More annual reports from Parkway Corporate Limited:
2019 ReportPOTASH WEST NL
A.C.N. 147 346 334
Annual Report
For the year ended
30 June 2014
Potash West NL
A.C.N. 147 346 334
Contents to Financial Report
Corporate Information
Chairman’s Letter
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional ASX Information
Tenement Register
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Potash West NL
A.C.N. 147 346 334
Corporate directory
Directors:
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Company Secretary:
Elizabeth Hunt (appointed 16 April 2014)
Amanda Wilton-Heald (resigned 16 April 2014)
Auditor:
Ernst & Young
Ernst & Young Building
11 Mounts Bay Road
Perth WA 6000 AUSTRALIA
Telephone (+61 8) 9429 2222
Facsimile (+61 8) 9429 2436
Share Registry:
Advanced Share Registry
160 Stirling Highway
Nedlands WA 6009 AUSTRALIA
Telephone (+61 8) 9389 8033
Facsimile (+61 8) 9262 3723
Registered and Principal Office
Suite 3
23 Belgravia Street
Belmont WA 6104 AUSTRALIA
Telephone (+61 8) 9479 5386
Facsimile (+61 8) 9475 0847
Website www.potashwest.com.au
Email info@potashwest.com.au
Stock Exchange Listing
Potash West NL shares are listed on the Australian Securities Exchange (ASX code: PWN) and OTC Pink
(OTC Pink code: PWNNY).
Solicitors
Price Sierakowski
Level 24, St Martin’s Tower
Perth WA 6000 AUSTRALIA
Telephone (+61 8) 6211 5000
Facsimile (+61 8) 6211 5055
Bankers
National Australia Bank
Ground Floor
100 St Georges Terrace
Perth WA 6000 AUSTRALIA
Telephone: (+61 8) 9441 9313
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Potash West NL
A.C.N. 147 346 334
CHAIRMAN’S LETTER
Fellow shareholders, it is with great pleasure that the management of Potash West NL presents this year’s
annual report to you. Once again it has been a significant year for your company which has succeeded in
completing the objectives set at the time of listing in 2011. Broadly the aim was to define a substantial
glauconite resource, develop a flow sheet to recover the potassium from that material, and to complete a
scoping study to quantify the operating parameters and likely commercial outcomes.
Through dedication and persistence more has been achieved than originally planned, particularly with the
recognition that the phosphate nodules, contained within the greensands could be viewed as a self-
contained phosphate project in their own right. This led to the acquisition of further ground near
Dandaragan, on which historic phosphate mining had been undertaken. The realization that phosphate may
well stand alone, gives your company the opportunity of commencing operations with a much lower capital
cost, and lower technical risk, while management determines how best to implement the much larger, and
more significant K-Max project, that being the recovery of potash, alum and other fertilizer products, from
the glauconite. These products will find a well-deserved place in the agricultural industry as global
population expands, and the intensity of agriculture increases to meet demand. So too will there be a place
for large scale alum production for clarifying much needed water supplies for increased domestic
consumption.
Development of the Dandaragan Trough, with glauconite spread over a length of 150km, width of 30km and
average thickness thought to be about 80m, offers an opportunity of a magnitude not seen in Australia
since the iron ore developments of the 1970s. The target is vast, and the impact on Australian agriculture
will be huge. I have to say that historically these characteristics have not gone unnoticed, and indeed it was
the Western Australian Government that first drilled to determine the potential of the glauconite as a potash
resource. At the time the technology to recover the potash commercially did not exist, and the project lay
dormant for over 50 years. Potash West has resolved the processing issue and transformed the project
from a government vision, to an undertaking that is likely to be of national importance.
As founder, and Chairman of Potash West, I have taken great pride in observing the transformation of the
project technically, as our management transformed a concept into a technical reality. The next challenge
will be to transform the technical reality into a commercial outcome. We will all look forward to watching that
evolve.
I am also pleased to report that the efforts of Potash West have not gone unnoticed, and the technology
developed for our project, is now in demand on the international stage. Ultimately the technology will
provide the opportunity to produce fertilizers from other glauconite deposits that are much closer to the
point of consumption, streamlining the logistic chain, which is currently long, and expensive, for most
fertilizer consumers. Your board is examining the means by which our unique process and the great
advantage it provides for deposits not belonging to the Company, can be turned into value for Potash West
shareholders.
It has been an eventful year indeed, and as capital markets once again become more liquid, we will
advance our aims of developing one of the greatest unconventional fertilizer production projects ever
undertaken.
I thank you for your support in the tough financial times of the last year, and look forward to your support
into the future as we realize our aspirations to extract fertilizer from the Dandaragan greensands.
Adrian Griffin
Chairman
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Potash West NL
A.C.N. 147 346 334
Directors’ Report
The directors of Potash West NL (“Potash West” or “the Company”) present their report for the year ended
30 June 2014.
Directors
The names and details of the Company’s directors in office during the financial year and until the date of
this report are set out below, directors were in office for the entire year unless otherwise stated.
Adrian Griffin was appointed as Non-executive Chairman.
Patrick McManus was appointed as Managing Director.
George Sakalidis was appointed as Non-executive Director.
Gary Johnson was appointed as Non-executive Director.
Names, qualifications, experience and special responsibilities
Adrian Griffin Non-Executive Chairman
Adrian Griffin, an Australian-trained mining professional, has had exposure to metal mining and processing
worldwide during a career spanning more than three decades. A pioneer of the lateritic nickel processing
industry, he has helped develop extraction technologies for a range of minerals over the years. Today,
Adrian specialises in mine management and production. He is a former Chief Executive Officer of Dwyka
Diamonds Limited, an AIM- and ASX-listed diamond producer, was a founding director and executive of
Washington Resources Limited and also a founding director of Empire Resources Limited, Ferrum
Crescent Limited and Reedy Lagoon Corporation Limited. Moreover, Mr Griffin was a founding director of
ASX-listed Northern Uranium, of which company he is currently a non-executive director. He is also
managing director of ASX-listed Cobre Montana NL, an African-focused iron ore project developer.
Other listed company directorships during the last 3 years:
Northern Minerals Ltd (Director June 2006 – present) and Cobre Montana NL (Director February 2011 –
Present).
Adrian Griffin is also a member of the Audit Committee, Remuneration Committee (Chairman) and the
Nomination Committee (Chairman).
Patrick McManus Managing Director
Patrick McManus has a degree in mineral processing from Leeds University and an MBA from Curtin
University. A mining professional for more than 30 years, his work has taken him to many sites within
Australia and overseas, including Eneabba and the Murray Basin in Australia, and Madagascar, Indonesia
and the United States. During that time, Patrick has worked in operational, technical and corporate roles for
RioTinto, RGC Limited and Bemax Resources Limited. He was a founding director and, from January 2007
to March 2010, managing director of ASX-listed Corvette Resources Limited.
Other listed company directorships during the last 3 years:
Tungsten Mining NL (Director December 2012 – present)
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Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
George Sakalidis Non-Executive Director
George Sakalidis is an exploration geophysicist of more than 20 years standing. His career has
encompassed extensive exploration for gold, diamonds, base metals and mineral sands and with others, he
compiled one of Australia’s largest aeromagnetic databases, now held by Image Resources NL. Using this
database, George contributed to a number of discoveries, including such gold discoveries as the Three
Rivers and the Rose deposits in Western Australia. Moreover, he was instrumental in the acquisition of the
Image Resources NL exploration tenements, and the design and interpretation of the magnetic surveys that
led to the discovery of the large mineral sands resources at the Dongara project of Magnetic Minerals NL,
of which he was a founding director. Also previously a director of North Star Resources NL, George is
currently a director of Meteoric Resources NL, Magnetic Resources NL, Emu Nickel Pty Ltd, Image
Resources NL and the unlisted Imperium Minerals Limited.
George Sakalidis is also a member of the Audit Committee (Chairman), Remuneration Committee and the
Nomination Committee.
Gary Johnson Non-Executive Director
Gary Johnson is a metallurgist with more than 30 years of broad experience in all aspects of the mining
industry. In his early career, he gained operational and project expertise with a range of metals in
operations in Africa and Australia. Later, he was a member of the team operating the metallurgical pilot
plant at the giant Olympic Dam copper, gold and uranium project in South Australia.
In 1998, after 10 years as chief metallurgist for a large gold producer, Mr Johnson formed his own
specialised hydrometallurgical consulting company. During this year he worked closely with LionOre Mining
International to develop the Activox® process for treating sulphide concentrates. When, in 2006, LionOre
acquired Gary’s company, he joined LionOre as a senior executive. In 2007, LionOre was taken over by
MMC Norilsk Nickel and in 2009 Mr Johnson became managing director of the latter’s Australian operations.
Today, Mr Johnson runs his own consulting company, which specialises in high-level metallurgical and
strategic advice. He also holds several patents in the field of hydrometallurgy and is a director of the TSX-
listed Hard Creek Nickel Corporation and ASX listed Antipa Minerals Ltd.
Gary Johnson is also a member of the Audit Committee, Remuneration Committee and the Nomination
Committee.
Company secretary as at year end
Elizabeth Hunt (appointed 16 April 2014)
Amanda Wilton-Heald (resigned 16 April 2014)
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors (including related parties) in the shares and
options of the company were:
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Number of ordinary
shares
Number of options
over ordinary shares
5,890,297
3,384,121
1,080,600
436,097
509,090
1,535,834
475,000
491,667
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Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Dividends
No dividend has been paid or declared since the start of the financial year and the directors do not
recommend the payment of a dividend in respect of the financial year.
Principal activities
The principal activity of the entity during the financial year was the exploration for minerals, namely potash.
Operating and financial review
Operating results for the year
The loss after income tax benefit for the year ended 30 June 2014 was $1,822,505 (2013: $4,193,632).
Financial Performance
Company income
Loss before tax
Profit/(loss) after income tax benefit
Earning per share (cents)
2014
$
605,096
(1,822,505)
(1,822,505)
(1.72)
2013
$
595,522
(4,193,632)
(4,193,632)
(5.85)
% Increase/
(decrease)
1.61%
-56.54%
-56.54%
-70.60%
The financial position of the Company is presented in the attached Statement of Financial Position.
OPERATING AND FINANCIAL REVIEW
DANDARAGAN TROUGH PROJECT
INTRODUCTION
the North Perth Basin.
The Dandaragan Trough is a large sedimentary
sequence within
The
Company has obtained the potash and phosphate
rights for more than 2,600km2 of ground within the
basin, covering more than 80% of the prospective
geological formations, (Figure 1). The trough is
known to carry significant deposits of glauconite, and
apatite nodules within greensand beds. Greensand
is a generic name for mixtures of quartz and
glauconite.
Work on the project has consisted of three activities,
• exploration drilling to delineate a JORC
•
resource,
the refining of process designs to develop
flow sheets capable of unlocking the value of
the elements within the deposit and
• Scoping Studies, to quantify value.
Figure 1: Dandaragan Trough project
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Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
OPERATING AND FINANCIAL REVIEW (continued)
We continue to make good progress in all three areas.
The greensand units within the Dandaragan Trough are widespread. The Dinner Hill project area covers
approximately 60km2 in the north-west of the Trough. This has been the focus of our exploration efforts as
the greensands sequences are close to the surface in this location, as shown in Figure 2.
Figure 2: Cross section 6 635 400
RESOURCE STATEMENT
Some 9km2 of the Dinner Hill project area has been drilled to a density sufficient to allow the estimation of
a JORC compliant Indicated and Inferred Mineral resource for both the phosphate and K-Max (potash)
resources. Nodular phosphate at Dinner Hill is located in the lower portions of the Poison Hill Greensand,
the Gingin Chalk and the Molecap Greensand. Potash is present in both the greensand units but the higher
grades are confined to the Molecap Greensand. Figure 3 shows drill holes samples in a generalised
stratigraphic sequence and depicts the location of the phosphate and K-Max resource in the sequence.
Figure 3: Generalised stratigraphic sequence
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Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
OPERATING AND FINANCIAL REVIEW (continued)
The resources for the Dinner Hill Project are shown in Table 1.
Phosphate Resource (All Indicated) (1)
Lower Cut-off Grade
(% P2O5)
2.15
Million
Tonnes
120
Grade
(% P2O5)
2.79
Grade
(% K2O)
3.10
Grade
(% CaO)
8.17
K-Max Resource (2)
Unit
Molecap Greensand
Poison Hill Greensand
Total K-Max Resources
Category Tonnes K2O
(Mt)
Indicated 120
Inferred
Total
%
4.6
4.4
4.6
2
122
Indicated 121
1
Inferred
Total
122
Indicated 241
Inferred
2
244
1.5
1.6
1.5
3.0
3.6
3.0
P2O5
%
1.8
2.2
1.8
1.4
1.1
1.4
1.6
1.9
1.6
Total
Table 1 Dinner Hill Resources
(1) Refer ASX release 20 March 2014
(2) Refer ASX release 11 October 2012
The broader Dinner Hill area, some 60km2, has been drilled to a density that has allowed the establishment
of an Exploration Target estimated to contain 1 to 1.5 Billion tonnes of greensand at a grade of 4.0 to 4.8%
K2O. Included in the same area is 300 to 600 million tonnes of greensand at a grade of 1.5 to 3% P2O5.
The location of the Dinner Hill resource and exploration target is shown in Figure 4.
Note: The potential quantity and grade of the target is conceptual in nature, as there has been
insufficient exploration to estimate a Mineral Resource over its area and it is uncertain if further
exploration will result in the estimation of a Mineral Resource
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Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
OPERATING AND FINANCIAL REVIEW (continued)
Figure 4: Dinner Hill resource and exploration target areas
K-MAX STUDY
The Company has applied for a patent for the revolutionary K-Max process which produces sulphate of
potash (SOP), high magnesium SOP, single superphosphate, iron oxide and aluminium sulphate from
glauconite. Aside from its value to the program to commercialise Dandaragan Trough Project, the K-Max
has the potential to be licensed with the Company already receiving interest in the process from around the
globe. The mined glauconite rich ore is concentrated by screening and magnetic separation then subject to
a number of hydrometallurgical and pyrometallurgical processing stages to extract and recover K, P, Mg,
Fe and Al from the minerals present in the ore. The extracted elements are converted to saleable products
including sulfate of potash, potassium magnesium sulfate, single superphosphate, hematite and aluminium
sulfate.
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Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
OPERATING AND FINANCIAL REVIEW (continued)
K-MAX STUDY (continued)
The main processing steps are:
• Beneficiation by de-agglomeration, screening and high-intensity magnetic separation results in 89%
K2O recovery to 64% mass recovery.
• Hot sulfuric acid leach extracts >95% K, Mg and P and results in a leach residue containing quartz
and amorphous silica.
Selective crystallization of a mixed Fe and K salt, ferric phosphate and magnesium sulfate.
•
• Conversion of iron sulfate to hematite and recovery of sulfur dioxide for acid production.
• Separation and recovery of sulfate of potash and potassium magnesium sulfate by water leaching,
quenching and crystallization stages.
• Separation and recovery of hematite and superphosphate by leaching and precipitation stages.
• Selective crystallization of aluminium sulfate by cooling.
The main reagent imported is elemental sulfur, which is converted to sulfuric acid for use in the process.
The energy recovered from the sulfuric acid production plant is utilised within the process. Limestone would
be mined locally and used to precipitate phosphate.
Work on that Scoping Study also identified a number of potential improvements to the process flow sheet
and these have been the subject of ongoing investigations.
The possible areas of potential improvement include:
• Optimising the heat management within the process to reduce energy needs.
• Optimising performance of the crystallizers to increase the yield of potassium to SOP, increasing
the revenue stream.
• Conduct testwork to better define the construction materials required by the process equipment.
• Further drilling to identify thicker greensand seams with lower overburden.
• Production of an iron oxide product that can be sold for its iron value.
•
The scoping study carried out by Strategic Metallurgy, Tenova-Bateman and CRU demonstrated a robust
project with the following parameters:
• Mining rate 2.4 Mtpa
• Mine life +60 years
• Average revenues per year $365 million
• Operating cash costs per year $137 million
•
• NPV10% $808 million
• Capital cost $650 million
IRR 21%
The long mine life, on the 9km2 of the Dinner Hill resource area, shows the potential to increase the
capacity of the project as market share is gained.
As the K-Max process is not used commercially at present, we will need to operate a pilot plant to establish
operating parameters more accurately. This will be the next stage of the commercialisation project and we
are currently planning the details of the pilot plant design and its funding.
11
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
OPERATING AND FINANCIAL REVIEW (continued)
PHOSPHATE STUDY
The phosphate component in the Dandaragan greensands has been identified as flourapatite, which is
relatively liberated. The apatite is nodular in nature and has proved easy to concentrate in the coarser
fractions. Phosphate concentrates respond well to conventional anionic flotation and high recoveries and
grades of more than 30% P2O5 are achieved. There appears to be potential value in recovering the
phosphate content present in the greensands in a stand-alone plant. The relatively short distance to market,
well-established infrastructure and friable mineralisation - which sits close to surface – are seen as key
advantages over most other “greenfields” phosphate projects. Work carried out to define this value
consisted of the following:
o Definition of a higher grade phosphate resource from Dinner Hill drill hole data
o Development of a processing flowsheet to produce a saleable phosphate product
o Conducting an initial economic assessment
This was carried out by our partners, Strategic Metallurgy, using the data generated for the K-Max Scoping
Study, and mineral processing data obtained by testing the phosphate rich material from Dinner Hill. An
operation producing 340 thousand tpa of single superphosphate (SSP) was evaluated, with the following
outcomes:
• Processing rate 3.8 Mtpa
• Mine life 20 years
• Average revenue per year $124 million ($383/tonne of SSP)
• Operating cash costs per year (inclusive of royalties) $82.1 million ($241 / tonne of SSP)
•
• NPV8% $331 million
• Capital Cost $144 million
IRR 29.5%
The processes to produce high-grade rock phosphate concentrate and to react that with sulphuric acid to
produce SSP are well established and are used at many sites throughout the world. It is believed that the
technical risk is reasonably low, accordingly it is planned to go straight to final feasibility study for this
project. Environmental work is in progress, as the first step in the approvals process.
EXPLORATION TENURE
During the year the following tenements were relinquished from the portfolio, E70/3635, E70/3636,
E70/3999, E70/4000 and E70/4001. The decision to relinquish was based on a combination of low
prospectivity, high holding costs and competition from competing land use.
A new application E70/4609 overlies the Dandaragan Scarp, on the western edge of the Dandaragan
Trough, in a similar geological setting to the Company’s potash and phosphate resources at Dinner Hill
( ASX release 20 August 2014).
E70/4471 was granted during the period.
12
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
OPERATING AND FINANCIAL REVIEW (continued)
OTHER OPPORTUNITIES
K-Max process
The intellectual property (IP) of the K-Max process is 100% owned by the Company. Patents are being
applied for and a number of steps have been taken to preserve the value associated with the IP. We
believe that the techniques used as part of the process can be applied to other minerals similar to
glauconite. This represents an opportunity for the Company to capture value by:
• Applying K-Max process to other glauconites worldwide
• Developing process’s to treat minerals with similar mineral structure to glauconite
We have been approached by companies with glauconite deposits with interest in applying K-Max
technology. We are also investigating, with our partners Strategic Metallurgy ways to widen the
applicability of the technology.
We will continue to pursue these opportunities, as it could become an important asset for the Company.
German Exploration
During the year we investigated the opportunity of entering an early stage potash exploration project in
Germany. We have a 25% interest as an associate in East Exploration Pty Ltd as at 30 June 2014.
Subsequent to year end, we are earning a further 30% of East Exploration Pty Ltd to take our total holding
to 55% by funding the application for two exploration licences and the geological appraisal of information
already available on the area. We are using as consultants, the group who worked on the licences as part
of the Potash group of the former East Germany.
The project is based in the South Harz region of Germany, close to the town of Sonderhausen. This area
has been the site of potash mining for over 100 years and still has operating potash mines. Production
from this region reduced significantly after the reunification of Germany. We believe that we can use the
considerable amount of drilling and assaying carried out in the 1970s and 80s to quickly evaluate the
geological and economic potential of the licences.
CORPORATE ACTIVITY
The Company continued to promote itself and the Dandaragan Trough Project throughout the financial year,
both locally and in key investment markets, participating in a number of investor focused conferences and
was featured in a number of articles in leading industry and investor publications.
The company removed itself from the OTC QX listing, due to lack of investor interest. It still trades in the
USA, on the OTC Pink Sheets.
We have raised $1.1M during the year, through share issues. It has been a difficult year in terms of market
interest, like many other small capacity exploration companies, we have suffered from a weak share price.
Whilst the market capitalisation of the Company has fallen sharply, there have been several strong
achievements and advances during the year. These include, notably:
Improvements to the phosphate scoping study
•
• Rationalisation of Dandaragan tenements
• Discussions with potential JV partners on the Dinner Hill project
In common with other companies in the sector, we have seen an improvement in market sentiment in the
last four months. Time will tell whether this will be the start of renewed interest in the exploration sector.
Research reports on the Company were published by Breakaway Research on 21 October 2013;
Arrowhead on 6 January 2014; Breakaway Research on March 21 2014 and Barclay Wells on 24 May 2014.
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Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
OPERATING AND FINANCIAL REVIEW (continued)
Competent Persons Statement
The information in this announcement that relate to Mineral Resources and Exploration Targets is based on,
and fairly represents, the Mineral Resource and Exploration Target information and supporting
documentation extracted from the reports which were prepared by a Competent Person in compliance with
the JORC Code (2012) and released to ASX by the Company on 11 October 2012 and 20 March 2014.
Potash West confirms that it is not aware of any new information or data that materially affect the
information included in the original announcements. All material assumptions and technical parameters
underpinning the Mineral Resource estimate in those previous ASX releases continue to apply and have
not materially changed.
Significant changes in the state of affairs
With the exception of the announcement regarding the entry into the German exploration project, there
have been no significant changes in the state of affairs of the Company from 1 July 2014 to the date of this
report.
Likely Developments and expected results
The Company will continue its focus on the Dandaragan Trough and exploring opportunities to progress
both the phosphate and the K-Max projects. It is likely, given the investing public risk profile, that we will
focus on progressing the phosphate project in the short term. We will also look to advance the South Harz
project. The Company will continue to focus on fertiliser projects in regions with low sovereign risk and
good infrastructure.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the Company from 1 July 2013 to the date
of this report.
Significant events after the balance date
On 9 July 2014, the Company successfully raised $826,275 before costs through private placement.
Proceeds of the placement will be directed to ongoing project development activities on Dandaragan
Trough projects.
On 29 July 2014, the Company has announced it is earning an interest in a potash project in Germany.
Potash West NL has the right to earn up to 55% of East Exploration Pty Ltd by funding early exploration.
The first tranche of $100,000 was paid during the financial year to acquire its first 25% earning interest in
the project and an additional $50,000 was paid on 12 August 2014 to increase its interest in the project.
On 20 August 2014, the Company announced the acquisition of an additional 300 km2 of prospective
ground within the Dandaragan Trough Project. The tenement was formerly held by Dempsey Minerals Ltd
(“Dempsey”) and the Company agreed to purchase the technical data generated by Dempsey for 200,000
fully paid ordinary shares and a 0.4% Net Smelter Royalty.
There have not been any matters that have arisen after balance date that have significantly affected, or
may significantly affect, the operations and activities of the Company, the results of those operations, or the
state of affairs of the Company in future financial years other than disclosed elsewhere in this annual report.
14
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Likely Developments and expected results
The Company will continue its focus on the Dandaragan Trough and exploring opportunities to progress
both the phosphate and the K-Max projects. It is likely, given the investing public risk profile, that we will
focus on progressing the phosphate project in the short term. We will also look to advance the South Harz
project. The Company will continue to focus on fertiliser projects in regions with low sovereign risk and
good infrastructure.
.
Environmental regulation and performance
The Company’s activities are subject to Australian legislation relating to the protection of the environment.
The Company is subject to significant environmental legal regulations in respect to its exploration and
evaluation activities. There have been no known breaches of these regulations and principles.
Indemnification and Insurance of directors and officers
The Company has entered into deeds of access and indemnity with the officers of the Company,
indemnifying them against liability incurred, including costs and expenses in successfully defending legal
proceedings. The indemnity applies to a liability for costs and expenses incurred by the director or officer
acting in their capacity as a director or officer.
Except in the case of a liability for legal costs and expenses, it does not extend to a liability that is:
(a)
(b)
(c)
owed to the Company or a related body corporate of the Company;
for a pecuniary penalty order under section 1317G or a compensation order under section 1317H or
section 1317HA of the Corporations Act 2001; or
owed to someone other than the Company or a related body corporate of the Company where the
liability did not arise out of conduct in good faith.
Similarly, the indemnity does not extend to liability for legal costs and expenses:
(d)
(e)
(f)
in defending proceedings in which the officer is found to have a liability described in paragraph (a), (b)
or (c);
in proceedings successfully brought by the Australian Securities and Investments Commission or a
liquidator; or
in connection with proceedings for relief under the Corporations Act 2001 in which the court denies
the relief.
During or since the financial year, the Company has paid premiums in respect of a contract insuring all the
Directors and Officers. The terms of the contract prohibit the disclosure of the details of the insurance
contract and premiums paid.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as
part of the terms of its audit engagement agreement against claims by third parties arising from the
audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or
since the financial year.
Share Options
As at the date of this report there were 13,021,457 (2013: 11,521,457) unissued ordinary shares under
options.
Option holders do not have any right, by virtue of the option, to participate in any share issue of the
company or any related body corporate.
15
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Non-audit services
The Company may decide to employ the auditor on assignments additional to its statutory audit duties
where the auditor’s expertise and experience with the Company are important.
Details of the amounts paid or payable to the auditor, Ernst & Young, for non-audit services provided during
the year are set out below.
Remuneration of the auditor of the Company for:
-other services; research & development tax concession.
2014
$
38,072
38,072
2013
$
38,888
38,888
Directors’ meetings
Meetings of directors held and their attendance during the financial year were as follows:
Name of director: Directors’
meeting
held whilst
in office
Directors’
meetings
attended
Audit
Committee
meetings
held
Audit
Committee
meetings
attended
Remuneration
and
Nomination
Committee
meetings held
Remuneration
and
Nomination
Committee
meetings
attended
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
6
6
6
6
6
6
4
6
2
-
2
2
2
-
2
1
1
-
1
1
1
-
1
1
Remuneration Report (audited)
This Remuneration Report outlines the director and executive remuneration arrangements of the Company
in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purpose of
this report, Key Management Personnel (KMP) of the Company are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company,
directly or indirectly, and includes executives of the Company. The information provided in this
remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
Details of Key Management Personnel
(i) Directors:
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
(ii) Executives:
Lindsay Cahill
Elizabeth Hunt
Amanda Wilton-Heald Company Secretary (resigned 16 April 2014)
Robert Van Der Laan
Geologist
Company Secretary (appointed 16 April 2014)
Chief Financial Officer
16
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
Remuneration Philosophy
The performance of the Company depends upon the quality of its directors and executives. To prosper, the
Company must attract, motivate and retain highly skilled directors and executives.
To this end, the Company embodies the following principles in its remuneration framework:
Provide competitive rewards to attract high calibre executives;
Link executive rewards to shareholder value.
Shares and options issued under the incentive plans provide an incentive to stay with the Company. At this
time, shares and options issued do not have performance criteria attached. This policy is considered to be
appropriate for the Company, having regard to the current state of its development.
The Company does not have a policy which precludes directors and executives from entering into contracts
to hedge their exposure to options or shares granted to them as remuneration.
The Company also recognises that, at this stage in its development, it is most economical to have only a
few employees and to draw, as appropriate, upon a pool of consultants selected by the directors on the
basis of their known management, geoscientific, and engineering and other professional and technical
expertise and experience. The Company will nevertheless seek to apply the principles described above to
its directors and executives, whether they are employees of/or consultants to the Company.
Remuneration Committee Responsibilities
The Committee assesses the appropriateness of the nature and amount of remuneration of directors and
senior executives on a periodic basis by reference to relevant employment market conditions, with the
overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and
executive team.
Remuneration Structure
In accordance with best practice corporate governance, the structure of non-executive and executive
director remuneration is separate and distinct.
Non-executive director remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to
attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Company’s constitution and the ASX Listing Rules specify that the aggregate remuneration of non-
executive directors must be determined from time to time by shareholders of the Company in a general
meeting. An amount not exceeding the amount determined is then divided between the non-executive
directors. During the 2013 year, the resolution to increase non-executive director remuneration was passed
at the Annual General Meeting. As at the date of the report, the aggregate directors’ fees for non-executive
Directors has been set at an amount not exceeding $200,000 per annum (2013: $200,000 per annum).
17
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it
is apportioned amongst non-executive directors is reviewed annually. The Board may consider advice from
external consultants, as well as the fees paid to non-executive directors of comparable companies, when
undertaking the annual review process.
Each non-executive director receives a fee for being a director of the Company. No additional fee is paid
for participating in the Audit, Remuneration and Nomination Committees.
Non-executive directors are encouraged by the Board to hold shares in the Company (purchased on market
and in accordance with the Company’s approved policies to ensure there is no insider trading). It is
considered good governance for directors of a company to have a stake in that company. The non-
executive directors of the Company may also participate in the share and option plans as described in this
report.
As an incentive to employees, Directors, executive officers and consultants, the Company has adopted a
scheme called the Potash West Employee Incentive Scheme (‘the Scheme’). The purpose of the Scheme is
to give employees, Directors, executive officers and consultants of the Company an opportunity to
subscribe for shares and/or options in the Company. The Directors consider that the Scheme will enable
the Company to retain and attract skilled and experienced employees, Board members and executive
officers and provide them with the motivation to participate in the future growth of the Company and, upon
becoming shareholders in the Company, to participate in the Company’s profits and development.
Executive director and senior management remuneration
Objective
The Company aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibilities within the Company and so as to:
reward executives for Company, business team and individual performance;
align the interests of executives with those of shareholders; and
ensure total remuneration is competitive by market standards.
Structure
At this time, the cash component of remuneration paid to the Executive director, the Company
Secretary and other senior managers is not dependent upon the satisfaction of performance conditions.
It is current policy that some executives be engaged by way of consultancy agreements with the
Company, under which they receive a contract rate based upon the number of hours of service
supplied to the Company. There is provision for yearly review and adjustment based on consumer
price indices. Such remuneration is hence not dependent upon the achievement of specific
performance conditions. This policy is considered to be appropriate for the Company, having regard to
the current state of its development.
Executive directors are encouraged by the Board to hold shares in the Company (purchased on market
and in accordance with the Company’s approved policies to ensure there is no insider trading). It is
considered good governance for directors of a company to have a stake in that company. The
Executive directors of the Company may also participate in the share and option plans as described in
this report.
18
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
Performance table
The following table details the loss of the Company from continuing operations after income tax, together
with the basic loss per share since the incorporation of the company:
2014
$
2013
$
2012
$
2011
$
Net loss from continuing operations after
income tax
Basic loss per share in cents
Share Price in Cents
1,822,505
4,193,632
3,900,096
808,723
1.72
3.60
5.85
12.0
5.76
23.0
1.08
18.00
* The Company was registered in November 2010
The options on issue are not considered dilutive for the purpose of the calculation of diluted earnings/loss
per share as their conversion to ordinary shares would not decrease the net profit from continuing
operations per share. Consequently, diluted earnings/loss per share is the same as basic earnings per
share.
Agreements with non-executive directors
On 12 November 2012, a resolution was passed at the Annual General Meeting to increase the maximum
aggregate amount payable to non-executive Directors, Mr Adrian Griffin, Mr George Sakalidis and Mr Gary
Johnson in any year from $120,000 per annum to $200,000 per annum inclusive of superannuation
requirements effective from 1 July 2012.
The revised director’s fees of $90,000 per annum inclusive of superannuation requirements were paid, or
due and payable to Mr Adrian Griffin. In the event of termination, there is no notice period required.
The revised director’s fees of $50,000 per annum inclusive of superannuation requirements were paid, or
due and payable to Mr George Sakalidis. In the event of termination, there is no notice period required.
The revised director’s fees of $50,000 per annum inclusive of superannuation requirements were paid, or
due and payable to Mr Gary Johnson. In the event of termination, there is no notice period required.
The company has also entered into a services agreement with Strategic Metallurgy Pty Ltd for the provision
of Metallurgical Services. Service fees are agreed on an arm’s length transaction basis. Mr Gary Johnson is
a director and shareholder of Strategic Metallurgy Pty Ltd.
Executive director and senior management remuneration
Long-Term Incentive (“LTI”) awards to executives are made under the Employee Share Plan (“ESP”) and
are delivered in the form of shares. Shares granted under the ESP are released equally over 36 months, 12
months from the grant date.
Agreement with Managing Director
On the 6 September 2012, the Remuneration Committee recommended to increase Mr Patrick McManus’s
annual salary from $250,000 inclusive of superannuation requirements to $275,000 per annum inclusive of
superannuation requirement, effective from 1 July 2012.
The agreement can be terminated by either party by giving three months’ notice or payment of three
months’ salary in lieu of notice.
19
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
Agreement with Company Secretary
On 13 May 2011, the company entered into an agreement containing the terms and conditions under which
the services of Company Secretary are provided to the Company.
The agreement involves the payment to the Company associated with Ms Amanda Wilton-Heald (resigned
16 April 2014) and Mrs Elizabeth Hunt (appointed 16 April 2014) of a monthly fee of $2,500 (excluding GST)
and reimbursement of expenses.
Ms Amanda Wilton-Heald and Mrs Elizabeth Hunt were excluded from the Executives’’ Remuneration as
they were uninvolved in strategic decision of the Company. The company secretary fees were paid via
Mining Corporate Pty Ltd, a company of which Ms Amanda Wilton-Heald is an employees and Mrs
Elizabeth Hunt is a director.
Agreement with Chief Financial Officer
Mr Robert Van Der Laan was appointed as Chief Financial Officer, effective on 13 May 2011. On 5 August
2011 the company entered into an agreement containing the terms and conditions under which the services
of Chief Financial Officer are provided. In the event of termination, there is no notice period required.
The agreement involves the payment to the Company associated with Robert Van der Laan of an hourly
fee of $120 and reimbursement of expenses. The hourly rate was revised up to $130 effective from 1 July
2013.
Agreement with Exploration Manager
On 25 August 2011, the Company and a company associated with Mr Lindsay Cahill entered into an
agreement containing the terms and conditions under which the services of Mining Services Manager are
provided to the Company. In the event of termination, there is no notice period required.
The agreement involves the payment to the Company associated with Mr Cahill of an hourly fee of $125
and reimbursement of expenses.
Directors’ Remuneration 2014
Short-term
Post-employment benefits
Superannuation Termination
Share and Option
Based Payments
Director
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Total
Directors’
Fees
$
76,982
-
42,711
42,771
162,464
Salary and
Consulting
Fees
$
-
228,315
-
-
228,315
Executives’ Remuneration 2014
Contribution
$
Benefits
$
Shares Options
$
$
Total
$
7,636
33,213
4,242
4,242
49,333
5,382
-
13,472
-
3,047
-
2,987
-
- 24,888
-
-
-
-
-
90,000
275,000
50,000
50,000
465,000
Executive
Lindsay Cahill
Robert Van der
Laan
Total
Total Directors’
and Executives’
Remuneration
Short-term
Post-employment benefits
Consulting Superannuation Termination
Contribution
$
Benefits
$
Share and Option
Based Payments
Shares Options
$
$
-
-
-
-
-
-
-
-
Total
$
54,083
86,172
Salary
$
-
-
Fees
$
54,083
86,172
-
140,255
-
- - -
140,255
162,464
368,570
49,333
- 24,888
-
605,255
20
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
Directors’ Remuneration 2013
Short-term
Post-employment benefits
Directors
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Total
Directors’
Fees
$
82,569
-
45,872
45,872
174,313
Salary and
Consulting
Fees
$
-
252,294
-
-
252,294
Superannuation Termination
Share and Option
Based Payments
Contribution
$
Benefits
$
Shares
$
7,431
22,706
4,128
4,128
38,393
-
-
-
-
-
-
-
-
-
-
Options
$
22,208*
83,281*
22,208*
22,208*
149,905
Total
$
112,208
358,281
72,208
72,208
614,905
*
1,350,000 $0.355 options were issued to the directors exercisable on or before 13 November 2015 for their services. The
options were valued at $0.1110 per option. . Refer to “Incentive shares and options: Granted and vested during the year” on
the page 15 for further details.
Executives’ Remuneration 2013
Short-term
Post-employment benefits
Consulting Superannuation
Salary
$
Fees
$
Contribution
$
Termination
Benefits
$
Share and Option
Based Payments
Shares
$
Options
$
-
-
154,968
71,580
-
-
-
-
-
-
-
-
Total
$
154,968
71,580
-
226,548
-
-
-
-
226,548
174,313
478,842
38,393
-
- 149,905
841,453
Executives
Lindsay Cahill
Robert Van der
Laan
Total
Total Directors’
and Executives’
Remuneration
Incentive shares and options: Granted and vested during the year
Shares
There were no shares issued to key management personnel as part of the incentive plan during the year
ended 30 June 2014 (2013: nil)
Options
There were no options granted to key management personnel as part of the incentive plan during the year
ended 30 June 2014.
There were total 1,350,000 options granted to key management personnel as part of the incentive plan
during the year ended 30 June 2013.
2013
Directors
A. Griffin
P. McManus
G. Sakalidis
G.Johnson
Total
Options
granted
during the
year
No.
200,000
750,000
200,000
200,000
1,350,000
Exercise
price
Grant date
$
0.355
0.355
0.355
0.355
13-Nov-12
13-Nov-12
13-Nov-12
13-Nov-12
Fair Value
per options
at grant
date(i)
$
0.1110
0.1110
0.1110
0.1110
Expiry
date
Vesting
Date (ii)
13-Nov-15 13-Nov-12
13-Nov-15 13-Nov-12
13-Nov-15 13-Nov-12
13-Nov-15 13-Nov-12
No. vested
during the
year
No.
lapsed
during
the year
200,000
750,000
200,000
200,000
1,350,000
-
-
-
-
-
21
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
Incentive shares and options: Granted and vested during the year (continued)
Options (continued)
(i) The Company 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. Estimating fair value for share
based payment transactions requires determining the most appropriate valuation model, which is
dependent on the terms and conditions of the grant. This estimate also requires determining the most
appropriate inputs to the valuation model including the expected life of the share option, volatility and
dividend yield and making assumptions about them. The assumptions and models used for estimating
fair value for share-based payment transactions are disclosed in Note18.
(ii) During the year ended 30 June 2013, a total of 1,350,000 options were issued to the directors under the
Employee Option Plan (EOP). The fair value of options granted under the EOP is estimated at the date
of grant using a Black-Scholes option pricing methodology, taking into account the terms and services
were valued at the market price at the date of issue as the value of the services received could not be
reliably measured. Options issued during the period vested at grant date.
2013
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Total
Value of options
granted during the
year
$
22,208
83,281
22,208
22,208
149,905
Value of options
exercised during
the year
$
-
-
-
-
-
Value of options
lapsed during the
year
$
-
-
-
-
-
Remuneration
consisting of options
for the year
%
19.79%
23.24%
30.76%
30.76%
-
22
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key management personnel, which including the
directors and executives.
(a)
Share holdings of Key Management Personnel
2014
Directors
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Total
Executives
Lindsay Cahill
Robert Van der Laan
Total
Balance at 1
July 2013
Ordinary
Granted as
remuneration
Ordinary
On Exercise of Options
Ordinary
Net change other
Ordinary
Balance at 30 June
2014
Ordinary
5,175,622
2,612,205
947,205
339,121
9,074,153
99,667
249,475
56,420
55,309
460,871
-
-
-
-
-
615,008
522,441
76,975
41,667
1,256,091
5,890,297
3,384,121
1,080,600
436,097
10,791,115
554,863
75,000
629,863
-
-
-
-
-
-
3,200,219
6,711,023
9,911,242
3,755,082
6,786,023
10,541,105
Total Directors' and Executives Share holdings
9,704,016
460,871
-
11,167,333
21,332,220
2013
Directors
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Total
Executives
Lindsay Cahill
Robert Van der Laan
Total
Balance at 1
July 2012
Ordinary
Granted as
remuneration On Exercise of Options
Ordinary
Ordinary
Net change other
Ordinary
Balance at 30 June
2013
Ordinary
3,455,261
1,715,000
700,517
250,000
6,120,778
-
-
-
-
-
300,000
300,000
600,000
-
-
-
-
-
-
-
-
-
-
-
-
1,720,361
897,205
246,688
89,121
2,953,375
254,863
(225,000)
29,863
2,983,238
5,175,622
2,612,205
947,205
339,121
9,074,153
554,863
75,000
629,863
9,704,016
Total Directors' and Executives Share holdings
6,720,778
-
23
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
(b) Partly Paid Contributing Shares of Key Management Personnel
2014
Directors
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Total
Executives
Lindsay Cahill
Robert Van der Laan
Total
Balance at 1 July
2013
Partly Paid
Granted as
remuneration
Partly Paid
On Exercise of Options
Partly Paid
Net change other
Partly Paid
Balance at 30 June
2014
Partly Paid
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,895,317
1,567,323
454,705
-
4,917,345
2,895,317
1,567,323
454,705
-
4,917,345
-
-
-
-
-
-
-
-
-
1,877,542
2,823,012
4,700,554
1,877,542
2,823,012
4,700,554
Total Directors' and Executives Share holdings
-
-
-
9,617,899
9,617,899
(c) Option holdings of Key Management Personnel
2014
Directors
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Total
Executives
Lindsay Cahill
Robert Van der Laan
Total
Balance at 1
July 2013
Number
Granted as
remuneration
Number
Options
exercised
Number
Net change
other
Number
Balance at 30
June 2014
Number
Not
exercisable
Number
Exercisable
Number
450,000
1,250,000
450,000
450,000
2,600,000
-
-
-
-
-
-
-
-
- -
59,090
285,834
25,000
41,667
411,591
509,090
1,535,834
475,000
491,667
3,011,591
-
-
-
-
-
500,000
-
-
-
-
-
500,000
- -
113,637
1,754,534
1,868,171
613,637
1,754,534
2,368,171
-
-
-
509,090
1,535,834
475,000
491,667
3,011,591
613,637
1,754,534
2,368,171
Total Directors' and Executives Share holdings
3,100,000
- -
2,279,762
5,379,762
-
5,379,762
24
Potash West NL
A.C.N. 147 346 334
Directors’ Report (continued)
Remuneration Report (audited) (continued)
(c) Option holdings of Key Management Personnel (continued)
2013
Directors
Adrian Griffin
Patrick McManus
George Sakalidis
Gary Johnson
Total
Executives
Lindsay Cahill
Robert Van der Laan
Total
Balance at 1
July 2012
Number
Granted as
remuneration
Number
Options
exercised
Number
Net change
other
Number
Balance at 30
June 2013
Number
Not
exercisable
Number
Exercisable
Number
250,000
500,000
250,000
250,000
1,250,000
200,000
750,000
200,000
200,000
1,350,000
500,000
-
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
450,000
1,250,000
450,000
450,000
2,600,000
-
-
-
-
-
450,000
1,250,000
450,000
450,000
2,600,000
-
-
-
500,000
-
500,000
-
-
-
500,000
-
500,000
Total Directors' and Executives Option holdings
1,750,000
1,350,000
-
-
3,100,000
-
3,100,000
(d) Other Transactions with Key Management Personnel
There were no other transactions with key management personnel.
End of Remuneration Report.
25
Potash West NL
A.C.N. 147 346 334
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 is set out on page 27 and forms part of this report.
This report is made in accordance with a resolution of directors.
Patrick McManus
Managing Director
Perth
Dated:
26
30 September 2014
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s independence declaration to the Directors of Potash West NL
In relation to our audit of the financial report of Potash West NL for the financial year ended 30 June
2014, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
Robert Kirkby
Partner
30 September 2014
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:MW:POTASH:085
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement
The Company is committed to implementing the highest standards of corporate governance. In
determining what those high standards should involve the Company has considered the ASX Corporate
Governance Council’s Principles of Good Corporate Governance and Recommendations.
In line with the above, the Board has set out the way forward for the Company in its implementation of its
Principles of Good Corporate Governance and Recommendations. The approach taken by the board was
to set a blueprint for the Company to follow as it introduces elements of the governance process. Due to
the current size of the Company and the scale of its operations it is neither practical nor economic for the
adoption of all of the recommendations approved via the board charter. Where the Company has not
adhered to the recommendations it has stated that fact in this Corporate Governance Statement however
has set out a mandate for future compliance when the size of the Company and the scale of its operations
warrants the introduction of those recommendations.
1.
Board of Directors
1.1 Role of the Board
The Board’s role is to govern the Company rather than to manage it. In governing the Company, the
Directors must act in the best interests of the Company as a whole. It is the role of senior management to
manage the Company in accordance with the direction and delegations of the Board and the responsibility
of the Board to oversee the activities of management in carrying out those delegated duties.
In carrying out its governance role, the main task of the Board is to drive the performance of the Company.
The Board must also ensure that the Company complies with all of its contractual, statutory and any other
legal obligations, including the requirements of any regulatory body. The Board has the final responsibility
for the successful operations of the Company. To assist the Board carry its functions, it has developed a
Code of Conduct to guide the Directors. A copy of the Code of Conduct is available on the Company’s
website (www.potashwest.com.au).
1.2 Composition of the Board
To add value to the Company the Board has been formed so that it has effective composition, size and
commitment to adequately discharge it responsibilities and duties. The names of the Directors and their
qualifications and experience have been stated in the Directors’ Report of the 2014 Annual Report along
with the term of office held by each of the Directors. Directors are appointed based on the specific skills
required by the Company and on their decision-making and judgment. The Company recognises the
importance of Non-Executive Directors and the external perspective and advice that Non-Executive
Directors can offer. There are currently three Non-Executive Directors on the board of the Company who
are also independent directors.
An Independent Director:
1.
2.
is a Non-Executive Director and;
is not a substantial shareholder of the Company or an officer of, or otherwise associated directly
with, a substantial shareholder of the Company;
3. within the last three years has not been employed in an executive capacity by the Company or
another group member, or been a Director after ceasing to hold any such employment;
4. within the last three years has not been a principal of a material professional adviser or a material
consultant to the Company or another group member, or an employee materially associated with
the service provided;
is not a material supplier or customer of the Company or another group member, or an officer of or
otherwise associated directly or indirectly with a material supplier or customer;
5.
6. has no material contractual relationship with the Company or other group member other than as a
Director of the Company;
7. has not served on the Board for a period which could, or could reasonably be perceived to,
8.
materially interfere with the Director’s ability to act in the best interests of the Company; and
is free from any interest and any business or other relationship which could, or could reasonably be
perceived to, materially interfere with the Director’s ability to act in the best interests of the
Company.
28
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
Materiality for the purposes of points 1 to 8 above is determined on the basis of both quantitative and
qualitative aspects with regard to the independence of Directors. An amount over 5% of the Company’s
expenditure or 10% of the particular directors annual gross income is considered to be material. A period
of more than six years as a Director would be considered material when assessing independence.
Mr Adrian Griffin is a Non-Executive Director and Chairman of the Company and meets the Company’s
criteria for independence. Although Mr Adrian Griffin has entered into a profit á prendre re mineral interest
rights with the Company, he is still considered to be independent as the agreement is not considered to be
material as the proportion vended in is insignificant to both parties. His experience and knowledge of the
Company makes his contribution to the Board such that it is appropriate for him to remain on the Board and
in his position as Chairman.
Mr Gary Johnson is a Non-Executive Director of the Company, is a material consultant to the Company and
therefore does not meet the Company’s criteria for independence. His experience and knowledge of the
Company makes his contribution to the Board such that it is appropriate for him to remain on the Board and
in his position as a Non-Executive Director.
Mr George Sakalidis is a Non-Executive Director of the Company and meets the Company’s criteria for
independence. Although Image Resources NL, of which Mr George Sakalidis is a director, has entered into
a profit á prendre re mineral interest rights with the Company, Mr George Sakalidis is still considered to be
independent as the agreement is not considered to be material as the proportion vended in is insignificant
to both parties. His experience and knowledge of the Company makes his contribution to the Board such
that it is appropriate for him to remain on the Board and in his position as a Non-Executive Director.
Mr Patrick McManus is an Executive Director of the Company and does not meet the Company’s criteria for
independence. However, his experience and knowledge of the Company makes his contribution to the
Board such that it is appropriate for him to remain on the Board.
1.3 Responsibilities of the Board
In general, the Board is responsible for, and has the authority to determine, all matters relating to the
policies, practices, management and operations of the Company. It is required to do all things that may be
necessary to be done in order to carry out the objectives of the Company.
Without intending to limit this general role of the Board, the principal functions and responsibilities of the
Board include the following.
1. Leadership of the Organisation: overseeing the Company and establishing codes that reflect the
values of the Company and guide the conduct of the Board.
2. Strategy Formulation: to set and review the overall strategy and goals for the Company and
ensuring that there are policies in place to govern the operation of the Company.
3. Overseeing Planning Activities: the development of the Company’s strategic plan.
4. Shareholder Liaison: ensuring effective communications with shareholders through an appropriate
communications policy and promoting participation at general meetings of the Company.
5. Monitoring, Compliance and Risk Management: the development of the Company’s risk
management, compliance, control and accountability systems and monitoring and directing the
financial and operational performance of the Company.
6. Company Finances: approving expenses and approving and monitoring acquisitions, divestitures
and financial and other reporting.
7. Human Resources: reviewing the performance of Executive Officers and monitoring the
performance of senior management in their implementation of the Company’s strategy.
8. Ensuring the Health, Safety and Well-Being of Employees: in conjunction with the senior
management team, developing, overseeing and reviewing the effectiveness of the Company’s
occupational health and safety systems to ensure the well-being of all employees.
9. Delegation of Authority: delegating appropriate powers to the Managing Director to ensure the
effective day-to-day management of the Company and establishing and determining the powers
and functions of the Committees of the Board.
Full details of the Board’s role and responsibilities are contained in the Board Charter. A copy of the Board
Charter is available on the Company’s website (www.potashwest.com.au).
29
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
1.4 Board Policies
1.4.1 Conflicts of Interest
Directors must:
• disclose to the Board actual or potential conflicts of interest that may or might reasonably be
thought to exist between the interests of the Director and the interests of any other parties in
carrying out the activities of the Company; and
if requested by the Board, within seven days or such further period as may be permitted, take such
necessary and reasonable steps to remove any conflict of interest.
•
If a Director cannot or is unwilling to remove a conflict of interest then the Director must, as per the
Corporations Act, absent himself or herself from the room when discussion and/or voting occurs on matters
about which the conflict relates.
1.4.2 Commitments
Each member of the Board is committed to spending sufficient time to enable them to carry out their duties
as a Director of the Company.
1.4.3 Confidentiality
In accordance with legal requirements and agreed ethical standards, Directors and key executives of the
Company have agreed to keep confidential, information received in the course of the exercise of their
duties and will not disclose non-public information except where disclosure is authorised or legally
mandated.
1.4.4 Continuous Disclosure
The Board has designated the Company Secretary as the person responsible for overseeing and
coordinating disclosure of information to the ASX as well as communicating with the ASX. In accordance
with the ASX Listing Rules the Company immediately notifies the ASX of information:
1. concerning the Company that a reasonable person would expect to have a material effect on the
2.
price or value of the Company’s securities; and
that would, or would be likely to, influence persons who commonly invest in securities in deciding
whether to acquire or dispose of the Company’s securities.
A copy of the Disclosure Strategy is available on the Company’s website (www.potashwest.com.au).
1.4.5 Education and Induction
It is the policy of the Company that each new Director undergo an induction process in which they are given
a full briefing on the Company. Where possible this includes meetings with key executives, tours of the
premises, an induction package and presentations. Information conveyed to new Directors includes:
formal policies on Director appointment as well as conduct and contribution expectations;
• details of the roles and responsibilities of a Director;
•
• a copy of the Board Charter;
• a copy of the Corporate Governance Statement, Charters, Policies and Memos and
• a copy of the Constitution of the Company.
In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo
continual professional development. The Board has implemented an Ongoing Education Framework.
1.4.6 Independent Professional Advice
The Board collectively and each Director has the right to seek independent professional advice at the
Company’s expense, up to specified limits, (that limit is currently set at $2,000), to assist them to carry out
their responsibilities.
1.4.7 Related Party Transactions
Related party transactions include any financial transaction between a Director and the Company. Unless
there is an exemption under the Corporations Act from the requirement to obtain shareholder approval for
the related party transaction, the Board cannot approve the transaction.
30
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
1.4.8 Shareholder Communication
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights
the Company is committed to:
1. communicating effectively with shareholders through releases to the market via ASX, information
mailed to shareholders and the general meetings of the Company;
2. giving shareholders ready access to balanced and understandable information about the Company
and corporate proposals;
3. making it easy for shareholders to participate in general meetings of the Company; and
4.
requesting the external auditor to attend the annual general meeting and be available to answer
shareholder questions about the conduct of the audit and the preparation and content of the
auditor’s report of future Annual Reports.
The Company also makes available a telephone number and email address for shareholders to make
enquiries of the Company. A copy of the Shareholder Communication Policy is available on the Company’s
website (www.potashwest.com.au).
1.4.9 Trading in Company Shares
The Company has a Share Trading Policy which states that Directors, members of senior management,
certain other employees and their associates likely to be in possession of unpublished price sensitive
information may not trade in the Company’s securities prior to that unpublished price sensitive information
being released to the market via the ASX and which include restrictions on trading in closed periods,
complying with the ASX Listing Rule requirements. A copy of the Share Trading Policy is available on the
Company’s website (www.potashwest.com.au). Unpublished price sensitive information is information
regarding the Company, of which the market is not aware, that a reasonable person would expect to have a
material effect on the price or value of the Company’s securities.
1.4.10 Performance Review / Evaluation
It is the policy of the Board to conduct evaluation of its performance. The objective of this evaluation is to
provide best practice corporate governance to the Company. During the financial year an evaluation of the
performance of the Board and its members was not formally carried out. However, a general review of the
Board and executives occurs on an on-going basis to ensure that structures suitable to the Company's
status as a listed entity are in place. A copy of the Board Performance Evaluation Policy is available on the
Company’s website (www.potashwest.com.au).
1.4.11 Attestations by Managing Director and CFO
It is the Board’s policy that the Managing Director and the CFO make the attestations recommended by the
ASX Corporate Governance Council as to the Company’s financial condition prior to the Board signing
future Annual Reports.
1.4.12 Risk Management Policy
The Company’s Risk Management Strategy states that the Board as a whole is responsible for the
oversight of the Company’s risk management and control framework. The objectives of the Company’s
Risk Management Strategy are to:
identify risks to the Company;
•
• balance risk to reward;
• ensure regulatory compliance is achieved; and
• ensure senior executives, the Board and investors understand the risk profile of the Company.
The Board monitors risk through various arrangements including:
•
regular Board meetings;
•
share price monitoring;
• market monitoring; and
•
regular review of financial position and operations.
31
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
The Company has developed a Risk Register in order to assist with the risk management of the Company.
The Company’s Risk Management Strategy was readopted by the Board on 20 September 2011 and is
considered a sound strategy for addressing and managing risk. A copy of the Risk Management Strategy
is available on the Company’s website (www.potashwest.com.au).
1.4.13 Diversity Policy
The Company recognises and respects the value of diversity at all levels of the organisation.
The Company is committed to setting measurable objectives for attracting and engaging women at the
Board level, in senior management and across the whole organisation.
The Diversity Policy was re-adopted on 1 March 2013 and the Company set the following objectives for the
employment of women:
•
•
•
to the Board – no target set
to senior management – 20% by 2014
to the organisation as a whole – 20% by 2014
As at the date of this report, the Company has the following proportion of women appointed:
•
•
•
to the Board – 0%
to senior management – 14%
to the organisation as a whole – 30%
The Company recognises that the mining and exploration industry is intrinsically male dominated in many of
the operational sectors and the pool of women with appropriate skills will be limited in some instances.
Where possible, the Company will seek to identify suitable candidates for positions from a diverse pool.
The Company’s Diversity Policy is located on its website (www.potashwest.com.au).
Board Committees
2.
2.1 Audit Committee
The Audit Committee consists of Mr George Sakalidis, Mr Adrian Griffin and Mr Gary Johnson. The Audit
Committee met twice during the financial year ended 30 June 2014 of which Mr George Sakalidis and Mr
Adrian Griffin were present at the first meeting and Mr Gary Johnson at the second. A copy of the Audit
Committee Charter is available on the Company’s website (www.potashwest.com.au).
Role
2.2 Remuneration Committee
2.2.1.1
The role of a Remuneration Committee is to assist the Board in fulfilling its responsibilities in respect of
establishing appropriate remuneration levels and incentive policies for employees. The Remuneration
Committee consists of three Non-Executive Directors, being Mr Gary Johnson, Mr Adrian Griffin and Mr
George Sakalidis and the Company Secretary. The Chairman of the Remuneration Committee is Mr Gary
Johnson, an independent director. The Remuneration Committee met once during the financial year ended
30 June 2014 and Mr Gary Johnson and Mr Adrian Griffin were present.
Responsibilities
2.2.1.2
The responsibilities of a Remuneration Committee include setting policies for senior officers’ remuneration,
setting the terms and conditions of employment for the Managing Director, reviewing and making
recommendations to the Board on the Company’s incentive schemes and superannuation arrangements,
reviewing the remuneration of both Executive and Non-Executive Directors, recommendations for
remuneration by gender and making recommendations on any proposed changes and undertaking reviews
of the Managing Director’s performance, including, setting with the Managing Director goals and reviewing
progress in achieving those goals.
2.2.2 Remuneration Policy
2.2.2.1 Non-Executive Director Remuneration Policy
Non-Executive Directors are to be paid their fees out of the maximum aggregate amount approved by
shareholders for the remuneration of Non-Executive Directors.
32
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
2.2.2.2 Executive Director Remuneration
Managing Director remuneration is set by the Board with the executive director in question not present.
2.2.3 Current Director Remuneration
Full details regarding the remuneration of Directors has been included in the Directors’ Report of the 2014
Annual Report. A copy of the Remuneration Committee Charter is available on the Company’s website
(www.potashwest.com.au).
2.3 Nomination Committee
2.3.1.1
Role
The role of a Nomination Committee is to help achieve a structured Board that adds value to the Company
by ensuring an appropriate mix of skills are present in Directors on the Board at all times. The Nomination
Committee consists of three Non-Executive directors, being Mr Gary Johnson, Mr Adrian Griffin and Mr
George Sakalidis and the Company Secretary. The Chairman of the Nomination Committee is Mr Gary
Johnson, an independent director. The Nomination Committee met once during the financial year ended 30
June 2014 and Mr Gary Johnson and Mr Adrian Griffin were present.
Responsibilities
2.3.1.1
The responsibilities of a Nomination Committee would include devising criteria for Board membership,
regularly reviewing the need for various skills and experience on the Board and identifying specific
individuals for nomination as Directors for review by the Board. The Nomination Committee also oversees
management succession plans including the Managing Director and his/her direct reports and evaluate the
Board’s performance and make recommendations for the appointment and removal of Directors. Currently
the Board as a whole performs this role. Matters such as remuneration, expectations, terms, the
procedures for dealing with conflicts of interest and the availability of independent professional advice are
clearly understood by all Directors, who are experienced public company Directors.
2.3.2 Criteria for selection of Directors
Directors are appointed based on the specific governance skills required by the Company. Given the size
of the Company and the business that it operates, the Company aims at all times to have at least one
Director with experience appropriate to the Company’s operations. The Company’s current directors all
have relevant experience in the operations. In addition, Directors should have the relevant blend of
personal experience in:
• Accounting and financial management; and
• Director-level business experience.
The Nomination Committee is responsible for implementing a program to identify, assess and enhance
director competencies. In addition, the Nomination Committee puts in place succession plans to ensure an
appropriate mix of skills, experience, expertise and diversity are maintained on the Board. A copy of the
Nomination Committee Charter is available on the Company’s website (www.potashwest.com.au).
Company Code of Conduct
3.
As part of its commitment to recognising the legitimate interests of stakeholders, the Company has
established a Code of Conduct to guide compliance with legal and other obligations to legitimate
stakeholders. These stakeholders include employees, clients, customers, government authorities, creditors
and the community as whole. The Code of Conduct was re-adopted by resolution of the Board on 29 April
2013. This Code of Conduct includes the following:
Responsibilities to Shareholders and the Financial Community Generally
The Company complies with the spirit as well as the letter of all laws and regulations that govern
shareholders’ rights. The Company has processes in place designed to ensure the truthful and factual
presentation of the Company’s financial position and prepares and maintains its financial statements fairly
and accurately in accordance with the generally accepted accounting and financial reporting standards.
33
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
Responsibilities to Clients, Customers and Consumers
The Company has an obligation to use its best efforts to deal in a fair and responsible manner with each of
the Company’s clients, customers and consumers and is committed to providing clients, customers and
consumers with fair value.
Employment Practices
The Company policy is to endeavours to provide a safe workplace in which there is equal opportunity for all
employees at all levels of the Company. The Company does not tolerate the offering or acceptance of
bribes or the misuse of Company assets or resources.
Obligations Relative to Fair Trading and Dealing
The Company aims to conduct its business fairly and to compete ethically and in accordance with relevant
competition laws. The Company strives to deal fairly with the Company’s customers, suppliers and
competitors.
Responsibilities to the Community
As part of the community the Company: is committed to conducting its business in accordance with
applicable environmental laws and regulations
Responsibility to the Individual
The Company is committed to keeping private information from employees, clients, customers, consumers
and investors confidential and protected from uses other than those for which it was provided.
Conflicts of Interest
Directors and Employees must avoid conflicts as well as the appearance of conflicts between personal
interests and the interests of the Company.
How the Company Complies with Legislation Affecting its Operations
Within Australia, the Company strives to comply with the spirit and the letter of all legislation affecting its
operations. Outside Australia, the Company will abide by local laws in all countries in which it operates.
Where those laws are not as stringent as the Company’s operating policies, particularly in relation to the
environment, workplace practices, intellectual property and the giving of “gifts”, Company policy will prevail.
How the Company Monitors and Ensures Compliance with its Code.
The Board of the Company is committed to implementing this Code of Conduct and each individual is
accountable for such compliance. Disciplinary measures may be imposed for violating the Code of
Conduct.
the Company’s website
A copy of
(www.potashwest.com.au).
the Code of Conduct
is available on
This Corporate Governance Statement sets out Potash West NL's current compliance with the ASX
Corporate Governance Council's Principles of Good Corporate Governance and Recommendations. The
Recommendations are not mandatory.
34
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
RECOMMENDATION
COMMENT
REFERENCE
Lay solid foundations for management and oversight
1
1.1 Companies should establish
the functions reserved to the
board and those delegated
to senior executives and
disclose those functions.
The Company's Corporate Governance Policy
includes a Board Charter, which discloses the
specific responsibilities of the Board.
1.1, 1.3,
Website
1.2 Companies should disclose
the process for evaluating
the performance of senior
executives.
The Board will monitor the performance of
senior management, including measuring actual
performance against planned performance. The
Board has also adopted a policy to assist in
evaluating Board performance.
1.4.10,
Website
1.3 Companies should provide
the information indicated in
the Guide to reporting on
Principle 1.
Structure the board to add value
2
2.1 A majority of
should
directors.
be
The Company has explained any departures (if
any) from recommendations 1.1 and 1.2 in the
Corporate Governance Statement and Policies.
the board
independent
There are four Directors on the Board, of which
Mr Adrian Griffin, Mr George Sakalidis are
independent. Mr Patrick McManus and Mr Gary
Johnson are not considered to be independent.
Both Mr Patrick McManus and Mr Gary Johnson
have a sound knowledge of Potash West NL’s
projects.
is considered
important in enabling the Company to capitalise
on the value of its projects to create shareholder
wealth.
This knowledge
2.2 The chair should be an
independent director.
2.3 The roles of chair and chief
executive officer should not
be exercised by the same
individual.
2.4 The board should establish
a nomination committee.
a
from
remains
departure
There
the
recommendation in relation to a majority of
independent directors due to the small scale
nature of the Company and its limited financial
resources to attract appropriately skilled yet
independent directors. The Board is continually
reviewing the status of independent directors
with a view to engaging further independent
directors when financial resources allow.
The Chairman, Mr Adrian Griffin, is considered
to be independent as his profit á prendre re
mineral interest rights with the Company is not
considered to be material to either party.
The roles of chair and chief executive officer are
not exercised by the same individual.
A
formal Nomination Committee has been
adopted by the Company, chaired by Mr Gary
Johnson, consisting of Mr George Sakalidis, Mr
Adrian Griffin and the Company Secretary.
35
1.1, 1.3,
1.4.10,
Website
1.2
1.2
1.2
2.3
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
2.5 Companies should disclose
the process for evaluating
the
the performance of
board, its committees and
individual directors.
2.6 Companies should provide
the information indicated in
the Guide to reporting on
Principle 2.
induction appropriate
The Chairman will review the composition of the
Board and the performance of each Director to
ensure that it continues to have a mix of skills
and experience necessary for the conduct of the
Company's activities. A new Director will receive
an
to his or her
experience.
The Company has provided details of each
Director, such as their skills, experience and
expertise relevant to their position, together with
an explanation of any departures (if any) from
recommendations 2.1, 2.2, 2.3, 2.4 and 2.5 in
the 2013 Annual Report and Corporate
Governance
Policies
respectively.
Statement
and
1.4.10, 2.3.2,
1.4.5,
Website
1.2, 2.3,
1.4.10, 2.3.2,
1.4.5, 1.4.6,
Website
Promote ethical and responsible decision-making
3
3.1 Companies should establish
a code of conduct and
disclose
the code or a
summary of the code as to:
• the practices necessary to
maintain confidence in the
company's integrity
• the practices necessary to
take
their
into account
legal obligations and the
reasonable expectations
of their stakeholders
responsibility
and
of
accountability
individuals
reporting
for
and investigating reports
of unethical practices
• the
3.2 Companies should establish
a policy concerning diversity
and disclose the policy or a
summary of that policy. The
policy
include
should
requirements for the board
establish measurable
to
achieving
objectives
the
gender diversity
to assess annually
board
both
the objectives and
progress in achieving them.
for
for
3.3 Companies should disclose
in each annual report the
measurable objectives
for
achieving gender diversity
in
the
set
accordance
the
diversity policy and progress
towards achieving them.
board
with
by
The Company's Corporate Governance Policy
includes a Code of Conduct for Directors and
Key Executives, which provides a framework for
decisions and actions in relation to ethical
conduct in employment.
3, 1.4.1, 1.4.2,
1.4.3,
Website
The Company has implemented a Diversity
Policy which includes requirements for the
board to establish measurable objectives for
achieving gender diversity for the board to
assess annually both
the objectives and
progress in achieving them.
1.4.13
The measurable objectives for achieving gender
diversity will be disclosed in each annual report.
1.4.13
36
3, 1.4.1, 1.4.2,
1.4.3, 1.4.9,
1.4.13, Website
2.1
2.1
2.1
2.1
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
3.4 Companies disclose in each
annual report the proportion
of women employees in the
whole organisation, women
in senior executive positions
and women on the board.
The measurable objectives
for achieving
gender diversity will be disclosed in each
annual report.
1.4.13
4
4.1
The Company has explained any departures (if
3.5 Companies should provide
any) from recommendations 3.1, 3.2, 3.3 and
the information indicated in
the Guide to reporting on
3.4 in the Corporate Governance Statement
Principle 3.
and Policies.
Safeguard integrity in financial reporting
The board should establish
an audit committee.
The audit committee should
be structured so that it:
• consists only of non-
A formal Audit Committee has been adopted
by the Company.
Mr George Sakalidis (Non-Executive Director –
Potash West NL)
Mr Adrian Griffin (Non-Executive Chairman –
Potash West NL)
Mr Gary Johnson (Non-Executive Director –
Potash West NL)
executive directors
• consists of a majority of
independent directors
4.2
• is
chaired
an
independent chair, who is
not chair of the board
by
4.3
has at least three members.
The audit committee should
have a formal charter.
4.4 Companies should provide
the information indicated in
the Guide to reporting on
Principle 4.
Make timely and balanced disclosure
5
5.1 Companies should establish
written policies designed to
compliance with
ensure
ASX Listing Rule disclosure
requirements and to ensure
accountability at a senior
that
level
executive
compliance and disclose
those policies or a summary
of those policies.
for
5.2 Companies should provide
the information indicated in
Guide
to Reporting on
Principle 5.
Respect the rights of shareholders
6
6.1 Companies should design a
communications policy
for
effective
promoting
with
communication
and
shareholders
their
encouraging
participation
general
meetings and disclose their
policy or a summary of that
policy.
at
The Company will explain any departures (if
any) from recommendations 4.1, 4.2 and 4.3 in
its Corporate Governance Statement.
The Company has a Disclosure Strategy in
place designed to ensure the compliance with
ASX Listing Rule disclosure and to ensure
accountability at a Board level for compliance
and factual presentation of the Company's
financial position.
1.4.4,
Website
1.4.4,
Website
1.4.8,
Website
The Company will provide an explanation of
any departures (if any) from recommendation
5.1 in its Corporate Governance Statement.
The Company's Corporate Governance Policy
includes a Shareholder Communications Policy,
which aims to ensure that the shareholders are
informed of all major developments affecting
the Company's state of affairs.
37
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
6.2 Companies should provide
the information indicated in
the Guide to reporting on
Principle 6.
Recognise and manage
risk
7
7.1 Companies should establish
policies for the oversight and
management of material
business risks and disclose
a summary of those policies.
7.2 The board should require
management to design and
implement
risk
the
management and
internal
control system to manage
the
company's material
business risks and report to
it on whether those risks are
being managed effectively.
The board should disclose
has
that management
the
reported
to
effectiveness
the
company's management of
its material business risks.
it as
of
to
officer
it has
from
officer
that
provided
7.3 The board should disclose
received
whether
the chief
assurance
(or
executive
the chief
equivalent) and
(or
financial
the
equivalent)
in
declaration
section
accordance with
295A of
the Corporations
Act is founded on a sound
system of risk management
and internal control and that
the system
is operating
in all material
effectively
to
relation
in
respects
financial reporting risks.
7.4 Companies should provide
the information indicated in
to Reporting on
Guide
Principle 7.
The Company has provided an explanation of
any departures (if any) from recommendation
6.1 in the Corporate Governance Statement
and Policies.
1.4.8,
Website
The Board determines the Company's "risk
profile" and is responsible for overseeing and
risk management strategy and
approving
policies,
internal
internal compliance and
control. The Company’s Corporate Governance
Policy includes a Risk Management Strategy
which aims to ensure that material business
risks are identified and mitigated, through the
use of a Risk Register.
The Board requires that the Managing Director
and the Chief Financial Officer will design and
implement
internal
control systems and provide a report at the
relevant time.
risk management and
1.4.12, Website
1.4.11, 1.4.12
Website
The Board will seek this relevant assurance
from the Managing Director and the Chief
Financial Officer.
1.4.11, 1.4.12
Website
The Company has provided an explanation of
any departures (if any) from recommendations
7.1, 7.2 and 7.3 in the Corporate Governance
Statement and Policies.
1.4.11, 1.4.12
Website
38
2.2.1
2.2.1, 2.2.2,
Website
2.2.2,
Website
2.2.1,
Website
2.2.2,
Potash West NL
A.C.N. 147 346 334
Corporate Governance Statement (continued)
8
8.1
8.2
Remunerate fairly and responsibly
The board should establish
a remuneration committee.
The
committee
structured so that it:
•
remuneration
be
should
A formal Remuneration Committee has been
adopted by the Company.
The Remuneration Committee is chaired by Mr
Gary Johnson, consisting of Mr Adrian Griffin,
Mr George Sakalidis and
the Company
Secretary.
consists of a majority of
independent directors
is
by
chaired
independent chair
an
•
• has
at
least
three
members.
8.3 Companies should clearly
distinguish the structure of
non-executive
directors'
remuneration from that of
executive
and
senior executives.
directors
8.4 Companies should provide
the information indicated in
the Guide to reporting on
Principle 8.
the
that
The Board will distinguish the structure of non
executive Director's remuneration from that of
executive Directors and senior executives.
the Company's Constitution
Relevantly,
provides
remuneration of non-
executive Directors will be not be more than
the aggregate fixed sum determined by a
general meeting. The Board is responsible for
determining the remuneration of any Director
or senior executives (without the participation
of the affected Director).
The Company has provided an explanation of
any departures (if any) from recommendations
8.1, 8.2 and 8.3 in the Corporate Governance
Statement and Policies.
39
Potash West NL
A.C.N. 147 346 334
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
INCOME FROM CONTINUING ACTIVITIES
For the year
ended 30
June 2014
For the year
ended 30
June 2013
Note
$
$
REVENUE
Geological services
Administrative services
Interest
OTHER INCOME
Government grant
TOTAL INCOME
EXPENSES
Administration
Depreciation
Share based payments
18
Exploration
Legal
Occupancy
Remuneration (excluding share based payments)
660
35,595
10,120
46,375
51,660
-
48,600
100,260
558,721
495,262
605,096
595,522
735,642
1,672,892
20,719
67,735
23,809
149,905
777,352
2,124,454
57,750
71,000
84,470
55,000
697,402
678,624
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX
(1,822,505)
(4,193,632)
INCOME TAX BENEFIT
4
-
-
NET LOSS FOR THE YEAR
OTHER COMPREHENSIVE INCOME
(1,822,505)
(4,193,632)
-
-
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(1,822,505)
(4,193,632)
Basic and diluted loss per share (cents per share)
7
(1.72)
(5.85)
The statement of comprehensive income should be read in conjunction with the accompanying notes.
40
Potash West NL
A.C.N. 147 346 334
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
Total Current Assets
NON CURRENT ASSETS
Exploration and evaluation
Investment in associate
Plant and equipment
Total Non Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
As at 30 June
2014
$
As at 30
June 2013
$
Note
8
9
12
10
11
13
14
15
16
17
164,270
48,133
18,804
231,207
1,157,541
96,141
20,753
1,274,435
2,500,000
100,000
65,580
2,665,580
2,896,787
2,500,000
-
86,299
2,586,299
3,860,734
297,490
46,281
343,771
343,771
548,066
34,286
582,352
582,352
2,553,016
3,278,382
12,754,631
523,341
(10,724,956)
2,553,016
11,725,227
455,606
(8,902,451)
3,278,382
The statement of financial position should be read in conjunction with the accompanying notes.
41
Potash West NL
A.C.N. 147 346 334
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2014
At 1 July 2012
Opening Balance
Loss for the year
Other comprehensive income (net of
tax)
Total comprehensive loss for the
year (net of tax)
Transactions with owners in their
capacity as owners:
Shares issued
Share issue transaction costs
Share and option based payments
Issued
Capital
Accumulated
Losses
$
$
Share and
Option
Based
Payment
Reserve
$
Total
$
9,965,087
-
(4,708,819)
(4,193,632)
305,701
5,561,969
- (4,193,632)
-
-
-
-
9,965,087
(8,902,451)
305,701
1,368,337
1,809,671
(49,531)
-
-
-
-
-
-
149,905
1,809,671
(49,531)
149,905
Balance at 30 June 2013
11,725,227
(8,902,451)
455,606
3,278,382
Balance at 1 July 2013
11,725,227
(8,902,451)
455,606
3,278,382
Loss for the year
Other comprehensive income (net of
tax)
Total comprehensive loss for the
year (net of tax)
Transactions with owners in their
capacity as owners:
Shares issued
Share issued transaction costs
Share and option based payments
Balance as at 30 June 2014
-
-
-
(1,822,505)
- (1,822,505)
-
-
-
(1,822,505)
- (1,822,505)
1,146,211
(116,807)
-
12,754,631
-
-
-
(10,724,956)
-
-
67,735
523,341
1,146,211
(116,807)
67,735
2,553,016
The statement of changes in equity should be read in conjunction with the accompanying condensed notes.
42
Potash West NL
A.C.N. 147 346 334
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
OPERATING ACTIVITIES
Payments to suppliers and employees
Government grant received
R&D tax rebate
Interest received
NET CASH FLOWS USED IN OPERATING ACTIVITIES
INVESTING ACTIVITIES
Purchase of plant and equipment
Payment for equity investments
NET CASH FLOWS USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
Proceeds from issue of shares
Share issue costs
NET CASH FLOWS FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at the beginning of the year
For the year
ended 30
June 2014
For the year
ended 30
June 2013
Note
$
$
(2,491,516)
11,139
547,582
10,120
(1,922,676)
(4,384,079)
-
491,862
48,600
(3,843,617)
22
-
(100,000)
(100,000)
(9,241)
-
(9,241)
1,146,211
(116,807)
1,029,404
1,809,671
(49,531)
1,760,140
(993,272)
1,157,541
(2,092,718)
3,250,259
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
8
164,270
1,157,541
The statement of cash flows should be read in conjunction with the accompanying notes.
43
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements
Note 1: Corporate information
The financial report of Potash West NL for the year ended 30 June 2014 was authorised for issue in
accordance with a resolution of directors on 30 September 2014.
Potash West NL is a company limited by shares incorporated in Australia whose share are publicly traded
on the Australian Securities Exchange (ASX) and OTC Pink.
The nature of operations and principal activities of the Company are described in the directors’ report.
Note 2: Statement of significant accounting policies
(a) Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Accounting Standards and Interpretations and complies with
other requirements of the law. Potash West NL is a for-profit entity for the purpose of preparing the financial
statements.
The accounting policies detailed below have been consistently throughout the year presented unless
otherwise stated.
The financial report has also been prepared on a historical cost basis. Cost is based on the fair values of the
consideration given in exchange for assets.
The financial report is presented in Australian dollars.
The company is a listed public company, incorporated in Australia and operating in Australia. The entity’s
principal activities are mineral exploration.
(b)
Adoption of new and revised standards
The Company has adopted the following new and amended Australian Accounting Standard and AASB
Interpretations for the reporting year ended 30 June 2014:
Reference
Title
AASB 10
AASB 11
AASB 12
AASB 13
Consolidated Financial Statements
AASB 10 establishes a new control model that applies to all
entities
Joint Arrangements
AASB 11 replaces AASB 131 Interests in Joint Ventures and
UIG-113 Jointly- controlled Entities - Non-monetary
Contributions by Ventures.
Disclosure of Interests in Other Entities
AASB 12 includes all disclosures relating to an entity's interests
in subsidiaries, joint arrangements, associates and structured
entities.
Fair Value Measurement
AASB 13 establishes a single source of guidance for
determining the fair value of assets and liabilities.
Application
date of
standard
Application
date for Group
1 January 2013 1 July 2013
1 January 2013 1 July 2013
1 January 2013 1 July 2013
1 January 2013 1 July 2013
44
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements
Note 2: Statement of significant accounting policies (continued)
(b)
Adoption of new and revised standards (continued)
Reference
Title
AASB 119
Employee Benefits
The main change introduced by this standard is to revise the
accounting for defined benefit plans.
Application
date of
standard
Application
date for Group
1 January 2013 1 July 2013
The adoption of these new and revised standards has not resulted in any significant changes to the
Company's accounting policies or to the amounts reported for the current or prior periods.
Accounting Standards and Interpretations issued but not yet effective:
Reference
Title
AASB 2012-3
Amendments to Australian Accounting Standards -
Offsetting Financial Assets and Financial Liabilities
Application
date of
standard
Application
date for Group
1 January 2014 1 July 2014
Interpretation 21
Levies
1 January 2014 1 July 2014
AASB 9/IFRS 9
Financial Instruments
1 January 2018 1 July 2018
AASB 2013-3
AASB 2013-4
AASB 2013-5
Amendments to AASB 136 – Recoverable
Amount Disclosures for Non-Financial Assets
1 January 2014 1 July 2014
Amendments to Australian Accounting Standards –
Novation of Derivatives and Continuation of Hedge
Accounting [AASB 139]
1 January 2014 1 July 2014
Amendments to Australian Accounting Standards –
Investment Entities
[AASB 1, AASB 3, AASB 7, AASB 10, AASB 12, AASB
107, AASB 112, AASB 124, AASB 127, AASB 132,
AASB 134 & AASB 139]
1 January 2014 1 July 2014
AASB 2013-7
Amendments to AASB 1038 arising from AASB 10 in
relation to Consolidation and Interests of Policyholders
[AASB 1038]
1 January 2014 1 July 2014
AASB 2014-1
Part A -Annual
Improvements
2010–2012 Cycle
AASB 2014-1
Part A -Annual
Improvements
2011–2013 Cycle
Amendments to Australian Accounting Standards -
Part A
Annual Improvements to IFRSs 2010–2012 Cycle
1 July 2014
1 July 2014
Amendments to Australian Accounting Standards -
Part A
Annual Improvements to IFRSs 2011–2013 Cycle
1 July 2014
1 July 2014
AASB 1031
Materiality
1 January 2014 1 July 2014
45
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements
Note 2: Statement of significant accounting policies (continued)
(b)
Adoption of new and revised standards (continued)
Reference
Title
Application
date of
standard
Application
date for Group
AASB 2013-9
Amendments to Australian Accounting Standards –
Conceptual Framework, Materiality and Financial
Instruments
Amendments to
IAS 16 and IAS 38
AASB 2014-1
Part B Amendments to
AASB 119
Clarification of Acceptable Methods of Depreciation
and Amortisation (Amendments to IAS 16 and IAS 38)
1 January 2016 1 July 2016
Amendments to Australian Accounting Standards -
Part B
Defined Benefit Plans: Employee Contributions
(Amendments to AASB 119)
1 July 2014
1 July 2014
IFRS 15
Revenue from Contracts with Customers
1 January 2017 1 July 2017
The impact of the above new and revised standards is yet to be determined.
(c)
Statement of compliance
The financial report complies with Australian Accounting Standards and International Financial Reporting
Standards (IFRS).
(d) Critical accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions about
carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in
the year in which the estimate is revised if it affects only that year or in the year of the revision and future
years if the revision affects both current and future years.
Share-based payment transactions
The Company measures the share-based payment transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. Estimating fair value for share based
payment transactions requires determining the most appropriate valuation model, which is dependent on the
terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the
valuation model including the expected life of the share option, volatility and dividend yield and making
assumptions about them. The assumptions and models used for estimating fair value for share-based
payment transactions are disclosed in Note 18.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only when management considers
that it is probable that sufficient future tax profits will be available to utilise those temporary differences.
Significant management judgement is required to determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and the level of future taxable profits over the next two years
together with future tax planning strategies.
46
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 2: Statement of significant accounting policies (continued)
(d)
Critical accounting estimates and judgements (continued)
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of
factors, including whether the Company decides to exploit the related lease itself or, if not, whether it
successfully recovers the related exploration and evaluation asset through sale.
(e)
Share-based payment transactions
Employees (including senior executives) of the Company receive remuneration in the form of share-based
payment transactions, whereby employees render services as consideration for equity instruments (equity-
settled transactions).
The cost of equity-settled transactions is recognised, together with a corresponding increase in other capital
reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The
cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Company’s best estimate of the number
of equity instruments that will ultimately vest. The income statement expense or credit for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period and
is recognised in equity based payments expense (Note 18).
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for
which vesting are conditional upon a market or non-vesting condition. These are treated as vesting
irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
When the terms of an equity-settled transaction award are modified, the minimum expense recognised is
the expense as if the terms had not been modified, if the original terms of the award are met. An additional
expense is recognised for any modification that increases the total fair value of the share based payment
transaction, or is otherwise beneficial to the employee as measured at the date of modification.
When an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any
expense not yet recognised for the award is recognised immediately. This includes any award where non-
vesting conditions within the control of either the entity or the employee are not met. However, if a new
award is substituted for the cancelled award, and designated as a replacement award on the date that it is
granted, the cancelled and new awards are treated as if they were a modification of the original award, as
described in the previous paragraph. The dilutive effect of outstanding options is reflected as additional
share dilution in the computation of diluted earnings per share (further details are given in Note 7).
(f)
Going concern
This report has been prepared on the going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and settlement of liabilities in the normal course of business.
The Company has incurred a net loss for the year ended 30 June 2014 of $1,822,505 (2013: $4,193,632)
and experienced net cash outflows from operating activities of $1,922,676 (2013: $3,843,617). At the end of
the reporting year, the Directors recognise the need to raise additional funds via equity raising to fund future
planned exploration activities.
The Directors have reviewed the Company’s financial position and are of the opinion that the use of the
going concern basis of accounting is appropriate as they believe the Company will be successful in
securing additional funds through the equity issue.
47
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 2: Statement of significant accounting policies (continued)
(f)
Going concern (continued)
Should the Company not achieve the matters set out above, there is significant uncertainty whether the
Company will continue as a going concern and therefore whether it will realise its assets and extinguish its
liabilities in the normal course of business and at the amounts stated in the financial report.
The financial report does not contain any adjustments relating to the recoverability and classification of
recorded assets or to the amounts or classification of recorded assets or liabilities that might be necessary
should the Company not be able to continue as a going concern.
(g)
Exploration and evaluation expenditure
Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs
which are carried forward where right of tenure of the area of interest is current and they are expected to be
recouped through sale or successful development and exploitation of the area of interest or, where
exploration and evaluation activities in the area of interest have not reached a stage that permits
reasonable assessment of the existence of economically recoverable reserves.
Where an area of interest is abandoned or the directors decide that it is not commercial, any accumulated
acquisition costs in respect of that area are written off in the financial period the decision is made. Each
area of interest is also reviewed at the end of each accounting period and accumulated costs written off to
the extent that they will not be recoverable in the future.
Amortisation is not charged on costs carried forward in respect of areas of interest in the development
phase until production commences.
(h) Plant & equipment
Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated
impairment in value. Depreciation is calculated on a straight-line basis over the estimated useful life of the
asset as follows:
Plant and equipment – over two to 15 years
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
If any indication exists of impairment and where the carrying values exceed the estimated recoverable
amount, the assets or cash-generating units are written down to their recoverable amount.
The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset.
Derecognition
An item of plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the item) is
included in the statement of comprehensive income in the period the item is derecognised.
48
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 2: Statement of significant accounting policies (continued)
(i)
Income tax
Current tax assets and liabilities for the current year and prior periods are measured at amounts expected
to be recovered from or paid to the taxation authorities based on the current year’s taxable income. The tax
rates and tax laws used for computations are enacted or substantively enacted by the balance date.
Deferred income tax is provided on all temporary differences at balance date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except where the
deferred income tax liability arises from the initial recognition of goodwill of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry-forward of unused tax assets and unused
tax losses can be utilised except where the deferred income tax asset relating to the deductible temporary
difference arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss.
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
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 balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the
statement of comprehensive income.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same
taxable entity and the same taxation authority.
(j) GST
Revenues, expenses and assets are recognised net of the amount of GST except:
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of
the expense item as applicable; and
•
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the statement of financial position.
49
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 2: Statement of significant accounting policies (continued)
(j) GST (continued)
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash
flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation
authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to,
the taxation authority.
(k)
Provisions and employee benefits
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Company expects some or all of a provision to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually
certain. The expense relating to any provision is presented in the statement of comprehensive income net
of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required
to settle the present obligation at the balance date. If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks
specific to the liability. The increase in the provision resulting from the passage of time is recognised in
finance costs.
Employee leave benefits
i. Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries including non-monetary benefits, annual leave and accumulating sick
leave due to be settled within 12 months of the reporting date are recognised in provisions in respect of
employees’ services up to the reporting date and are measured at the amounts expected to be paid when
the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken
and measured at the rates paid or payable.
ii. Long service leave
The liability for long service leave is recognised and measured as 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 the 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 national government bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
(l) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and
short-term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
50
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 2: Statement of significant accounting policies (continued)
(m) Receivables
Receivables, which generally have 30-90 day terms, are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest rate method, less an allowance for any uncollectible
amounts.
Collectability or receivables are reviewed on an ongoing basis. Debts that are known to be uncollectible are
written off when identified. An allowance for doubtful debts is raised when there is objective evidence that
the Company will not be able to collect the debt.
(n) Prepayments
Prepayment for goods and services which are to be provided in future years are recognised as
prepayments. Prepayments are recorded in the other assets in the balance sheet.
(o) Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to the
extent that it is probable that the economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is
recognised:
Interest Income
Income is recognised as the interest accrues (using the effective interest method, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the
net carrying amount of the financial asset.
Fee Income
Revenue from geological services provided is recognised as the services are rendered, the revenue and
the costs incurred or to be incurred in respect of the transactions can be measured reliably and the
economic benefits associated with the transaction will flow to the Company.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and
all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as
income over the period necessary to match the grant on a systematic basis to the costs that it is intended to
compensate. When the grant relates to an asset, it is recognised as deferred income and released to
income in equal amounts over the expected useful life of the related asset.
When the Company receives non-monetary grants, the asset and the grant are recorded gross at nominal
amounts and released to the income statement over the expected useful life and pattern of consumption of
the benefit of the underlying asset by equal annual installments. When loans or similar assistance are
provided by governments or related institutions with an interest rate below the current applicable market
rate, the effect of this favourable interest is regarded as additional government grants.
(p) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds.
(q) Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and
services provided to the Company prior to the end of the financial year that are unpaid and arise when the
Company becomes obliged to make future payments in respect of the purchase of these goods and
services.
51
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 2: Statement of significant accounting policies (continued)
(r)
Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the Company adjusted to
exclude any costs of servicing equity (other than dividends) divided by the weighted average number of
ordinary shares, adjusted for any bonus element.
Diluted earnings per share is calculated as net profit attributable to members of the Company adjusted for:
•
•
costs of servicing equity (other than dividends);
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that
have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the
dilution of potential ordinary shares;
•
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted
for any bonus element.
(s)
Investments and other financial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are
classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-
maturity investments, or available-for-sale financial assets. When financial assets are recognised initially,
they are measured at fair value, plus, in the case of investments not at fair value through profit or loss,
directly attributable transaction costs. The Company determines the classification of its financial assets
after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial
year-end.
(i) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as
held-to-maturity when the Company has the positive intention and ability to hold to maturity. Investments
intended to be held for an undefined period are not included in this classification. Investments that are
intended to be held-to maturity, such as bonds, are subsequently measured at amortised cost. This cost is
computed as the amount initially recognised minus principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between the initially recognised amount
and the maturity amount. This calculation includes all fees and points paid or received between parties to
the contract that are an integral part of the effective interest rate, transaction costs and all other premiums
and discounts. For investments carried at amortised cost, gains and losses are recognised in profit and loss
when the investment are derecognised or impaired, as well as through the amortisation process.
(ii)Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such assets are carried at amortised cost using the effective interest method.
Gains and losses are recognised in profit and loss when the loans and receivables are derecognised or
impaired, as well as through the amortisation process.
(t)
Impairment of financial assets
The Company assesses at each balance date whether a financial asset or group of financial assets is
impaired.
Available-for-sale investments
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the
difference between its cost and its current fair value, less any impairment loss previously recognised in
profit and loss, is transferred from equity to the statement of comprehensive income. Reversals of
impairment losses for equity instruments classified as available-for-sale are not recognised in profit.
Reversals of impairment losses for debt instruments are reversed through profit and loss if the increase in
an instrument’s fair value can be objectively related to an event occurring after the impairment loss was
recognised in profit or loss.
52
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 2: Statement of significant accounting policies (continued)
(u) Leases
Operating Lease payments are recognised as an operating expense in the statement of comprehensive
income on a straight-line basis over the lease term. Operating lease incentives are recognised as a liability
when received and subsequently reduced by allocating lease payments between rental expense and the
reduction of the liability.
(v)
Investment in associate
The Group’s investments in its associate are accounted for using the equity method. Under the equity
method, the investment in an associate is initially recognised at cost. The carrying amount of the
investment is adjusted to recognise changes in the Group’s share of net assets of the associate since the
acquisition date.
The statement of profit or loss reflects the Group’s share of the results of operations of the associate. Any
change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been
a change recognised directly in the equity of the associate, the Group recognises its share of any changes,
when applicable, in the statement of changes in equity.
Unrealised gains and losses resulting from transactions between the Group and the associate are
eliminated to the extent of the interest in the associate.
The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement
of profit or loss outside operating profit and represents profit or loss after tax and non-controlling interests in
the subsidiaries of the associate.
The financial statements of the associate are prepared for the same reporting period as the Group. When
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an
impairment loss on its investment in its associate. At each reporting date, the Group determines whether
there is objective evidence that the investment in the associate is impaired. If there is such evidence, the
Group calculates the amount of impairment as the difference between the recoverable amount of the
associate and its carrying value, then recognises the loss as ‘Share of profit of an associate’ in the
statement of profit or loss.
Upon loss of significant influence over the associate, the Group measures and recognises any retained
investment at its fair value. Any difference between the carrying amount of the associate upon loss of
significant influence and the fair value of the retained investment and proceeds from disposal is recognised
in profit or loss.
Note 3: Segment information
The Company has based its operating segment on the internal reports that are reviewed and used by the
executive management team (“Chief Operating Decision Makers”) in assessing performance and in
determining the allocation of resources.
The Company currently does not have production and is only involved in exploration. As a consequence,
activities in the operating segment are identified by management based on the manner in which resources
are allocated, the nature of the resources provided and the identity of the manager and country of
expenditure. Information is reviewed on a whole of entity basis.
Based on these criteria the Company has only one operating segment, being exploration, and the segment
operations and results are reported internally based on the accounting policies as described in Note 2 for
the computation of the Company’s results presented in this set of financial statements.
53
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 4: Income tax
(a) Income tax expense/(benefit)
Current tax
Deferred tax
Adjustments for current tax of prior years
Total tax expense/(benefit)
2014
2013
$
$
-
-
-
-
-
-
-
-
(b) Numerical reconciliation of income tax expense to prima facie tax
payable
Loss from continuing operations before income tax expense
(1,822,505)
(4,193,632)
Prima facie tax benefit at the Australian tax rate of 30%
(546,751)
(1,258,090)
Tax effect of amounts which are not deductible (taxable) in calculating taxable
income:
Share based payment
Non-deductible expenses
Non-assessable income
Capital raising costs deductible
Deferred tax assets not brought to account
Income tax expense/(benefit)
(c) Deferred tax assets
Accrued expenses
Employee entitlement provisions
Tax losses
Deferred tax asset not recognised
Offset against deferred tax liabilities
Net deferred tax assets
(d) Deferred tax liabilities
Exploration tenement
Offset against deferred tax assets
Net deferred tax liabilities
54
-
7,366
(164,275)
(35,042)
738,702
44,972
9,316
-
(14,859)
1,218,661
-
-
7,500
13,884
3,920,326
3,941,710
(3,191,710)
750,000
(750,000)
7,500
10,286
3,206,606
3,224,392
(2,474,392)
750,000
(750,000)
-
-
750,000
750,000
(750,000)
-
750,000
750,000
(750,000)
-
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 5: Directors’ and Executives’ remuneration
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payment
Total compensation
Note 6: Auditor’s remuneration
Remuneration of the auditor of the Company for:
- auditing or reviewing the financial report
- research & development tax concession
- tax agent
Note 7: Earnings per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Net loss
Loss used in calculating basic and diluted loss per share
2014
$
531,034
49,333
2013
$
653,155
38,393
-
-
24,888
605,255
149,905
841,453
2014
$
2013
$
42,745
33,440
4,632
80,817
41,200
28,253
10,635
80,088
2014
$
1.72
1.72
(1,822,505)
(1,822,505)
Number
2013
$
5.85
5.85
(4,193,632)
(4,193,632)
Number
Weighted average number of ordinary shares used in the
calculation of basic and diluted (loss)/earnings per share
106,144,476
71,864,583
During the year there were no listed or key management personnel options exercised.
The options issued under Employee Option Plan (EOP) are not considered dilutive for the purpose of the
calculation of diluted earnings/loss per share as their conversion to ordinary shares would not decrease the
net profit from continuing operations per share. Consequently, diluted earnings/loss per share is the same
as basic earnings per share.
Subsequent to the reporting date, the Company undertook a capital raising, raising a total of $826,275
before costs at $0.035 per share. Total 23,604,857 ordinary shares have been issued as a result of the
capital raising and that would significantly change the number of ordinary shares or potential ordinary
shares outstanding between the reporting date and the date of completion of these financial statements.
55
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 8: Cash and cash equivalents
Cash at bank and on hand
Reconciliation of cash and cash equivalents
30-Jun-14
$
164,270
164,270
30-Jun-13
$
1,157,541
1,157,541
Cash at the end of financial period is shown in the Statement of Cash Flows is reconciled to items in
the Statement of Financial Position as follows:
Cash and cash equivalents
164,270
1,157,541
Note 9: Trade and other receivables
Trade debtors
GST Receivables
30-Jun-14
$
30-Jun-13
$
14,837
33,296
48,133
23,298
72,843
96,141
(i) Non-trade debtors are non-interest bearing and are generally on 30-90 days terms. The carrying
amounts of these receivables represent fair value and are not considered to be impaired.
Ageing Analysis
30 June 2014
Financial assets
Trade and other receivables
Financial liabilities
Trade and other payables
Loans and borrowings
Current
90 – 120
Days
120 – 180
Days
180 +
Days
Total
46,525
1,608-
297,490
-
-
-
-
-
-
-
-
48,133
-
-
297,490
-
- (249,357)
Net Maturity
(250,965)
1,608
30 June 2013
Financial assets
Trade and other receivables
Financial liabilities
Trade and other payables
Loans and borrowings
Net Maturity
Current
90 – 120
Days
120 – 180
Days
180 +
Days
Total
-
-
-
-
-
-
-
-
-
96,141
-
-
548,066
-
- (451,925)
96,141
548,066
-
(451,925)
56
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 10: Exploration expenditure
Acquisition of mineral rights - Dandaragan Trough
tenements
30-Jun-14
$
30-Jun-13
$
2,500,000
2,500,000
2,500,000
2,500,000
The ultimate recoupment of acquisition costs carried forward for exploration and evaluation phases is
dependent on the successful development and commercial exploitation or scale of the respective areas.
Note 11: Investment in associate
Investment - East Exploration Pty Ltd
30-Jun-14
$
30-Jun-13
$
100,000
100,000
-
-
On 24 April 2014, the Company has entered agreement with Lufgan Nominees Pty Ltd and RL Holdings Pty Ltd to set
up a new company called East Exploration Pty Ltd and acquires exploration permits in respect of the tenements and
developing the tenements in Germany, which is the principal place of business. Upon signing of the Heads of
Agreement, the Company agrees to subscribe 100,000 shares at $1.00 per share in East Exploration Pty Ltd to acquire
its first 25% interest in the project. Subsequent to year end, the Company is earning a further 30% of East Exploration
Pty Ltd to take the total holding to 55% by funding the application for two exploration licences and the geological
appraisal of information already available on the area. The investment in East Exploration Pty Ltd has been accounted
for using the equity method. As at 30 June 2014, East Exploration Pty Ltd holds current assets of $100,000
representing cash received through the subscription of 100,000 shares to Potash West NL. There has been no further
activity impacting the financial information of East Exploration Pty Ltd. There are no commitment or contingent liabilities.
Note 12: Other assets
Prepayments
Note 13: Plant and equipment
At 30 June 2013
Cost
Additions
Accumulate depreciation
Closing net carrying value
Year ended 30 June 2014
Opening net carrying value
Additions
Depreciation charge for the year
Closing net carrying value
30-Jun-14
$
30-Jun-13
$
18,804
18,804
20,753
20,753
Office
Equipment
$
Plant and
Equipment
$
Computer
Software
$
Total
$
9,465
3,466
(3,142)
9,789
59,458
-
(11,876)
47,582
31,944
5,775
(8,791)
28,928
100,867
9,241
(23,809)
86,299
47,582
-
(9,503)
38,079
28,928
-
(7,924)
21,004
86,299
-
(20,719)
65,580
9,789
-
(3,292)
6,497
57
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 14: Trade and other payables
30-Jun-14
$
30-Jun-13
$
Current
Unsecured liabilities
Trade payables
297,490
297,490
548,066
548,066
Due to short term nature of these payables, their carrying value is assumed to approximate their fair value.
Note 15: Provisions
Employee benefits
Note 16: Contributed equity
30-Jun-14
$
30-Jun-13
$
46,281
46,281
34,286
34,286
30-Jun-14
30-Jun-13
No.
$
No.
$
Ordinary shares - fully paid
Contributing Shares - partly paid
113,806,148
35,960,024
13,047,840
-
92,021,064
-
11,960,252
-
149,766,172
13,047,840
92,021,064
11,960,252
Effective 1 July 1998, the corporation legislation abolished the concepts of authorised capital and par value
shares. Accordingly, the Company does not have authorised capital or par value in respect of its issued
shares. Fully paid ordinary shares carry one vote per share and carry the rights to dividends.
When managing capital (which is defined as the Company's total equity amounting $2,553,016, (2013:
$3,278,382), the Board's objective is to ensure the entity continues as a going concern as well as to
maintain optimal returns to shareholders and benefits for other stakeholders. The Board also aims to
maintain a capital structure that ensures the lowest cost of capital available for future exploration and
development activity. The Company is not subject to any externally imposed capital requirements.
Movements in ordinary shares on issue of the legal parent are:
Note
2014
Number
2013
Number
At the beginning of reporting year
Issue of 8,2223,344 shares to existing shareholders via
renounceable entitlement issue
Issue of 1,887 shares via exercising options
Issue of 2,000,000 shares via private share placement
Issue of 8,174,790 shares via non-renounceable entitlement issue
Issue of 10,649,423 shares via non-renounceable entitlement
shortfall issue
Issue of 460,871 shares to directors and senior management via
remuneration sacrifice share plan
Issue of 500,000 shares to consultant in lieu of services provided
16.1
16.2
16.3
16.4
16.5
16.6
16.7
Reserved shares
At the end of the reporting year
92,021,064 83,795,833
-
8,223,344
-
2,000,000
8,174,790
10,649,423
460,871
1,887
-
-
-
-
500,000
-
113,806,148 92,021,064
(2,110,871)
(1,150,000)
111,695,277 90,871,064
58
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 16: Contributed equity (continued)
At the beginning of reporting year
Issue of 8,2223,344 shares to existing shareholders via
renounceable entitlement issue
Issue of 2,000,000 shares via private share placement
Issue of 8,174,790 shares via non-renounceable entitlement issue
Issue of 10,649,423 shares via non-renounceable entitlement
shortfall issue
Issue of 460,871 shares to directors and senior management via
remuneration sacrifice share plan
Issue of 500,000 shares to consultant in lieu of services provided
Shares to be issued to Steda Nominees Pty Ltd via private share
placement
Shares to be issued under the director and senior management fee
and remuneration sacrifice share plan
Equity raising costs
Reserved shares
At the end of the reporting year
Note
16.1
16.3
16.4
16.5
16.6
16.7
16.8
16.9
16.10
2014
$
2013
$
11,960,252
10,200,112
-
1,809,671
200,000
408,740
532,471
24,887
25,000
5,000
8,296
-
-
-
-
-
-
-
(116,807)
(49,531)
13,047,839
11,960,252
(293,208)
(235,025)
12,754,631
11,725,227
Movements in partly paid contributing shares on issue of the legal parent are:
Note
2014
Number
2013
Number
At the beginning of reporting year
Issue of 35,960,024 partly paid contributing shares pursuant to
non-renounceable entitlement issue
At the end of the reporting year
-
16.11
35,960,024
35,960,024
-
-
-
Outstanding amount per partly paid contributing share at 30 June 2014 is $0.049 (2013: Nil).
The partly paid contributing shares are issued with 35,960,024 outstanding calls of 4.9 cents each. The
dates for the future calls are not before 30 June 2014. The partly paid contributing shares carry a right to a
dividend on the same basis as holders of Ordinary Shares. Partly paid contributing shares carry the right to
vote in proportion which the amount paid (not credited) bears to the total amounts paid and payable
(excluding amounts credited). The company has the power to forfeit any shares where the call remains
unpaid 14 days after the call was payable. The company must then offer the shares forfeited for public
auction within six weeks of the call becoming payable.
16.1
16.2
16.3
16.4
16.5
The issue of 8,223,344 shares to existing shareholders at $0.22 per share via renounceable
entitlement issue.
The issue of 1,887 shares as $0.30 listed options expiring 15 March 2015 exercised during the year.
The issue of 2,000,000 shares at $0.10 per share via private share placement.
The issue of 8,174,790 shares to existing shareholders at $0.05 per share via non-renounceable
entitlement issue.
The issue of 10,649,423 shares to existing shareholders at $0.05 per share via non-renounceable
entitlement shortfall issue.
59
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 16: Contributed equity (continued)
16.6
16.7
16.8
16.9
The issue of 460,871 shares to directors and senior management at $0.054 per share via director
fee and remuneration sacrifice share plan.
The issue of 500,000 shares to consultant at $0.05 per share in lieu of services provided.
Shares to be issued to Steda Nominees Pty Ltd at $0.05 per share via private share placement.
Shares to be issued to directors and senior management via director fee and remuneration sacrifice
share plan. Shares have not yet been issued, with the number of shares to be determined at issue
date, dependent on the market share price.
16.10 For the year 2014, the payment of costs incurred by the Company in relation to equity raising and
listing of the Company's shares and of $116,807 (2013: $49,531).
16.11 The issue of 35,960,024 partly paid contributing shares pursuant to non-renounceable entitlement
bonus issue.
Note 17: Share based payment reserve
At the beginning of reporting year
Issue of 1,350,000 options for option based payment
Issue of 500,000 options for option based payment
Issue of 460,871 shares for share based payment
Issue of 500,000 shares for share based payment
At the end of the reporting year
Note
30-Jun-14
Number
30-Jun-13
Number
17.1
17.2
16.6
16.7
4,450,000
3,100,000
-
500,000
460,871
500,000
1,350,000
-
-
-
5,910,871
4,450,000
Note
30-Jun-14
$
30-Jun-13
$
At the beginning of reporting year
455,606
305,701
Amount expensed for options issued to directors. 1,350,000
options with exercise price of $0.355
Amount expensed for options issued to consultant.
500,000 options with exercise price of $0.15
Amount expensed for shares issued to directors and senior
management under the Remuneration Sacrifice Share Plan.
460,871 shares at $0.054 per share
Amount expensed for shares issued to consultant in lieu of
services provided.
500,000 share at $0.05 per share
Shares to be issued under the Director and Senior
Management Fee and Remuneration Sacrifice Share Plan
17.1
17.2
9,552
16.6
24,887
16.7
25,000
16.9
8,296
-
149,905
-
-
-
-
At the end of the reporting year
523,341
455,606
17.1 The issue of 1,350,000 $0.355 options exercisable on or before 13 November 2015 on 12
November 2012 to Directors. Please refer to Note 18 for further explanation.
17.2 The issue of 500,000 $0.15 options exercisable on or before 7 February 2017 on 6 February 2014
to consultant. Please refer to Note 18 for further explanation.
60
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 18: Equity based payments
Expenses arising from share-based payment and option-based payment transactions
Total expenses arising from share-based payment transactions recognised during the year were as follows:
Options issued in consideration for services. See note 17.2
Shares issued under the director and senior management fee and
remuneration sacrifice share plan. See note 16.6 and 16.9
Shares issued in consideration of services. See note 16.7
30-Jun-14
$
9,552
33,183
25,000
67,735
30-Jun-13
$
149,905
-
-
149,905
During the 2014 financial year, 500,000 options were issued to consultant under the Employee Option Plan
(EOP). The fair value of options granted under the EOP is estimated at the date of grant using a Black-
Scholes option pricing methodology, taking into account the terms and services were valued at the market
price at the date of issue as the value of the services received could not be reliably measured. Options
issued during the period vested at grant date.
Under the Management fee and remuneration sacrifice share plan, the eligible directors and senior
management of the Company may elect to sacrifice part of their directors’ fees or consulting fees to acquire
Shares in the Company. Under the Plan, the relevant directors and senior management will receive the
remainder of their directors’ fees or consulting fees in cash. As such, the Shares will be issued for nil cash
consideration and will be valued at market fair value. The Plan has been approved by the shareholders
during 2013 AGM. The associated shares for the sacrificed amount up to March 2014 have been issued to
the directors who have elected to sacrifice part of their directors’ fees, with remaining associated shares to
be issued in next financial year.
On 8 April 2014 and 20 June 2014, a total of 500,000 shares were issued to a consultant for services
provided to the Company at a market value, $0.05 per share.
The fair value of the shares and options granted for the year ended 30 June 2014 was estimated on the
date of grant using the following assumptions:
30-June-2014
30-June-2013
Dividend yield (%)
Expected volatility* (%)
Risk-free interest rate (%)
Expected life (years)
Nil
75
2.5
3
Nil
75
3
3 to 5
Share price ($)
See below tables:
See below tables:
Share-based payment plans
Outstanding at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at 31 December
Exercisable at 31 December
2014
Number
2014
WAEP
2013
Number
2013
WAEP
$0.2040
$0.0500
-
-
-
$0.1348
-
1,150,000
-
-
-
-
1,150,000
-
$0.2040
-
-
-
-
$0.2040
-
1,150,000
960,871
-
-
-
2,110,871
-
61
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 18: Equity based payments (continued)
Option-based payment plans
Outstanding at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
2014
Number
2014
WAEP
2013
Number
2013
WAEP
2,600,000
$0.3189
-
-
-
-
-
-
1,250,000
1,350,000
-
-
-
$0.2800
$0.3550
-
-
-
Outstanding at 31 December
2,600,000
$0.3189
2,600,000
$0.3189
Exercisable at 31 December
-
-
-
-
* Volatility was determined using considered judgement as to the volatility of the share price over the vesting period.
Option-based payments (to
consultants)
Outstanding at 1 July
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
2014
Number
2014
WAEP
2013
Number
2013
WAEP
700,000
500,000
$0.3570
$0.1500
-
-
-
-
-
-
700,000
$0.3570
-
-
-
-
-
-
-
-
Outstanding at 31 December
1,200,000
$0.2708
700,000
$0.3570
Exercisable at 31 December
-
-
-
-
Note 19: Commitments
(i) The Company has certain obligations with respect to tenements and minimum expenditure
requirements on areas, as follows:
Within 1 year
1 to 2 years
Total
2014
$
1,000,500
1,000,500
2,001,000
2013
$
961,000
961,000
1,922,000
The commitments may vary depending upon additions or relinquishments of the tenements, as well as
farm-out agreements. The above figures are based on the mines department Emits reports as at 30 June
2014. These figures are adjusted at the anniversary date of each tenement and therefore the total can
change on a monthly basis.
(ii) Mr Patrick McManus was appointed as Managing Director on 23 November 2010. Pursuant to an
agreement dated 23 November 2010 and resolution passed at the 2012 Annual General Meeting, his
salary is set at $275,000 per annum inclusive of superannuation requirement, effective from 1 July
2012. The agreement can be terminated by either party by giving three months’ notice or payment of
three months’ salary in lieu of notice being $68,750.
Note 20: Contingent liabilities
There are no contingent liabilities as at 30 June 2014 (2013: Nil).
62
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 21: Related party transactions
Consulting fees were paid to Strategic Metallurgy Pty
Ltd, a company of which Gary Johnson is a director
and shareholder
30-Jun-14
$
30-Jun-13
$
340,785
614,614
The Company issued 15,000,000 shares to Barclay Wells Ltd for the Contingent Entitlement shares in 2011
year (Nil: 2014 year). The Contingent Entitlement share Trustee has entered into a declaration of trust
under which it declares that it holds the Contingent Entitlement shares on trust for certain shareholders of
the Company (‘Eligible Beneficiaries’), being those shareholders who hold at least 10,000 shares in the
Company as the Listing Date and who hold at least one shares in the Company on the first Business Day
following the date that all shares in respect of which the ASX imposes restrictions as a condition to the
listing cease to be restricted securities (‘the Entitlement Date’). These shares are held in Share Plan Trust
on behalf of the Company and accounted for as reserve shares with nil value.
During the year, the 15,000,000 Contingent Entitlement shares were transferred from the Share Plan Trust
to the Eligible Beneficiaries accordingly.
In 2012 financial year, 1,150,000 shares were issued under the Employee Share Plan (ESP) accounted for
as in-substance options. The Company has provided each employee with a Resource Loan up to the
amount payable in respect of the shares. The employee must repay the Loan in full prior to expiry of the
Loan Term but may elect to repay the Loan Amount in respect of any or all of the Plan Shares at any time
prior to expiry of the Loan Term.
Note 22: Cash flow information
30-Jun-14
$
30-Jun-13
$
Reconciliation of cash flow from operations with (loss)/profit from ordinary activities after income tax
Loss from ordinary activities after income tax
Depreciation and amortisation
Expenses settled via equity issues
Changes in assets and liabilities
(Increase)/decrease in receivables
Increase/(decrease) in payables
Increase/(decrease) in provisions
(1,822,505)
20,719
67,735
49,957
(250,576)
11,994
(4,193,632)
23,809
149,905
(5,395)
170,487
11,209
Cash flows from operations
(1,922,676)
(3,843,617)
Note 23: Financial risk management objectives and policies
The Company’s principal financial instruments comprise cash and short term deposits. The main purpose of
the financial instruments is to finance the Company’s operations. The Company also has other financial
instruments such as trade debtors and creditors which arise directly from its operations. The main risks
arising from the Group’s financial instruments are interest rate risk and credit risk. The board reviews and
agrees policies for managing each of these risks and they are summarised below:
Interest Rate Risk
(a)
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate
as a result of changes in market interest rates and the effective weighted average interest rate for each
class of financial assets and financial liabilities is set out in the following table. Also included is the effect on
profit and equity after tax if interest rates at that date had been 10% higher or lower with all other variables
held constant as a sensitivity analysis.
63
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 23: Financial risk management objectives and policies (continued)
The Group has not entered into any hedging activities to manage interest rate risk. In regard to its interest
rate risk, the Group continuously analyses its exposure. Within this analysis consideration is given to
potential renewals of existing positions, alternative investments and the mix of fixed and variable interest
rates.
Weighted
Average
Effective
Interest
Rate
%
Floating
Interest
Fixed
Interest
Non
Interest
Interest Rate
Risk Sensitivity
-10%
10%
Rate
$
Rate
Bearing
Total
Profit Equity
Profit Equity
$
$
$
$
$
$
$
2014
Financial Assets
Cash
Receivables
Total Financial Assets
Financial Liabilities
Trade
creditors
Total Financial
Liabilities
2.35
92,968
-
92,968
-
-
-
-
-
-
-
71,302
48,133
164,270
-153
-153
153
153
48,133
119,435
212,403
297,490
297,490
297,490
297,490
Weighted
Average
Effective
Interest
Rate
%
Floating
Interest
Fixed
Interest
Non
Interest
Interest Rate
Risk Sensitivity
-10%
10%
Rate
Rate
Bearing
Total
Profit
Equity
Profit Equity
$
$
$
$
$
$
$
$
2.75
2013
Financial Assets
Cash
Receivables
Total Financial Assets
Financial Liabilities
Trade creditors
Total Financial Liabilities
1,097,848
-
1,097,848
-
-
-
-
-
-
-
59,693
96,141
155,834
1,157,541
96,141
1,253,682
548,066
548,066
548,066
548,066
-2,113
-2,113
2,113
2,113
A sensitivity of 10% (2013: 10%) has been selected as this is considered reasonable given the current level
of both short term and long term Australian dollar interest rates. A -10% sensitivity would move short term
interest rates at 30 June 2014 from around 2.35% to 2.12% (2012: 2.75% to 2.48%) representing a 23.5
basis points (2013: 27.5 basis points) downwards shift, which is 16.5 basis points (2013: 19.3 basis points)
net of tax.
Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances is
impacted resulting in a decrease or increase in overall income.
Liquidity Risk
(a)
The Company manages liquidity risk by maintaining sufficient cash reserves and marketable securities
required to meet the current exploration and administration commitments, through the continuous
monitoring of actual cash flows.
All payables are due within 30 days, which is consistent with the prior year.
64
Potash West NL
A.C.N. 147 346 334
Notes to Financial Statements (continued)
Note 23: Financial risk management objectives and policies (continued)
Fair Values
(b)
For financial assets and liabilities, the net fair value approximates their carrying value. No financial assets
and financial liabilities are readily traded on organised markets in standardised form.
(d) Credit Risk
Credit risk arises in the event that counterparty will not meet its obligations under a financial instrument
leading to financial losses. The Company is exposed to credit risk from its operating activities, financing
activities including deposits with banks. The credit risk control procedures adopted by the Company is to
assess the credit quality of the institution with whom funds are deposited or invested, taking into account its
financial position and past experiences.
The maximum exposure to credit risk on financial assets of the Company which have been recognised on
the statement of financial position is generally limited to the carrying amount.
Cash is maintained with National Australia Bank.
Note 24: Subsequent events
On 9 July 2014, the Company successfully raised $826,275 before costs through private placement.
Proceeds of the placement will be directed to ongoing project development activities on Dandaragan
Trough projects.
On 29 July 2014, the Company announced it is earning an interest in a potash project in Germany. Potash
West NL has the right to earn up to 55% of East Exploration Pty Ltd by funding early exploration. The first
tranche of $100,000 was paid during the financial year to acquire its first 25% earning interest in the project
and an additional $50,000 was paid on 12 August 2014 to increase its earning interest in the project.
On 20 August 2014, the Company announced the acquisition of an additional 300 km2 of prospective
ground within the Dandaragan Trough Project. The tenement was formerly held by Dempsey Minerals Ltd
(“Dempsey”) and the Company has agreed to purchase the technical data generated by Dempsey for
200,000 fully paid ordinary shares and 0.4% Net Smelter Royalty.
65
Potash West NL
A.C.N. 147 346 334
Directors’ Declaration
In the opinion of the directors of Potash West NL
:
(a)
the financial statements and notes set out on pages 40 to 65 are in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the financial position of the Company as at 30 June 2014
and of its performance, as represented by the results of its operations and its cash
flows, for the year ended on that date; and
complying with Accounting Standards in Australia and the Corporations Regulations
2001;
(b)
(c)
the financial statements and notes also comply with International Financial Reporting
Standards as disclosed in Note 2 (c); and
subject to the matters discussed in Note 2(f), there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the year ending 30 June 2014.
This declaration is made in accordance with a resolution of the directors.
Patrick McManus
Managing Director
Perth
Dated:
66
30 September 2014 Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Potash West NL
Report on the financial report
We have audited the accompanying financial report of Potash West NL, which comprises the statement of
financial position as at 30 June 2014, the statement of comprehensive income, statement of changes in
equity and statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors' declaration.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation of the
financial report that gives a true and fair view in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:EH:POTASH:082
Opinion
In our opinion:
a.
the financial report of Potash West NL is in accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the company's financial position as at 30 June 2014 and of its
performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b.
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 2 (f) in the financial report which describes the
principal conditions that raise doubt about the company’s ability to continue as a going concern.. These
conditions indicate the existence of a material uncertainty that may cast significant doubt about the
company’s ability to continue as a going concern and therefore, the company may be unable to realise its
assets and discharge its liabilities in the normal course of business.
Report on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2014. 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.
Opinion
In our opinion, the Remuneration Report of Potash West NL for the year ended 30 June 2014, complies
with section 300A of the Corporations Act 2001.
Ernst & Young
Robert Kirkby
Partner
Perth
30 September 2014
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:EH:POTASH:082
Potash West NL
A.C.N. 147 346 334
Shareholder Information
Distribution schedules of shareholders and statements of voting rights are set out in Table 1, whilst the
Company’s top twenty shareholders and option holders are shown in Tables 2, 3 and 4. Substantial
shareholder notices that have been received by the Company are set out in Table 5.
Table 1
Shareholder spread as at 28 August 2014
Ordinary shares, with right to attend meetings and vote personally or by proxy, through show of
hands and, if required, by ballot (one vote for each share)
Spread of Holdings
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 - and over
No. Holders
PWN
103
256
216
821
166
No. Holders
PWNCA
29
138
140
292
53
No. Holders
PWNO
120
237
62
74
12
Total number of holders of securities
Total number of securities
1,562
137,414,005
652
35,960,024
505
8,221,457
Table 2
Top twenty shareholders as at 28 August 2014
Shareholder
1 Citicorp Nominees Pty Limited
2 UOB Kay Hian Private Limited
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