Lotus Resources Annual Report 2024 l 1
Annual Report
2024
ABN 38 119 992 175
2 l Lotus Resources Annual Report 2024
Directors
Mr Michael Bowen
Non-Executive Chairman
Mr Mark Hanlon
Non-Executive Director
Ms Dixie Marshall
Non-Executive Director
Mr Keith Bowes
Executive Director
Mr Grant Davey
Executive Director
Chief Executive Officer
Mr Gregory Bittar
Company Secretary
Ms Catherine Anderson
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
RSM Australia Partners
Level 32, Exchange Tower 2
The Esplanade
Perth WA 6000
Corporate Directory
Share Registry
Computershare Investor Services Pty Ltd
Level 17, 221 St George’s Terrace
Perth, Western Australia, 6000
Telephone: + 61 8 9323 2000
Facsimile: + 61 8 9323 2033
Securities Exchange
ASX Limited
Level 40
Central Park, 152-159
St Georges Terrace
Perth, Western Australia, 6000
ASX Code: LOT
OTCQX®
Level 12, 300 Vesey Street
New York, NY 10282
OTC Code: LTSRF
Image: Top of the stockpiles looking over the Kayelekera plant
Lotus Resources Annual Report 2024 l 3
Contents
Letter from the Chairman and Managing Director
4
Directors’ Report
6
Review of Activities
6
Sustainability and ESG
18
Risk Management
20
Directors’ Profiles
29
Annual Statement of Ore Reserves and Mineral Resources
37
Audited Remuneration Report
43
Auditor’s Independence Declaration
62
Corporate Governance Statement
63
Statement of Profit or Loss and Other Comprehensive Income
65
Statement of Financial Position as at 30 June 2024
66
Statement of Changes in Equity for the Year Ended 30 June 2024
67
Statement of Cash Flows for the Year Ended 30 June 2024
69
Notes to the Financial Statements
70
Consolidated Entity Disclosure Statement
107
Directors’ Declaration
108
Independent Auditor’s Report
109
ASX Additional Information
114
4 l Lotus Resources Annual Report 2024
Letter from the Chairman
and Executive Director
The Company has made significant progress
in advancing its core objectives during year
with our activities focusing around two key
areas; continuing the advancement of the
Kayelekera Project in Malawi towards the
restart of production and a resource growth
strategy with the completion of the acquisition
of the Letlhakane Project in Botswana through
the ASX listed company A-Cap Energy by way
Scheme of Arrangements in November 2023.
The Mine Development Agreement with the
Government of Malawi was finalised in late
July 2024 representing a key milestone in
the Company’s development plans for the
Kayelekera Project. The agreement provides
for a long-term stabile fiscal regime, in addition
to specifying legal protections and non-fiscal
government support, providing confidence to
our investors.
A front-end engineering and design program for
Kayelekera is nearing completion will be used
assess the cost and timing associated with
specific items required to achieve accelerated
production from Kayelekera.
We continued to strengthen relationships
with utilities as part of its offtake contracting
strategy as well as advancing financing options
including the appointment of debt advisors to
assist the Company to assess debt funding
options. This has culminated in the recent
announcement by the Company of its first
binding sales agreement and a term sheet for a
total of 1.5 million lbs of uranium for delivery 2026
– 2029 at an escalated fixed price with Curzon
Uranium and North American power utility PSEG
Nuclear LLC, respectively, in addition to a US$15
million unsecured loan facility from Curzon to
provide part of overall funding for the Kayelekera
restart.
The acquisition of the Letlhakane Project in
the premier mining jurisdiction of Botswana
provides the company with the platform to
become a long-term supplier in the uranium
market with the project having one of
the largest undeveloped mineral resources
globally. Following acquisition, the Company
has updated the mineral resource estimate as
part of its plan to focus on higher grade zones
with the best prospects of economic extraction
in addition to undertaking a significant infill
drilling
program
and
undertaking
various
process optimisation workstreams.
This past year has also seen continued
positive sentiment in the nuclear and uranium
industries, as the world continues its transition
away from fossil fuels to a zero-carbon emission
future. The uranium market has stabilised after
the significant increases in prices (especially
evident in spot prices) over the end of 2023 and
into the start of 2024. The term market has risen
from the mid- US$50s/lb to the low US$80s/lb
over the financial year. Market fundamentals
pointing to an existing and growing supply gap
indicate that further price increases are likely
to occur which is essential to incentivise new
production to enter the market.
The Company released its third Sustainability
Report in November 2023 and will release its
fourth report later this year. The report forms
a key part of Lotus annual corporate reporting
suite and demonstrates the Company’s clear
commitment becoming a leader in the industry
in this regard and to leave a lasting positive
legacy in the jurisdictions that we operate.
The latest 2023 Sustainability Report was
prepared in reference to the Global Reporting
Initiative Sustainability Standards and further
progress was made towards reporting against
the Taskforce for Climate-related Financial
Disclosure (TCFD) framework, an important
global
framework
for
understanding
and
mitigating financial implications of climate
change. Lotus participated in its first S&P Global
Corporate Sustainability Assessment (CSA)
and achieved an S&P Global ESG Score of 37 out
of 100, which placed the Company in the 64th
percentile in the MNX Metals & Mining industry
in February 2024.
Dear Shareholders
On behalf of the Board of Directors for Lotus Resources Limited, we are delighted
to present the Annual Report for the financial year ended 30 June 2024.
Lotus Resources Annual Report 2024 l 5
During the period, Lotus strengthened the
management team with the appointment
of several highly experienced executives.
Following execution of the Mine Development
Agreement and as Lotus transitions towards
project delivery, a restructure of the Board
and
management
team
was
undertaken
which the Managing Director Keith Bowes
has assumed the role of Technical Director to
focus on advising the Board and supporting
the management team in the execution of the
Kayelekera Project and development of the
Letlhakane Project.
Grant Davey has transitioned to Executive
Director and Greg Bittar has been appointed
Chief Executive Officer. Both Executives will
bring their significant experience in project
development, operations and capital markets
to take the Company forward.
Mr Grant Davey
Executive Director
Mr Michael Bowen
Non-Executive Chairman
On behalf of the Lotus Board and management team, we would also like to thank the Malawi
government, for their continued support and the faith they have shown in the Kayelekera
Project. We look forward to continuing working closely together in the years ahead.
Finally, we 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 and Letlhakane in the future.
Image: Kayelekera mine access road
6 l Lotus Resources Annual Report 2024
Directors’ Report
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 or
Lotus Resources) and its subsidiaries (the consolidated entity or Group) for the year ended 30 June
2024, and the auditor’s report thereon.
REVIEW OF ACTIVITIES
Summary of Key Achievements
During the financial year ended 30 June 2024, Lotus advanced its core strategic objectives of readying
Kayelekera for the restart of production to meet the growing supply gap in the utilities reported fuel
coverage profile and of increasing the global uranium mineral resource and project pipeline through the
acquisition of the Letlhakane Project. The significant achievements during the year and up to the date
of this report included the following:
Substantial
increase
in
the
global
uranium Mineral Resource through the
acquisition of Letlhakane with completion
of the merger with A-Cap Energy Limited
in November 2023 to underpin potential
multi-decade production profile.
Finalisation of the Mine Development
Agreement with the Government of Malawi
in late July 2024 ensuring the Kayelekera
Project will operate under a stable fiscal
regime
and
provides
the
necessary
confidence for investors.
Enhanced the commercial and technical
team with the appointment of highly
experienced executives and a restructure
of the Board and Management team to
transition to the project delivery phase for
Kayelekera.
Strengthened
existing
relationships
with major global utilities and uranium
traders to secure offtake agreements in line
with the Company’s strategy culminating in
the recent announcement by the Company
of its first binding sales agreement and
a term sheet for a total of 1.5 million lbs
of uranium for delivery 2026 – 2029 at an
escalated fixed price with Curzon Uranium
and North American power utility PSEG
Nuclear LLC, respectively, in addition to a
US$15 million unsecured loan facility from
Curzon to provide part of overall funding for
the Kayelekera restart.
Progressing
a
preferred
financing
strategy
for
the
redevelopment
of
Kayelekera including the appointment of a
highly experienced external debt advisor.
Advanced plans to connect to the Malawi
national grid with selection of the route,
progression of approvals and design work.
Participation in its first S&P Global
Corporate Sustainability Assessment
(CSA) and achieved an S&P Global ESG
Score which placed the Company in the
64th percentile in the MNX Metals & Mining
industry in February 2024.
Further progress towards alignment
of the Group’s Environmental, Social
and
Governance
(“ESG”)
reporting
against the Global Reporting Initiative
(GRI) Sustainability Standards and the UN
Sustainable Development Goals (SDGs)
with the release of the third annual
Sustainability Report in November 2023.
Ongoing care and maintenance activities
at Kayelekera to ensure site plant and
infrastructure is in a good state for restart
of production, including undertaking water
treatment following the wet season in Malawi.
Letlhakane Mineral Resource Estimate
update undertaken post-acquisition to
produce a more economically derived
resource that has also formed the basis
for the ongoing infill drill program being
used to convert Inferred Resources to M&I
Resources.
Front End Engineering Design (FEED)
program nearing completion and will
be used to assess the cost and timing
associated with specific items required
to achieve accelerated production from
Kayelekera.
Lotus Resources Annual Report 2024 l 7
Enhanced Board and Management Team
During the period Lotus strengthened its management team with several appointments of highly
experienced executives. A restructure of the Board and management team was also undertaken
following execution of the Mine Development Agreement to reflect the transition into the project
delivery phase at Kayelekera.
Keith Bowes has assumed the role Technical Director where he will advise the Board and support the
management team in the execution of the Kayelekera Project and the development of the Letlhakane
Project.
Greg Bittar was appointed as Chief Executive Office on 9 August 2024. Greg is an accomplished
resources and energy executive with significant experience in equity capital markets, debt advisory,
project development studies as well as project evaluation. He joined Lotus in an advisory role in May
2024 focussing on corporate and commercial areas including project financing, offtake, investor
relations and company strategy.
Grant Davey has transitioned into an Executive Director role bringing his significant management,
project development and operations experience.
Michael da Costa was appointed as Chief Operations Officer in May 2024. Mike is focussing on operational
readiness, contract mining preparation and mining startup along with Government relations, OH&S and
ESG. He will also oversee the development activities at Letlhakane.
Warren King has been appointed Kayelekera Project Director – Execution. Warren is an engineer
with 25 years’ experience specialising in project execution, plant refurbishment and construction,
commissioning and optimisation.
Directors’ Report
REVIEW OF ACTIVITIES
Image: Mine Development Agreement signing ceremony with the Malawian government negotiating team including the
Minister of Mines the Honourable Ms Monica Chang’anamuno and Head of the Presidential Delivery Unit Ms Janet Banda
8 l Lotus Resources Annual Report 2024
Uranium Market
The uranium market has stabilised after the significant increase in spot prices experienced through the
end of 2023 and into 2024 as a result of increasing demand related to new reactors builds, reactor life
extensions and reactor restarts, specifically in Japan. At the same time, concerns over supply issues
stemming from the Russian invasion of Ukraine and delays in some mine start-ups and ramp ups have
raised concerns in the market. Financial institutions, physical funds and traders were also active in the
market during the second and third quarters of the financial year 2024 which has put further pressure
on the spot uranium price.
The uranium spot price started the financial year at around US$55/lb rising to levels around US$107/
lb before stabilising in a range of US$80/lb to US$90/lb, with an apparent floor of US$80/lb. The spot
price is still very volatile, and this is driven by the low volumes traded, with the total spot volume traded
during the financial year being significantly lower than the average seen over the past decade.
The spot market is dominated by the financial institutions, physical funds and traders, while the term
market which is more indicative of the fundamentals of the supply and demand scenarios is where the
utilities and producers are most active. The term uranium price has steadily risen through the period
with increases in the pricing seen in most months. Long-term prices quoted by market analysts indicate
price ranges in the low of US$80s/lb, although the mid-term price is considerably higher (above US$90/
lb). Any contracting done by producers will generally be in reference to this term price.
Directors’ Report
REVIEW OF ACTIVITIES
8 l Lotus Resources Annual Report 2024
Lotus Resources Annual Report 2024 l 9
Kayelekera 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 equivalent (including the Livingstonia resource)
and historically produced approximately 11Mlbs U3O8 equivalent over a five-year period from 2009-
2014, before ceasing production in 2014 and entering into care and maintenance due to sustained low
uranium prices.
Figure 1: Location of the Kayelekera Uranium Mine and Livingstonia Uranium Tenements
Directors’ Report
REVIEW OF ACTIVITIES
10 l Lotus Resources Annual Report 2024
Mine Development Agreement (MDA or Agreement)
In late July 2024, Lotus’ Malawian registered subsidiary Lotus (Africa) Limited executed a Mine
Development Agreement with the Government of Malawi for Kayelekera, a major milestone in the
redevelopment for this Project. This Agreement ensures the mine will operate under a stable fiscal
regime and provides the necessary confidence to investors.
The MDA demonstrates the commitment by the Government of Malawi to develop the local mining
industry, a key pillar of Malawi 2063, their new 40-year economic vision.
The Agreement secures a stable fiscal regime for the operations with a guaranteed Stability Period of
10 years during which the Project will not be subject to any detrimental changes to the fiscal regime
in addition to specifying legal protections and non-fiscal government support under which Lotus will
develop and operate Kayelekera. Lotus has benchmarked comparable fiscal regimes elsewhere in
informing its MDA discussions with the Government of Malawi.
Front -End Engineering and Design (FEED)
Lotus commenced the Kayelekera FEED program in March 2024. The FEED study is nearing completion
at the time of this report at which point, it will be used to assess the cost and timing associated with
specific items required to achieve the accelerated production from Kayelekera.
Connection to Malawi National Grid
Lotus continued to advance the negotiations for a Power Implementation Agreement and Power Supply
Agreement with the Energy Supply Company of Malawi (ESCOM) which will facilitate the connection of
Kayelekera to the Malawi national grid and allow the mine to access cheaper power, a critical component
of lower operating costs reported in the Restart DFS. Connection to the Malawi national grid, where
power is sourced predominantly from hydro, is a critical part of Lotus low carbon strategy.
Lotus collaborated with ESCOM on the proposed new transmission line routes that will connect
Kayelekera to the substation in Karonga which is approximately 50 kilometres from the mine. As
part of this process, the Company, ESCOM and the selected consultants commenced a community
engagement process. The Company also submitted the Environmental Project Brief to the Malawian
Environmental Protection Agency (MEPA) and have received the Terms of Reference required to
complete the permitting process which consists of developing environmental and social management
plans for the affected areas along the new route. The Company’s consulting engineers have also
continued with the design work for the substation upgrades and transmission lines which will then
generate a more accurate cost estimate for this portion of the project.
Directors’ Report
REVIEW OF ACTIVITIES
Lotus Resources Annual Report 2024 l 11
Directors’ Report
REVIEW OF ACTIVITIES
Financing and Offtake
Lotus continued to engage with multiple nuclear utilities regarding potential offtake agreements,
including participating in formal Requests for Proposals (RFPs) and “off market” discussions with a
number of utilities and other offtakers. Lotus is finding utilities are increasingly receptive to its proposed
offtake terms, with the market effectively rising to the pricing level Lotus has been prescribing in its
submissions for the last 12 months.
Following a competitive process, Lotus appointed Orimco as debt advisor for Kayelekera to assist in the
financing process and help the Group determine the optimal financing strategy moving forward. Orimco
was appointed as a result of their global reach and very broad experience across a range of projects,
commodities, and transactions. The team has an extensive experience in arranging and managing debt,
hedging and offtake transactions for both resource companies and financiers. Importantly, Orimco has
a demonstrated track record, knowledge and experience within the African mining sector and uranium
projects.
Lotus’s objective in appointing a debt advisor is to consider cost effective debt as a portion of the re-
start capital and working capital requirements.
This has culminated in the recent announcement by the Company of its first binding sales agreement
and a term sheet for a total of 1.5 million lbs of uranium for delivery 2026 – 2029 at an escalated fixed
price with North American power utility PSEG Nuclear LLC and Curzon Uranium in addition to a US$15
million unsecured loan facility from Curzon to provide part of overall funding for the Kayelekera restart.
The Group’s offtake contracting strategy will work in conjunction with its financing strategy as Lotus
seeks to balance the need for revenue certainty from debt providers and the desire to be exposed to
the uranium price for equity investors.
Care and Maintenance Activities
The Company continues to critically review activities and associated costs at Kayelekera to ensure the
site care and maintenance programs and costs are optimised.
The primary focus for the ongoing activities is the core requirements of:
1.
Ensuring compliance with all regulatory requirements;
2. Maintaining the equipment on site so as to minimise restart costs;
3. Ensuring security of the assets at site; and
4. Management of water on site to control the discharge of water to the environment during the wet
season, in accordance with licence conditions and global standards.
In anticipation of the FY2024 wet season, the site team also executed geotechnical works associated
with the plant terrace and the return water dam 2 (RWP2) to repair some damage resulting from the
previous wet season. In addition to installing a gabion basket system, significant work was also carried
out on the water drainage/diversion system, specifically around the plant and RWP2 so as to minimise
the ingress of water into the ground water system.
12 l Lotus Resources Annual Report 2024
Government and Community Relations: Malawi Ministerial Site Visit
Malawi Mining Minister, the Honourable Monica Chang’anamuno, and members of her team, along with
members of local government, and His Royal Highness Paramount Chief Dr Kyungu, visited Kayelekera
on 26 February 2024. This was the Minister’s first visit to Kayelekera.
The Minister and her team received an update on ongoing activities on site before undertaking a tour
of the plant and project. The Minister noted that her visit to Kayelekera provided an opportunity to
see existing infrastructure and how this may accelerate the restart of operations. She commented
positively on the Environmental, Social and Water Resources Management programs at Kayelekera and
expressed her wish that other stakeholders should learn from Kayelekera’s work programs and that she
will encourage educational tours to Kayelekera for other players in the Malawian mining sector.
Lotus also welcomed back to site the Paramount Chief, His Royal Highness Dr Kyungu. Paramount Chief
Kyungu has been a strong advocate for Kayelekera’s re-start and provided positive feedback to the
Malawian Government delegation.
As part of the Malawian Mines and Minerals Act, a company that has a large-scale mining licence, such
as Lotus 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 a minimum
of 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’ aim to achieve a balance
between economic, environmental and social performance. The qualified communities and Lotus have
agreed terms with the CDA awaiting ratification by the Government of Malawi in accordance with the
Mines and Minerals Act.
Acquisition of A-Cap Energy
In July 2023, Lotus and A-Cap Energy Limited (A-Cap, now Lotus Marula Pty Ltd) announced an
agreement to merge via a Scheme of Arrangement. The rationale for the merger was to form a leading
African focused uranium player with significant scale and resource by combining a production-ready
asset, Kayelekera, and a future larger scale growth asset, Letlhakane, located in Botswana, one of the
world’s top mining jurisdictions.
Under the Share Scheme, A-Cap shareholders received 1 new Lotus share for every 3.54 A-Cap shares
held on 7 November 2023. Botswana regulatory approvals were received by the Minister of Mines
and Energy and Competition and Consumer Authority in October 2023. The transaction saw Lotus
shareholders holding approximately 79% of the merged group with A-Cap shareholders holding the
remaining approximately 21%.
On 7 November 2023, the acquisition was implemented with all of the ordinary shares and listed options
of A-Cap being acquired by Lotus through the issuance of 361,722,889 ordinary shares of Lotus.
As part of the acquisition Lotus acquired 100% of the Letlhakane Uranium Project in Botswana and a
55% interest in the Wilconi Nickel Cobalt Project in Western Australia.
Directors’ Report
REVIEW OF ACTIVITIES
Lotus Resources Annual Report 2024 l 13
Directors’ Report
REVIEW OF ACTIVITIES
Letlhakane Project Overview
The Letlhakane Uranium Project in Botswana is one of the world’s largest undeveloped uranium deposits.
It consists of a significant Joint Ore Reserve Committee (JORC) 2012 Mineral Resource Estimate of
118.2Mlbs (155.3Mt at 345ppm U3O8)1. The mining license has been in place since 2016 and provisional
surface rights have been granted as well as water abstraction rights and rights to install water bores.
The asset is located close to high quality infrastructure with a sealed highway, rail line and power line
running past the mining license boundary all of which make significant contributions to keeping the
capital cost of future developments low. The asset is located within 50 kilometres of Francistown, a
major population centre in Botswana.
ZIMBA BWE
NA MIBIA
GABORONE
PROJECT
AREA
Palapye
Serowe
Orapa
Letlhakane
Francistown
Selebi Phikwe
Maun
Karoo Basin
Main Roads
BO T S W A N A
BOTSWANA
Figure 2: Location of the Letlhakane Uranium Project
Botswana is a mining friendly jurisdiction, consistently ranking highly in the Fraser Institute Perceptions
Index (for the latest report for 2023 it was rated the top mining jurisdiction in Africa and the fourth
worldwide out of 86 jurisdictions).
1 Refer to Lotus ASX announcement dated 9 May 2024.
14 l Lotus Resources Annual Report 2024
Updated Letlhakane Mineral Resources Estimate
Letlhakane is a large-scale uranium resource with potential higher-grade zones as identified in Lotus’s
due diligence work. Following acquisition, Lotus commissioned an optimised pit constrained Mineral
Resource Estimate (MRE) for the Letlhakane deposit that takes into account economic factors resulting
in the release of an updated MRE in May 2024.
Letlhakane’s revised resources are now reported as having “reasonable prospects of eventual economic
extraction”, or RPEEE, and lie within pit shells defined by uranium price, mining and processing cost as well
as other criteria, including losses in mining and processing. Letlhakane is shaping up to be a large-scale
project, with Figure 3 illustrating the extensive size of the deposit which stretches 10km north-south and
8km east-west. Figure 3 also shows the various resource domains and optimised pit shell outlines.
Directors’ Report
REVIEW OF ACTIVITIES
Figure 3: Letlhakane Uranium Project Orebodies and Potential Pits
Lotus Resources Annual Report 2024 l 15
Directors’ Report
REVIEW OF ACTIVITIES
Letlhakane Infill Drill Program and Other Workstreams
A significant infill drill program of up to 15,000m of reverse circulation and 1,500m of diamond drilling for
approximately 170 drill holes was initiated with 2 RC rigs mobilised to site in May 2024 and a diamond
drill rig mobilised in July 2024. The drill program primarily aims to upgrade Inferred Resources currently
contained within the Mineral Resource Estimate (71%) to Indicated and Measured status. The bulk
of the Inferred resources lie within the Gorgon West and Serule West areas and represent the main
targets for the current drill program. Lotus drill program plan to bring the drill spacing down from 400m
centres to 200m centres at Gorgon West and from 200m centres to 100m centres at Serule West.
Lotus has also planned a minimum 10 drill holes to test isolated high-grade intercepts from historical
drilling west of the existing resource base.
The results of this drill program will be used to prepare an updated Mineral Resource Estimate, including
increased Measured and Indicated Resources.
Lotus’s work programs for Letlhakane also includes Process Optimisation Work comprising an ore
beneficiation assessment to determine the potential for upgrading the ore prior to feeding to the main
processing plant, preliminary metallurgical test work, including leaching and downstream processing,
and definition of the preferred processing flowsheet based on results from these.
A Scoping Study based on mine planning, acid modelling and a selected processing route to identify a
suitable production rate and a defined development pathway is also underway. Lotus has completed an
initial technical assessment of the Letlhakane Project in Botswana that considered the historical test
work completed, including the 2015 Feasibility Study, along with additional work programs subsequently
undertaken by the previous owners. The key cost and value drivers that will drive project economics
include:
1.
Head grade of the mill feed material;
2. Acid consumption and acid management;
3. Uranium process plant recoveries;
4. Mining techniques that minimise unit costs; and
5. Final product quality.
Lotus aims to determine a more effective processing route to improve upon the 2015 Feasibility Study
project economics, which envisaged a two-stage heap leach process. As Letlhakane is located within
a wider regional geology known as the Karoo Sandstones that Kayelekera also sits in, Lotus intends
to leverage its work at Kayelekera including beneficiation and acid management to further refine the
Letlhakane processing.
16 l Lotus Resources Annual Report 2024
Wilconi Nickel-Cobalt Project Overview
As part of the acquisition of A-Cap, Lotus also acquired a 55% ownership in the Wilconi Nickel-Cobalt
Project, near Wiluna in Western Australia. The project has a mineral resource estimate of 570,000
tonnes of contained nickel metal and 29,500 tonnes of contained cobalt metal, both valuable battery
materials2.
The Board determined during the period that it would divest the Group’s 55% interest in the non-core
Wilconi Nickel-Cobalt Project. The decision was made to maintain the Group’s focus on the Kayelekera
and Letlhakane uranium projects. Lotus acquired 100% of A-Cap, including its 55% stake in the Wilconi
Joint Venture, in late in 2023. The asset was seen as non-core to this deal. Analysis undertaken by Lotus
in following the acquisition to determine Wilconi’s potential for other minerals, including lithium or rare
earths, did not show prospectivity. As a result of the poor economics of the nickel project in the current
market, the lack of alternative minerals and ongoing significant holding costs associated with the
tenements, the decision was made to withdraw, effective 30 May 2024. Refer to note 32 of the financial
statements for more information.
Directors’ Report
REVIEW OF ACTIVITIES
2 Refer to A-Cap ASX Announcement 5 June 2023.
16 l Lotus Resources Annual Report 2024
Image: Letlhakane Infill Drilling Program
Lotus Resources Annual Report 2024 l 17
Directors’ Report
REVIEW OF ACTIVITIES
Health & Safety
Kayelekera and Letlhakane3 have achieved 3,648 and 236 consecutive days, respectively without any
Lost Time Injuries (LTI) with a total of 3,835,866 and 26,217 person hours worked, respectively as at 30
June 2024 (2023: 3,571,351 person hours worked) and 264,535 and 26,217 person hours, respectively
for the year ended 30 June 2024 (2023: 224,364 person hours). During the financial year ended 30
June 2024, there were no reportable health and safety incidents for both Kayelekera and Letlhakane.
The 12-month rolling Total Recordable Injury Frequency Rate (TRIFR) of the Group was at 1.98, including
Kayelekera and Letlhakane at 2.27 and zero, respectively (2023: 0.89), while the Lost Time Injury
Frequency Rate (LTIFR) remains at zero (2023: zero) for the Group.
Site staff 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.
Safety performance at Kayelekera was below expectation with 6 first aid injuries and 1 restricted work
injury resulting in the TRIFR target not being met for the financial year.
The incidents that caused these injuries were thoroughly investigated, the basic causes determined,
and corrective actions developed to prevent re-occurrence. Management attended pre-work tool
box talks in all areas on site and re-enforced the requirements for good pre-work planning and risk
assessment, proper communication during the completion of a task, and the importance of maintaining
focus and concentration when executing a task.
3 Letlhakane statistics report from acquisition 7 November 2023.
In Letlhakane, a significant safety program was initiated prior to
commencement of the drill programme which emphasised safety among
personnel and regarding the drill rigs and support equipment with a number
of safety measures being enforced (which includes leading indicators from
assessment of risk, planned task observation, toolbox safety meetings and
Take 5 safety checklists).
Image: Jacob Chabwera our resident doctor at Kayelekera
18 l Lotus Resources Annual Report 2024
Directors’ Report
SUSTAINABILITY AND ESG
Lotus Vision
To be a responsible uranium producer, building strong local communities, a
safe and healthy work environment and making a positive contribution to a
carbon free future.
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 volatile 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. Nuclear energy 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.
Lotus released the Company’s FY2023 Sustainability Report in November 2023. This Report is Lotus’
third annual Sustainability Report and forms part of Lotus’ annual corporate reporting suite. The report
provided a summary of our approach to creating sustainable value for our stakeholders and included
an overview of our ESG management systems and performance of our Kayelekera Uranium Project
in Malawi, and our corporate activities in Perth, WA. Importantly, a new milestone for the Company
was achieved, with the Report being prepared with reference to the Global Reporting Initiative (GRI)
Sustainability Standards.
This step change in reporting reflects Lotus’ ongoing commitment to transparency, accountability
and continuous improvement in ESG performance. Additionally in line with global expectations, Lotus
is continuing to develop its climate change mitigation strategy for the recommencement of mining at
Kayelekera, and the Report provided an update of the Company’s progress towards its alignment with
the Task Force on Climate related Financial Disclosures (TCFD) reporting framework.
Image: Kayelekera community meeting
Lotus Resources Annual Report 2024 l 19
Directors’ Report
SUSTAINABILITY AND ESG
During FY2024, Lotus commenced the transition from TCFD reporting process to the Australian
Sustainability Reporting Standards (ASRS) - Disclosure of Climate-related Financial Information. The
ASRS framework is based on the IFRS S2 climate related disclosures and builds upon the existing annual
financial reporting structures, by introducing a mandatory ‘sustainability report’ to Annual Reporting.
The objective of the ASRS is to ensure that entities disclose their exposure to material climate-related
financial risks and opportunities, encompassing aspects such as greenhouse gas emissions, climate-
related improvement plans, net zero plans and governance processes.
Lotus is in the process of undertaking a climate scenario risk assessment, with the results planned to
be included Lotus’ FY2024 Sustainability Report.
This year, Lotus participated in its first S&P Global Corporate Sustainability Assessment (CSA) and
achieved an S&P Global ESG Score of 37 out of 100, which placed the Company in the 64th percentile in
the MNX Metals & Mining industry in February 2024.
Sustainability Governance
Sustainability at Lotus is governed through the Board who has formed an ESG Committee to assist it to
fulfil its responsibilities in relation to environmental, social and governance matters arising out of the
Company’s activities and sustainability reporting.
The ESG Committee focuses on the Company’s strategy and reporting and legal and regulatory
compliance in sustainability matters. It also focusses on performance in the areas of sustainability risk
management, health, safety, radiation, environment, social responsibilities, sustainable development
and disclosure. To further strengthen Lotus’ ESG performance and to support the ESG Committee,
Lotus has engaged an ESG Manager who has the responsibility to lead the Company’s Sustainability
Strategy.
Community Engagement
The Company continues to support the Kayelekera and Letlhakane local communities. In Malawi, we
support surrounding towns by sponsoring teachers at the local schools, providing power and water
to the Kayelekera Village Health Centre, undertaking mosquito spraying programs at the local village
to reduce malaria in the community, grading roads following the wet seasons to Juma and the Chiteka
school to improve access, as well as providing seedlings to the local villages to restore vegetation cover.
Lotus also supports local Malawian suppliers and prioritises sourcing local labour wherever possible.
In Botswana, our community engagement program is relatively new. We have commenced engaging with
our local communities and from this engagement we have identified our first ESG initiative opportunity.
This opportunity involved providing essential school furniture, uniforms, and textbooks to the Gojwane
Primary School, Serule Primary School, and Bonwatlou Community Junior Secondary School. These
contributions have contributed to improving the learning environment of the schools and have boosted
the morale and academic opportunities for the students.
20 l Lotus Resources Annual Report 2024
Directors’ Report
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
and tolerance” 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 has established an Audit and Risk Committee to which it has delegated responsibility for
implementing and overseeing the risk management system. This Committee reports to the Board on its
activities and the Board reviews risk information each meeting in accordance with the risk management
framework.
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 has implemented 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.
Key Business Risks
This section describes the key business risks of Lotus.
•
Uranium Prices and Market
The uranium market is sensitive to a range of external economic and political factors beyond the
Company’s control which have the potential to impact uranium demand and pricing. These factors
include global uranium supply and demand trends, nuclear and other technology development,
political developments in uranium producing and nuclear power generating countries, unanticipated
destabilising global events or industry related events, general economic conditions, currency exchange
rates and other factors.
Nuclear energy is in competition with other sources of energy and is the subject of negative public
opinion by some parties due to political, technological and environmental factors which have the
potential to impact future uranium prices.
The uranium mining industry is competitive and there is no guarantee that a profitable market may exist
for the sale of uranium produced from the Company’s assets.
•
Security of Tenure
All tenements in which the Group has interest are subject to maintenance and renewal conditions
which may be subject to discretion from the relevant regulatory authority. There is a risk that the Group
may lose title to, or interests in, its tenements, or that such tenements may be subjected to additional
conditions or obligations which may require increased funding or that the Group may not be able to
comply with.
Lotus Resources Annual Report 2024 l 21
•
Mineral Resources and Ore Reserves
The Mineral Resources and Ore Reserves reported by Lotus are estimates only and no assurance can be
given that any particular recovery level will be realised. Lotus’ estimates are prepared in accordance with
the JORC 2012 reporting standard but represent expressions of judgment from qualified professionals
based on knowledge, experience, industry practice and resource modelling. Therefore, such estimates
are necessarily imprecise and depend to some extent on interpretations, which may prove to be
inaccurate or require adjustment or revision. Should the Group encounter mineralisation of formations
different to those predicted by past drilling, sampling and similar examinations, resource estimates
may have to be adjusted or revised. Adjustments or revisions could impact the Group’s development
and mining plans and resultant production levels and unit costs.
Due to the uncertainty which may attach to inferred mineral resources there is no assurance that
inferred mineral resources will be upgraded to measured and indicated mineral resources or proven
and probable ore reserves.
Ore reserves rely on interpretations from the mineral resource in addition to other operating assumptions
including mining and processing efficiencies, mining and processing recoveries and operating costs.
The basis of these assumptions may change which may require revision to these estimates and actual
results may differ from these assumptions.
•
Speculative Nature of Mineral Exploration and Development
The nature of exploration and development of mineral resources is speculative and by nature
contains elements of significant risk which even a combination of experience, knowledge and careful
evaluation may not be able to be adequately mitigated. As such there is no guarantee of successful
commercialisation which depends upon factors such as the global uranium market including demand
and price, the discovery and/or acquisition of economically recoverable reserves, access to experienced
and skilled exploration and operations personal, access to adequate capital for project development,
securing and maintaining title to interests, obtaining regulatory consents and approvals necessary for
the conduct of mineral exploration, development and production and securing plant and equipment
given the high competition for such resources in the current period of global exploration and mining
activity.
There is no assurance that any exploration of the current or future interest held by the Group will result
in the discovery of economic uranium deposits. The Group is performing future activities such as front-
end engineering and design which may have different results to previous studies including the 2022
Restart DFS.
•
Political Risks, Government Actions and Foreign Jurisdictions
The Group’s foreign operations are exposed to various levels of political, economic and other risks and
uncertainties associated with operating in a foreign jurisdiction. These risks and uncertainties vary from
country to country and include, but are not limited to, currency exchange rates, high rates of inflation,
labour unrest, renegotiation or nullification of existing concessions, licenses, permits and contracts,
changes in taxation policies, changes in local or Government ownership requirements, restrictions on
foreign exchange, changing political conditions, currency controls, export controls and governmental
regulations that favour or require the awarding of contracts to local contractors or require foreign
contractors to employ citizens of, or purchase supplies from, a particular jurisdiction.
Changes, if any, in mining or investment policies or shifts in political attitude may adversely affect
the Group’s operations or profitability. Operations may be affected in varying degrees by government
regulations with respect to, but not limited to, restrictions on production, price controls, export
controls, currency remittance, income taxes, foreign investment, maintenance of claims, environmental
legislation, land use, land claims of local people, water use and mine safety. Failure to comply strictly
with applicable laws, regulations and local practices relating to mineral right applications and tenure
could result in loss, reduction or expropriation of entitlements. The occurrence of these various factors
adds uncertainties which cannot be accurately predicted and could have an adverse effect on the
operations of the Group.
Directors’ Report
RISK MANAGEMENT
22 l Lotus Resources Annual Report 2024
Directors’ Report
•
Funding Risk
Exploration and development of the various properties in which Lotus holds interests depends on the
Company’s ability to obtain funding through joint ventures, debt funding, equity financing or other
means. In addition, Lotus is required in the ordinary course of business to provide financial assurances
(including insurances, performance guarantees, performance bond and bank guarantee instruments)
to secure statutory and environmental performance undertakings and commercial arrangements.
Lotus’ ability to provide such assurances is subject to the willingness of financial institutions and other
third-party providers of such assurances to issue such assurances for the Company’s account.
Volatility in uranium markets, or the factors affecting financial institutions and other third parties’
assessments of the Company and its prospects may make it difficult or impossible for the Company
to obtain facilities for the issuance of such financial assurances or of other debt financing or equity
financing on favourable terms or at all. Failure to obtain such facilities or financing on a timely basis may
cause the Company to postpone its development plans, forfeit rights in some or all of its properties
or reduce or terminate some or all of its operations which may have a material adverse effect on the
Company’s financial position and performance.
•
Offtake Risk
The future operations and revenues of Lotus are dependent on the counterparties to future offtake
agreements performing their obligations. If counterparties do not take their obligated quantities of
product or seek to renegotiate the price or quantity of product, Lotus revenues could be adversely
affected. The risk of non-performance or attended re-negotiation of terms by offtake customers is
enhanced by the prevailing demand and pricing sensitivities currently impacting the global market for
uranium products.
•
Reliance on Key Personnel
The Group’s prospects depend in part on the ability of its executive officers, senior management and
key consultants to operate effectively, both independently and as a group. The loss of any of the
Group’s key personnel, the inability to recruit necessary staff as needed or the increased cost to recruit
or retain the necessary staff, may cause a disruption to the Group and adversely impact the Group’s
operations, financial performance and financial position.
Any disputes with employees (through personal injuries, industrial matters or otherwise), changes in
labour regulations or other developments in the area may cause labour disputes, work stoppages or
other disruptions in operations that could adversely affect the Group.
•
Environmental Liabilities
Uranium exploration and mine development is an environmentally hazardous activity which may give
rise to substantial costs for environmental rehabilitation, damage control and losses. The Company’s
operations may use hazardous materials and produce hazardous waste, which may have an adverse
impact on the environment or cause exposure to hazardous materials.
Despite efforts to conduct its activities in an environmentally responsible manner and in accordance
with applicable laws, the Group may be subject to potential risks and liabilities associated with the
potential pollution of the environment and the necessary disposal of mining waste products resulting
from mineral exploration and production. Insurance against environmental risk (including potential
liability for pollution or other hazards as a result of the disposal of waste products occurring from
exploration and production) is not generally available to the Group (or to other companies in the
minerals industry). To the extent that the Group becomes subject to environmental liabilities, the
satisfaction of any such liabilities would reduce funds otherwise available to the Group and could have
a material adverse effect on the Group. Laws and regulations intended to ensure the protection of the
environment are constantly changing and are generally becoming more restrictive.
RISK MANAGEMENT
Lotus Resources Annual Report 2024 l 23
Directors’ Report
RISK MANAGEMENT
•
Climate Change
Increased regulation of greenhouse gas emissions could adversely affect the Group’s costs of
operations. Mining and processing of mineral resources is relatively energy dependent and depends
on fossil fuels. Whilst Lotus has a strategy to minimise the use of fossil fuels where practicable there
is no assurance that Lotus will be able to implement this strategy or that it will provide the expected
benefits.
Regulatory changes by governments may represent an increased cost to the Group. Increasing
regulation of greenhouse gas emissions, including the introduction of carbon emissions trading or
abatement mechanisms, and tighter emission reduction targets or the introduction of a carbon tax in
any jurisdiction the Group operates is likely to raise energy costs and costs of production.
Further to this, the Group’s activities may be impacted in the future by the effects of climate change,
including factors such as increased or decreased rainfall, increased severity of weather events, impacts
on ground stability and movement and impacts to planned sources of water for operations. The effects
of these risks could adversely affect the Group’s activities and performance.
•
Health and Safety
Lotus aspires to conduct its activities to high standards of occupational health and safety. Lotus has
systems in place for the management of risks appropriate for its current level of activity which will
be updated as appropriate when the decision to restart operations is made. Despite this, uranium
exploration and mining is inherently a high risk environment. In addition, Lotus has interests in a
developing country, embedding systems for managing occupational health and safety risks, and
maintaining and ensuring compliance with these systems may present challenges for the Group.
Operating in developing countries where HIV/AIDS, ebola, malaria, cholera, COVID 19 and other diseases
may represent a threat to maintaining a skilled workforce. There can be no assurances that such
infections will not affect project staff, and there is the risk that operations could be affected in the
event of such a safety threat. Any failure to comply with the necessary occupational health and safety
requirements could result in a safety claim, fines, penalties and compensation for damages against the
Group as well as reputational damage.
•
Community Acceptance and Reputation
All industries, including the mining industry, are subject to community actions in the various jurisdictions
in which they are present including in Malawi. In recent years, communities and non-governmental
organisations (NGOs) have become more vocal and active with respect to mining activities at, or near,
their communities. These parties may take actions, such as road blockades, applications for injunctions
seeking work stoppage and lawsuits for damages.
Additionally, the Group’s relationship with the communities in which it operates is important to ensure
the future success of existing operations and the construction and development of its projects. While
Lotus believes the relationships it has with the communities in which it will operate is strong, there
is an increasing level of public concern relating to the perceived effect of mining activities on the
environment and on communities impacted by such activities.
Certain non-government organizations (NGOs), some of which oppose globalisation and resource
development, are also often vocal critics of the mining industry and its practices. Adverse publicity
generated by such NGOs or others related to extractive industries generally, or its operations
specifically, could have an adverse effect on the Group’s reputation or financial condition.
24 l Lotus Resources Annual Report 2024
Directors’ Report
•
Restarting Operations
Lotus has not made a final investment decision in relation to the restart of operations at the Kayelekera
Project. A final investment decision will be dependent on factors including the completion of the project
work including front end engineering and design, offtake negotiations for the sale of product, securing
the necessary financing and market conditions including financial markets, the uranium market and the
nuclear power industry.
Should Lotus make the final investment decision, there are customary risks relating to restarting
operations which could delay the recommencement of operations, impact the funding requirements or
profitability from operations. Such risks include delays in or inability to secure permits and approvals (or
renewals), securing the required funding or the requirement to secure additional funding to expected,
recruitment and retention of experienced skilled personnel, securing consumables and supplies
necessary for the refurbishment of the plant on acceptable contractual arrangements, securing the
new plant and infrastructure required on acceptable contractual arrangements, ability to connect to
the Malawian national grid and associated availability and reliability of power supply, performance of
plant and infrastructure that is below expectation and other factors.
•
Culture and Business Conduct
An organisations culture can greatly influence individual and group behaviors. If Lotus Resources
conduct and ethics related controls, frameworks and practices were to fail significantly, be set
inappropriately, or not meet legal, regulatory or community expectations, then the Group may be
exposed to reputational damage through fines, regulatory intervention or investigation, temporary or
permanent loss of license, litigation and or permanent loss of business.
The Group’s operations will be governed by, and involve interaction with, many levels of government
including in Malawi, Botswana and Australia. The Group will be subject to various anti- corruption laws
and regulations, which prohibit a company and its employees or intermediaries from bribing or making
improper payments to foreign officials or other persons to obtain or retain business or gain some other
business advantage.
The Group will maintain anti-bribery policies, anti-corruption training programs, codes of conduct,
procedures and other safeguards designed to prevent the occurrence of fraud, bribery and corruption.
However, wherever the Group operates it always needs to be aware of the potential risk of fraud,
bribery and corruption. The Group cannot predict the nature, scope or effect of future regulatory
requirements to which the Group’s operations might be subject or the manner in which existing laws
might be administered or interpreted. Instances of fraud, bribery and corruption, and violations of laws
and regulations could expose the Group and its directors and senior management to civil or criminal
penalties or other sanctions and could have a material adverse effect on the Group’s reputation,
business, results of operations, financial condition and the share price.
Likewise, any investigation of any alleged violations of the applicable anticorruption legislation by
Australia or foreign authorities could also have an adverse impact on the Group’s business, reputation,
financial condition and results of operations.
•
Legal Action
The Group is subject to litigation risks. All industries, including the minerals exploration industry, are
subject to legal claims, with and without merit. Defence and settlement costs of legal claims can be
substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the
litigation process, the resolution of any particular legal proceeding to which the Group is or may
become subject could have a material effect on its financial position, results of operations or the
Group’s activities.
RISK MANAGEMENT
Lotus Resources Annual Report 2024 l 25
Directors’ Report
RISK MANAGEMENT
•
General Legal Matters
Future earnings, asset values and the relative attractiveness of Lotus Resources shares may be
affected by changes in law and government policy in the jurisdictions that it operates.
•
Changes in Laws
The Group (including the operations of the Group) will be subject to various federal, state and local laws
(including Australia, Malawi and Botswana). Changes to current laws in the jurisdictions within which
the Group operates or may in the future operate, could have a material adverse impact on the Group’s
operations, financial performance and financial position.
•
Subsidiaries
Lotus Resources is a holding company with no significant assets other than cash and the shares in
its wholly owned and non-wholly owned subsidiaries. Accordingly, any limitation on the transfer of
cash or other assets between Lotus Resources and its subsidiaries could restrict Lotus Resources’
ability to fund it operations efficiently and to meet its payment obligations. Any such limitations, or the
perception that such limitations may exist now or in the future, could also have an adverse impact on
Lotus Resources’ valuation and share price.
•
Estimates and Assumptions Are Used in Preparing Financial Statements
Preparation of consolidated financial statements required the Company to use estimates and
assumptions which require Lotus Resources to use its judgement to determine the amount to be
recorded in its financial statements in connection with these estimates.
The Company reviews the carrying value of its assets periodically to determine whether there is any
indication that the carrying value of those assets may not be recoverable through continuing use. If
any such indication exists, the recoverable amount of the asset is reviewed in order to determine the
amount of the impairment, if any. Changes in assumptions underlying the carrying value of certain
assets, including assumptions rewalting to uranium prices, production costs, foreign exchange
rates, discount rates, tax rates, the level of proven and probable reserves and measured, indicated
and inferred mineral resources and market conditions, could result in impairment of such assets. No
assurance can be given as to whether there may be significant impairments in future periods, including
as a result of further restructuring activities or changes in assumptions underlying carrying values as a
result of adverse market conditions in the industry in which the Group operates.
The notes to the financial statements provide information on other balances that require significant
estimation, assumptions and judgment.
•
Share Market Conditions
Lotus Resources is listed on the ASX and the price of Lotus’ shares is subject to many influences
that may affect both the share market trends and individual company share prices. Such influences
include movements in local and international share markets, changes in the outlook for commodities
including uranium, inflation, interest rates, general economic conditions, changes in government fiscal,
monetary and regulatory policies. These factors may cause Lotus shares to trade below current prices
or to fluctuate going forward.
26 l Lotus Resources Annual Report 2024
Directors’ Report
•
Securities Price Fluctuations
Lotus Resources shares carry no guarantee in respect of profitability, dividends, return of capital,
or the price at which they may trade. The value of Lotus shares will be determined by the securities
market and will be subject to a range of factors beyond the control of Lotus, the Lotus Board and Lotus
Management.
The market price of a publicly traded stock is affected by many variables not directly related to the
success of the Group. These factors include, but are not limited to, the demand for, and availability
of Lotus shares, movements in interest rates, exchange rates, fluctuations in the Australian and
international stock markets and general domestic and economic activity. Securities markets can
experience high levels of price and volume volatility, and the market price of securities of many
companies can experience wide fluctuations which have not necessarily been related to the operating
performance, underlying asset values or prospects of such companies. There can be no assurance that
such fluctuations will not affect the price of Lotus Resources securities going forward.
•
Risk of Dilution
Lotus Resources may undertake offerings of securities in the future to raise capital as well as
undertaking equity funded acquisitions which may dilute the holdings of investors. The increase in the
number of shares issued and the possibility of sales of such shares may have a depressive impact on
the price of shares already owned.
•
Dividends
Currently, the Group does not have any active operations or generate any operating revenues. As such,
it is not expected that Lotus will pay any dividends in the short term.
Any future determination as to the payment of dividends by the Group will be at the discretion of the
Board and will depend on the financial condition of the Group, future capital requirements and general
business and other factors considered relevant to the Board. No assurance in relation to the future
payment of dividends or franking credits attaching to dividends can be given by the Group.
•
Insurance
The Group maintains a range of insurance covers for its business activities. These policies will not cover
every potential risk associated with its activities. The occurrence of a significant adverse event which
is not fully covered by insurance could have a material adverse effect on the Groups financial condition
and performance.
The Group may become subject to liability for accidents, pollution and other hazards against which it
cannot insure, or against which it may elect not to insure because of premium costs or other reasons,
or for amounts which exceed policy limits.
•
General Economic Conditions
General economic conditions, movements in interest and inflation rates and currency exchange rates
may have an adverse effect on the Group’s exploration, development and production activities, as well
as on its ability to fund those activities.
Further, share market conditions may affect the value of the Lotus’ quoted securities regardless of the
Group’s operating performance. Share market conditions are affected by many factors such as general
economic outlook, interest rates, inflation rates, currency fluctuations, changes in investor sentiment
toward particular market sectors, the demand for, and supply of, capital and terrorism or other hostilities.
The Group’s future revenues and the Group’s share price may be affected by these factors, which are
beyond the Group’s control.
RISK MANAGEMENT
Lotus Resources Annual Report 2024 l 27
Directors’ Report
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 was announced
on 9 June 2022, 15 February 2022 and 9 May 2024. 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, 15 February 2022 and 9 May 2024 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 dated 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.
Lotus Resources Annual Report 2024 l 27
Image: ESG meeting at Kayelekera
28 l Lotus Resources Annual Report 2024
Directors’ Report
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 timeframe 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; 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 outbreak of disease 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 offtake 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.
Lotus Resources Annual Report 2024 l 29
Directors’ Report
DIRECTORS’ PROFILES
The Directors of the Company at any time during or since the end of the financial year are:
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 extensive experience and emphasis on
mergers, acquisitions, capital raisings and resources.
He was a Non-Executive Director of ASX listed company
Omni Bridgeway Limited (ASX: OBL), where he chaired
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 companies Genesis Minerals Limited (ASX: GMD)
and Emerald Resources NL (ASX: EMR).
Mr Bowen 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.
Other current directorships
Genesis Minerals Limited (Non-Executive Director)
Emerald Resources NL (Non-Executive Director)
Former directorships in the last 3 years
Omni Bridgeway Limited (Non-Executive Director
from 30 November 2001 to 30 November 2022)
Special responsibilities
Board Chairman
Interests in shares and options
Ordinary shares
5,250,000
Unlisted Options
3,000,000
Mr Michael Bowen
Bachelor of Laws, Jurisprudence and Commerce,
Certified Public Accountant
Non-Executive Chairman – Since appointment on 22 February 2021
30 l Lotus Resources Annual Report 2024
Directors’ Report
DIRECTORS’ PROFILES
Experience and expertise
Mr Bowes is a highly regarded mining executive with over
30 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, Superior Lake’s zinc project in Ontario,
Matador Mining’s Cape Ray gold project in Newfoundland
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 (i.e.,
leach chemistry and IX resins).
Other current directorships
Copper Strike Limited (Non-Executive Director)
Former directorships in the last 3 years
Nil
Special responsibilities
Managing Director until 9 August 2024
Interests in shares and options
Ordinary shares
11,323,196
Unlisted Options
10,238,651
Mr Keith Bowes
BSc Chemical Engineering, Australian
Institute of Company Directors (AICD)
Managing Director – Since appointment on
15 February 2021 until 9 August 2024
Technical Director – From 9 August 2024
Lotus Resources Annual Report 2024 l 31
Directors’ Report
DIRECTORS’ PROFILES
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.
Other current directorships
Frontier Energy Limited (Executive Chairman)
Earths Energy Limited (Executive Director)
(formerly Cradle Resources Limited)
Former directorships in the last 3 years
Waroona Energy Inc. (TSXV: WHE) (Non-Executive
Director from 16 March 2022 to 15 May 2023)
Special responsibilities
Nil
Interests in shares and options
Ordinary shares
150,098,458
Unlisted Options
2,000,000
Mr Grant Davey
BSc Mining Engineering, AICD
Non-Executive Director - Since appointment
on 22 June 2020 until 9 August 2024
Executive Director – Since 9 August 2024
32 l Lotus Resources Annual Report 2024
Directors’ Report
DIRECTORS’ PROFILES
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
as Chief Financial Officer and Finance Director across
a wide range of industries including mining and mining
services.
Other current directorships
Nil
Former directorships in the last 3 years
Copper Strike Limited (Non-Executive Chairman
from 25 November 2020 to 6 December 2022)
Red River Resources Limited (Non-Executive
Director from 1 October 2015 to 29 August 2023)
Waroona Energy Inc (Non-Executive Director; TSXV:
WHE from 15 May 2023 to 13 December 2023)
Special responsibilities
Chair of Audit and Risk Committee (from 1 July 2022)
Chair of Remuneration and Nomination Committee (from
1 July 2022)
Interests in shares and options
Ordinary shares
6,500,000
Unlisted Options
2,000,000
Mr Mark Hanlon
Master of Business (Banking & Finance), Bachelor
of Business (Accounting & Finance)
Non-Executive Director – Since
appointment on 22 February 2021
Lotus Resources Annual Report 2024 l 33
Directors’ Report
DIRECTORS’ PROFILES
Experience and expertise
Ms Marshall has 40 years’ experience in strategic
communications and government relations; this includes
crisis
communications,
editorial
media,
advocacy,
reputation, stakeholder engagement, marketing and
policy development.
She has held senior leadership roles in government, media,
sport and advertising.
Ms Marshall is the chair of leading government relations
company, GRA Partners, a board director and chief growth
officer of the Marketforce Group, a commissioner of the
Australian Sports Commission, deputy chair of the WA
Football Commission and, a Non-Executive Director of
Frontier Energy Limited (ASX:FHE).
Other current directorships
Frontier Energy Limited (Non-Executive Director)
Marketforce (Chief Growth Officer)
WA Football Commission (Deputy Chair)
Member Australian Sports Commission
Former directorships in the last 3 years
Nil
Special responsibilities
Chair of Environment, Social and Governance Committee
(from 1 July 2022)
Interests in shares and options
Ordinary shares
800,000
Unlisted Options
2,000,000
Ms Dixie Marshall
Bachelors Degree - Physical Education
Non-Executive Director – Since appointment on 1 April 2022
34 l Lotus Resources Annual Report 2024
Directors’ Report
COMPANY SECRETARY
Experience and expertise
Ms Anderson is a legal practitioner admitted in Western
Australia and Victoria with over 30 years’ experience in both
high-level private practice and in-house roles, particularly
in the area of capital raisings, corporate acquisitions,
structuring and regulatory compliance. Ms Anderson has
advised on all aspects of corporate and commercial law
and brings extensive experience over a range of industries,
in particular the mining and IT/cyber security sectors.
Ms Anderson is an experienced company secretary
for both listed and unlisted public companies and has
served as a director of an ASX listed junior explorer. She
has provided consultancy services to entities wishing to
proceed to Initial Public Offering and ASX listing, and has
twice been nominated for the Telstra Business Woman of
the Year Award.
Other current directorships
Nil
Former directorships in the last 3 years
Nil
Special responsibilities
Nil
Interests in shares and options
Ordinary shares
Nil
Unlisted Options
657,028
Ms Catherine Anderson
B Juris (Hons) LLB
Company Secretary – Appointed on 12 January 2023
Lotus Resources Annual Report 2024 l 35
Directors’ Report
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:
Board Meeting
Committee Meetings
Audit
and Risk
Environmental,
Social and
Governance
Nomination &
Remuneration
Director
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Mr Michael Bowen
9
8
5
5
-
-
-
-
Mr Mark Hanlon
9
8
5
5
-
-
3
3
Ms Dixie Marshall
9
8
5
4
5
5
3
3
Mr Keith Bowes
9
9
-
-
5
4
-
-
Mr Grant Davey1
9
9
-
-
5
5
3
2
1 Mr Grant Davey transitioned to Executive Director on 9 August 2024. As a result, Mr Grant Davey stepped off the Nomination
and Remuneration Committee with Mr Michael Bowen joining the Committee to ensure the Committee was constituted entirely
of independent directors.
Board Composition
The Board plans on renewing its composition and will seek to attract candidates with the appropriate
skills and diversity to best position the Company as it transitions to a uranium producer. Whilst the
current composition of the Board is effectively discharging its roles and responsibilities, strengthened
independence is recognised as important and something to be achieved through the Board’s renewal
process. In particular, in addition to increased diversity, the Board intends to appoint suitably qualified
and demonstrably independent directors as soon as such candidates can be practicably identified and
attracted onto the Board.
Furthermore, Lotus will adopt diversity targets and a timeline for achieving such targets, to ensure
that Lotus’ corporate governance frameworks mature in tandem with this transition from developer to
producer.
Committee membership
The Board has established Committees for Audit and Risk, Nomination and Remuneration, and
Environmental, Social and Governance. The Board 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.
For further information, refer to the Company’s Corporate Governance Statement.
36 l Lotus Resources Annual Report 2024
Directors’ Report
PRINCIPAL ACTIVITY
The principal activity of the Group during the financial year was the exploration and development of the
Group’s Kayelekera Uranium Project in Malawi and Letlhakane Uranium Project in Botswana.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant or material changes to the Consolidated Entity’s state of affairs during the
financial year ended 30 June 2024, other than as disclosed below:
•
Issuance of 361,722,889 new shares relating to the merger with Lotus Marula Pty Ltd (formerly
A-Cap Energy Limited) and subsidiaries (collectively referred as A-Cap Acquisition);
•
Issuance of 22,236,879 shares as a result of the conversion of unlisted Lotus options; and
•
Issuance of 100,000,000 shares to strategic investors for a capital raising of $30,000,000 to
enable the Group to accelerate the restart works at its Kayelekera mine and advance works at its
Letlhakane project in Botswana.
RESULTS
The Group incurred a loss after income tax of $24,507,450 for the financial year (2023: loss after income
tax of $9,916,736).
As at 30 June 2024, the net current assets and net assets of the Group amounted to $32,254,767 (2023:
$16,353,637) and $127,394,878 (2023: $33,684,890), respectively.
During the financial year, the acquisition of Lotus Marula Pty Ltd and its subsidiaries (formerly A-Cap
Energy Limited) resulted to recognition of:
•
$10,447,397 impairment recognised on exploration and evaluation assets recognised by Wilconi Pty
Ltd brought by the withdrawal from the Joint Venture agreement as discussed in the “Review of
Activities” above).
•
An increase in net assets of $87,347,476 primarily brought by capitalisation of exploration and
evaluation assets for the Letlhakane Project.
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 year subsequent to 30 June 2024.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
On 26 July 2024, the Mine Development Agreement (MDA) with the Government of Malawi for the
Group’s Kayelekera Uranium Mine has been signed. Refer to the Director Report for more information.
On 9 August 2024 a restructure of the Board and management team was undertaken following execution
of the MDA to reflect the transition into the project delivery phase at Kayelekera. Refer to the Director
Report for more information.
On 3 September the Company announced the execution of a binding sales agreement and an unsecured
loan agreement with Curzon Uranium for US$15 million. On the same day the Company announced the
execution of a term sheet with North American utility PSEG Nuclear LLC. Refer to note 33 for further
details.
There were no other matters or circumstances that have arisen since 30 June 2024 that have significantly
affected, or may significantly affect the Group’s operations, the results of those operations, or the
Group’s state of affairs in future financial years.
Lotus Resources Annual Report 2024 l 37
Directors’ Report
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 or more frequently where circumstances necessitate. As a result of the completion of
the merger with A-Cap during the financial year ended 30 June 2024, an updated Mineral Resource
Statement is presented in this report.
The 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 Resource 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 financial year,
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. There was no update to the Mineral
Resources and Ore Reserves required as at 30 June 2024.
Image: Kayelekera processing plant
38 l Lotus Resources Annual Report 2024
Directors’ Report
Mineral Resources Inventory
The Lotus global Mineral Resources Inventory is contained in table 1 below and reflects the Mineral
Resources Estimate for the Kayelekera Project and the Letlhakane Project.
Table 1 - Lotus Mineral Resource Inventory – June 2024
Project
Category
Mt
Grade
(U3O8 ppm)
U3O8
(M kg)
U3O8
(M lbs)
Kayelekera
Measured
0.9
830
0.7
1.6
Kayelekera
Measured – RoM Stockpile4
1.6
760
1.2
2.6
Kayelekera
Indicated
29.3
510
15.1
33.2
Kayelekera
Inferred
8.3
410
3.4
7.4
Kayelekera
Total
40.1
510
20.4
44.8
Kayelekera
Inferred – LG Stockpiles9
2.24
290
0.7
1.5
Kayelekera
Total – Kayelekera
42.5
500
21.1
46.3
Livingstonia
Inferred
6.9
320
2.2
4.8
Livingstonia
Total – Livingstonia
6.9
320
2.2
4.8
Kayelekera Project Total
49.4
472
23.3
51.1
Letlhakane
Indicated
46.1
339
15.6
34.4
Letlhakane
Inferred
109.2
348
38.0
83.8
Letlhakane
Total – Letlhakane
155.3
345
53.6
118.2
Total
All Uranium Resources
204.7
377
76.8
169.3
The information in this document that relates to Mineral Resources were reported by the Company
in announcements to the ASX dated 15 February 2022, 9 June 2022 and 9 May 2024. 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.
ANNUAL STATEMENT OF ORE RESERVES AND MINERAL RESOURCES
4 RoM stockpile has been mined and is located near the mill facility.
Lotus Resources Annual Report 2024 l 39
Directors’ Report
ANNUAL STATEMENT OF ORE RESERVES AND MINERAL RESOURCES
Ore Reserve Inventory
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.
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 2 - Lotus Resources Ore Reserve Inventory – July 20225
Project
Category
Mt
Grade
(U3O8 ppm)
U3O8
(M kg)
U3O8
(M lbs)
Kayelekera
Open Pit - Proved
0.6
902
0.5
1.2
Kayelekera
Open Pit - Probable
13.7
637
8.7
19.2
Kayelekera
RoM Stockpile – Proved
1.6
760
1.2
2.6
Kayelekera
Total
15.9
660
10.4
23.0
5 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 has an 85% interest. Lotus 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.
Image: Contractors from the local community
40 l Lotus Resources Annual Report 2024
Directors’ Report
SHARES AND OPTIONS ON ISSUE
At the date of this report, the Company has 1,831,766,906 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
Expiry Date
Exercise Price -
Per Option
1,230,000
29 November 2021
29 November 2024
$0.00
11,050
15 December 2021
29 November 2024
$0.00
1,319,000
15 December 2021
29 November 2024
$0.00
335,814
14 November 2022
31 October 2025
$0.00
3,823,073
14 November 2022
31 October 2027
$0.00
1,950,345
30 October 2023
31 October 2026
$0.00
1,266,661
30 October 2023
31 October 2028
$0.00
1,156,757
28 November 2023
31 October 2026
$0.00
1,098,919
28 November 2023
31 October 2028
$0.00
12,000,000
28 November 2023
30 September 2026
$0.00
1,266,661
30 October 2023
31 October 2028
$0.00
1,098,919
28 November 2023
31 October 2028
$0.00
4,000,000
20 May 2024
19 May 2027
$0.30
6,000,000
9 August 2024
8 August 2027
$0.00
2,000,000
13 August 2024
22 August 2028
$0.30
38,557,199
Total Unlisted Options
The number of shares that were issued during the financial year on the conversion of options was
12,236,879 (2023: 20,063,211). The weighted average exercise price of these options was 0.00 cents
(2023: 2.40 cents). A further 550,800 options were exercised post balance date at an exercise price of
0.00 cents per share.
There were 1,682,408 options that expired or were cancelled during the financial year and none since
the end of the financial year. There were no options that lapsed unexercised during the financial 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.
Lotus Resources Annual Report 2024 l 41
Directors’ Report
INDEMNIFICATION OF OFFICERS AND AUDITORS
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 end of the financial year.
INSURANCE PREMIUMS
The Company paid a premium during the financial 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 financial year are set out in note 23.
The Board is satisfied that the provision of the non-audit services is compatible with the 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’s 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.
ROUNDING OF AMOUNTS
Lotus Resources Limited is a type of company that is referred to in ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191 and therefore the amounts contained in this report
and in the financial report have been rounded to the nearest dollar.
REMUNERATION REPORT
The Remuneration Report set out on pages 43 to 61 forms part of the Directors’ Report and is signed as
part of it.
42 l Lotus Resources Annual Report 2024
Directors’ Report
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.
Signed in accordance with a resolution of the directors:
Mr Michael Bowen
Non-Executive Chairman
3 September 2024
Lotus Resources Annual Report 2024 l 43
Audited Remuneration Report
MESSAGE FROM THE CHAIR OF THE REMUNERATION AND NOMINATION
COMMITTEE
Dear Shareholders,
On behalf of the Board, I am pleased to present the Lotus Resources Remuneration Report for
the 2024 financial year.
With the Group advancing towards becoming a uranium producer with a decision on the restart of
operations at Kayelekera expected shortly, the Board has decided to appoint independent remuneration
consultants to review the Group’s remuneration framework to ensure that it is focussed on driving a high
performance culture that closely aligns with the achievement of our strategic and business objectives,
and with our shareholders’ interests including consistent value creation over a long term time frame.
In March 2024 Lotus was admitted to the S&P ASX 300 Index which measures up to 300 of Australia’s
largest securities by float adjusted market capitalisation. This is a significant achievement for the
Company as it progresses its strategy to become a leading African focussed uranium player with
significant scale and resources. Lotus acknowledges the expectations that follows admittance to the
ASX 300 and is committed to evolving its practices as it continues to grow and mature.
As a result of his transition to Executive Director on 9 August 2024, Mr Grant Davey stepped off the
Nomination and Remuneration Committee with Non-Executive Chair, Mr Michael Bowen joining the
Committee to ensure the Committee was constituted entirely of independent directors.
Key Achievements FY2024
Lotus has made significant progress towards its objectives through the financial year and up to the
date of this report including
•
Significant resource growth through the merger with A-Cap Energy to acquire the Letlhakane
Uranium Project in Botswana to advance Lotus objective to become a major southern African
uranium company;
•
Completion of the Mine Development Agreement with the Malawian Government to specify the key
fiscal terms, legal protections and non-fiscal government support under which Lotus will develop
and operate Kayelekera;
•
Execution of the front-end engineering and design program at Kayelekera to confirm the capital
and operation costs and project execution timetable with the program nearing completion;
•
Strengthening of key relationships with utilities and traders to position Lotus to secure offtake
contracts;
•
Advancement of funding options for the restart of production at Kayelekera including the
appointment of leading debt advisory Orimco;
•
Advanced connection to the Malawi national grid with selection of the route, progression of
approvals and design work;
•
Remodelling of the Letlhakane Project mineral resource estimate incorporating tighter modelling
constraints and shorter search parameters, aiming to reduce the amount of ‘smoothing’ that has
occurred within the higher grade zones of the model and commencement of a significant infill
drilling program to seek to increase the confidence in the mineral resource estimate classification;
and
•
New appointments to the management team including Greg Bittar and Michael da Costa in addition
to a recent restructure of the management team as the company transitions into the execution
phase for the restart of operations at Kaleyekera.
44 l Lotus Resources Annual Report 2024
Audited Remuneration Report
Remuneration Outcomes FY2024
The FY2024 short term incentive outcomes saw the vesting of 60.2% of the grants with
•
Strong performance outcomes achieved around cost control;
•
The successfully completion of the merger with A-Cap;
•
Execution of the Mine development Agreement in July 2024; and
•
Significant progress made around advancing the groups risk management and governance
objectives.
Disappointingly the group safety target was not achieved as a result of one incident requiring medical
treatment and two incidents requiring first aid treatment in June 2024 at the Kayelekera. A significant
focus continues around ensuring that the Company safety objectives are met. Refer to the Directors
Report for more information.
The FY2022 long term incentive performance period ended 30 June 2024 with the vesting of 53.3% of
the grants with the company achieving significant resource growth at Kayelekera and more broadly
with the acquisition of the Letlhakane Project. Despite the disappointing recent market conditions for
uranium companies across the sector, Lotus achieved strong shareholder returns during the three-
year performance period.
Image: Letlhakane team completing their defensive driving training course
MESSAGE FROM THE CHAIR OF THE REMUNERATION AND NOMINATION
COMMITTEE
Lotus Resources Annual Report 2024 l 45
Audited Remuneration Report
Remuneration Framework FY2025
The Company has engaged The Reward Practice to perform an independent review of the remuneration
framework including the remuneration structures, remuneration benchmarking and allocation between
fixed and “at risk” remuneration for Executives. Once complete, the Remuneration Committee and Board
will consider the results of this review and the elements to incorporate into the 2025 financial year.
The review is considering Non-Executive Directors, the Chief Executive Officer and Key Management
Personnel.
The attraction and retention of highly skilled executives and staff is of significant importance for the
Board as the Group embarks on a transformational period. The Board recognises the need to review and
enhance the remuneration approach to reflect current market trends and practices and the changing
nature of the business as the scale and complexity of the Group’s activities increases.
On behalf of the Board, I invite you to review the financial year 2024 Remuneration Report which
explains the remuneration arrangements employed by the Group for Directors and Key Executives and
how these arrangements align with the Group’s objectives and performance.
We value our shareholders support and welcome your feedback as we strive to enhance the
transparency and clarity of or reporting. Thank you for your ongoing support and we look forward to our
ongoing engagement with you and sharing in our Company’s success.
Mark Hanlon
Chair – Remuneration and Nomination Committee
3 September 2024
MESSAGE FROM THE CHAIR OF THE REMUNERATION AND NOMINATION
COMMITTEE
46 l Lotus Resources Annual Report 2024
Audited Remuneration Report
REMUNERATION REPORT
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 KMP for the entire financial year:
Name
Position held
Executives
Mr Keith Bowes
Managing Director
Mr Michael da Costa1
Chief Operations Officer
Mr Michael Ball
Chief Financial Officer
Non-Executive Directors
Mr Michael Bowen
Non-Executive Chairman
Mr Grant Davey2
Non-Executive Director
Mr Mark Hanlon
Non-Executive Director
Ms Dixie Marshall
Non-Executive Director
1 Mr Michael da Costa was appointed 15 May 2024.
2 Mr Grant Davey transitioned to Executive Director on 9 August 2024.
Following the signing of the Mine Development Agreement with the Government of Malawi as the
Company transitions to the execution phase for the restart of production at Kayelekera, a management
restructure was undertaken with Mr Gregory Bittar appointed Chief Executive Officer appointed on 9
August 2024. Mr Bittar had previously held an advisory role with the Company from 15 May 2024 assisting
with the project financing programs, offtake contracting and investor relations.
As part of the restructure Mr Keith Bowes has assumed the role of Technical Director where he will
advise the Board and support the management team in the execution of the Kayelekera Project and
the development of the Letlhakane Project. Mr Grant Davey has assumed an executive director role to
assist with the execution of the Kayelekera Project. There are no changes to Mr Davey’s or Mr Bowes’
remuneration.
Lotus Resources Annual Report 2024 l 47
Audited Remuneration Report
REMUNERATION GOVERNANCE
A.
Roles and Responsibilities
The roles and responsibilities of the Board, Nomination and Remuneration Committee and external
advisors in relation to remuneration for KMP and employees at Lotus are outlined below.
Board of Directors
The Board of Directors of the Company are responsible for determining and reviewing remuneration
policies for the directors and executives and ensuring alignment with the Company’s purpose, values,
strategic objectives and risk appetite. The Board has established a Nomination and Remuneration
Committee (the Committee) which operates as a subcommittee of the Board. The Board reviews and
as appropriate approved recommendations from the Committee.
Nomination and Remuneration Committee
The Committee’s primary function is to assist the Board in fulfilling its responsibility to shareholders in
accordance with the Committee Charter by reviewing and recommending to the Board for approval a
remuneration policy for KMP. The Committee also reviews and recommends to the Board the proposed
remuneration (including incentive awards, equity awards and service contracts) for each KMP.
The Committee regularly assesses remuneration in light of remuneration trends, market conditions and
peer companies. During the financial year, the members of the Nomination and Remuneration Committee
were Non-Executive Directors Mark Hanlon (Chair), Grant Davey and Dixie Marshall. Subsequent to 30
June 2024, Non-Executive Chair Michael Bowen replaced Grant Davey on this Committee following
Grant Davey becoming an Executive Director.
Chief Executive Officer
The Chief Executive Officer makes recommendations to the Committee regarding remuneration for
Executives such as incentive targets and outcomes, short term incentive and long-term incentive
participation and individual remuneration and contractual arrangements.
External Advisors
The Committee also seeks independent advice as required on the appropriateness of remuneration
arrangements given trends in comparable companies and in accordance with the objectives of the
Company.
Further information on the committee’s role, responsibilities and membership in relation to remuneration
and composition is set out in the Corporate Governance Statement.
B.
Engagement of Remuneration Consultants
The Committee seeks advice from independent remuneration consultants from time to time as required
to assist in discharging its duties, including periodically testing the market competitiveness of the
remuneration policy and framework by benchmarking against comparable companies.
The Reward Group was engaged in July 2024 by the Committee to undertake a remuneration
benchmarking review for key management personnel and review of incentive structures to ensure they
are effective in achieving the Committee’s objectives, including attracting and retaining a high calibre
team and in driving a high-performance culture. The review is ongoing at the time of this report.
The Committee has in place procedures to ensure that all engagements with independent external
remuneration consultants and recommendations (if any) are free from undue influence. In performing
their scope Remuneration consultants may be required to interact with management to obtain the
relevant information needed to form any remuneration recommendations. In these instances a Non-
Executive Director, usually the Chair of the Committee, will always have oversight of interactions
between independent consultants and management. No remuneration advice was received during the
financial year ended 30 June 2024.
48 l Lotus Resources Annual Report 2024
Audited Remuneration Report
PRINCIPLES OF REMUNERATION
The remuneration structures explained below are competitively set to attract and retain highly skilled
Executives and staff, and to drive a high performance culture. The structures are designed to reward
the achievement of strategic objectives and achieve the broader objective of sustainable creation of
long-term value for shareholders.
Given the stage of the Group’s development, being pre-production, the overall level of compensation
does not have regard to the earnings of the Group.
A.
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.
B.
Total Fixed Remuneration
Total Fixed Remuneration (TFR) 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.
TFR is set to provide a market competitive base salary and is reviewed annually (or as required)
through a process that considers individual and overall performance of the Group, with reference to
benchmarking information from ASX listed resources companies. Also taken into consideration are
factors such as market conditions, competition for talent, individual’s relevant skills and experience
and role scope and complexity.
There were no changes to TFR during the financial year ended 30 June 2024. In the previous financial year
the Managing Director TFR was adjusted on a pro rata basis with no change in underlying remuneration
rate to reflect the transition to the role becoming a full-time role.
C.
Executive KMP Remuneration – FY2024
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
Managing Director – Keith Bowes
(Appointed on 15 February 2021 and transitioned to Technical Director on
9 August 2024)
Fixed remuneration
$400,000 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, pro rata payment for of any cash incentive payments,
and any unvested incentives will vest immediately in full, subject to the limits
imposed under the Corporations Act.
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 pre-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.
Lotus Resources Annual Report 2024 l 49
Audited Remuneration Report
Component
Chief Operations Officer – Michael da Costa
(Appointed on 15 May 2024)
Fixed remuneration
$450,000 Inclusive of superannuation.
Contract duration
Initial 6 month fixed term, extension by mutual agreement.
Termination
Statutory entitlements will be paid as required by law. One months written
notice.
Other benefits
A car park and mobile phone is provided in addition to statutory leave provisions.
Equity incentives
The Executive is eligible to receive 2,000,000 options upon joining with an
exercise price of $0.30 per option with 1,000,000 vesting at 31 December 2024
and 1,000,000 vesting at 30 June 2025.
Component
Chief Financial Officer – Michael Ball
(Appointed on 5 January 2022)
Fixed remuneration
$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, and any unvested incentives will vest immediately in
full, subject to the limits imposed under the Corporations Act.
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 pre-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.
PRINCIPLES OF REMUNERATION
50 l Lotus Resources Annual Report 2024
Audited Remuneration Report
D.
Non-Executive Director Remuneration – FY2024
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 was increased at the 2023 AGM to a maximum of $800,000 per year. The increase
in fee pool was proposed in recognition that the size of the Board will increase as the Group moves
toward production requiring additional director skills sets, the demands on directors will increase as
the Group’s activities become more complex, and that future fee arrangements will become entirely
cash based to align with recommended best practice. Directors’ fees cover all main board activities and
membership of committees.
Non-executive directors do not receive any retirement benefits, other than statutory superannuation
which is included in the Base Fees set out below. Non-Executive Directors have no entitlement to
termination payments in the event of removal for misconduct or gross negligence.
Non-executive director fees are reviewed annually by the Board taking into account comparable roles
and market data. The Board recognises the importance of retaining key personnel and providing an
appropriate remuneration to deliver the Company’s objectives. In the interests of conserving cash,
options are viewed as a cost-effective and efficient mechanism to align the interests of Directors with
shareholders. As such, non-executive directors were issued options during the financial year. Fees for
the financial year are as follows:
Name
Base Fees
(Annual)
Options Granted
Term of Agreement
Notice Period
Mr Michael Bowen
$75,000
3,000,000
No fixed term
Statutory
Mr Grant Davey1
$50,000
2,000,000
No fixed term
Statutory
Mr Mark Hanlon
$50,000
2,000,000
No fixed term
Statutory
Ms Dixie Marshall
$50,000
2,000,000
No fixed term
Statutory
1 Mr Grant Davey transitioned to Executive Director on 9 August 2024 with no change in remuneration.
Options issued entitled the holder the right to acquire one ordinary share with a nil exercise price.
The Options will vest on 31 March 2025 and expire on 30 September 2026. The options have a service
condition but do not have performance-based vesting conditions to ensure director independence is
maintained. Refer to the table under Incentive Arrangements for further details.
PRINCIPLES OF REMUNERATION
Lotus Resources Annual Report 2024 l 51
Audited Remuneration Report
E.
Incentive Arrangements – Option Plan
The Group adopted an Option Plan (the Option Plan) which was approved by the shareholders at the
2022 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. The table below sets out the key terms of the Option Plan.
Plan Term
Description of Term
Termination of
Employment
Where a Participant who holds Options becomes a Leaver, all unvested
Options will automatically be forfeited by the Participant, unless the Board
otherwise determines in its discretion to permit some or all of the Options to
vest.
Change of Control
If a Change of Control Event occurs, or the Board determines that such an
event is likely to occur, the Board may in its discretion determine the manner
in which any or all of the Participant’s Options will be dealt with, including,
without limitation, in a manner that allows the Participant to participate in
and/or benefit from any transaction arising from or in connection with the
Change of Control Event.6
Plan Term
Description of Term
Board Discretion
All incentives offers and final outcomes are subject to the full discretion of the
Board (or Nomination and Remuneration Committee as its delegate).
Clawback
Under the terms and conditions of the Company’s incentive plan offer and
option plan rules, the Board (or Nomination and Remuneration Committee as
its delegate) has discretion to determine forfeiture of unvested equity awards
in certain circumstances (e.g. unlawful, fraudulent or dishonest behaviour or
a serious breach of obligations to the Company).
The Group may utilise both short-term and long-term incentive programs to balance the short and
long-term aspects of business performance, to reflect market practice, to attract and retain key talent
and to ensure a strong alignment between the incentive arrangements of executives and the creation
and delivery of shareholder return. Both short term incentives and long-term incentives were issued
under the Option Plan in the 2024 financial year.
PRINCIPLES OF REMUNERATION
6 Certain Executive employment contracts contain clauses that differ to the Plan terms in relation to vesting outcomes in the
event of a change of control.
52 l Lotus Resources Annual Report 2024
Audited Remuneration Report
E.
Incentive Arrangements – Option Plan (continued)
Short-term incentives
The Managing Director, Key Management Personnel and other employees have the opportunity to earn
an annual Short-Term Incentive (STI) if predefined targets are achieved.
STI Term
Description of Term
Who participates in
the STI Plan?
All Executives and other employees are eligible for the STI.
What is the objective
of the STI Plan?
To attract, reward and retain high calibre employees.
To incentivise employees towards meeting the company short term objectives.
How is the award
delivered?
Zero exercise prices options issued under the Lotus Option Plan are the
vehicle used for the FY2024 STI for Executives, Senior Management and
Corporate staff.
Employees in Malawi and Botswana can be rewarded under the short-term
incentive by cash payment instead of options.
How much can
Executives earn?
The STI opportunity is measured as a percentage of TFR. Refer to the table
setting out the FY2024 STI opportunity and outcomes for individual KMP
opportunities.
What is the
performance period?
The STI is issued annual and relates to performance over the period 1 July to
30 June. The relevant period for the FY2024 STI was 1 July 2023 to 30 June
2024.
How was
performance
measured?
Performance is measured against pre-determined measurable financial and
non-financial performance targets as set out in the scorecard below.
When are the
outcomes
determined?
The outcomes for the FY2024 STI were determined at the end of the
performance period following a review by the Committee and Board of
performance against the STI performance targets.
The Board determined the final STI bonus based on this assessment of
performance.
What happens if
Executive leaves?
For retention purposes, the Executive must remain an employee, office bearer
or consultant of the company at the date the outcomes are determined.
However, if an Executive’s employment or consultancy with the Company
is terminated prior to this time, the Board retains the discretion to award or
forfeit any STI on a case by case basis, taking into account longevity and the
reasons for leaving.
PRINCIPLES OF REMUNERATION
Lotus Resources Annual Report 2024 l 53
Audited Remuneration Report
FY2024 Short Term Incentive Targets and Performance Outcomes
The STI awards for the executive team in the 2024 financial year were based on the scorecard measures
and weighting as disclosed below. Targets were approved by the Committee through a rigorous process
to align the Company’s strategic and business objectives. The Committee has the discretion to adjust
short term incentives downwards in light of unexpected or unintended circumstances.
The pre-determined performance conditions relating to the financial year 2024 STI opportunity for
eligible KMP and the outcomes as assessed by the Committee are set out in the table below. In the
event of a significant safety incident (involving a fatality or life changing event) or major environmental
incident the Committee has the discretion to review vesting outcomes.
Area
Weighting
Target
Outcomes
Safety and
Environment
20%
•
Total Recordable Injury Frequency Rate (TRIFR)
improvement below specified value. Refer to
the Directors Report for more details.
0% Not Met
Financial
Performance
15%
•
FY2024 costs for the whole Group equal to or
below budget equals 75% vesting.
•
Additional
25%
vesting
determined
by
calculation if performance is below budget.
15% Achieved
7.5%
•
FY2024 costs for Kayelekera Site Managed
Costs below budget equals 75% vesting.
•
Additional
25%
vesting
determined
by
calculation if performance is below budget.
7.5% Achieved
2.5%
•
FY2024 costs for Letlhakane and Wilconi
Projects below budget equals 75%.
•
Additional
25%
vesting
determined
by
calculation if performance is below budget.
2.2%Achieved
Threshold &
Partial Additional
Vesting Met
Projects and
Growth
30%
•
Execute Mine Development Agreement with
terms supportive of project development.
15% Achieved
10%
•
Complete Scheme of Arrangement for A-Cap
Merger with implementation by mid-November
2023.
10% Achieved
Governance
15%
•
For this target to vest a threshold TSR
performance at or above the 50th percentile
for the peer group identified in the LTI target
must be achieved.
•
If this is achieved then the Board will
assess the performance of the executive /
management team based on specific criteria
relating to statutory audit, risk management
and governance compliance.
15% Achieved
Threshold TSR
Target Met,
Additional
Vesting Met
Total
100%
Total Vesting Outcome
60.2%
PRINCIPLES OF REMUNERATION
54 l Lotus Resources Annual Report 2024
Audited Remuneration Report
FY2024 Short Term Incentive Opportunity and Outcomes by KMP
Name
Role
Maximum STI
Opportunity
(as % of TFR as
at 1 July 2023)
Total STI
Available for
FY2024
($)
Total STI
Awarded
($)
Keith Bowes
Managing Director
53.5%
$214,000
$128,828
Michael Ball
Chief Financial Officer
42.8%
$117,700
$70,855
* KMP Michael da Costa joined on 15 May 2024 and was not eligible to participate in the FY2024 STI.
Certain KMP and other employees were eligible for a one-off cash STI bonus with payment conditional
upon the achievement of each of two milestones critical to the Company objectives relating to the
completion of the A-Cap Group acquisition and for execution of the Mine Development Agreement. In
relation to the A-Cap Group acquisition the Managing Director Keith Bowes received $45,000 and the
Chief Financial Officer Michael Ball received $30,000. After the end of the reporting period the Mine
Development Agreement cash bonus was awarded with the Managing Director Keith Bowes receiving
$30,000 and the Chief Financial Officer Michael Ball receiving $20,000.
PRINCIPLES OF REMUNERATION
Image: Kayelekera tailing storage facility
Lotus Resources Annual Report 2024 l 55
Audited Remuneration Report
PRINCIPLES OF REMUNERATION
Long-Term Incentives
The LTI is designed to focus executives on delivering long-term sustainable shareholder returns. The
key elements of the plan are summarised below. As the LTI is issued under the Lotus Option Plan the
key terms for the Plan are also relevant. In the event of a significant safety incident (involving a fatality
or life changing event) or major environmental incident the Committee has the discretion to review
vesting outcomes.
LTI Term
Description of Term
Who participates in
the LTI Plan?
Executives and nominated Senior Management are eligible to participate
being the employees who are most able to influence shareholder value. The
Board may invite other employees, from time to time, at its discretion.
What is the objective
of the LTI Plan?
To align Executive and shareholder interests through share ownership,
focussing on Group results through awards of long term, at risk, deferred
equity.
To reward Executives for the achievement of strategic objectives that position
the Company for future long term sustainable success.
To attract, reward and retain high calibre Executives and drive a high-
performance driven culture.
How is the award
delivered?
Zero exercise prices options issued under the Lotus Option Plan are the
vehicle used under the LTI Plan.
How often are
awards made?
LTI awards are granted on an annual basis to eligible participants.
How much can
Executives earn?
Under the FY2024 LTI the LTI opportunity is measured as a percentage of TFR.
For the FY2024 LTI the Managing Director had an LTI opportunity of 102% of
TFR for the FY2024 and the Chief Financial Officer had an LTI opportunity of
64.2% of TFR.
What is the
performance period?
The performance period is a three-year period from 1 July to 30 June. The
FY2024 LTI performance period is from 1 July 2023 to 30 June 2026
How is performance
measured?
Performance is measured against pre-determined measurable performance
targets including a Total Shareholder Return target and milestone-based
targets as set out in the scorecard below.
When are the
outcomes deter
mined?
The outcomes for the FY2022 LTI were determined at the end of the
performance period following a review by the Committee and Board of
performance against the LTI performance targets.
The Board determined the final LTI bonus based on this assessment of
performance.
The outcomes for the FY2024 LTI will be assessed at the end of the performance
period (i.e. after 30 June 2026).
What happens if
Executive leaves?
For retention purposes, the participant must remain an employee or consultant
of the company at the date the outcomes are determined.
However, if a participant’s employment or consultancy with the Company
is terminated prior to this time, the Board retains the discretion to award or
forfeit any STI on a case by case basis, taking into account longevity and the
reasons for leaving.
56 l Lotus Resources Annual Report 2024
Audited Remuneration Report
Long-Term Incentives (continued)
The pre-determined performance conditions relating to the financial year 2022 LTI opportunity for
eligible KMP and the outcomes as assessed by the Committee are set out in the table below. The
performance period ran from 1 July 2021 to 30 June 2024.
KPI
Weighting
Target
Outcomes
Shareholder
Return
50%
Relative Total Shareholder Return (TSR)
Share price growth over the period compared with
peer group:
•
<50th percentile = 0% vest
•
50th - 75th percentile = 50%-100% pro-
rata vesting
•
>75th percentile = 100% vest
33.3% Achieved
Project
Milestones
20%
Mineral Resources Growth
Increase the JORC compliant Mineral Resource
Estimate at Kayelekera by >25% from that reported
prior to acquisition (refer to ASX announcement
dated 24 June 2019)
•
0% - 25% growth = pro-rata vesting
•
>25% growth = 100% vest
20% Achieved
20%
Ore Reserve Growth
Increase the Group’s JORC Compliant Ore Reserves
by >15% from that reported prior to acquisition
(refer to ASX announcement dated 24 June 2019)
•
0% - 15% growth = pro-rata vesting
•
>15% growth = 100% vest
0% Not Met
10%
Rare Earths Resource
Discovery
of
JORC
compliant
resource
at
Kayelekera of minimum 5Mt at 3.5% contained
Total Rare Earth Oxide or
Execute commercialisation of rights by way of joint
venture or divestment.
0% Not Met
Total
100%
Total Vesting Outcome
53.3%
PRINCIPLES OF REMUNERATION
Lotus Resources Annual Report 2024 l 57
Audited Remuneration Report
PRINCIPLES OF REMUNERATION
Long-Term Incentives (continued)
The Peer Group used for the financial year 2022 Relative TSR measure is set out in the table below. In
selecting the Peer Group, the Committee considered an investor perspective for a uranium focussed
company seeking to transition to production.
Company
Exchange:Code
Company
Exchange:Code
1.
Paladin Energy Limited
ASX:PDN
7.
Berkeley Energia
ASX:BKY
2.
Boss Energy Limited
ASX:BOE
8.
Govi-Ex Uranium Inc.
TSX:GXU
3.
Peninsula Energy Limited
ASX:PEN
9.
Energy Fuels Inc.
TSX:EFR
4.
Deep Yellow Limited
ASX:BMN
10.
UR Energy Inc.
TSX:URE
5.
Bannerman Limited
ASX:DYL
11.
Uranium Energy Corp.
NYSE:UEC
6.
Alligator Energy Limited
ASX:AGE
Note that some companies in the above peer group listing have multiple listings and details of only one listing is provided. Vimy
Resources Limited was removed from the peer group following its acquisition by Deep Yellow Limited.
Image: Letlhakane geologists logging drill core
58 l Lotus Resources Annual Report 2024
Audited Remuneration Report
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-
EMPLOY
MENT
SHARE-
BASED
PAY
MENTS
Salary,
Fees &
Leave
$
Non-
Monetary
$
Cash
Bonus
$
Superan
nuation
& Long
Service
Leave
$
Options
$
Total
$
Proportion of
Performance
Based
Remuneration
%
Non-Executive Directors
Mr M Bowen
2024
67,568
-
-
7,432
369,325
444,325
83%
2023
67,873
-
-
7,127
75,083
150,083
50%
Mr G Davey
2024
50,000
-
-
-
246,217
296,217
83%
2023
50,000
-
-
-
50,055
100,055
50%
Mr M Hanlon
2024
45,045
-
-
4,955
246,217
296,217
83%
2023
45,249
-
-
4,751
50,055
100,055
50%
Ms D Marshall
2024
45,045
-
-
4,955
371,801
421,801
88%
2023
45,249
-
-
4,751
492,883
542,883
91%
Executive Director
Mr K Bowes1
2024
386,827
8,675
45,000
28,548
792,397
1,261,447
66%
2023
372,500
8,422
-
27,500
406,272
814,694
50%
Other KMP
Mr M da Costa2
2024
69,966
704
-
7,147
74,515
152,332
49%
2023
-
-
-
-
-
-
-
Mr M Ball1
2024
258,229
7,385
30,000
28,816
187,530
511,960
42%
2023
248,724
8,422
-
26,276
181,105
464,527
39%
Total KMP
2024
922,680
16,764
75,000
81,853
2,288,002
3,384,299
70%
2023
829,595
16,844
-
70,405
1,255,453
2,172,297
58%
1 As employees of the Company, Mr Keith Bowes and Mr Michael Ball accrued long-service leave benefits of $1,048 and $1,553,
respectively for the financial year ended 30 June 2024. The amounts were included as part of the post-employment section of
the above table.
2 Mr Michael Da Costa was appointed on 15 May 2024.
3 Mr Grant Davey transitioned to Executive Director on 9 August 2024.
Lotus Resources Annual Report 2024 l 59
Audited Remuneration Report
OPTIONS ISSUED DURING THE FINANCIAL YEAR TO KEY MANAGEMENT
PERSONNEL
The table below sets out details of options granted to the KMP, where the vesting criteria did not
contain any market conditions.
Options
Number
Grant date
Expiry date
Exercise
Price
Spot Price at
Grant Date
Dividend
Yield
Risk-free
Interest
Rate
Fair Value
at Grant
Date
Managing Director – Keith Bowes
1,156,757
28/11/2023
31/10/2026
$0.00 each
$0.28
Nil
3.870%
$0.280
1,098,919
28/11/2023
31/10/2028
$0.00 each
$0.28
Nil
3.870%
$0.280
Chief Financial Officer – Michael Ball
636,217
30/10/2023
31/10/2026
$0.00 each
$0.22
Nil
3.870%
$0.220
477,163
30/10/2023
31/10/2028
$0.00 each
$0.22
Nil
3.870%
$0.220
* KMP Michael da Costa joined on 15 May 2024 and was not eligible for the FY2024 STI orFY2024 LTI grants.
The table below sets out details of the options granted to KMP that contained market based vesting
criteria related to total shareholder return performance against a peer 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
Managing Director – Keith Bowes
1,098,919
28/11/2023
31/10/2028
$0.00 each
$0.28
Nil
3.870%
$0.2145
Chief Operations Officer – Michael da Costa
2,000,000
20/05/2024
19/05/2027
$0.30 each
$0.475
Nil
4.110%
$0.263
Chief Financial Officer – Michael Ball
477,163
30/10/2023
31/10/2028
$0.00 each
$0.22
Nil
3.870%
$0.1535
In addition, during the period, 12,000,000 options were granted to Directors with a service-related
vesting condition. 3,000,000 options were issued to the Managing Director with the number issued to
each Non-Executive Directors set out previously. Furthermore, 2,000,000 options were granted with a
service-related vesting condition to the Chief Operations Officer.
Options
Number
Grant date
Expiry date
Exercise
Price
Spot Price at
Grant Date
Dividend
Yield
Risk-free
Interest
Rate
Fair Value
at Grant
Date
12,000,000
28/11/2023
30/09/2026
$0.00 each
$0.28
Nil
3.870%
$0.280
2,000,000
20/05/2024
19/05/2027
$0.30 each
$0.475
Nil
4.110%
$0.263
60 l Lotus Resources Annual Report 2024
Audited Remuneration Report
OPTIONS HOLDINGS OF KEY MANAGEMENT PERSONNEL
For the year ended 30 June 2024, the outstanding options granted by the Company to KMP are set out
below. The options carry no dividend or voting rights.
2024
Held at
1 July 2023
Granted as
compensation
Exercised
Lapsed
Held at
30 June
2024
Vested
during
the year
Non-Executive Directors
Mr Michael Bowen
-
3,000,000
-
-
3,000,000
-
Mr Grant Davey1
-
2,000,000
-
-
2,000,000
-
Mr Mark Hanlon
-
2,000,000
-
-
2,000,000
-
Ms Dixie Marshall
2,000,000
2,000,000
(2,000,000)
-
2,000,000
2,000,000
Executive Director
Mr Keith Bowes
10,478,475
6,354,595
(6,000,000)
(594,419)
10,238,651
335,814
Other KMP
Mr Michael da Costa
-
2,000,000
-
-
2,000,000
-
Mr Michael Ball
1,779,070
1,590,542
(685,209)
(326,419)
2,357,984
435,209
1 Mr Grant Davey transitioned to Executive Director on 9 August 2024.
SHAREHOLDINGS OF KEY MANAGEMENT PERSONNEL
The table below sets out the shareholdings of KMP and the movements for the year ended 30 June 2024.
2024
Held at
1 July 2023
Acquired at
market value
Received on
exercise of
options
Disposal
Other
Changes
Held at
30 June
2024
Non-Executive Directors
Mr Michael Bowen
5,250,000
-
-
-
-
5,250,000
Mr Grant Davey1,2
179,459,031
-
-
(3,949,542)
(25,411,031)
150,098,458
Mr Mark Hanlon
6,500,000
-
-
-
6,500,000
Ms Dixie Marshall
-
-
2,000,000
(1,200,000)
-
800,000
Executive Director
Mr Keith Bowes1
4,000,000
-
6,000,000
(10,000,000)
11,323,196
11,323,196
Other KMP
Mr Michael da Costa
-
-
-
-
-
-
Mr Michael Ball
-
-
685,209
(435,209)
-
250,000
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. 50,954,438 shares were
previously transferred to an entity with an interest in Kayelekera Resources Pty Ltd. During the financial year ended 30 June
2024, 25,411,031 shares (including 11,323,196 shares transferred to Keith Bowes) to certain entities with interest on Kayelekera
Resources Pty Ltd, thereby releasing the bare trust arrangements on these entities.
2 Mr Grant Davey transitioned to Executive Director on 9 August 2024.
Lotus Resources Annual Report 2024 l 61
Audited Remuneration Report
OTHER TRANSACTIONS AND BALANCES WITH KEY MANAGEMENT
PERSONNEL AND DIRECTORS’ RELATED ENTITIES
Key management personnel, or their related parties, hold positions in other entities that result in them
having control or significant influence over the financial or operating policies of these entities. The
Board has in place procedures to review the nature and terms of such related party transactions, prior
to commencement, and on a regular basis thereafter, to ensure that the transactions are appropriate
and do not have the potential to compromise director independence.
The Company engages a range of law firms, including Thompson Geer Lawyers (Thomson Geer) from
time to time, as considered appropriate for the services required. Mr Michael Bowen, who is a Non-
Executive Director of the Company is a Partner of national law firm Thompson 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 financial year, the Company incurred costs under this arrangement totalling $294,037 which
predominately related to the A-Cap transaction by way of Scheme of Arrangement and also provided
efficiencies due to Mr Bowen’s knowledge of the Company (2023: $140,052). There was no balance
owing to Thompson Geer as at 30 June 2024 in relation to the provision of services (2023: $107,965).
Mr Grant Davey, who was a Non-Executive Director of the Company until 9 August 2024 at which time
he transitioned to Executive Director, is also a Director and a 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, general office services, bookkeeping services,
company secretarial services, ESG consulting services, corporate development and investor relation
services and, technical exploration and geological staff to the Company at cost plus 5%. During the
year, the Company incurred costs under this arrangement totalling $814,482 (2023: $635,589). 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 (2023: $50,000) as disclosed in the
remuneration table above, he was paid a consulting fee of $100,000 (2023: $100,000) in relation to
government liaison and in country services. There was a balance of $71,662 (2023: $62,895) owing to
Matador Capital as at 30 June 2024 in relation to the provision of services. As the Company makes
the transition to producer, the office sharing, and cost sharing arrangements will be scaled down and
discontinued.
Ms Dixie Marshall, who is a Non-Executive Director of the Company, is a Director at advertising company
Marketforce. The Company incurred costs with Marketforce totalling $36,236 on arm’s length normal
commercial terms for a corporate rebranding exercise including website re-design and development
for which it was considered that the selection of Marketforce provided certain efficiencies as a result
of the knowledge of the Company’s business provided by Ms Marshall (2023: nil). There was a balance
of $22,865 (2023: nil) owing to Marketforce as at 30 June 2024 in relation to the provision of those
services.
There were no other related party transactions with key management personnel during the year.
[This is the end of the audited remuneration report.]
62 l Lotus Resources Annual Report 2024
Auditor’s Independence Declaration
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
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
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 2024,
I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA
Perth, WA
ALASDAIR WHYTE
Dated: 3 September 2024
Partner
Lotus Resources Annual Report 2024 l 63
Corporate Governance Statement
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 2024 corporate governance statement is dated as at 30 June 2024 and reflects the corporate
governance practices in place throughout the 2024 financial year. The 2024 corporate governance
statement was approved by the Board on 3 September 2024. 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/corporate-governance.
64 l Lotus Resources Annual Report 2023
Annual Financial Statements
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
65
Consolidated Statement of Financial Position
66
Consolidated Statement of Changes in Equity
67
Consolidated Statement of Cash Flows
69
Notes to the Consolidated Financial Statements
70
Consolidated Entity Disclosure Statement
107
Directors’ Declaration
108
Independent Auditors’ Report
109
ASX Additional Information
114
Contents
Image: Kayalekera village
Lotus Resources Annual Report 2023 l 65
Note
Consolidated
2024
$
Consolidated
2023
$
Other income
3
1,669,776
1,195,764
Corporate and administrative expenses
4(a)
(3,609,421)
(2,888,286)
Care and maintenance costs
4(b)
(3,741,967)
(3,573,338)
Exploration and evaluation expenses
10
(3,061,969)
(1,064,041)
Finance costs – accretion interest
15
(1,309,702)
(1,428,869)
Finance costs - other
(131,877)
(148,572)
Impairment charges – plant and equipment
9
(1,423,931)
(522,578)
Impairment charges – exploration and evaluation assets
9
(10,447,397)
-
Depreciation charges
9
(2,740)
(2,223)
Share-based payments expense
22
(3,161,616)
(1,917,251)
Loss before income tax
(25,220,844)
(10,349,394)
Income tax expense
5
(22,881)
(211,138)
Loss after income tax
(25,243,725)
(10,560,532)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on translating foreign operations
(1,552,195)
418,082
Total other comprehensive loss, net of tax
(1,552,195)
418,082
Total comprehensive loss for the financial year
(26,795,920)
(10,142,450)
Loss attributable to:
Non-controlling interests
(736,275)
(643,796)
Members of the parent
(24,507,450)
(9,916,736)
(25,243,725)
(10,560,532)
Total comprehensive loss attributable to:
Non-controlling interests
(1,003,750)
(643,517)
Members of the parent
(25,792,170)
(9,498,933)
(26,795,920)
(10,142,450)
Loss per share
Basic and diluted loss per share (cents)
26
(1.54)
(0.76)
The statement of profit or loss and other comprehensive income is to be read in conjunction with the
accompanying notes.
Statement of profit or loss
and other comprehensive income
for the year ended 30 June 2024
66 l Lotus Resources Annual Report 2023
Statement of financial position
as at 30 June 2024
Note
Consolidated
2024
$
Consolidated
2023
$
Current Assets
Cash and cash equivalents
6
34,125,776
15,519,217
Other current assets
7
1,215,557
1,169,556
Inventories
8
136,986
492,560
Total Current Assets
35,478,319
17,181,333
Non-Current Assets
Plant and equipment
9
164,480
3,797
Exploration and evaluation assets
10
118,178,228
39,532,314
Other financial assets
11
14,999,903
15,053,100
Total Non-Current Assets
133,342,611
54,589,211
Total Assets
168,820,930
71,770,544
Current Liabilities
Trade and other payables
12
3,087,556
811,449
Provisions – current
13
135,996
16,247
Total Current Liabilities
3,223,552
827,696
Non-Current Liabilities
Provisions – non-current
15
38,202,500
37,257,958
Total Non-Current Liabilities
38,202,500
37,257,958
Total Liabilities
41,426,052
38,085,654
Net Assets
127,394,878
33,684,890
Equity
Contributed equity
16
263,785,659
143,537,936
Reserves
17
(32,681,683)
(31,577,701)
Accumulated losses
18
(101,296,301)
(76,866,298)
Equity attributable to owners of the Company
129,807,675
35,093,937
Non-controlling interest
17
(2,412,797)
(1,409,047)
Total Equity
127,394,878
33,684,890
The above statement of financial position should be read in conjunction with the accompanying
notes.
Lotus Resources Annual Report 2023 l 67
Consolidated
2024
Contributed
Equity
$
Share-Based
Payment
Reserve
$
Foreign
Currency
Reserve
$
Accumulated
Losses
$
Capital
Reserves
$
Non-Controlling
Interest
$
Total
Equity
$
Balance at 1 July 2023
143,537,936
2,995,081
373,178
(76,866,298)
(34,945,960)
(1,409,047)
33,684,890
Loss after income tax
-
-
-
(24,507,450)
-
(736,275)
(25,243,725)
Other comprehensive loss
-
-
(1,284,720)
-
-
(267,475)
(1,552,195)
Total comprehensive loss for the
financial year
-
-
(1,284,720)
(24,507,450)
-
(1,003,750)
(26,795,920)
Transactions with equity holders in their
capacity as equity holders
Shares issued on acquisition of A-Cap
Group
88,622,108
-
-
-
-
-
88,622,108
Shares issued to consultants
802,201
-
-
-
-
-
802,201
Share-based payments
-
2,359,415
-
-
-
-
2,359,415
Exercise of options
2,651,230
(2,101,230)
-
-
-
-
550,000
Expiry of options
-
(77,447)
-
77,447
-
-
-
Issue of shares – capital raising
30,000,000
-
-
-
-
-
30,000,000
Share issue costs
(1,827,816)
-
-
-
-
-
(1,827,816)
Balance at 30 June 2024
263,785,659
3,175,819
(911,542)
(101,296,301)
(34,945,960)
(2,412,797)
127,394,878
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Statement of changes in equity
for the year ended 30 June 2024
68 l Lotus Resources Annual Report 2023
Consolidated
2023
Contributed
Equity
$
Share-Based
Payment
Reserve
$
Option
Premium
Reserve
$
Foreign
Currency
Reserve
$
Accumulated
Losses
$
Capital
Reserves
$
Non-Con
trolling
Interest
$
Total
Equity
$
Balance at 1 July 2022
114,923,546
2,637,335
1,361,434
(44,625)
(68,391,981)
(34,945,960)
(765,530)
14,774,219
Loss after income tax
-
-
-
-
(9,916,736)
-
(643,796)
(10,560,532)
Other comprehensive loss
-
-
-
417,803
-
-
279
418,082
Total comprehensive loss for the
financial year
-
-
-
417,803
(9,916,736)
-
(643,517)
(10,142,450)
Transactions with equity holders in their
capacity as equity holders
Shares issued for deferred consideration
3,000,000
-
-
-
-
-
-
3,000,000
Exercise of options by shareholders
482,044
-
-
-
-
-
-
482,044
Expiry of options
-
(80,985)
-
-
80,985
-
-
-
Share-based payments
1,478,520
438,731
-
-
-
-
-
1,917,251
Share issue costs
(1,346,174)
-
-
-
-
-
-
(1,346,174)
Issue of shares – capital raising
25,000,000
-
-
-
-
-
-
25,000,000
Reclassification of options premium
reserve to accumulated losses
-
-
(1,361,434)
-
1,361,434
-
-
-
Balance at 30 June 2023
143,537,936
2,995,081
-
373,178
(76,866,298)
(34,945,960)
(1,409,047)
33,684,890
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Statement of changes in equity
for the year ended 30 June 2024
Lotus Resources Annual Report 2023 l 69
Statement of cash flows
for the year ended 30 June 2024
Note
Consolidated
2024
$
Consolidated
2023
$
Cash flows from operating activities
Other income received
21,158
102,472
Interest received
1,566,274
934,579
Payments to suppliers and employees
(3,539,520)
(3,337,438)
Payments for care and maintenance
(5,200,147)
(5,731,906)
Finance costs paid
(152,595)
(148,573)
Income tax paid
(22,881)
(161,944)
Net cash used in operating activities
27
(7,327,711)
(8,342,810)
Cash flows from investing activities
Payments for exploration costs
(2,124,901)
-
Purchases of plant and equipment
(1,400,025)
(524,641)
Payment of environmental bond
14
-
(4,518,392)
Cash acquired from acquisition of A-Cap Group
1,237,533
-
Payments for acquisition-related costs
(360,644)
-
Net cash used in investing activities
(2,648,037)
(5,043,033)
Cash flows from financing activities
Proceeds from issue of shares
30,000,000
25,000,000
Share issue transaction costs
(1,827,816)
(1,346,174)
Proceeds from the exercise of options
550,000
482,044
Net cash from financing activities
28,722,184
24,135,870
Net increase in cash and cash equivalents
18,746,436
10,750,027
Cash and cash equivalents at the beginning of the
financial year
15,519,217
4,876,370
Effect of exchange rate changes on cash and cash equivalents
(139,877)
(107,180)
Cash and cash equivalents at the end of the financial year
6
34,125,776
15,519,217
The above statement of cash flows should be read in conjunction with the accompanying notes.
70 l Lotus Resources Annual Report 2023
Notes to the Financial Statements
1.
STATEMENT OF MATERIAL ACCOUNTING POLICY INFORMATION
This financial report includes the consolidated 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.
Supplementary information about the parent entity is disclosed in note 31.
The financial report was authorised for issue on 3 September 2024 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 2024. The Consolidated Entity has not yet assessed the impact of these new or
amended Accounting Standards and Interpretations.
Basis of Preparation
The consolidated financial statements are 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 as otherwise
disclosed below or on the respective notes.
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.
Lotus Resources Annual Report 2023 l 71
1.
STATEMENT OF MATERIAL ACCOUNTING POLICY INFORMATION
(continued)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Lotus
Resources as at 30 June 2024 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.
Notes to the Financial Statements
72 l Lotus Resources Annual Report 2023
1.
STATEMENT OF MATERIAL ACCOUNTING POLICY INFORMATION
(continued)
Foreign currency
Functional and presentation currency
Both the functional and presentation currency of the parent entity and the Group is Australian Dollars
($), with the exception of Lotus (Africa) Limited and Lotus Marula Botswana Proprietary Limited
(formerly A-Cap Resources Botswana (Pty) Ltd) whose functional currency for both Companies is
United States Dollars (US$).
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.
Foreign operations
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.
The consolidated entity’s financial assets during the financial year comprised other receivables and a
security deposit.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 73
1.
STATEMENT OF MATERIAL ACCOUNTING POLICY INFORMATION
(continued)
Investments and other financial assets (continued)
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.
Derecognition of financial assets
The consolidated entity derecognises a financial asset when the contractual rights to the cash flows
from the financial asset expire or it transfers the rights to receive the contractual cash flows in a
transaction in which either:
- substantially all of the risks and rewards of ownership of the financial asset are transferred; or
- the consolidated entity neither transfers nor retains substantially all of the risks and rewards of
ownership and it does not retain control of the financial asset.
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 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.
Notes to the Financial Statements
74 l Lotus Resources Annual Report 2023
1.
STATEMENT OF MATERIAL ACCOUNTING POLICY INFORMATION
(continued)
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.
Asset acquisition
If an entity acquires an asset or a group of assets (including any liabilities assumed) that does not
constitute a business, then the transaction is outside the scope of AASB 3, Business Combination
because it cannot meet the definition of a business combination. Such transaction is accounted for
as an asset acquisition in which the cost of acquisition is generally allocated between the individual
identifiable assets and liabilities in the group based on their relative fair values at the date of acquisition
and does not give rise to a goodwill. Transaction costs are capitalised into the carrying value of individual
assets, rather than being expensed as is the case for business combinations.
In addition, the acquisition of non-financial assets that does not constitute a business in exchange for
equity instruments is in scope of AASB 2, Share-based Payments, where the entity shall measure the
goods or services received, and the corresponding increase in equity, directly at the fair value of the
goods or services received, unless the fair value cannot be estimated reliably.
If the entity cannot estimate reliably the fair value of the goods or services received, the entity shall
measure their fair value, and the corresponding increase in equity, indirectly, by reference to the fair
value of the equity instruments granted.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 75
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 ended 30 June 2024, the Consolidated entity operated in four business
segments and two geographical locations, being the exploration, evaluation and development of
Uranium assets in Africa (comprising the geographical locations Malawi and Botswana), nickel-cobalt
exploration, evaluation and development in Australia, and Corporate activities in Australia.
2024
Operating
Loss
$
Total
Assets
$
Total
Liabilities
$
Uranium – Malawi
(5,155,281)
55,804,758
(38,530,422)
Uranium - Botswana
(70,231)
74,594,058
(335,949)
Nickel-Cobalt-Australia
(10,450,608)
44,680
(448,544)
Corporate
(9,567,605)
38,377,434
(2,111,137)
(25,243,725)
168,820,930
(41,426,052)
2023
Operating
Loss
$
Total
Assets
$
Total
Liabilities
$
Uranium – Malawi
(4,291,973)
55,713,692
(37,300,374)
Corporate
(6,268,559)
16,056,852
(785,280)
(10,560,532)
71,770,544
(38,085,654)
3.
OTHER INCOME
Consolidated
2024
$
Consolidated
2023
$
Finance income - interest
1,648,618
1,093,292
Other income (including foreign currency gains)
21,158
102,472
1,669,776
1,195,764
Notes to the Financial Statements
76 l Lotus Resources Annual Report 2023
3. OTHER INCOME (CONTINUED)
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.
Foreign currency gain or loss on financial assets and financial liabilities
Finance costs attributable to qualifying assets are capitalised as part of the asset (e.g. interest on
borrowings). All other finance gains or losses are realised when earned or expensed in the period in
which they are incurred, respectively. These are mainly foreign currency gains or losses on financial
assets and financial liabilities.
4.
EXPENSES
Consolidated
2024
$
Consolidated
2023
$
(a) Corporate and administrative expenses
Director fees and salaries, including superannuation expense
1,414,998
1,120,574
Accounting and company secretarial fees
416,808
309,074
Legal fees
21,628
23,997
Other corporate and administrative costs
1,755,987
1,434,641
3,609,421
2,888,286
(b) Care and maintenance costs
Processing costs
253,796
299,596
Engineering fees
1,362,760
1,079,480
Site services costs
1,602,889
1,174,746
Safety, health, environment and radiation
253,379
745,138
Security fees
269,143
274,378
3,741,967
3,573,338
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 77
5.
TAXATION
Consolidated
2024
$
Consolidated
2023
$
The prima facie tax on loss before income tax is
reconciled to the income tax expense as follows:
Income tax expense – withholding tax expense on interest
payments
22,881
211,138
Income tax expense and deferred tax assets and liabilities
Income tax expense comprises amounts withheld from interest payments under Malawian tax law.
These amounts are able to be recouped against assessable company income tax. Given the uncertainty
around the timing of the generation of assessable income tax with the Kayelekera Uranium Project
currently on care and maintenance, these amounts have been de-recognised for accounting purposes.
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.
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.
Notes to the Financial Statements
78 l Lotus Resources Annual Report 2023
5.
TAXATION (CONTINUED)
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 2024, the Group has unused tax losses relating to the operating losses incurred under
Malawian tax law by subsidiary Lotus (Africa) Limited, the owner of the Kayelekera Uranium Mine. The
Group also has tax losses relating to the Australian tax consolidation group.
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
2024
$
Consolidated
2023
$
Cash at bank and on hand
625,776
1,019,215
Term deposits
33,500,000
14,500,002
34,125,776
15,519,217
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
As at 30 June 2024, the Group’s term deposits have a maturity date of no more than three months
(2023: three months).
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 79
7.
OTHER CURRENT ASSETS
Consolidated
2024
$
Consolidated
2023
$
Prepayments
492,147
538,529
GST receivables
392,241
403,456
Security deposits
141,475
74,826
Other receivables
189,694
152,745
1,215,557
1,169,556
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 (2023: Nil) in profit or loss in respect of the expected credit
losses for the year ended 30 June 2024.
8.
INVENTORIES
Consolidated
2024
$
Consolidated
2023
$
Spare parts, supplies and consumables
136,986
492,560
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based
on the weighted average cost method. During the financial year, inventories amounting to $49,625
(2023: $15,664) were recognised as an expense and included in the care and maintenances costs in the
statement of profit or loss and other comprehensive income. There are no items which are identified as
obsolete during the financial year.
Notes to the Financial Statements
80 l Lotus Resources Annual Report 2023
9.
PLANT AND EQUIPMENT
Furniture
and Fixtures
$
Mine Plant
and
Equipment
$
Motor
Vehicles
$
Total
$
At 30 June 2024 (Consolidated)
Cost
122,116
3,156,869
232,742
3,511,727
Accumulated depreciation and impairment
(97,744)
(3,112,718)
(136,785)
(3,347,247)
Net carrying amount
24,372
44,151
95,957
164,480
Year ended 30 June 2024 (Consolidated)
At 1 July 2023, net of accumulated depreciation
3,797
-
-
3,797
Acquisition of Lotus Marula Pty Ltd (note 29)
20,044
31,043
130,987
182,074
Additions
12,074
1,428,157
-
1,440,231
Depreciation charge for the financial year
(2,740)
-
-
(2,740)
Depreciation capitalised to exploration and evaluation
assets
(3,690)
(5,265)
(31,250)
(40,205)
Impairment charge for the financial year
(8,404)
(1,415,527)
-
(1,423,931)
Foreign exchange movements
3,291
5,743
(3,780)
5,254
At 30 June 2024, net of accumulated depreciation
24,372
44,151
95,957
164,480
At 30 June 2023 (Consolidated)
Cost
86,708
1,691,926
113,140
1,891,774
Accumulated depreciation and impairment
(82,911)
(1,691,926)
(113,140)
(1,887,977)
Net carrying amount
3,797
-
-
3,797
Year ended 30 June 2023 (Consolidated)
At 1 July 2022, net of accumulated depreciation
4,230
-
-
4,230
Additions
1,790
522,578
-
524,368
Depreciation charge for the financial year
(2,223)
-
-
(2,223)
Impairment charge for the financial year
-
(522,578)
-
(522,578)
At 30 June 2023, net of accumulated depreciation
3,797
-
-
3,797
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.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 81
9.
PLANT AND EQUIPMENT (CONTINUED)
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:
•
Motor vehicles
5 years
•
Furniture and fixtures
3–5 years
•
Mine plant and equipment
9 years
Depreciation method, useful lives and residual values are reassessed at the reporting date.
Derecognition
An item of 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.
10. EXPLORATION AND EVALUATION ASSETS
Consolidated
2024
$
Consolidated
2023
$
Exploration and evaluation expenditure carried forward in
respect of areas of interest (net of amounts written off)
118,178,228
39,532,314
Reconciliation
Carrying amount – 1 July
39,532,314
46,279,048
Acquisition of Lotus Marula Group (Note 29)
88,607,578
-
Exploration and evaluation expenditures
5,302,666
1,064,041
Provision for impairment
(13,509,366)
(1,064,041)
Change in estimates provision for rehabilitation and closure costs
(note 15)
(246,782)
(8,537,051)
Movement in exchange rates
(1,508,182)
1,790,317
Carrying amount – 30 June
118,178,228
39,532,314
Notes to the Financial Statements
82 l Lotus Resources Annual Report 2023
10. EXPLORATION AND EVALUATION ASSETS (CONTINUED)
Exploration and evaluation assets
Exploration and evaluation 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 and charged to profit or loss in
the financial 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 Kayelekera mine on care and
maintenance, any new exploration and evaluation expenditures are impaired and charged to profit or
loss. No impairment has been recognised in relation to the Letlhakane Project from the acquisition date
in November 2023.
As disclosed in note 32, due to the withdrawal of the Group from the Joint Venture Agreement, Wilconi
Pty Ltd ceased its operations effective May 2024 and the exploration and evaluation asset of $10,447,397
relevant to Wilconi’s Nickel-Cobalt Project was fully impaired as at 30 June 2024. The provision for
impairment includes exploration costs recorded as exploration and evaluation expenses in the profit or
loss of $3,061,969 (2023: $1,064,041).
11.
OTHER FINANCIAL ASSET
Consolidated
2024
$
Consolidated
2023
$
Security deposit
14,999,903
15,053,100
Security Deposit
Security deposit consists of a collateral deposit provided by subsidiary Lotus (Africa) Limited to support
a bond issued for rehabilitation obligations of the Kayelekera Uranium Project in Malawi in the amount
of US$10,000,000 (2023: 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 Group as part of the Kayelekera Uranium Project acquisition in 2020.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 83
Notes to the Financial Statements
12.
TRADE AND OTHER PAYABLES
Consolidated
2024
$
Consolidated
2023
$
Trade payables
1,177,188
107,273
Other payables and accruals
1,910,368
704,176
3,087,556
811,449
Trade and other payables
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 liquidity risk related to trade and other payables are disclosed in note 20.
13.
PROVISIONS – CURRENT
Consolidated
2024
$
Consolidated
2023
$
Annual leave provision
111,048
16,247
Termination benefits provision
24,948
-
135,996
16,247
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
Short-term employee benefits are expensed as the related service is provided. A liability is recognised
for the amount expected to be paid if the Company has a present legal or constructive obligation to pay
this amount as a result of past service provided by the employee and the obligation can be estimated
reliably.
Liabilities for wages and salaries, including non-monetary benefits and annual 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.
84 l Lotus Resources Annual Report 2023
13.
PROVISIONS – CURRENT (CONTINUED)
Other long-term employee benefits
The liability for annual leave and long service leave (refer to note 15) 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.
Termination benefits
Termination benefits are expensed at the earlier of when the consolidated entity can no longer
withdraw the offer of those benefits. If benefits are not expected to be settled wholly within 12 months
of the reporting date, then they are discounted.
Defined contribution superannuation
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions into a separate entity and will have no legal or constructive obligation to pay further
amounts. Obligations for contributions to defined contribution plans are recognised as part of
corporate and administrative expenses in profit or loss in the year during which related services are
rendered by employees.
14.
OTHER LIABILITIES
Consolidated
2024
$
Consolidated
2023
$
Environmental bond – current
-
-
Environmental bonds -current
Opening balance – 1 July
-
4,351,143
Repayment of environmental bond
-
(4,518,392)
Foreign currency movement
-
167,249
Closing balance – 30 June
-
-
Environmental bond reimbursement
In the previous financial year, as agreed in the sale and purchase agreement, the final instalment for
US$3,000,000 of the reimbursement of the US$10,000,000 cash account which had previously been
advanced by the former owners of Lotus (Africa) Limited to provide security for the environmental bond
in favour of the Government of Malawi (Environmental Bond) was settled in March 2023.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 85
Notes to the Financial Statements
15.
PROVISIONS – NON-CURRENT
Consolidated
2024
$
Consolidated
2023
$
Rehabilitation and closure provision
38,167,789
37,257,958
Long-service leave (note 13)
34,711
-
38,202,500
37,257,958
Reconciliation – Rehabilitation and closure provision
Opening balance – 1 July
37,257,958
42,728,847
Decrease in provision for closure cost
(246,782)
(8,537,051)
Accretion of interest
1,309,702
1,428,869
Foreign currency movements
(153,089)
1,637,293
Closing balance – 30 June
38,167,789
37,257,958
Rehabilitation and closure provision
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 reporting 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 planning for the intended restart of operations at the Kayelekera mine a closure cost
estimate was prepared in the previous financial year. 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 management’s estimate of the likely timing of
the expenditures. Similar with the previous financial year, the cost estimate was 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 $14,999,903 (2023:
$15,053,100) or US$10,000,000 as outlined in note 11. 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.
86 l Lotus Resources Annual Report 2023
16.
CONTRIBUTED EQUITY
Consolidated
2024
$
Consolidated
2023
$
Fully paid ordinary shares
263,785,659
143,537,936
2024
Number of
Shares
2023
Number of
Shares
2024
$
2023
$
Movements during the year:
Opening balance – 1 July
1,343,982,044
1,206,765,153
143,537,936
114,923,546
Issue of shares – acquisition of Lotus
Marula Group (note 29)
361,722,889
-
88,622,108
-
Issue of shares – capital raising
100,000,000
104,166,667
30,000,000
25,000,000
Shares issued to acquiree financial
advisor in lieu of fees
3,274,294
-
802,201
-
Exercise of options by shareholders
10,000,000
12,050,861
550,000
482,044
Shares issued to employees upon
exercise of options
12,236,879
8,012,350
2,101,230
1,478,520
Shares issued for deferred
consideration
-
12,987,013
-
3,000,000
Share issue costs
-
-
(1,827,816)
(1,346,174)
Closing balance – 30 June
1,831,216,106
1,343,982,044
263,785,659
143,537,936
Ordinary shares
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.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 87
Notes to the Financial Statements
17. RESERVES AND NON-CONTROLLING INTEREST
Consolidated
2024
$
Consolidated
2023
$
Share-based payment reserve
3,175,819
2,995,081
Capital reserve
(34,945,960)
(34,945,960)
Foreign currency reserve
(911,542)
373,178
(32,681,683)
(31,577,701)
Movement in reserves:
Share based payment reserve
Opening balance – 1 July
2,995,081
2,637,335
Share-based payment expense
2,359,415
1,917,251
Transferred to share capital from exercise of options
(2,101,230)
(1,478,520)
Transferred to accumulated losses upon expiry of options
(77,447)
(80,985)
Closing balance – 30 June
3,175,819
2,995,081
Capital reserve
Opening and closing balance
(34,945,960)
(34,945,960)
Option premium reserve
Opening balance – 1 July
-
1,361,434
Reclassification to accumulated losses
-
(1,361,434)
Closing balance – 30 June
-
-
Foreign exchange reserve
Opening balance – 1 July
373,178
(44,625)
Foreign exchange differences on translation of foreign operations
(1,284,720)
417,803
Closing balance – 30 June
(911,542)
373,178
Non-controlling interest
Opening balance – 1 July
(1,409,047)
(765,530)
Loss after income tax and other comprehensive loss
(1,003,750)
(643,517)
Closing balance – 30 June
(2,412,797)
(1,409,047)
Movement in options:
Number
Number
Opening balance – 1 July
31,131,780
48,176,742
Granted
23,895,506
7,184,651
Exercised
(22,236,879)
(19,661,425)
Expired
(1,682,408)
(4,568,188)
Closing balance – 30 June
31,107,999
31,131,780
Weighted average exercise price of outstanding options (Cents)
3.86
1.77
Weighted average remaining life of outstanding options (Years)
2.99
1.50
88 l Lotus Resources Annual Report 2023
17. RESERVES AND NON-CONTROLLING INTEREST(CONTINUED)
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.
Option lapsed
No options lapsed during the year (2023: none).
Option expired and cancelled
1,682,408 options expired or were cancelled during the year (2023:4,568,188).
Foreign currency translation reserve
The foreign currency translation reserve records exchange rate differences on translating foreign
operations.
18.
ACCUMULATED LOSSES
Consolidated
2024
$
Consolidated
2023
$
Balance - 1 July
(76,866,298)
(68,391,981)
Loss for the financial year
(24,507,450)
(9,916,736)
Reclassification of options premium reserve
-
1,361,434
Transfer from share-based payments reserve – expiry of options
77,447
80,985
Closing balance – 30 June
(101,296,301)
(76,866,298)
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 89
Notes to the Financial Statements
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 disposal 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.
19.
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
90 l Lotus Resources Annual Report 2023
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 the prior year in relation to all of the exposures.
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
is 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:
Carrying Amount
Consolidated
2024
$
Consolidated
2023
$
Cash and cash equivalents
34,125,776
15,519,217
Other assets (excluding prepayments, GST receivables)
331,169
227,571
Other financial asset (security deposit)
14,999,903
15,053,100
49,456,848
30,799,888
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 91
Notes to the Financial Statements
20.
FINANCIAL RISK MANAGEMENT (CONTINUED)
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.
Carrying
amount
Contractual
cash flows
1 year
2-5 years
>5 years
Consolidated - 2024
Financial Liabilities
Trade and other payables
(3,087,556)
(3,087,556)
(3,087,556)
-
-
(3,087,556)
(3,087,556)
(3,087,556)
-
-
Consolidated – 2023
Financial Liabilities
Trade and other payables
(811,449)
(811,449)
(811,449)
-
-
(811,449)
(811,449)
(811,449)
-
-
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates
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 the Group entities.
The Group operates internationally and is primarily exposed to foreign exchange risk arising from
currency exposures to the United States dollar, Malawi Kwacha and Botswana Pula.
92 l Lotus Resources Annual Report 2023
20.
FINANCIAL RISK MANAGEMENT (CONTINUED)
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:
Carrying Amount
Consolidated
2024
$
Consolidated
2023
$
Variable rate instruments
Financial assets
49,125,679
30,572,317
The Group’s variable rate instruments comprised the cash and cash equivalents and security deposit.
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 2023.
+100 basis points
-100 basis points
Profit
$
Equity
$
Profit
$
Equity
$
Consolidated - 2024
Financial instruments with variable interest rate
Financial assets
491,257
491,257
(491,257)
(491,257)
Consolidated – 2023
Financial instruments with variable interest rate
Financial assets
305,723
305,723
(305,723)
(305,723)
The weighted average effective interest rate on variable rate instruments was 4.77% (2023: 4.30%).
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 93
Notes to the Financial Statements
20.
FINANCIAL RISK MANAGEMENT (CONTINUED)
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.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt.
Net debt is calculated as total borrowings less cash and cash equivalents.
94 l Lotus Resources Annual Report 2023
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 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.
An award with a service-related condition requires the counterparty to complete a specified period of
services. The fair value at grant date is trued up for failure to satisfy the condition. The service condition
is considered not met if the counterparty receiving an award, regardless of reason ceases to provide
the service during the vesting period and the Board does not exercise its discretion otherwise. If the
Group terminates the services of an employee and prevents the required service from being provided,
then such termination is accounted for as a forfeiture.
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.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 95
Notes to the Financial Statements
22.
SHARE BASED PAYMENTS (CONTINUED)
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 incentive 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 financial year.
2024
Options No.
Weighted average
fair value
Balance - 1 July
31,131,780
$0.199
Granted during the financial year
23,895,506
$0.259
Vested and exercised during the financial year
(22,236,879)
$0.172
Lapsed or expired during the financial year
(1,682,408)
$0.228
Closing balance – 30 June
31,107,999
$0.259
2023
Options No.
Weighted average
fair value
Balance - 1 July
48,176,742
$0.194
Granted during the financial year
7,184,651
$0.214
Vested and exercised during the financial year
(19,661,425)
$0.185
Lapsed or expired during the financial year
(4,568,188)
$0.275
Closing balance – 30 June
31,131,780
$0.199
Consolidated
2024
$
Consolidated
2023
$
Share based payments expense
3,161,616
1,917,251
96 l Lotus Resources Annual Report 2023
22.
SHARE BASED PAYMENTS (CONTINUED)
Below are options granted by the Company during the financial year 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.
Options
Number
Grant date
Expiry date
Exercise
Price
Spot Price
at Grant
Date
Dividend
Yield
Risk-free
Interest
Rate
Fair Value
at Grant
Date
46,060
30/10/2023
31/10/2025
$0.00 each
$0.220
Nil
3.870%
$0.220
1,961,529
30/10/2023
31/10/2026
$0.00 each
$0.220
Nil
3.870%
$0.220
1,266,661
30/10/2023
31/10/2028
$0.00 each
$0.220
Nil
3.870%
$0.220
1,156,757
28/11/2023
31/10/2026
$0.00 each
$0.280
Nil
3.870%
$0.280
1,098,919
28/11/2023
31/10/2028
$0.00 each
$0.280
Nil
3.870%
$0.280
4,000,000
20/05/2024
19/05/2027
$0.30 each
$0.475
Nil
4.110%
$0.263
The pre-determined performance conditions relating to the above options include:
•
safety performance conditions;
•
conditions related to financial performance against budget;
•
project performance conditions relating to the Mine Development Agreement and offtake
contracting;
•
a resource growth target; and
•
performance against environmental, social and governance targets.
The vesting conditions for the key management personnel is disclosed in the “Audited Remuneration
Report”.
In addition, during the financial year, 12,000,000 options were granted to Directors with a service-
related vesting condition.
Options
Number
Grant date
Expiry date
Exercise
Price
Spot Price
at Grant
Date
Dividend
Yield
Risk-free
Interest
Rate
Fair Value
at Grant
Date
12,000,000
28/11/2023
30/09/2026
$0.00 each
$0.28
Nil
3.870%
$0.280
Below are options granted during the financial year 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
1,266,661
30/10/2023
31/10/2028
$0.00 each
$0.22
Nil
3.870%
$0.1535
1,098,919
28/11/2023
31/10/2028
$0.00 each
$0.28
Nil
3.870%
$0.2145
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 97
Notes to the Financial Statements
22.
SHARE BASED PAYMENTS (CONTINUED)
Below are options granted during the previous financial year 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.
Options
Number
Grant date
Expiry date
Exercise
Price
Spot Price
at Grant
Date
Dividend
Yield
Risk-free
Interest
Rate
Fair Value
at Grant
Date
1,767,624
14/11/2022
31/10/2025
$0.00 each
$0.240
Nil
3.18%
$0.240
250,000
14/11/2022
05/01/2025
$0.00 each
$0.240
Nil
3.18%
$0.240
250,000
14/11/2022
05/01/2026
$0.00 each
$0.240
Nil
3.18%
$0.240
1,109,676
14/11/2022
31/10/2027
$0.00 each
$0.240
Nil
3.18%
$0.240
930,233
25/11/2022
31/10/2025
$0.00 each
$0.205
Nil
3.18%
$0.205
883,721
25/11/2022
31/10/2027
$0.00 each
$0.205
Nil
3.18%
$0.205
Below are options granted during the previous financial year 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
1,109,676
14/11/2022
31/10/2027
$0.00 each
$0.240
Nil
3.18%
$0.188
883,721
25/11/2022
31/10/2027
$0.00 each
$0.205
Nil
3.18%
$0.164
23. AUDITOR’S REMUNERATION
The following amounts were paid or payable for services provided by the auditors of the Group and its
related practices.
Consolidated
2024
$
Consolidated
2023
$
Audit and review services:
RSM Australia Partners
- audit and review of financial reports
69,000
61,300
Grant Thornton
- audit of financial report
7,867
-
Ernst & Young Malawi
- audit of financial report
23,850
36,354
100,717
97,654
98 l Lotus Resources Annual Report 2023
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:
Consolidated
2024
$
Consolidated
2023
$
Short-term employee benefits
1,014,444
846,439
Post-employment benefits
81,853
70,405
Share-based payments
2,288,002
1,255,453
3,384,299
2,172,297
d.
Loans to related parties
No loans were advanced to related parties during the reporting year (2023: Nil).
e.
Amounts owed to related parties
As at the reporting date, $101,694 were owing to related parties (2023: $170,860) 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 performed on
an arm’s length basis and on normal commercial terms. During the financial year, the Company incurred
costs under this arrangement totalling $294,037 (2023: $140,052). There was no balance owing to
Thomson Geer as at 30 June 2024 in relation to the provision of these services (2023: $107,965).
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, general office services,
bookkeeping services, company secretarial services, ESG consulting services, corporate development
and investor relation services and technical exploration and geological staff to the Company at cost
plus 5%. During the financial year the Company incurred costs under this arrangement totalling
$814,482 (2023: $635,589). 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 in country services. These services provided by Matador Capital were performed on an arm’s
length basis and on normal commercial terms. There is a balance of $78,829 (2023: $62,895) owing to
Matador Capital as at 30 June 2024 in relation to the provision of these services.
Ms Dixie Marshall, who is a Non-Executive Director of the Company and is Chief Growth Officer at
advertising company Marketforce. The Company incurred costs with Marketforce totalling $36,236
on arm’s length normal commercial terms for a corporate rebranding exercise including a website re-
design and development (2023: nil). There was a balance of $22,865 (2023: nil) owing to Marketforce
as at 30 June 2024 in relation to the provision of those services.
There were no other related party transactions with key management personnel during the year.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 99
Notes to the Financial Statements
25.
COMMITMENTS
Exploration Project commitments
Commitments for tenement rentals and expenditure commitments due within one year amounted to
$5,519,000 (2023: $47,383). The expenditure commitments at 30 June 2024 predominately comprise
purchase orders issued for the Kayelekera Front End Engineering Design (FEED) workstreams and
contractual commitments relating to the Letlhakane drilling program in progress in Botswana.
26.
EARNINGS PER SHARE
Consolidated
2024
$
Consolidated
2023
$
Reconciliation of earnings to profit or loss:
Loss attributable to owners of the Company
(24,507,450)
(9,916,736)
Loss after income tax used for basic and dilutive loss per share
(24,507,450)
(9,916,736)
Weighted average number of ordinary shares
outstanding during the financial year used in
calculating basic and dilutive loss per share
1,593,355,318
1,309,279,308
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 financial 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.
100 l Lotus Resources Annual Report 2023
27.
RECONCILIATION OF CASH FLOWS USED IN OPERATING ACTIVITIES
Consolidated
2024
$
Consolidated
2023
$
Cash flows from operating activities
Loss after income tax
(25,243,725)
(10,560,532)
Adjustments for:
Depreciation expense
2,740
2,223
Share based payments
3,161,616
1,917,251
Provision for rehabilitation - accretion of interest
1,309,702
1,428,869
Foreign currency translation difference
(18,104)
48,914
Impairment charges
11,871,328
522,578
Adjusted operating loss before changes in working capital
(8,916,443)
(6,640,697)
Change in other current assets, including inventories
145,169
(657,796)
Change in trade and other payables
1,443,563
(1,044,317)
Net cash used in operating activities
(7,327,711)
(8,342,810)
28.
CONTINGENT LIABILITIES
Kayelekera Uranium Project
As at 30 June 2024, the Company had three agreements providing royalty payments to local government
and former owners for production from the Kayelekera Uranium Project. Royalties’ payable on production
comprises an uncapped royalty on revenue to the Malawi Government of 5%, a 3.5% royalty on revenue
capped at $5,000,000 to Paladin Energy Limited and an uncapped 0.75% royalty on revenue to Power
Resources Inc, a subsidiary of Cameco Corporation. Liability to make royalty payments only arises upon
the restart of production from Kayelekera.
The Company also has in place a US$10,000,000 cash backed environmental performance bond of
$14,999,903 (2023: $15,053,100) as outlined in note 11. 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.
Letlhakane Uranium Project
As required under the Mines and Minerals Act of Botswana to enable the grant of a mining licence, Lotus
Marula Pty Ltd (or referred to as “Lotus Marula” and formerly A-Cap Energy Limited) provided a parent
company guarantee for wholly owned subsidiary Lotus Marula Botswana Proprietary Limited (formerly
A-Cap Resources Botswana Pty Ltd) (A-Cap Botswana), the holder of the Letlhakane Uranium Project,
for the performance of A-Cap Botswana’s obligations under the mining licence and Mines and Minerals
Act of Botswana. The guarantee was provided on 14 August 2015 and will remain in place for the duration
of the mining licence.
Wilconi Nickel Project
Under the terms of the Farm-In and Joint Venture Agreement for the Wilconi Project, Lotus Marula’s
subsidiary, Wilconi Pty Ltd, has provided a guarantee to the tenement holder for obligations under the
agreement. With the withdrawal from the Joint Venture Agreement effective 30 May 2024 as set out in
note 32 the guarantee has been terminated.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 101
Notes to the Financial Statements
29.
ACQUISITION OF LOTUS MARULA PTY LTD (FORMERLY A-CAP ENERGY
LIMITED)
On 13 July 2023, the Company announced that it had agreed to merge with A-Cap via a scheme of
arrangement (Scheme) under which the Company would acquire all of the A-Cap shares on issue (the
Acquisition).
On 12 July 2023, prior to the merger announcement, the Company and A-Cap entered into a Scheme
Implementation Deed (SID). The SID stipulated that the Company shall acquire all of the A-Cap shares
(the Share Scheme) and A-Cap Listed Options (the Option Scheme) subject to the terms and conditions
to be executed by the respective party/parties as outlined in the Scheme.
Both the Share Scheme and Option Scheme were approved by the A-Cap Shareholders on 20 October
2023 with the final Federal Court approval provided on 26 October 2023. The Acquisition was completed
on 7 November 2023 (the Implementation Date).
A-Cap is an ASX-listed company incorporated in Australia. The subsidiaries of A-Cap at the
Implementation Date were as follows:
Entity
Country of
incorporation
Equity
Holding
Immediate holding
company
Lotus Marula Botswana Proprietary Limited**
Botswana
100%
Lotus Marula Pty Ltd*
Pulse Resources Botswana (Pty) Ltd
Botswana
100%
Lotus Marula Botswana
Proprietary Limited
Wilconi Pty Ltd
Australia
100%
Lotus Marula Pty Ltd*
*Formerly A-Cap Energy Limited
**Formerly A-Cap Resources Botswana Proprietary Limited
The issued A-Cap securities and the equivalent Lotus shares were as follows:
Number of A-Cap
Shares/Options
Lotus Shares
Issued
Description
Share on issue
1,272,050,471
359,336,331
Unlisted options
54,000,000
2,294,445
Listed options
46,039,445
92,113
Total
1,372,089,916
361,722,889
The Acquisition was finalised for an offer price of approximately $0.0521 per A-Cap Share, representing
a premium of 21% to the closing A-Cap Share price on 11 July 2023 of $0.043 (being the last trading day
for A-Cap Shares and Lotus Shares prior to the announcement).
Upon implementation of the Share Scheme, the Company’s shareholders held approximately 79% of
the merged Group and A-Cap shareholders held approximately 21%.
102 l Lotus Resources Annual Report 2023
29.
ACQUISITION OF LOTUS MARULA PTY LTD (FORMERLY A-CAP ENERGY
LIMITED)(CONTINUED)
The fair value of the net assets acquired and liabilities assumed upon the Implementation Date were
summarised below:
7 November 2023
$
Fair value of Lotus shares (361,722,889 shares at $0.245 cents per share)
88,622,108
Transaction costs
896,894
89,519,002
Identifiable fair value of net assets of A-Cap acquired:
Cash and cash equivalents
1,237,533
Trade and other receivables
148,657
Property, plant and equipment
182,074
Exploration and evaluation assets
88,607,578
Trade and other payables
(574,844)
Provisions
(81,996)
89,519,002
Management assessed that A-Cap had limited assets and no business inputs, processes, and outputs.
As a result, the Acquisition was accounted for as an asset acquisition.
For the eight months ended 30 June 2024, A-Cap’s net losses of $10,464,994 (including the $10,447,397
impairment losses of exploration and evaluation assets of Wilconi Pty Ltd) were incorporated to the
Group’s results.
30.
INTEREST IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following
subsidiaries in accordance with the accounting policy described in note 1:
Name
Country of
incorporation
Ownership
Interest
2024
%
Ownership
Interest
2023
%
Providence Metals Pty Ltd
Australia
100%
100%
Lily Resources Pty Ltd
Australia
100%
100%
Lotus (Africa) Limited
Malawi
85%
85%
Lotus Marula Pty Ltd*
Australia
100%
-
Wilconi Pty Ltd
Australia
100%
-
Lotus Marula Botswana Proprietary Limited**
Botswana
100%
-
*Formerly A-Cap Energy Limited
**Formerly A-Cap Resources Botswana Proprietary Limited
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 103
Notes to the Financial Statements
30.
INTEREST IN SUBSIDIARIES (CONTINUED)
As discussed in note 29, Lotus Marula Pty Ltd, Wilconi Pty Ltd and Lotus Marula Botswana Proprietary
Limited are the entities within A-Cap Group which the Company acquired effective 7 November 2023.
The results of operations for the eight months ended 30 June 2024 of the aforementioned entities
were consolidated with the Group.
Summarised financial information
Summarised financial information of the subsidiary with non-controlling interest that are material to
the consolidated entity are set out as below
Lotus (Africa) Limited
2024
$
2023
$
Statement of profit or loss and other comprehensive income
Revenue
-
-
Expenses
(4,885,619)
(4,080,835)
Loss before income tax
(4,885,619)
(4,080,835)
Tax expense
(22,881)
(211,138)
Loss after income tax
(4,908,500)
(4,291,973)
Other comprehensive income
(1,783,167)
1,862
Total comprehensive income
(6,691,667)
(4,290,111)
Statement of financial position
Current assets
602,444
1,047,290
Non-current assets
81,986,658
82,277,424
Total assets
82,589,102
83,324,714
Current liabilities
(362,633)
(42,416)
Non-current liabilities
(69,171,327)
(73,767,584)
Total liabilities
(69,533,960)
(73,810,000)
Net assets
13,055,142
9,514,714
Statement of cash flows
Cash used in operating activities
(3,034,177)
(8,777,425)
Cash from financing activities
3,030,963
8,786,849
Other information
Loss attributable to non-controlling interest
736,275
643,796
Accumulated non-controlling interest at the end of reporting period
2,412,797
1,409,047
104 l Lotus Resources Annual Report 2023
31.
PARENT ENTITY DISCLOSURES
Set out below is the supplementary information about the parent entity.
2024
$
2023
$
Statement of profit or loss and other comprehensive income
Loss after income tax
(15,005,828)
(13,734,621)
Total comprehensive loss
(15,005,828)
(13,734,621)
Statement of financial position
Total current assets
34,323,913
16,053,055
Total assets
122,947,825
16,056,852
Total current liabilities
(2,095,186)
(785,280)
Total liabilities
(2,095,186)
(785,280)
Net assets
120,852,639
15,271,572
Equity
Issued capital
263,785,659
143,537,936
Share-based payments reserve
3,175,819
2,995,081
Accumulated losses
(146,108,839)
(131,261,445)
Total equity
120,852,639
15,271,572
Guarantees
Lotus Resources Limited has no guarantees other than as disclosed in note 28.
Parent entity contingency
The directors of the Company are of the opinion that a provision is not required in respect of the success
fee relevant to the agreement entered with an external financing consultant as at 30 June 2024, as the
key milestone have not been achieved and the amount is not capable of reliable measurement.
Other Commitments and Contingencies
Lotus Resources Limited has no other commitments and contingencies other than as disclosed in
notes 25 and 28.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 105
Notes to the Financial Statements
32.
WITHDRAWAL
FROM
JOINT
VENTURE
AGREEMENT
AND
DISCONTINUANCE OF NICKEL-COBALT PROJECT
The Board determined during the period that it would divest the Group’s 55% interest in the non-core
Wilconi Nickel-Cobalt Project, a legacy of the merger with A-Cap Energy (refer to note 29). The terms
of the Joint Venture Agreement allowed for the Group’s withdrawal from the Wilconi’ Nickel-Cobalt
Project which became effective on 30 May 2024 (the Termination date).
The decision was made to maintain the Group’s focus on the Kayelekera and Letlhakane uranium
projects. Lotus acquired 100% of A-Cap, including its 55% stake in the Wilconi Joint Venture, in late
2023. The asset was seen as non-core to this deal. Analysis undertaken by Lotus in recent months
to determine Wilconi’s potential for other minerals, including lithium or rare earths, did not show
prospectivity. As a result of the poor economics of the nickel project in the current market, the lack of
alternative minerals and ongoing significant holding costs associated with the tenements, the decision
was made to withdraw, effective 30 May 2024.
As part of the withdrawal, the Group fully impaired the exploration and evaluation assets amounting to
$10,447,397.
There were no intercompany transactions from the Termination date with the intercompany loan to
fund the Project being fully written off.
As at and for the financial year ended 30 June 2024, the following outstanding assets and liabilities and
results of discontinued operations were attributable to Wilconi which were not separately disclosed in
the Group’s statement of financial position and statement of profit or loss and other comprehensive
income in accordance with the relevant standard:
A.
Financial position of discontinued operation
Description
2024
$
Cash and cash equivalents
8,236
GST
2,500
Motor Vehicle – net book value
33,944
Exploration and evaluation assets
10,447,397
Provision for impairment of exploration and evaluation assets
(10,447,397)
Trade and other payables
(448,544)
Net liabilities
(403,864)
B.
Results of discontinued operation
Description
2024
$
Finance costs - net
(3,211)
Impairment of exploration and evaluation assets
(10,447,397)
Loss before income tax
(10,450,608)
Income tax
-
Loss after income tax
(10,450,608)
106 l Lotus Resources Annual Report 2023
33.
EVENTS OCCURING AFTER THE REPORTING DATE
On 26 July 2024, the Company’s Mine Development Agreement (MDA) with the Government of Malawi
for the Group’s Kayelekera uranium mine project had been signed. As announced on 31 July 2024, the
MDA secures a stable fiscal regime for the uranium mine operations in Malawi for 10 years and also
provides legal protection on security of tenure, dispute resolution and expropriation. Refer to the
Review of Activities section in the Directors’ Report for more details.
On 9 August 2024 a restructure of the Board and management team was undertaken following execution
of the MDA to reflect the transition into the project delivery phase at Kayelekera. Refer to the Directors’
Report for more information.
On 3 September the Company announced the execution of a binding sales agreement and an unsecured
loan agreement with Curzon Uranium for US$15 million. As part of Curzon’s binding agreement to buy
700,000 lbs of uranium for delivery from 2026-2029, Curzon is granted an option to buy an additional
100,000 lbs per annum for 2030 to 2032 (300,000 lbs total) through fixed-price buyer options for the
purchase of uranium, subject to Lotus using the unsecured loan facility. Both agreements are conditional
upon the Company raising capital and making the decision to restart production at Kayelekera.
On the same day the Company announced the execution of a term sheet with North American utility
PSEG Nuclear LLC for the delivery of 800,000 lbs of uranium from 2026-2029. The term sheet is non-
binding and conditional on the execution of a full-form document within the next four months, as well
as the Company taking a decision to restart Kayelekera.
There were no other matters or circumstances that have arisen since 30 June 2024 that have significantly
affected, or may significantly affect the Group’s operations, the results of those operations, or the
Group’s state of affairs in future financial years.
Notes to the Financial Statements
Lotus Resources Annual Report 2023 l 107
Consolidated Entity Disclosure Statement
The consolidated entity disclosure statement as at 30 June 2024 were as follows:
Name***
Country of
Incorporation
Ownership
Interest (%)
Tax Residency
Jurisdiction
for Foreign
Tax Resident
Lotus Resources Limited
Australia
Parent Entity
Australia
N/A
Providence Metals Pty Ltd
Australia
100%
Australia
N/A
Lily Resources Pty Ltd
Australia
100%
Australia
N/A
Wilconi Pty Ltd
Australia
100%
Australia
N/A
Lotus Marula Pty Ltd *
Australia
100%
Australia
N/A
Lotus (Africa) Limited
Malawi
85%
Foreign
Malawi
Lotus Marula Botswana Proprietary
Limited**
Botswana
100%
Foreign
Botswana
Pulse Resources Proprietary Limited
Botswana
100%
Foreign
Botswana
*Formerly A-Cap Energy Limited
**Formerly A-Cap Resources Botswana Proprietary Limited
*** All entities are body corporates.
108 l Lotus Resources Annual Report 2023
Directors’ Declaration
In the directors’ opinion:
•
the attached financial statements and notes comply with the Corporations Act 2001, the
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements;
•
the attached financial statements and notes comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board as stated in note 1 to the
financial statements;
•
the attached financial statements and notes give a true and fair view of the Group’s financial
position as at 30 June 2024 and of its performance for the financial year ended on that date;
•
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable; and
•
the information disclosed in the attached consolidated entity disclosure statements is true and
correct.
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 3rd day of September 2024.
Lotus Resources Annual Report 2023 l 109
Independent Auditor’s Report
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
www.rsm.com.au
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
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 consolidated statement of financial position as at 30 June 2024, the consolidated statement
of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of
cash flows for the year then ended, and notes to the financial statements, including material accounting policy
information, the consolidated entity disclosure statement 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 2024 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 (including independence standards) (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.
110 l Lotus Resources Annual Report 2023
Independent Auditor’s Report
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 10 in the financial statements
The
Group
has
capitalised
exploration
and
evaluation expenditure with a carrying value of
$118,178,228 as at 30 June 2024.
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 significant management judgments involved in
assessing the carrying value of the asset including:
•
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.
Our audit procedures included:
•
Assessing the Group’s accounting policy for
compliance with Australian Accounting Standards;
•
Obtaining management reconciliation of capitalised
exploration and evaluation expenditure by area of
interest and agreeing to general ledger;
•
Assessing whether the right to tenure of the area of
interest is current;
•
Testing a sample of additions to supporting
documentation
and
ensuring
the
amounts
capitalised during the year are in compliance with
the Group’s accounting policy and relate to the area
of interest;
•
Assessing the amount of evaluation expenditure
written off during the year;
•
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
reading
relevant
supporting
documentation,
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.
Acquisition of Lotus Marula Pty Ltd (previously known as A-Cap Energy Limited) - Refer to Note 29 in
the financial statements
Acquisition of Lotus Marula Pty Ltd (previously known
as A-Cap Energy Limited) was completed on 7
November 2023. The fair value of net assets acquired
upon implementation date was $89,519,002, of which
$88,607,579 has been capitalised to exploration and
evaluation assets.
We considered this transaction to be a key audit
matter as there is risk of incorrect accounting
treatment for the acquisition in terms of whether the
acquisition is a business combination in accordance
with AASB 3 Business Combination or an Asset
Acquisition.
Our audit procedures included:
•
Reviewing
the
acquisition
agreements
to
understand the transaction, acquisition date and the
related accounting considerations;
•
Evaluating management’s accounting assessment
on acquisition accounting in accordance with
Australian Accounting Standards;
•
Assessing management’s determination of the
acquisition date, fair value of consideration paid and
fair value of net assets acquired; and
•
Assessing the appropriateness of the related
financial statements disclosure.
Lotus Resources Annual Report 2023 l 111
Independent Auditor’s Report
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 $38,167,789 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:
•
Assessing the Group’s accounting policy for
compliance with Australian Accounting Standards;
•
Critically assessing development activities during
the
year
to
ascertain
impact
on
area
of
disturbances;
•
Testing key inputs such as inflation rate, discount
rate and timing of rehabilitation;
•
Assessing of the work performed by management’s
expert, including the competency and objectivity of
the expert;
•
Assessing the mathematical accuracy of the model
used to calculate the provision;
•
Assessing the movement in the provision has been
accounted for in accordance with Australian
Accounting Standards; 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 2024 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.
112 l Lotus Resources Annual Report 2023
Independent Auditor’s Report
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of:
a. the financial report (other than the consolidated entity disclosure statement) that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001; and
b. the consolidated entity disclosure statement that is true and correct in accordance with the Corporations
Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i.
the financial report (other than the consolidated entity disclosure statement) that gives a true and fair view
and is free from material misstatement, whether due to fraud or error; and
ii.
the consolidated entity disclosure statement that is true and correct and is free of 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/admin/file/content102/c3/ar1_2020.pdf. This
description forms part of our auditor's report.
Lotus Resources Annual Report 2023 l 113
Independent Auditor’s Report
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2024.
In our opinion, the Remuneration Report of Lotus Resources Limited, for the year ended 30 June 2024, 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
Perth, WA
ALASDAIR WHYTE
Dated: 3 September 2024
Partner
114 l Lotus Resources Annual Report 2023
ASX Additional Information
Additional information required by Australian Securities Exchange Ltd and not shown elsewhere in this
report is as follows. The information is current as at 2 September 2024.
a.
Twenty largest shareholders
The names of the twenty largest holders of quoted ordinary shares are:
Rank
Name
Units
% Units
1
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
268,863,214
14.68
2
CITICORP NOMINEES PTY LIMITED
217,637,841
11.88
3
BNP PARIBAS NOMINEES PTY LTD
144,790,911
7.90
4
DAVEY HOLDINGS (AUS) PTY LTD
116,745,571
6.37
5
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
97,516,098
5.32
6
BNP PARIBAS NOMINEES PTY LTD
91,595,452
5.00
7
BNP PARIBAS NOMS PTY LTD
62,503,913
3.41
8
DESERTFOX PTY LTD
46,954,438
2.56
9
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
34,000,000
1.86
10
SANDHURST TRUSTEES LTD
27,478,985
1.50
11
DAVEY HOLDINGS (AUS) PTY LTD
21,740,000
1.19
12
MRS PAMELA JULIAN SARGOOD
19,750,000
1.08
13
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
18,819,799
1.03
14
TAURUS CORPORATE SERVICES PTY LTD
18,100,000
0.99
15
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
17,640,491
0.96
16
RL HOLDINGS PTY LTD
17,250,000
0.94
17
NETWEALTH INVESTMENTS LIMITED
12,458,252
0.68
18
NETWEALTH INVESTMENTS LIMITED
12,393,280
0.68
19
DAVEY MANAGEMENT (AUS) PTY LTD
11,612,887
0.63
20
UBS NOMINEES PTY LTD
11,376,559
0.62
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
1,269,227,691
69.28
Total Remaining Holders Balance
562,539,215
30.72
Lotus Resources Annual Report 2023 l 115
ASX Additional Information
The names of the holders of unlisted options are:
Rank
Name
Units
% Units
1
MR KEITH BOWES
9,687,851
25.12
2
MR GREGORY BITTAR
8,000,000
20.74
3
BOUCHI PTY LTD
3,000,000
7.78
4
MR MICHAEL BARRIE BALL
2,357,984
6.12
4
MR MICHAEL DA COSTA
2,000,000
5.19
4
DAVEY HOLDINGS (AUS) PTY LTD
2,000,000
5.19
4
MR TIMOTHY M HANLON
2,000,000
5.19
4
MR WARREN KING
2,000,000
5.19
9
MS DIXIE INA MARSHALL + MR LUKE MORFESSE
2,000,000
5.19
10
MR THEO CORNELIUS KEYTER
1,919,621
4.98
11
MR JACOBUS CHARL CILLIERS
1,120,197
2.91
12
CATHERINE ANDERSON
657,028
1.70
13
MS AMY SULLIVAN
498,954
1.29
14
TSI CAPITAL PTY LTD
424,000
1.10
15
MRS TARA ELIZABETH KILEY + MR ADAM KILEY
334,884
0.87
16
MR MARTIN ARNO STULPNER
301,039
0.78
17
MR BRIAN SCOTT
81,861
0.21
18
ZENNY CUSTODIO
67,500
0.18
19
MR TRENTAN GRANT BURNAFORD DAVEY
30,678
0.08
20
MS JAYDE PEARL ROBINSON
27,802
0.07
21
MISS ASHLEE MICHELLE GORMAN
21,091
0.05
22
MISS NADINE VERENA MICHAELA MAYER
15,659
0.04
23
MS JESSICA JANETH CABALLERO GONGORA
7,225
0.02
24
FRANK HERNAN TERRONES FERNANDEZ
3,825
0.01
Totals: Holders of Unlisted Options
38,557,199
100
116 l Lotus Resources Annual Report 2023
ASX Additional Information
a.
Distribution of equity security holders
Ordinary Shares
Range
Total holders
Units
% of Issued Capital
1 - 1,000
1,097
385,123
0.02
1,001 - 5,000
1,998
5,562,022
0.30
5,001 - 10,000
1,088
8,317,029
0.46
10,001 - 100,000
2,481
88,705,723
4.84
100,001 Over
784
1,728,797,009
94.38
Total
7,448
1,831,766,906
100
There are 1,835 holders of a less than marketable parcel of shares (as at 2 September 2024), a less than
marketable parcel is 2,000 shares), representing a total of 1,574,121 shares.
Unlisted Options
Range
Total holders
Units
% of Issued Capital
1 - 1,000
-
-
-
1,001 - 5,000
1
3,825
0.01
5,001 - 10,000
1
7,225
0.02
10,001 - 100,000
6
244,591
0.63
100,001 Over
16
38,301,558
99.34
Total
24
38,557,199
100
b.
Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with section
671B of the Corporations Act 2001 are:
Name
Number of Shares
%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
268,863,214
14.68
CITICORP NOMINEES PTY LIMITED
217,637,841
11.88
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
97,516,098
5.32
c.
Restricted Securities
There are nil restricted securities as at 2 September 2024.
Lotus Resources Annual Report 2023 l 117
ASX Additional Information
d.
Voting Rights
The voting rights attaching to ordinary shares are:
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.
e.
On Market Buy Back
There is no current on market buy-back.
f.
Unquoted securities
Class
Total Holdings
O19 - UNL OPTS EXP 14/12/2024
11,050
O20 - UNL OPTS EXP 14/12/2026
1,319,000
O22 - UNL OPTS EXP 29/11/2026
1,230,000
O24 - UNL OPTS EXP 31/10/2025
335,814
O25 - UNL OPTS EXP 31/10/2027
3,823,073
O28 - UNL STI OPT EXP 31/10/26 @ $0
3,107,102
O29 - UNL LTI OPT EXP 31/10/28 @ $0
4,731,160
O30 - DIR OPTS EXP 30/09/26 @ $0.00
12,000,000
O31 - UNL OPT EXP 20/05/27 @ $0.30
2,000,000
O32 - UNL OPT EXP 20/05/27 @ $0.30
2,000,000
O33 – UNL OPT EXP 22/08/27 @ $0.30
1,000,000
O34 – UNL OPT EXP 22/08/27 @ $0.30
1,000,000
O35 – UNL OPT EXP 08/08/27 @ $0.00
3,000,000
O36 – UNL OPT EXP 08/08/27 @ $0.00
3,000,000
Total Unquoted Securities
38,557,199
118 l Lotus Resources Annual Report 2023
ASX Additional Information
g.
Unquoted Securities >20% Holders
Class
Holder
Number
%
O19 - UNL OPTS EXP 14/12/2024
MS JESSICA JANETH CABALLERO GONGORA
7,225
65.38
FRANK HERNAN TERRONES FERNANDEZ
3,825
34.62
O22 - UNL OPTS EXP 29/11/2026
MR KEITH BOWES
1,230,000
100.00
O24 - UNL OPTS EXP 31/10/2025
MR KEITH BOWES
335,814
100.00
O28 - UNL STI OPT EXP 31/10/26 @ $0
MR MICHAEL BARRIE BALL
636,217
20.48
O25 - UNL OPTS EXP 31/10/2027
MR KEITH BOWES
1,767,442
46.23
BOUCHI PTY LTD
767,442
20.07
O20 - UNL OPTS EXP 14/12/2026
MR THEO CORNELIUS KEYTER
565,000
42.84
MR JACOBUS CHARL CILLIERS
330,000
25.02
TSI CAPITAL PTY LTD
424,000
32.14
O29 - UNL LTI OPT EXP 31/10/28 @ $0
MR KEITH BOWES
2,197,838
57.49
MR MICHAEL BARRIE BALL
954,325
20.17
O30 - DIR OPTS EXP 30/09/26 @ $0.00
MR KEITH BOWES
3,000,000
25.00
BOUCHI PTY LTD
3,000,000
25.00
O31 - UNL OPT EXP 20/05/27 @ $0.30
MR GREGORY BITTAR
1,000,000
50.00
MR MICHAEL DA COSTA
1,000,000
50.00
O32 - UNL OPT EXP 20/05/27 @ $0.30
MR GREGORY BITTAR
1,000,000
50.00
MR MICHAEL DA COSTA
1,000,000
50.00
O33 – UNL OPT EXP 22/08/27 @ $0.30
MR WARREN KING
1,000,000
100.00
O34 – UNL OPT EXP 22/08/27 @ $0.30
MR WARREN KING
1,000,000
100.00
O35 – UNL OPT EXP 08/08/27 @ $0.00
MR GREGORY BITTAR
3,000,000
100.00
O36 – UNL OPT EXP 08/08/27 @ $0.00
MR GREGORY BITTAR
3,000,000
100.00
Interest in Mining Tenements
As at 2 September 2024, the Company’s tenement interests are shown in the table below.
Uranium
Tenement
Ownership
Project
Location
ML0152 - Kayelekera
85%
Kayelekera
Malawi
EPL489 - Nthalire
85%
Kayelekera
Malawi
EPL502 - Juma-Miwanga
85%
Kayelekera
Malawi
EL595 - Livingstonia
85%
Kayelekera
Malawi
EL583 - Livingstonia West
85%
Kayelekera
Malawi
PL 2482/2023
100%
Letlhakane
Botswana
ML 2016/16L
100%
Letlhakane
Botswana
Lotus Resources Annual Report 2023 l 119
Registered Office
Level 20, 140 St Georges Terrace
Perth, Western Australia, 6000
lotusresources.com.au | ASX:LOT