the acquisition
of the additional interest in the Kayelekera Uranium Mine. Refer to note 29 for additional information.
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
No options lapsed during the year.
Option expired
No options expired during the year.
Foreign currency translation reserve
The foreign currency translation reserve records exchange rate differences on translating foreign operations.
18. ACCUMULATED LOSSES
Accumulated losses at the beginning of the year
Loss for the year
Transfer from share-based payments reserve
Accumulated losses at the end of the year
Consolidated
2022
$
Consolidated
2021
$
(56,441,844)
(11,996,177)
46,040
(51,427,354)
(5,014,490)
-
(68,391,981)
(56,441,844)
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 i n u e d )
19. CRITICAL 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 report. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors it believes to be reasonable under the circumstances. The
resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
(refer to the respective notes) within the next financial year are discussed 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 the consolidated entity will commence commercial
production in the future, from which time the costs will be amortised in proportion to the depletion of the mineral resources.
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. In addition, costs are only
capitalised that are expected to be recovered either through successful development or sale of the relevant mining interest.
Factors that could impact the future commercial production at the mine include the level of reserves and resources, future
technology changes, which could impact the cost of mining, future legal changes and changes in commodity prices. To the
extent that capitalised costs are determined not to be recoverable in the future, they will be written off in the period in
which this determination is made.
Rehabilitation provision
A provision has been made for the present value of 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.
20. 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.
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 i n u e d )
20. FINANCIAL RISK MANAGEMENT (continued)
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.
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)
Other financial assets
Carrying Amount
Consolidated
2022
$
Consolidated
2021
$
4,876,370
113,039
14,552,735
19,542,144
14,751,569
61,095
13,572,826
28,385,490
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.
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 2022
Carrying
amount
Contractual
cash flows
1 year
2-5 years
>5 years
Financial Liabilities
Trade and other payables
Other liabilities
(1,746,244)
(7,357,874)
(1,746,244)
(7,357,874)
(1,746,244)
(7,357,874)
(9,104,118)
(9,104,118)
(9,104,118)
-
-
-
-
-
-
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 i n u e d )
20. FINANCIAL RISK MANAGEMENT (continued)
Liquidity risk (continued)
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)
-
(7,006,832)
(10,316,982)
(10,316,982)
(3,310,150)
(7,006,832)
-
-
-
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.
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
2022
$
Consolidated
2021
$
19,429,105
-
28,324,395
-
19,429,105
28,324,395
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 2021.
Interest rate risk
Financial instruments with interest rate
Financial assets
Financial liabilities
Consolidated
2022
+100 basis points
-100 basis points
Profit
$
Equity
$
Profit
$
Equity
$
194,291
-
194,291
-
(194,291)
-
(194,291)
-
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 i n u e d )
20. FINANCIAL RISK MANAGEMENT (continued)
Interest rate risk (continued)
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)
-
The weighted average effective interest rate on variable rate instruments was 0.83% (2021: 0.52%).
Fair value measurements
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers
between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value
measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where
applicable, with external sources of data.
The Directors consider that the carrying amounts of financial assets and financial liabilities recorded in the financial
statements approximate their fair values.
21.
CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital are to safeguard the ability to continue as a going concern, so that it can
continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may return capital to
shareholders, pay dividends to shareholders, issue new shares or sell assets
22.
SHARE BASED PAYMENTS
Share-based payment accounting policy
Equity-settled and cash-settled share-based compensation benefits are provided to Key Management Personnel and
employees.
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 measured at fair value on grant date. Fair value is independently determined using
either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option,
the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not
determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account
is taken of any other vesting conditions.
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 i n u e d )
22.
SHARE BASED PAYMENTS (continued)
Share-based payment accounting policy (continued)
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.
Share-based payment transactions
Share based compensation benefits are provided to employees via the Group’s incentive plans. The incentive plans consist
of short term and long-term incentives plans for Executive Directors, other Executives and senior management and the short-
term incentive plan for all other employees. The equity instruments used for the Group incentive plans are zero exercise
priced options. Information relating to these plans is set out in the Remuneration Report and below.
The following tables illustrate the number and weighted average fair value of, and movements in, options relating to share-
based payments during the year.
Outstanding at the beginning of the year
Granted during the year
Vested and exercised during the year
Outstanding at the end of the year
Options No.
30 June 2022
Weighted
average fair
value
-
26,169,000
(3,000,000)
23,169,000
-
$0.187
$0.138
$0.194
Below are options granted during the period where the vesting criteria did not contain any market conditions. The Black-
Scholes-Merton model was used to determine the estimated fair value of those options.
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 i n u e d )
22.
SHARE BASED PAYMENTS (continued)
Share-based payment transactions (continued)
Options
Number
648,000
1,406,000
615,000
942,500
3,000,000*
3,000,000*
3,000,000*
3,000,000*
7,000,000
2,000,000
Grant date
Expiry date
Exercise Price
Spot Price at
Grant Date
Dividend
Yield
Risk-free
Interest Rate
Fair Value at
Grant Date
29/11/2021
14/12/2021
29/11/2021
14/12/2021
26/08/2021
26/08/2021
26/08/2021
26/08/2021
26/08/2021
01/04/2022
29/07/2024
14/12/2024
29/07/2026
14/12/2026
1/01/2024
10/02/2024
1/01/2024
10/02/2024
22/02/2024
31/03/2025
$0.00 each
$0.00 each
$0.00 each
$0.00 each
$0.00 each
$0.00 each
$0.00 each
$0.00 each
$0.00 each
$0.00 each
$0.310
$0.285
$0.310
$0.285
$0.170
$0.170
$0.170
$0.170
$0.170
$0.370
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
0.91%
0.91%
0.75%
0.72%
0.91%
0.91%
0.91%
0.91%
0.91%
2.35%
$0.310
$0.285
$0.310
$0.285
$0.109
$0.109
$0.138
$0.138
$0.170
$0.370
* These represent options granted that had a market based vesting criteria related to a share price target, a trinomial barrier
valuation was performed to estimate the fair value.
Below are options granted during the period that had market based vesting criteria related to performance against a per
group. A Monte-Carlo simulation was performed to estimate the fair value.
Options
Number
Grant date
Expiry date
Exercise Price
Spot Price at
Grant Date
Dividend
Yield
Risk-free
Interest Rate
Fair Value at
Grant Date
615,000
942,500
29/11/2021
14/12/2021
29/07/2026
14/12/2026
$0.00 each
$0.00 each
$0.310
$0.285
Nil
Nil
0.75%
0.72%
$0.279
$0.277
Share based payments expense
Consolidated
2022
$
Consolidated
2021
$
3,242,821
403,896
The previous period share based payments expense comprises:
options with a fair value of $343,035 that were issued as part of the fee arrangement for corporate advisory
services provided; and
shares to the value of $60,861 that were issued to certain employees in lieu of annual leave entitlements.
23.
AUDITOR’S REMUNERATION
The following amounts were paid or payable for services provided by the auditors of the Group and its related practices.
Audit and review services:
RSM Australia Partners
- audit and review of financial reports
Ernst & Young Malawi
- audit of financial report
Consolidated
2022
$
Consolidated
2021
$
56,000
19,290
75,290
50,000
19,236
69,236
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 i n u e d )
24. RELATED PARTY DISCLOSURES
(a) Ultimate parent
Lotus Resources Limited is the ultimate Australian entity.
(b) Subsidiaries
Interests in subsidiaries are set out in note 30.
(c) Key management personnel 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
Share based payments
2022
$
618,593
24,801
-
1,978,327
2,621,721
2021
$
489,403
3,841
253,571
-
746,815
(d) Loans to related parties
No loans were advanced to related parties during the reporting year (2021: Nil).
(e) Amounts owed to related parties
As at the reporting date, $79,403 were owing to related parties (2021: $34,898) 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 $28,734. There is a balance of $4,056 (2021: $11,572) owing to
Thomson Geer as at 30 June 2022 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 $290,064 (2021: $269,008). 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 $75,347 (2021: $17,358) owing to Matador Capital as at 30 June 2022 in relation to the provision of
these services.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
25. COMMITMENTS
Exploration Project commitments
Commitments for mining license/tenement rentals and expenditure commitments due within one year total $51,347 (2021:
$13,736)
26. EARNINGS PER SHARE
Consolidated
2022
$
Consolidated
2021
$
Reconciliation of earnings to profit or loss:
Loss after income tax used for basic and dilutive EPS
(11,996,177)
(5,014,490)
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 i n u e d )
26. EARNINGS PER SHARE (continued)
Consolidated
2022
No.
Consolidated
2021
No.
Weighted average number of ordinary shares outstanding during the
year used in calculating basic EPS
1,167,267,583
820,557,319
Weighted average number of ordinary shares outstanding during the
year used in calculating dilutive EPS
1,167,267,583
820,557,319
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.
27. RECONCILIATION OF CASH FLOWS USED IN OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the year
Adjustments for:
Gain on sale of tenements
Depreciation
Share based payments – contractors
Share based payments – employees
Impairment of property, plant and equipment
Foreign currency translated difference
Adjusted operating loss before changes in working capital
Change in other assets
Change in trade and other payables
Net cash used in operating activities
28. CONTINGENT LIABILITIES
Consolidated
2022
$
Consolidated
2021
$
(12,962,890)
(5,897,844)
(2,196,001)
1,217
1,546,483
1,696,337
1,242,547
65,093
(10,607,214)
(133,879)
777,799
(9,963,294)
-
25,022
343,035
60,861
-
(163,080)
(5,632,006)
(127,564)
(746,715)
(6,506,285)
Bank Guarantee
The Company had provided a bank guarantee of $20,000 to the Department of Mines and Petroleum for a tenement bond.
The tenements were sold during the year and the guarantee cash collateral was returned.
Kayelekera Uranium Project
At 30 June 2022, 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 royalty on
revenue to the Malawi Government (the rate is subject to ongoing negotiations with the Government), a 3.5% royalty on
revenue capped at $5.0 million to Paladin Energy and an uncapped 0.75% royalty on revenue to Power Resources Inc.
Liability to make royalty payments only arises upon the restart of production from Kayelekera.
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 i n u e d )
29. 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:
$200,000 in cash, plus 90,000,000 ordinary shares in Lotus Resources Limited to be issued on completion (Initial
Consideration);
a royalty of 3.5% of gross returns at the Kayelekera mine up to a maximum of $5.0 million in favour of the Paladin Energy
Limited ; and
$3,000,000 worth of ordinary shares in Lotus Resources Limited to be issued on the third anniversary of Completion,
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).
Environmental Bond
In addition to the consideration set out above, subsidiary Lotus (Africa) Limited, 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 Energy Limited to Lotus
(Africa) Limited to fund the environmental bond in favour of the Government of Malawi (Environmental Bond). The following
repayment schedule was agreed:
i.
ii.
iii.
iv.
US$4,000,000 on completion (13 March 2020);
US$1,000,000 on the date that is not later than 1 year after completion (13 March 2021);
US$2,000,000 on the date that is not later than 2 years after completion (13 March 2022); and
US$3,000,000 on the date that is not later than 3 years after completion (13 March 2023).
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 paid
Ordinary Shares – Initial Consideration
Ordinary shares issued on third anniversary – Deferred Consideration
Total purchase consideration
The fair value of assets and liabilities recognised as a result of the acquisition are outlined below.
Cash and cash equivalents
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
59
2020
$
200,000
3,060,000
3,000,000
6,260,000
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
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 i n u e d )
29. ACQUISITION OF KAYELEKERA URANIUM PROJECT (continued)
As prescribed in the accounting standards, 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.
Increase in Ownership Interest
During the financial year, the Company increased its ownership interest in the Kayelekera Uranium Project from 65% to 85%,
by acquiring the remaining 23.5% interest in Lily Resources Pty Ltd, with the Government of Malawi holding the remaining
15% interest.
The additional interest was acquired upon the Company exercising its buy out right under the agreement entered when the
Company acquired its initial 65% interest. The interest was purchased from a director related entity following shareholder
approval on 30 July 2021. In consideration for the additional ownership interest, the Company issued 226,463,927 ordinary
shares to the vendor, estimated at fair value of $35,101,909 based on the market price of the equity instruments at grant
date.
30. 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
Malawi
Ownership
Interest
2022
%
100%
100%
100%
85%
Ownership
Interest
2021
%
100%
100%
76.5%
65%
During the financial year, the Company increased its shareholding in Lily Resources Pty Ltd to 100% which resulted in the
ownership in Lotus (Africa) Limited increasing to 85%. Refer to note 29 for further details.
31. 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
60
2022
$
2021
$
(53,962,918)
(53,962,918)
(13,891,899)
(13,891,899)
5,293,468
15,094,684
5,297,699
18,096,093
(4,611,266)
(471,177)
(4,611,266)
(3,471,177)
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 i n u e d )
31. PARENT ENTITY DISCLOSURES (continued)
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
2022
$
2021
$
686,434
14,624,916
114,923,545
4,651,147
(118,888,258)
78,142,781
1,407,475
(64,925,340)
686,434
14,624,916
Guarantees
Lotus Resources Limited has no guarantees other than as disclosed in note 28.
Other Commitments and Contingencies
Lotus Resources Limited has no other commitments and contingencies other than as disclosed in notes 25 and 28.
32. 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 11 August 2022 Lotus Resources released the Restart Definitive Feasibility Study for the Kayelekera Uranium
Project. Refer to the ASX announcements on this date and the Directors Report for more details.
On 2 September 2022, the Company completed an institutional placement issuing 104,166,667 new shares to raise
$25,000,000 (before costs) to provide funding to progress the development of the Kayelekera Uranium Project,
including finalising the Mine Development Agreement, advancing offtake negotiations, Front End Engineering and
Design (FEED) and project financing prior to a final investment decision. The capital raise will also provide funding
for the final instalment of the rehabilitation bond repayment in March 2023, for care and maintenance activities
at Kayelekera and corporate costs for a period of at least 18 months, for general working capital purposes and the
costs of the offer.
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 2022, it is not practicable to estimate the potential impact, positive or negative,
after the reporting date. The situation continues to change 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.
8,076,408 unlisted options were exercised at $0.04 per options for gross proceeds before costs of $323,056.
7,000,000 unlisted zero exercise price options held by non-Executive Directors vested and were exercised post
reporting date. 625,000 options held by the Managing Director at an exercise price of $0.04 were exercised post
balance date. A further 3,000,000 zero exercise priced options held by the Managing Director vested post balance
date.
61
D I R E C T O R S ’ D E C L A R A T I O N
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 2022
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 2022.
62
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 2022, 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 2022 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
The Group has capitalised exploration and evaluation
expenditure with a carrying value of $46,279,048 as at
30 June 2022.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resource, the Group is required
to assess at each reporting date if there are any
triggers for impairment which may suggest the
carrying value exceeds the recoverable value.
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
• Determining 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;
• determining 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
$42,728,847 relating to the estimated future cost of
mine closure and rehabilitation.
We considered this to be a key audit matter due to the
significant management judgments and estimates
involved in assessing the provision of asset retirement
obligation including:
• The determination of costs to be incurred in future
years and its timing;
• The complexity involved in the quantification of the
provision based on areas disturbed; and
• The methodology used to calculate the provision
amount to ensure compliance with Australian
Accounting Standards.
Our audit procedures included:
• Obtaining management
• Assessing the Group’s accounting policy for
compliance with Australian Accounting Standards;
of
capitalised exploration and evaluation expenditure
by area of interest and agreeing to general ledger;
• Assessing whether the right to tenure of the area
reconciliation
of interest was current;
• Testing a sample of additions to supporting
the amounts
documentation and ensuring
capitalised during the year are in compliance with
the Group’s accounting policy and relate to the
area of interest;
• Assessing
and
evaluating management’s
assessment that no indicators of impairment
existed for those tenements where the Group has
rights of tenure;
• Through discussions with the management and
relevant supporting documentation,
reading
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; and
• Assessing the appropriateness of the related
financial statements disclosure.
Our audit procedures included:
• Assessing the Group’s accounting policy for
compliance with Australian Accounting Standards;
• Testing key inputs such as inflation rate, discount
rate, timing of rehabilitation, area of disturbances
and unit costs to supporting documentation;
performed
by
the work
management’s expert, including the competency
and objectivity of the expert;
• Assessing
of
• Assessing the mathematical accuracy of the
model used to calculate the provision;
• Assessing the movement in the provision has been
in accordance with Australian
accounted
for
Accounting Standards; and
• Assessing the appropriateness of the related
financial statements disclosure.
Key Audit Matter
How our audit addressed this matter
Share-based payments
Refer to Note 22 in the financial statements
The Group
payment
entered
arrangements with key management personnel,
advisors, and employees. The Group’s recognised
share-based payments of $3,242,821 for the year
ended 30 June 2022.
share-based
We considered this to be a key audit matter due to:
• The complexity of the accounting required to
determine the grant date fair value of these
instruments; and
• The estimates and judgements applied to inputs
of valuation models, including the likelihood of
vesting conditions being met, and the appropriate
valuation methodology to apply.
Our audit procedures included:
• Reading
the
terms and conditions of
the
instruments issued;
• Assessing the valuation methodology to ensure in
compliance with AASB 2 Share based payments;
• Assessing the mathematical accuracy of the
underlying model;
• Testing the inputs to the valuation model for
key
evaluating
the
by
reasonableness
assumptions used;
• Recalculating
the value of
the share-based
payment expense to be recognised and reserve
balance for accuracy and factoring in any vesting
conditions; and
• Assessing the appropriateness of the related
financial statements disclosure.
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 2022 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 2022.
In our opinion, the Remuneration Report of Lotus Resources Limited, for the year ended 30 June 2022, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 30 September 2022
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 2022.
(a) Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
18
20
KAYELEKERA RESOURCES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
PERPETUAL CORPORATE TRUST LTD
BNP PARIBAS NOMINEES PTY LTD
SACHEM COVE SPECIAL OPPORTUNITIES FUND LP
BNP PARIBAS NOMS PTY LTD
TR NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
WOODROSS NOMINEES PTY LTD
SANDHURST TRUSTEES LTD
MRS PAMELA JULIAN SARGOOD
MCNEIL NOMINEES PTY LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
BUTTONWOOD NOMINEES PTY LTD
NETWEALTH INVESTMENTS LIMITED
MR DARREN CRAIG GLOVER
MR BENJAMIN LEIGH HARPER
NETWEALTH INVESTMENTS LIMITED
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
Units
% Units
175,509,489
13.24
121,435,534
100,618,548
50,954,438
50,580,667
48,561,178
37,093,538
35,600,000
29,899,706
28,405,269
26,115,231
25,568,989
19,000,000
16,866,645
15,894,520
12,347,204
12,075,138
11,904,762
11,904,762
9.16
7.59
3.84
3.81
3.66
2.80
2.68
2.25
2.14
1.97
1.93
1.43
1.27
1.20
0.93
0.91
0.90
0.90
11,841,287
842,176,905
483,831,323
0.89
63.51
36.49
67
The names of the twenty largest holders of unlisted options are:
Rank
Name
Units
% Units
1
2
3
4
5
5
5
8
9
10
11
12
13
13
15
16
16
18
19
19
TR NOMINEES PTY LTD
MR KEITH BOWES
MS DIXIE INA MARSHALL
MIKENTY PTY LTD
MR ADAM LEE KILEY
MR CHRISTOPHER BRUCE KNEE
MRS RUTH MARY MCKENZIE + MR STUART ANDREW MCKENZIE
MR THEO CORNELIUS KEYTER
TSI CAPITAL PTY LTD
HAWTHORN GROVE INVESTMENTS PTY LTD
MR JACOBUS CHARL CILLIERS
MR SAMUEL LEWIS MCCARDEL
MR CHRISTOPHER BRUCE KNEE
MR STUART MCKENZIE + MS RUTH MCKENZIE
PERSHING AUSTRALIA NOMINEES PTY LTD
BEAUMY PTY LTD
MR LINDSAY BETTIOL
ADVENTURE CAPITAL PTY LTD
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
MR EMRE BASAR
10,000,000
7,878,000
2,000,000
1,125,000
1,000,000
1,000,000
1,000,000
989,000
707,000
642,857
578,000
500,000
472,000
472,000
401,787
401,786
401,786
241,072
160,715
160,715
32.00
25.21
6.40
3.60
3.20
3.20
3.20
3.17
2.26
2.06
1.85
1.60
1.51
1.51
1.29
1.29
1.29
0.77
0.51
0.51
Totals: Top 20 holders of Unlisted Options
Total Remaining Holders Balance
(b) Distribution of equity security holders
30,131,718
1,114,662
91.69
8.31
Ordinary Shares
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Total holders
Units
603
1,199
868
2,059
666
5,395
205,715
3,638,121
6,768,745
74,449,084
1,240,946,563
1,326,008,228
% of Issued
Capital
0.02
0.27
0.51
5.61
93.59
100.00
There are 937 holders of a less than marketable parcel of shares (as at 29 September 2022, a less than marketable parcel is
2,174 shares), representing a total of 781,829 shares.
68
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
2
0
1
19
21
43
(c) Substantial Shareholders
2
0
9,000
962,558
30,274,820
31,246,380
% of Issued
Capital
0.00
0.00
0.03
3.08
96.89
100.00
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
(d) Restricted Securities
There are nil restricted securities as at 29 September 2022.
(e) Voting Rights
The voting rights attaching to ordinary shares are:
Number of Shares
175,509,489
%
13.24
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
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 13/03/2023, EXERCISABLE AT $0.04
UNL OPTS EXP 14/12/2024
UNL OPTS EXP 14/12/2026
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 29/07/2024
UNL OPTS EXP 29/11/2026
UNL OPTS EXP 31/03/2025
TOTAL HOLDINGS
3,000,000
643,102
6,000,000
4,434,278
1,406,000
1,885,000
5,000,000
2,500,000
2,500,000
648,000
1,230,000
2,000,000
69
(h) Unquoted Securities >20% Holders
Class
Holder
Number
UNL OPTS EXP 01/01/2024
MR ADAM LEE KILEY
MR CHRISTOPHER BRUCE KNEE
MR STUART ANDREW MCKENZIE
UNL OPTS EXP 04/10/2022, EXERCISABLE AT $0.04 MR SAMUEL LEWIS MCCARDEL
UNL OPTS EXP 10/02/2024
C P EQUITIES PTY LTD
MR KEITH BOWES
1,000,000
1,000,000
1,000,000
500,000
143,102
%
33.33
33.33
33.33
77.75
22.25
6,000,000
100.00
UNL OPTS EXP 13/03/2023, EXERCISABLE AT $0.04 MIKENTY PTY LTD
1,125,000
25.37
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
UNL OPTS EXP 29/07/2024
UNL OPTS EXP 29/11/2026
MR KEITH BOWES
MR KEITH BOWES
UNL OPTS EXP 31/03/2025
MS DIXIE INA MARSHALL
UNL OPTS EXP 14/12/2024
MR THEO CORNELIUS KEYTER
TSI CAPITAL PTY LTD
UNL OPTS EXP 14/12/2026
MR THEO CORNELIUS KEYTER
TSI CAPITAL PTY LTD
5,000,000
100.00
2,500,000
100.00
2,500,000
100.00
648,000
100.00
1,230,000
100.00
2,000,000
100.00
424,000
283,000
565,000
424,000
30.16
20.13
29.97
22.49
(i)
Interest in Mining Tenements
As at 30 September 2022, the Company’s tenement interests are shown in the table below.
Tenement
Ownership
Project
Location
ML0152 - Kayelekera
EPL418 - Chilumba
EPL489 - Nthalire
EPL502 - Juma-Miwanga
EPL417 - Rukuru
EL595 - Livingstonia
EL583 - Livingstonia West
85%
85%
85%
85%
85%
85%
85%
Kayelekera
Kayelekera
Kayelekera
Kayelekera
Kayelekera
Kayelekera
Kayelekera
Mapambo (Formerly EPL0225)
Under Application
Kayelekera
Malawi
Malawi
Malawi
Malawi
Malawi
Malawi
Malawi
Malawi
70