PIEDMONT LITHIUM ANNUAL REPORT 2019NASDAQ:PLLLASX:PLLinfo@piedmontlithium.comwww.piedmontlithium.com50 002 664 4953 New York Office 28 W 44th Street, Suite 810 New York, NY 10036North Carolina Office 5706 Dallas-Cherryville Highway 279 Bessemer City, NC 28016Registered Office Level 9, BGC Centre 28 The Esplanade PERTH WA 6000ANNUAL REPORTPiedmont Lithium Limited ABN 50 002 664 495NORTH CAROLINACHECK SPINE WIDTH OLD CONTENT TO BE REPLACED
CONTENTS
1 Message from the CEO
2 Directors’ Report
22 Auditor’s Independence Declaration
23 Consolidated Statement of Profit or Loss and
Other Comprehensive Income
24 Consolidated Statement of Financial Position
25 Consolidated Statement of Changes in Equity
26 Consolidated Statement of Cash Flows
27 Notes to the Financial Statements
53 Directors’ Declaration
54 Independent Auditor’s Report
58 Mineral Resources Statement
59 Corporate Governance
60 ASX Additional Information
CORPORATE
DIRECTORY
DIRECTORS:
Mr Ian Middlemas – Chairman
Mr Keith Phillips – President & CEO
Mr Anastasios Arima – Executive Director
Mr Jeffrey Armstrong – Non-Executive Director
Mr Jorge Beristain – Non-Executive Director
Mr Levi Mochkin – Non-Executive Director
COMPANY SECRETARY:
Mr Gregory Swan
OFFICES:
New York Office:
28 W 44th Street, Suite 810
New York, NY 10036
UNITED STATES
North Carolina Office:
32 North Main Street, Suite 100
Belmont, NC 28012
UNITED STATES
Registered Office:
Level 9, 28 The Esplanade
Perth WA 6000
AUSTRALIA
WEBSITE:
www.piedmontlithium.com
STOCK EXCHANGE LISTINGS:
Nasdaq Capital Market (NASDAQ: PLLL)
Australian Securities Exchange (ASX: PLL)
SHARE REGISTRY:
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
AUSTRALIA
Tel: +61 8 9323 2000
LAWYERS:
United States:
Gibson Dunn
Johnston, Allison & Hord Attorneys
Australia:
DLA Piper Australia
BANKERS:
United States:
The Bank of New York Mellon Corporation
PNC Financial Services Group, Inc.
Australia:
Australia and New Zealand Banking Group Limited
AUDITOR:
Deloitte Touche Tohmatsu
MESSAGE FROM THE CEO
DEAR FELLOW SHAREHOLDERS,
It gives me great pleasure to provide an update on our progress and
exciting future ahead. 14 months into my tenure as President & CEO I
have never been more optimistic about lithium market fundamentals or
the prospects for our Company.
“
The past twelve months were a period of great
accomplishment for us, as we transition from
‘explorer’ to ‘developer’, achieving many
important milestones.
“
Our maiden Mineral Resource for the Piedmont Lithium Project of 16.2
million tonnes at 1.12% Li2O, containing 182,000 tonnes of Li2O or
450,000 tonnes of Lithium Carbonate Equivalent (“LCE”), is the first
resource estimate completed in over 30 years in the historic Carolina
Tin-Spodumene Belt, which was the home of most of the world’s lithium
production and processing from the 1950s until the 1980s.
The region continues to be the home to the US lithium processing facilities
of Albemarle Corporation and FMC Corporation. The current resource
is within our Core Property, which is 5 kilometres north of the historic
Hallman-Beam mine (ex-FMC).
Following our maiden Mineral Resource, we completed a Scoping Study
for our vertically-integrated Piedmont Lithium Project, incorporating a
lithium hydroxide chemical plant supplied with spodumene concentrate
from an open pit mine and concentrator.
The Scoping Study demonstrated that the Project has compelling projected
economics due to attractive capital and operating costs, significant by-
product credits, short transportation distances, minimal royalties and low
corporate income taxes. Scoping Study highlights include:
• US$888 million after-tax net present value (“NPV”);
• 46% after-tax internal rate of return (“IRR”);
• US$193 per tonne spodumene concentrate cash costs (net of by-
• US$3,112 per tonne lithium hydroxide costs (net of by-product
product credits);
credits); and
• US$225 million annual steady-state earnings before interest, tax,
depreciation and amortization (“EBITDA”).
The Scoping Study reinforced the fundamental advantages of our
location in North Carolina, USA:
• Existing infrastructure – ready access to high quality roads and
rail, and abundant power from many sources;
• Low-cost environment – short transportation distances combined
with low-cost power and natural gas;
• Skilled labour force – a substantial local labour force is in the
region, with Gaston County, NC possessing arguably the world’s
deepest pool of lithium processing talent;
• Proximity to downstream markets – located within 15 miles
of the only two large scale lithium processing facilities in the USA
providing potential cost savings and certainty of supply; and
• Stable and investment friendly jurisdiction – stable legal regime,
established permitting process for mining operations, with low
corporate taxes and no state mining royalties.
While our results to date have laid a solid foundation for our success, it is
Piedmont’s future which I find most exciting. We have several important
activities already underway or pending over the coming months, including:
• Resource growth – we aim to expand the Project’s life by adding
resources at our Core property, while also hoping to identify
resources on our Sunnyside and Central properties, and additional
properties we may add in the future;
• Permitting – we are actively engaged with local, state and federal
regulators in advance of a comprehensive permitting submission
targeted for late-2018;
• Metallurgical studies – further metallurgical studies, including
evaluating the potential for a Dense Medium Separation (“DMS”)
before the flotation circuit, to further improve operating costs in the
concentrator;
• Pre-Feasibility Study – we will be undertaking detailed
engineering work and infill drilling to upgrade Inferred resources to
Indicated, putting us in a position to lodge a Pre-Feasibility Study in
the first half of 2019;
• Offtake agreements – we are engaged in discussions with
numerous potential offtake partners for our spodumene concentrate
and by-products; and
• Strategic partnerships – we are in early discussions with several
prospective partners for our chemical plant and are gratified by the
strong preliminary interest shown by highly credible parties.
As with any quality resource project, market conditions are critical to
the ultimate realization of shareholder value. Lithium pricing has been
strong all year, especially for the battery-grade hydroxide markets the
Company is targeting. Global electric vehicle demand is up 77% year-
over-year and new grid storage applications are also driving lithium
demand. Supply growth remains relatively restrained, particularly in the
critical lithium hydroxide segment that Piedmont is targeting.
Regrettably, after a strong H2 2017, the market for lithium equities has
been disappointing so far in 2018, with shares of lithium developers
falling over 40% year-to-date despite lithium chemical prices
appreciating. This dislocation cannot last, and I believe the supply
concerns of some market commentators will be overwhelmed by the
commercial realities in coming months, making this an opportune time to
be investing in the sector.
I am very excited about our prospects for 2018 and beyond. I would
like to extend my sincere appreciation to shareholders for your support
and I look forward to sharing success with you in the year ahead.
Yours faithfully,
Keith D. Phillips
PRESIDENT & CEO
DIRECTORS' REPORT
The Directors of Piedmont Lithium Limited present their report on the Consolidated Entity consisting of Piedmont
Lithium Limited (“Company” or “Piedmont”) and the entities it controlled at the end of, or during, the year ended
June 30, 2019 (“Consolidated Entity” or “Group”).
OPERATING AND FINANCIAL REVIEW
Operations
Piedmont Lithium Limited (ASX: PLL; Nasdaq: PLL) holds a 100% interest in the Piedmont Lithium Project
(“Project”) located within the world-class Carolina Tin-Spodumene Belt (“TSB”) and along trend to the Hallman
Beam and Kings Mountain mines, historically providing most of the western world’s lithium between the 1950s and
the 1980s. The TSB has been described as one of the largest lithium provinces in the world and is located
approximately 25 miles west of Charlotte, North Carolina. It is a premier location for development of an integrated
lithium business based on its favourable geology, proven metallurgy and easy access to infrastructure, power, R&D
centers for lithium and battery storage, major high-tech population centers and downstream lithium processing
facilities.
Piedmont, through its 100% owned U.S. subsidiary, Piedmont Lithium Inc., has entered into exclusive option and
land acquisition agreements with local landowners which, upon exercise, allow the Company to purchase (or in
some cases long-term lease) approximately 2,207 acres of surface property and the associated mineral rights. The
Company also controls a 60-acre parcel in Kings Mountain, North Carolina, for the site of the Company’s planned
Chemical Plant, after signing an extension to the purchase agreement in May 2019.
Figure 1: Piedmont Lithium Project located within the TSB
Piedmont Lithium Limited ANNUAL REPORT 2019
1
DIRECTORS' REPORT
(Continued)
OPERATING AND FINANCIAL REVIEW (continued)
Highlights
Highlights during and subsequent to the end of the year were as follows:
(a)
Completed an updated Scoping Study for the Project, which was managed by independent consultants,
Primero Group Limited, and delivered outstanding results including:
(i)
(ii)
(iii)
a 25-year mine life and compelling economics including an NPV of US$1.45 billion and an after-tax
IRR of 34%, due to attractive capital and operating costs;
a chemical plant producing 22,700tpa of lithium hydroxide supported by an open pit mine and
concentrator producing 160,000tpa of 6% spodumene concentrate; and
by-product quartz (86,000tpa), feldspar (125,000tpa), and mica (13,000tpa) providing credits to the
cost of lithium production;
(b)
Increased total Mineral Resources for the Piedmont Lithium Project (“Project”) by 72% to 27.9 million tonnes
(“Mt”) at a grade of 1.11% Li2O following:
(i)
(ii)
an updated Mineral Resource estimate for the Company’s Core property, increasing the Core
property Mineral Resources to 25.1 Mt at a grade of 1.09% Li2O; and
an initial Mineral Resource estimate for the Company’s Central property, located approximately one
mile south of the Core property, of 2.8 Mt at a grade of 1.34% Li2O;
Demonstrated that 74% of the Mineral Resources located at the Core property are within 100 metres of
surface, and that 97% of the Mineral Resources at Core are located within 150 metres of surface;
Completed mineralogical analysis on samples of mineralized pegmatites and composite samples from the
Project demonstrating that lithium occurs almost exclusively within spodumene in the Project’s ore body;
Completed PFS-level metallurgical test work demonstrating high quality spodumene concentrate product
with a grade above 6.0% Li2O, iron oxide below 1.0%, and low impurities from representative samples using
a combination of Dense Medium Separation (“DMS”) and flotation technology;
Continued the 25,000-meter Phase 4 drill program, where a total of 94 holes have been completed to date
for a total of 15,738 meters;
Completed Mineral Resource estimates and bench-scale metallurgical testwork for by-product quartz,
feldspar and mica as by-products of spodumene concentrate from the Project. The Mineral Resource
estimates were prepared by independent consultants, CSA Global Pty Ltd;
Increased overall land position of the Project by 60% to 2,207 acres. The Company’s Core property now
comprises 1,004 acres, representing an 86% increase from the Core property land position underlying the
maiden Mineral Resource estimate;
Submitted key permit applications for the Project, including a Section 404 Standard Individual Permit
application to the US Army Corps of Engineers (“USACE”) and a Section 401 Individual Water Quality
Certification to the North Carolina Division of Water Resources (“NCDWR”);
Completed initial exploratory drilling on the Company’s new Sunnyside and Central properties in the Carolina
TSB, which returned encouraging results, including the Project’s widest intercept to-date;
Continued numerous preliminary off-take, financing and strategic conversations, including companies from
the lithium, mining, chemicals, battery, automotive and private equity sectors;
In February 2019, completed a private placement of 111 million shares at an issue price of A$0.11 per share
to raise gross proceeds of A$12.2 million; and
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
After year end, in July 2019, completed an institutional placement of 145 million shares at A$0.145 per share
to raise gross proceeds of A$21 million, led by cornerstone investor, Fidelity International (“Fidelity”) and the
Company’s largest shareholder, AustralianSuper.
2
OPERATING AND FINANCIAL REVIEW (continued)
Expanded Scoping Study
Subsequent to the end of the year, the Company announced the results of its updated Scoping Study (“Scoping
Study”) for its vertically integrated Piedmont Lithium Project located within the Carolina TSB in North Carolina, USA.
This updated Scoping Study incorporates the expanded Mineral Resource update published in June 2019 which
has extended the overall project life to 25 years.
The Project includes a lithium hydroxide chemical plant (“Chemical Plant”) supplied with spodumene concentrate
from an open pit mine and concentrator (“Mine” or “Mine/Concentrator”). The Project has compelling projected
economics due to attractive capital and operating costs, long mine life, significant by-product credits, short
transportation distances, minimal royalties and low corporate income taxes.
The Scoping Study includes a steady-state 22,700 tonnes per year (“t/y”) lithium hydroxide (“LiOH”) Chemical Plant
supported by a Mine/Concentrator producing 160,000t/y of 6% Li2O spodumene concentrate (“Concentrate” or
“SC6.0”). By-products quartz, feldspar, and mica will provide credits to the cost of lithium production.
Highlights of the Scoping Study are as follows:
•
•
•
•
Integrated project to produce 22,700t/y of LiOH;
25-year project life with 2 years of concentrate-only sales and 23 years of integrated operations;
More than 100% increase in life-of-project LiOH production compared with prior studies;
1st quartile operating costs:
o
Lithium hydroxide cash costs of US$3,105/t (AISC of US$3,565/t);
o Spodumene concentrate cash costs of US$199/t (AISC of US$238/t);
•
Exceptional project economics:
o NPV8% of US$1.45B;
o After-tax IRR of 34%;
•
•
•
Steady-state annual average EBITDA of US$298M;
Mine/Concentrator engineering and metallurgical testwork completed to PFS-level; and
Conventional technology selection in all project aspects.
Figure 2: Lithium Hydroxide 2028 Cost Curve (Source – Roskill Lithium Cost Service)
Piedmont Lithium Limited ANNUAL REPORT 2019
3
DIRECTORS' REPORT
(Continued)
OPERATING AND FINANCIAL REVIEW (continued)
Expanded Scoping Study (continued)
First-Quartile Operating Costs
The integrated Piedmont project is projected to have an average life of project all-in sustaining cost (“AISC”) of
approximately $3,565/t, including royalties and net of by-product credits, positioning Piedmont as the industry’s
lowest-cost producer as reflected in the 2028 lithium hydroxide cost curve1 (see Figure 2).
Comparison to Prior Studies
In comparison to the prior Scoping Study published in September 2018, every year of additional project life is a year
of ‘integrated operation’, resulting in higher levels of cash flow than in the early ‘concentrate only’ years.
Life-of-project LiOH production has thus more than doubled vs. the prior study, and EBITDA and NPV have
correspondingly increased significantly. The project IRR has declined largely due to a more conservative
assumption about the timing of initial capital spending and production ramp-up at the Mine/Concentrator.
Operating costs have remained in the first quartile after detailed scrutiny at a PFS-level, while capital expenditures
at the Mine/Concentrator have increased by ~$38M to reflect the increased scale of the Company’s land position
and more rigorous assessment of the Project’s infrastructure requirements.
Table 1: Updated Scoping Study
Comparative Results
Mineral Resource Estimate
Project Life
LOM Lithium Hydroxide Produced
LOM Spodumene Concentrate Produced
After-Tax Net Present Value (NPV8)
Average Steady State EBITDA
Internal Rate of Return (IRR)
Initial Capex – Integrated Project
Lithium Hydroxide Cash Costs
Scoping Study Results
Unit
2019 Study
2018 Study
% Change
Mt
years
kt
kt
US$M
US$M/y
%
US$M
US$/t
27.9Mt
@ 1.11% Li2O
16.2Mt
@ 1.12% Li2O
25
489
3,810
$1,447
$298
34
512
3,105
13
216
1,960
$888
$235
46
470
3,112
72%
92%
126%
94%
63%
27%
-26%
9%
-
The Scoping Study is based on the updated Mineral Resource Estimate for the Piedmont Lithium Project reported
in June 2019, of 27.9Mt at a grade of 1.11% Li2O and the By-Product Mineral Resource Estimates comprising 7.4Mt
of quartz, 11.1Mt of feldspar and 1.1Mt of mica reported in July 2019.
The Scoping Study contemplates a 25-year project life, with the downstream lithium hydroxide chemical plant
commencing in year 3 of mining operations. The ramp up period for Chemical Plant operations is estimated to
achieve nameplate capacity after a 3 year ramp up period. The mining production target is approximately 25.6Mt
at an average run of mine grade of 1.11% Li2O (undiluted) over the 25-year project life.
1 AISC includes all direct and indirect operating costs including feedstock costs (internal AISC or external supply), refining, on-site G&A costs and
selling expenses. It does not include costs associated with corporate-level G&A
4
OPERATING AND FINANCIAL REVIEW (continued)
Expanded Scoping Study (continued)
Scoping Study Results (Continued)
The following table provides a summary of production and cost figures for the integrated project.
Table 2: Piedmont Lithium Project – LOM Integrated Project
Unit
Estimated Value
PHYSICAL – MINE/CONCENTRATOR
Mine life
Steady-state annual spodumene concentrate production
LOM spodumene concentrate production
LOM quartz by-product production
LOM feldspar by-product production
LOM mica by-product production
LOM feed grade (excluding dilution)
LOM average concentrate grade
LOM average process recovery
LOM average strip ratio
PHYSICAL – LITHIUM CHEMICAL PLANT
Steady-state annual lithium hydroxide production
LOM lithium hydroxide production
LOM concentrate supplied from Piedmont mining operations
Chemical Plant life
Commencement of lithium hydroxide chemical production
OPERATING AND CAPITAL COSTS – INTEGRATED PROJECT
Average LiOH production cash costs using self-supplied concentrate
Mine/Concentrator – Direct development capital
Mine/Concentrator – Owner’s costs
Mine/Concentrator – Land acquisition costs
Mine/Concentrator – Contingency
Mine/Concentrator – Sustaining and deferred capital
Mine/Concentrator – Working Capital
Chemical Plant - Direct development capital
Chemical Plant – Owner’s costs
Chemical Plant – Contingency
Chemical Plant – Sustaining and deferred capital
years
t/y
t
t
t
t
%
%
%
waste:ore
t/y
t
t
years
year
US$/t
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
US$M
FINANCIAL PERFORMANCE – INTEGRATED PROJECT – LIFE OF PROJECT
Annual steady state EBITDA
Annual steady state after-tax cash flow
Net operating cash flow after tax
Free cash flow after capital costs
After tax Net Present Value (NPV) @ 8% discount rate
After tax Internal Rate of Return (IRR)
US$M/y
US$M/y
US$M
US$M
US$M
%
25
160,000
3,805,000
1,920,000
2,795,000
275,000
1.11
6.0
85
10.4:1
22,700
489,000
3,100,000
23
3
$3,105
$106.2
$11.3
$28.3
$22.1
$147.9
$20.0
$252.6
$12.1
$79.4
$86.5
$240-$340
$195-$260
$5,370
$4,630
$1,447
34
Piedmont Lithium Limited ANNUAL REPORT 2019
5
DIRECTORS' REPORT
(Continued)
OPERATING AND FINANCIAL REVIEW (continued)
Expanded Mineral Resource Estimate
In June 2019 the Company announced an updated Mineral Resource Estimate prepared by independent
consultants CSA Global Pty Ltd (“CSA Global”) in accordance with JORC Code (2012 Edition). The total Mineral
Resources for the Project are 27.9Mt grading at 1.11% Li2O.
Table 3: Project Wide Mineral Resource Estimate for the Piedmont Lithium Project (0.4% cut-off)
Resource
Category
Indicated
Inferred
Total
Core property
Central property
Total
Tonnes
(Mt)
Grade
(Li2O%)
Tonnes
(Mt)
Grade
(Li2O%)
Tonnes
(Mt)
Grade
(Li2O%)
Li2O
(t)
LCE
(t)
12.5
12.6
25.1
1.13
1.04
1.09
1.41
1.39
2.80
1.38
1.29
1.34
13.9
14.0
27.9
1.16
1.06
1.11
161,000
398,000
148,000
366,000
309,000
764,000
In July 2019 the Company announced updated Mineral Resource Estimates for by-products quartz, feldspar and
mica. The by-product Mineral Resource estimates have been prepared by independent consultants, CSA Global
and are reported in accordance with the JORC Code (2012 Edition). The economic extraction of by-product
minerals is contingent on the economic extraction of lithium mineral resources at the project. Accordingly, the by-
product Mineral Resource Estimates are reported at a 0.4% Li2O cut-off grade, consistent with the lithium MRE for
the Project.
Table 4: Mineral Resource Estimates – Piedmont Lithium Project Core Property
Categor
y
Tonnes
(Mt)
Li2O
Quartz
Feldspar
Mica
Grade
(%)
Tonnes
(t)
Grade
(%)
Tonnes
(Mt)
Grade
(%)
Tonnes
(Mt)
Grade
(%)
Tonnes
(Mt)
Indicated
Inferred
Total
12.5
12.6
25.1
1.13
1.04
1.09
141,000
131,000
272,000
30.0
28.7
29.3
3.75
3.61
7.36
44.4
44.4
44.4
5.55
5.58
11.13
4.5
4.4
4.5
0.56
0.56
1.12
Corporate
During the year, the Group increased the Project’s lithium mineral rights to approximately 2,207 acres within the
Carolina Tin-Spodumene Belt, through additional land option and acquisition agreements signed with local
landowners.
During the year, the Group completed a private placement of 111 million shares at an issue price of A$0.11 per
share to raise gross proceeds of A$12.2 million (US$8.6 million). Proceeds were used for drilling to expand and
upgrade the resource base at the Project, as well as for permit applications, metallurgical testwork, additional
engineering studies, and ongoing land consolidation.
Subsequent to the end of the year, the Group completed an institutional placement of 145 million shares at an issue
price of A$0.145 per share to institutional investors to raise gross proceeds of A$21.0 million (approximately
US$14.5 million). The placement was led by cornerstone investor, Fidelity International (“Fidelity”), a global asset
manager, and the Company’s largest shareholder, AustralianSuper, the largest industry super fund in Australia.
Proceeds from the Placement will provide funding for the Company to continue exploration and development of the
Project.
Piedmont has been engaged in numerous preliminary off-take, financing and strategic conversations over the past
several months. Interested parties are of a global nature, and include companies from the lithium, mining, chemicals,
battery, automotive and private equity sectors. Piedmont expects to appoint financial and legal advisors in the
second half of 2019 to assist in the evaluation of strategic and financing options, but we do not plan to report on
such matters until there is more clarity on the ultimate outcome.
6
OPERATING AND FINANCIAL REVIEW (continued)
Results of Operations
The Group’s net loss after tax for the year ended June 30, 2019 was US$9.8 million (2018: US$10.0 million). This
loss is partly attributable to:
(a)
(b)
exploration and evaluation expense of US$7.1 million (2018: US$6.0 million), which is attributable to the
Group’s accounting policy of expensing exploration and evaluation expenditure (other than expenditures
incurred in the acquisition of the rights to explore, including option payments to landowners) incurred by the
Group in the period subsequent to the acquisition of the rights to explore and up to the successful completion
of definitive feasibility studies for each separate area of interest; and
non-cash share-based payment expense of US$0.4 million (2018: US$1.2 million) which is attributable to
expensing the value (estimated using an option pricing model) of incentive options granted to key
employees, consultants and advisors, as required under AASB 2. The value is measured at grant date and
recognised over the period during which the option holders become unconditionally entitled to the options.
Loss Per Share
The basic and diluted loss per share for year ended June 30, 2019 was US$0.02 per share (2018: US$0.02).
Dividends
No dividends were paid or declared since the start of the financial year. No recommendation for payment of
dividends has been made.
Financial Position
At June 30, 2019, the Company had cash reserves of approximately US$4.4 million (2018: US$7.2 million) and no
debt, placing the Company in a good position to conduct its current exploration and development activities.
Subsequent to the end of the year, the Group completed an institutional placement of 145 million shares at an issue
price of A$0.145 per share to institutional investors to raise gross proceeds of A$21.0 million (approximately
US$14.5 million). Proceeds from the Placement will provide funding for the Company to continue exploration and
development of the Project.
At June 30, 2019, the Company had net assets of approximately US$4.6 million (2018: US$6.1 million), a decrease
of 23% compared with the previous year. This is largely attributable to the Company’s net loss after tax of US$9.5
million, offset by the capital raising during the year which raised net proceeds of US$8.3 million.
Figure 3: U.S. Congressman Patrick McHenry, centre, looks over Piedmont core samples with Patrick Brindle, VP &
Project Manager, left, and Lee Beasley, Senior Geologist, right
Piedmont Lithium Limited ANNUAL REPORT 2019
7
DIRECTORS' REPORT
(Continued)
OPERATING AND FINANCIAL REVIEW (continued)
Business Strategies and Prospects for Future Financial Years
The objective of the Group is to create long-term shareholder value through the discovery, development and
acquisition of technically and economically viable mineral deposits.
To date, the Group has not commenced production of any minerals, nor has it identified any Ore Reserves in
accordance with the JORC Code. To achieve its objective, the Group currently has the following business strategies
and prospects over the medium to long term:
•
•
•
•
•
•
•
Continue the 25,000-meter Phase 4 drill program on the Project’s Core property and other properties;
Continue to expand the Company’s land position in the TSB;
Secure the necessary permits and approvals to commence mining and processing operations at the Project;
Complete further metallurgical studies for the production of LiOH from Piedmont’s spodumene concentrate;
Accelerate the development of the Company’s proposed lithium hydroxide chemical plant;
Commence a detailed market study of the important US quartz, feldspar and mica markets; and
Formalize our dialogue with a number of prospective strategic, technical and offtake partners.
All of these activities are inherently risky and the Board is unable to provide certainty of the expected results of
these activities, or that any or all of these likely developments will be achieved.
The material business risks faced by the Group that could have an effect on the Group’s future prospects, and how
the Group manages these risks, include:
The Company’s exploration properties may never be brought into production – The exploration for,
and development of, mineral deposits involves a high degree of risk. Few properties which are explored are
ultimately developed into producing mines. To mitigate this risk, the Company will undertake systematic and
staged exploration and testing programs on its mineral properties and, subject to the results of these
exploration programs, the Company will then progressively undertake a number of technical and economic
studies with respect to its projects prior to making a decision to mine. However there can be no guarantee
that the studies will confirm the technical and economic viability of the Company’s mineral properties or that
the properties will be successfully brought into production;
The Company’s activities will require further capital – The exploration and any development of the
Company’s exploration properties will require substantial additional financing. Failure to obtain sufficient
financing may result in delaying or indefinite postponement of exploration and any development of the
Company’s properties or even a loss of property interest. There can be no assurance that additional capital
or other types of financing will be available if needed or that, if available, the terms of such financing will be
favourable to the Company;
The Company may be adversely affected by fluctuations in lithium prices – The price of lithium
fluctuates widely and is affected by numerous factors beyond the control of the Group. Future production, if
any, from the Group’s mineral properties will be dependent upon the price of lithium being adequate to make
these properties economic. The Group currently does not engage in any hedging or derivative transactions
to manage commodity price risk. As the Group’s operations change, this policy will be reviewed periodically
going forward;
The Company may be adversely affected by competition within the lithium industry – The Group
competes with other domestic and international lithium companies, some of whom have larger financial and
operating resources. Competition may also arise from alternative materials and the development of new
products. Increased competition could lead to higher supply or lower overall pricing. There can be no
assurance that the Company will not be materially impacted by increased competition. In addition, the Group
is continuing to secure additional surface and mineral rights, however there can be no guarantee that the
Group will secure additional surface and mineral rights which could impact on the results of the Group’s
operations; and
Global financial conditions may adversely affect the Company’s growth and profitability – Many
industries, including the mineral resource industry, are impacted by these market conditions. Some of the
key impacts include contraction in credit markets resulting in a widening of credit risk, devaluations and high
volatility in global equity, commodity, and foreign exchange markets, and a lack of market liquidity. Due to
the current nature of the Group’s activities, a slowdown in the financial markets or other economic conditions
may adversely affect the Group’s growth and ability to finance its activities.
•
•
•
•
•
8
DIRECTORS
The names and details of the Group's directors in office at any time during the financial year or since the end of the
financial year are:
Mr Ian Middlemas
Mr Keith Phillips
Mr Anastasios Arima
Mr Jeffrey Armstrong
Mr Jorge Beristain
Mr Levi Mochkin
Mr Mark Pearce
Chairman
Managing Director, President & Chief Executive Officer
Executive Director
Non-Executive Director (appointed August 1, 2018)
Non-Executive Director
Non-Executive Director
Non-Executive Director (resigned August 1, 2018)
Unless otherwise stated, Directors held their office from July 1, 2018 until the date of this report.
CURRENT DIRECTORS AND OFFICERS
Mr Ian Middlemas B.Com, CA
Chairman
Mr Middlemas is a Chartered Accountant, a member of the Financial Services Institute of Australasia and holds a
Bachelor of Commerce degree. He worked for a large international Chartered Accounting firm before joining the
Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive
corporate and management experience, and is currently a director with a number of publicly listed companies in the
resources sector.
Mr Middlemas was appointed a Director of the Company on September 14, 2009. During the three year period to
the end of the financial year, Mr Middlemas has held directorships in Constellation Resources Limited (November
2017 – present), Apollo Minerals Limited (July 2016 – present), Paringa Resources Limited (October 2013 –
present), Berkeley Energia Limited (April 2012 – present), Prairie Mining Limited (August 2011 – present), Salt Lake
Potash Limited (January 2010 – present), Equatorial Resources Limited (November 2009 – present), Sovereign
Metals Limited (July 2006 – present), Odyssey Energy Limited (September 2005 – present), Cradle Resources
Limited (May 2016 – July 2019) and Syntonic Limited (April 2010 – June 2017).
Mr Keith Phillips H.B.Com, MBA
Managing Director, President & Chief Executive Officer
Mr Phillips joined Piedmont on July 10, 2017 after a 30-year career on Wall Street during which he has worked on
strategic and financing transactions representing over US$100 billion in aggregate value. Mr Phillips was most
recently a Senior Advisor with merchant banker Maxit Capital, after leading the mining investment banking teams
for Merrill Lynch, Bear Stearns, JPMorgan and Dahlman Rose.
Mr Phillips has worked with numerous mining companies, including many established global leaders, and has
dedicated most of the past decade to advising exploration and development-stage companies in achieving their
strategic objectives, with a particular focus on obtaining relevance in the United States capital markets. Mr Phillips
received his Master of Business Administration from The University of Chicago and a Bachelor of Commerce from
Laurentian University in Canada.
Mr Phillips was appointed a Director of the Company on July 10, 2017. During the three-year period to the end of
the financial year, Mr Phillips has not held any other directorships in listed companies.
Piedmont Lithium Limited ANNUAL REPORT 2019
9
DIRECTORS' REPORT
(Continued)
CURRENT DIRECTORS AND OFFICERS (Continued)
Mr Anastasios (Taso) Arima
Executive Director
Mr Arima is a resource company executive with a strong history of identifying company-making resource projects.
He has extensive experience in the formation and development of resource projects in North America. Mr Arima
was formerly Executive Director of Paringa Resources Ltd which is developing a coal project in the U.S., Executive
Director of Coalspur Mines Ltd, which is developing a coal project in Canada, and Executive Director of Prairie
Mining Ltd, which is developing a coal project in Poland. Mr Arima was instrumental in the identification and
acquisition of Paringa’s and Coalspur’s projects, as well as the corporate strategy and marketing of the companies.
Mr Arima began his career as a resources analyst for a Perth based boutique investment banking firm where he
specialised in assessing the technical and financial aspects of resource companies and their projects. He has
previously worked in the hydrocarbon division at Worley Parsons Limited. He attended the University of Western
Australia where he studied a Bachelor of Commerce and a Bachelor of Engineering.
Mr Arima was appointed a Director of the Company on October 1, 2016. During the three-year period to the end of
the financial year, Mr Arima held a directorship in Paringa Resources Limited (October 2013 – June 2017).
Mr Jeffrey Armstrong B.S., MBA
Non-Executive Director
Mr Armstrong resides in Charlotte, North Carolina where he is actively engaged in the community and has extensive
relationships with major corporations and entrepreneurs alike. He serves as CEO and Managing Partner of North
Inlet Advisors, LLC, a firm providing strategic and financial advice to companies on capital formation, mergers,
acquisitions, divestitures, restructurings, and other corporate transactions. Mr Armstrong was previously a senior
leader in what is now Wells Fargo’s Investment Bank for nearly a decade, where his leadership roles included the
Head of Corporate Finance, Mergers and Acquisitions, Private Equity Coverage and Leveraged Capital groups. Mr
Armstrong also worked as an investment banker for Citigroup from 1994 to 1999, and for Morgan Stanley from 1987
to 1994. Mr Armstrong graduated from the University of Virginia with a B.S. in finance and marketing from the
McIntire School of Commerce and an MBA from the Darden School of Business.
Mr Armstrong was appointed a Director of the Company on August 1, 2018. During the three-year period to the
end of the financial year, Mr Armstrong has not held any other directorships in listed companies.
Mr Jorge Beristain B.Com, CFA
Non-Executive Director
Mr Beristain recently retired as Managing Director and Head of Deutsche Bank’s Americas Metals & Mining equity
research, where he was consistently ranked by institutional investors as one of the top analysts in the United States.
During his over 20-year career on Wall Street, Mr Beristain has lived and worked in the United States, Latin America
and Canada and has visited hundreds of industrial companies worldwide. He is a proven strategic thinker with
extensive international experience in the valuation of mining projects and metals operations and downstream metal
uses. Mr Beristain holds a Bachelor of Commerce degree from the University of Alberta and is a Chartered Financial
Analyst.
Mr Beristain was appointed a Director of the Company on May 7, 2018. During the three-year period to the end of
the financial year, Mr Beristain has not held any other directorships in listed companies.
Mr Levi Mochkin
Non-Executive Director
Mr Mochkin is a key member of the Ledger Holdings Pty Ltd Group (the Ledger Group), located in Melbourne,
Australia and has been in the resources sector for over 28 years advising companies, identifying projects and raising
capital of over A$800 million for mining projects.
Mr Mochkin was appointed a Director on April 3, 2006. During the three-year period to the end of the financial year,
Mr Mochkin has not held any other directorships in listed companies.
10
CURRENT DIRECTORS AND OFFICERS (Continued)
Mr Gregory Swan BCom, CA, FCIS, FFin
Company Secretary
Mr Swan is a Chartered Accountant and Chartered Secretary and is currently Company Secretary and Chief
Financial Officer for several listed companies that operate in the resources sector. He commenced his career at a
large international Chartered Accounting firm and has since been involved with a number of exploration and
development companies, including Mantra Resources Limited, Papillon Resources Limited and Paringa Resources
Limited.
Mr Swan was appointed Company Secretary of the Company on October 31, 2012.
FORMER DIRECTORS
Mark Pearce B.Bus, CA, FCIS, FFin
Non-Executive Director
Mr Pearce is a Chartered Accountant and is currently a director of several listed companies that operate in the
resources sector. He has had considerable experience in the formation and development of listed resource
companies. Mr Pearce is also a Fellow of the Institute of Chartered Secretaries and a Fellow of the Financial
Services Institute of Australasia.
Mr Pearce was appointed a Director of the Company on September 14, 2009. During the three year period to the
end of the financial year, Mr Pearce has held directorships in Constellation Resources Limited (July 2016 – present),
Apollo Minerals Limited (July 2016 – present), Salt Lake Potash Limited (August 2014 – present), Prairie Mining
Limited (August 2011 – present), Equatorial Resources Limited (November 2009 – present), Sovereign Metals
Limited (July 2006 – present), Odyssey Energy Limited (September 2005 – present) and Syntonic Limited (April
2010 – October 2016).
Mr Pearce resigned as a Director of the Company on August 1, 2018.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year consisted of the exploration and development of resource
projects.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Consolidated Entity's operations are subject to various environmental laws and regulations under the relevant
government's legislation. Full compliance with these laws and regulations is regarded as a minimum standard for
all operations to achieve. Instances of environmental non-compliance by an operation are identified either by
external compliance audits or inspections by relevant government authorities. There have been no known breaches
by the Consolidated Entity during the financial year.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs of the Consolidated Entity during the financial year were as follows:
(a) On July 5, 2018, the Company announced that it had acquired a 60-acre property in Kings Mountain, North
Carolina as the proposed site for the Company’s future lithium chemical plant;
(b) On July 17, 2018, the Company announced that it had completed a bench-scale metallurgical testwork
program to produce consistent high-grade spodumene concentrates (Li2O greater than 6.0%) with low iron
content (Fe2O3 less than 1%);
(c) On July 19, 2018, the Company announced the results of a Scoping Study for the Project, which
demonstrated compelling economics of the prospective integrated Project, highlighted by low operating
costs, high after-tax margins and strong free cash flow;
Piedmont Lithium Limited ANNUAL REPORT 2019
11
DIRECTORS' REPORT
(Continued)
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS (Continued)
(d) On September 4, 2018, the Company announced that it had completed a bench-scale metallurgical testwork
program to produce quartz, feldspar and mica as by-products of spodumene concentrate from the Project;
(e) On September 6, 2018, the Company announced Mineral Resource estimates for by-product quartz, feldspar
and mica mineral products from the spodumene bearing pegmatite on its Core Property;
(f)
On September 13, 2018, the Company announced the results of an updated Scoping Study for the Project
to incorporate the production of by-product quartz, feldspar and mica. The updated Scoping Study
demonstrated compelling economics due to attractive capital and operating costs, significant by-product
credits, short transportation distances, minimal royalties and low corporate income taxes;
(g) On January 10, 2019, the Company announced that it had submitted key permit applications for the Project,
including a Section 404 Standard Individual Permit application to the US Army Corps of Engineers (“USACE”)
and a Section 401 Individual Water Quality Certification to the North Carolina Division of Water Resources
(“NCDWR”);
(h) On January 23, 2019, the Company announced that it had commenced a 25,000-meter Phase 4 drill
program, with the aim of significantly expanding on the 13-year project life reported in the Scoping Study
released in September 2018;
(i)
(j)
On February 1, 2019, the Company announced that it had completed a private placement of 111 million
shares at an issue price of A$0.11 per share to raise gross proceeds of A$12.2 million;
On February 20, 2019, the Company announced that it had increased its land position by 32% to 1,824 acres
in the Carolina TSB;
(k) On April 24, 2019, the Company announced a maiden Mineral Resource estimate for the Company’s Central
property, increasing the total Mineral Resources for the Project by 17% to 19.0 million tonnes (“Mt”) at a
grade of 1.15% Li2O;
(l)
On June 18, 2019, the Company announced the results from mineralogical analysis on samples of
mineralized pegmatites and composite samples from the Project demonstrating that lithium occurs almost
exclusively within spodumene in the Project’s ore body; and
(m) On June 26, 2019, the Company announced an updated Mineral Resource estimate for the Company’s Core
property, increasing the total Mineral Resources for the Project by 47% to 27.9 million tonnes (“Mt”) at a
grade of 1.11% Li2O.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
(a) On July 10, 2019, the Company announced that it had completed an institutional placement of 145 million
shares at an issue price of A$0.145 per share to institutional investors to raise gross proceeds of A$21
million;
(b) On July 17, 2019, the Company announced the results from PFS-level metallurgical test work which
demonstrated high quality spodumene concentrate product with a grade above 6.0% Li2O, iron oxide below
1.0%, and low impurities from composite samples using a combination of DMS and flotation technology; and
(c) On August 7, 2019, the Company announced the results of an enhanced Scoping Study for the Project to
incorporate the expanded Mineral Resource update published in June 2019 which extended the Project’s
mine life to 25 years.
Other than as outlined above, as at the date of this report there are no other matters or circumstances which have
arisen since June 30, 2019 that have significantly affected or may significantly affect:
the operations, in financial years subsequent to June 30, 2019, of the Consolidated Entity;
the results of those operations, in financial years subsequent to June 30, 2019, of the Consolidated Entity;
or
the state of affairs, in financial years subsequent to June 30, 2019, of the Consolidated Entity.
•
•
•
12
DIRECTORS' INTERESTS
As at the date of this report, the Directors' interests in the securities of the Company are as follows:
Ian Middlemas
Keith Phillips
Anastasios Arima
Jeff Armstrong
Jorge Beristain
Levi Mochkin
Shares1
Options2
21,909,091
2,160,0003
-
750,000
1,649,0004
52,500,000
-
24,000,000
11,000,000
1,000,000
1,000,000
-
‘Shares’ means fully paid ordinary shares in the capital of the Company.
‘Options’ means an unlisted option to subscribe for one Share in the capital of the Company.
Notes:
1
2
3 Mr Phillips holds 810,000 Shares in the form of American Depositary Shares.
4 Mr Beristain holds 1,649,000 Shares in the form of American Depositary Shares.
SHARE OPTIONS AND PERFORMANCE RIGHTS
At the date of this report the following Incentive Options and Performance Rights have been issued over unissued
Ordinary Shares of the Company:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
14,000,000 Incentive Options exercisable at A$0.05 each expiring on December 31, 2019;
1,000,000 Incentive Options exercisable at A$0.08 each expiring on December 31, 2019;
16,500,000 Incentive Options exercisable at A$0.10 each expiring on December 31, 2019;
16,500,000 Incentive Options exercisable at A$0.15 each expiring on December 31, 2019;
1,300,000 Incentive Options exercisable at A$0.15 each expiring on June 30, 2020;
1,300,000 Incentive Options exercisable at A$0.20 each expiring on June 30, 2020;
4,175,000 Incentive Options exercisable at A$0.25 each expiring on June 30, 2020;
6,000,000 Incentive Options exercisable at A$0.10 each expiring on July 10, 2020;
6,000,000 Incentive Options exercisable at A$0.12 each expiring on January 10, 2021;
6,000,000 Incentive Options exercisable at A$0.16 each expiring on July 10, 2021;
6,000,000 Incentive Options exercisable at A$0.24 each expiring on July 10, 2022;
400,000 Incentive Options exercisable at A$0.22 each expiring on July 31, 2021;
400,000 Incentive Options exercisable at A$0.26 each expiring on July 31, 2021;
400,000 Incentive Options exercisable at A$0.28 each expiring on July 31, 2021;
1,500,000 Incentive options exercisable at A$0.15 each on or before June 30, 2021;
1,500,000 Incentive options exercisable at A$0.20 each on or before June 30, 2022;
2,875,000 Incentive Options exercisable at A$0.35 each expiring on December 31, 2021; and
50,000 Performance Rights subject to various performance conditions to be satisfied prior to 31 December
2020.
During the year ended June 30, 2019 and up to the date of this report, 350,000 ordinary shares have been issued
as a result of the conversion of performance rights.
INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS
The Constitution of the Company requires the Company, to the extent permitted by law, to indemnify any person
who is or has been a director or officer of the Company or Group for any liability caused as such a director or officer
and any legal costs incurred by a director or officer in defending an action for any liability caused as such a director
or officer.
During or since the end of the financial year, no amounts have been paid by the Company or Group in relation to
the above indemnities. During the financial year, an insurance premium of US$24,044 (2018: US$9,502) was paid
by the Group to insure against a liability incurred by a person who is or has been a director or officer of the Company
or Group.
Piedmont Lithium Limited ANNUAL REPORT 2019
13
DIRECTORS' REPORT
(Continued)
REMUNERATION REPORT (AUDITED)
This Remuneration Report, which forms part of the Directors’ Report, sets out information about the remuneration
of Key Management Personnel (“KMP”) of the Group.
Details of Key Management Personnel
The KMP of the Group during or since the end of the financial year were as follows:
Directors
Mr Ian Middlemas
Mr Keith Phillips
Mr Anastasios Arima
Mr Jeffrey Armstrong
Mr Jorge Beristain
Mr Levi Mochkin
Mr Mark Pearce
Other KMP
Mr Patrick Brindle
Mr David Buckley
Mr Lamont Leatherman
Mr Bruce Czachor
Mr Gregory Swan
Chairman
Managing Director, President & Chief Executive Officer
Executive Director
Non-Executive Director (appointed August 1, 2018)
Non-Executive Director
Non-Executive Director
Non-Executive Director (resigned August 1, 2018)
Vice President and Project Manager
Vice President and Chief Process Engineer
Vice President and Chief Geologist
Vice President and General Counsel
Company Secretary
Unless otherwise disclosed, the KMP held their position from July 1, 2018 until the date of this report.
Remuneration Policy
The Group’s remuneration policy for its KMP has been developed by the Board taking into account the size of the
Group, the size of the management team for the Group, the nature and stage of development of the Group’s current
operations, and market conditions and comparable salary levels for companies of a similar size and operating in
similar sectors.
In addition to considering the above general factors, the Board has also placed emphasis on the following specific
issues in determining the remuneration policy for KMP:
•
•
•
the Group is currently focused on identifying and acquiring suitable resource projects and undertaking
exploration, appraisal and development activities;
risks associated with small cap resource companies whilst exploring and developing projects; and
other than profit which may be generated from asset sales, the Company does not expect to be undertaking
profitable operations until sometime after the commencement of commercial production on any of its
projects.
Executive Remuneration
The Group’s remuneration policy is to provide a fixed remuneration component and a performance-based
component (short term incentive and long-term incentive). The Board believes that this remuneration policy is
appropriate given the considerations discussed in the section above and is appropriate in aligning executives’
objectives with shareholder and business objectives.
Fixed Remuneration
Fixed remuneration consists of base salaries, as well as employer 401(k) contributions or contributions to
superannuation funds and other non-cash benefits. Non-cash benefits may include provision of motor vehicles,
rental allowance, health care benefits, health insurance, and life insurance.
Fixed remuneration is reviewed annually by the Board. The process consists of a review of company and individual
performance, relevant comparative remuneration externally and internally and, where appropriate, external advice
on policies and practices.
14
Performance Based Remuneration – Short Term Incentive
Some executives are entitled to an annual cash bonus upon achieving various key performance indicators (“KPI’s”),
as set by the Board. Having regard to the current size, nature and opportunities of the Company, the Board has
determined that these KPI’s will include measures such as successful completion of the acquisition of new projects,
exploration activities (e.g. completion of exploration programs within budgeted timeframes and costs), development
activities (e.g. completion of scoping and/or feasibility studies), corporate activities (e.g. recruitment of key
personnel) and business development activities (e.g. project acquisitions and capital raisings). Prior to the end of
each financial year, the Board assesses performance against these criteria.
During the 2019 financial year, a total discretionary bonus sum of US$275,000 (2018: US$137,580) was paid to
executives after achievement of KPIs set by the Board. For the 2019 financial year, the KPI areas of focus included:
(a) completion of successful exploration activities; (b) completion of successful development activities; and (c)
completion of successful corporate activities. Specific KPIs are set and weighted individually for each KMP and are
designed to drive successful business outcomes. For the 2019 financial year, the CEO’s KPI areas of focus were
weighted as follows: (a) 30% weighted to completion of successful exploration activities; (b) 30% weighted to
completion of successful development activities; and (c) 40% weighted to completion of successful corporate
activities.
Performance Based Remuneration – Long Term Incentive
The Group has a long-term incentive plan (“LTIP”) comprising the grant of Performance Rights and/or Incentive
Options to reward KMP and key employees and contractors for long-term performance.
To achieve its corporate objectives, the Group needs to attract, incentivise, and retain its key employees and
contractors. The Board believes that grants of Performance Rights and/or Incentive Options to KMP will provide a
useful tool to underpin the Group's employment and engagement strategy.
(i)
Performance Rights
The Group has a Performance Rights Plan (“Plan”) that provides for the issuance of unlisted performance share
rights (“Performance Rights”) which, upon satisfaction of the relevant performance conditions attached to the
Performance Rights, will result in the issue of an Ordinary Share for each Performance Right. Performance Rights
are issued for no consideration and no amount is payable upon conversion thereof.
The Plan enables the Group to: (a) recruit, incentivise and retain KMP and other key employees and contractors
needed to achieve the Group's business objectives; (b) link the reward of key staff with the achievement of strategic
goals and the long-term performance of the Group; (c) align the financial interest of participants of the Plan with
those of Shareholders; and (d) provide incentives to participants of the Plan to focus on superior performance that
creates Shareholder value.
Performance Rights granted under the Plan to eligible participants will be linked to the achievement by the Group
of certain performance conditions as determined by the Board from time to time. These performance conditions
must be satisfied in order for the Performance Rights to vest. Upon Performance Rights vesting, Ordinary Shares
are automatically issued for no consideration. If a performance condition of a Performance Right is not achieved by
the expiry date then the Performance Right will lapse.
During the financial year, nil Performance Rights were granted to KMP. 300,000 Performance Rights held by KMP
were converted into ordinary shares during the financial year. 950,000 Performance Rights previously granted to
KMP lapsed during the financial year.
(ii)
Incentive Options
The Group has also chosen to grant unlisted incentive options (“Incentive Options”) to some KMP and key
employees and contractors as part of their remuneration and incentive arrangements in order to attract and retain
their services and to provide an incentive linked to the performance of the Group.
The Board’s policy is to grant Incentive Options to KMP with exercise prices at or above market share price (at the
time of agreement). As such, the Incentive Options granted to KMP are generally only of benefit if the KMP performs
to the level whereby the value of the Group increases sufficiently to warrant exercising the Incentive Options
granted.
Other than service-based vesting conditions (if any) and the exercise price required to exercise the Incentive
Options, there are no additional performance criteria on the Incentive Options granted to KMP, as given the
speculative nature of the Group’s activities and the small management team responsible for its running, it is
considered that the performance of the KMP and the performance and value of the Group are closely related.
The Group prohibits executives from entering into arrangements to limit their exposure to Incentive Options granted
as part of their remuneration package.
During the financial year, 4,750,000 Incentive Options were granted to KMP. No Incentive Options were exercised
by KMP during the financial year. No Incentive Options previously granted to KMP lapsed during the financial year.
Piedmont Lithium Limited ANNUAL REPORT 2019
15
DIRECTORS' REPORT
(Continued)
REMUNERATION REPORT (AUDITED) (Continued)
Non-Executive Director Remuneration
The Board’s policy is to remunerate Non-Executive Directors at market rates for comparable companies for time,
commitment and responsibilities. Given the current size, nature and risks of the Group, Incentive Options have
been used to attract and retain Non-Executive Directors, where deemed appropriate. The Board determines
payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties
and accountability. Independent external advice is sought when required.
The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by
shareholders at a General Meeting. Director’s fees paid to Non-Executive Directors accrue on a daily basis. Fees
for Non-Executive Directors are not linked to the performance of the economic entity. However, to align Directors’
interests with shareholder interests, the Directors are encouraged to hold shares in the Company and Non-
Executive Directors may in limited circumstances receive Incentive Options and/or Performance Rights in order to
secure their services.
The Company prohibits Non-Executive Directors from entering into arrangements to limit their exposure to Incentive
Options granted as part of their remuneration package.
Fees for the Chairman are presently A$36,000 (approximately US$25,247) per annum. Fees for other Non-
Executive Directors are presently set at between A$20,000 to A$50,000 (approximately US$14,026 to US$35,065)
per annum. These fees cover main board activities only. Non-Executive Directors may receive additional
remuneration for other services provided to the Company, including but not limited to, membership of committees.
Relationship between Remuneration of KMP and Shareholder Wealth
During the Company’s exploration and development phases of its business, the Board anticipates that the Company
will retain earnings (if any) and other cash resources for the exploration and development of its resource projects.
Accordingly, the Company does not currently have a policy with respect to the payment of dividends and returns of
capital. Therefore, there was no relationship between the Board’s policy for determining, or in relation to, the nature
and amount of remuneration of KMP and dividends paid and returns of capital by the Company during the current
and previous four financial years.
The Board did not determine, and in relation to, the nature and amount of remuneration of the KMP by reference to
changes in the price at which shares in the Company traded between the beginning and end of the current and the
previous four financial years. Discretionary annual cash bonuses are based upon achieving various non-financial
KPI’s that are not based on share price or earnings, such as the successful acquisition of new projects, exploration
activities (e.g. completion of exploration programs within budgeted timeframes and costs), development activities
(e.g. completion of scoping and/or feasibility studies), corporate activities (e.g. recruitment of key personnel) and
business development activities (e.g. project acquisitions and capital raisings). However, as noted above, certain
KMP are granted Performance Rights and/or Incentive Options which generally will be of greater value to KMP if
the value of the Company’s shares increases (subject to vesting conditions being met).
Relationship between Remuneration of KMP and Earnings
As discussed above, the Company is currently undertaking exploration and development activities, and does not
expect to be undertaking profitable operations (other than by way of material asset sales, none of which is currently
planned) until sometime after the successful commercialisation, production and sales of commodities from one or
more of its projects. Accordingly, the Board does not consider earnings during the current and previous four financial
years when determining, and in relation to, the nature and amount of remuneration of KMP.
Loans with Key Management Personnel
No loans were provided to or received from KMP during the year ended June 30, 2019 (2018: Nil).
16
Emoluments of KMP
Details of the nature and amount of each element of the emoluments of each KMP of the Group are as follows:
Salary &
fees
US$
25,760
250,000
180,000
27,500
40,000
121,641
1,193
2019
Directors
Ian Middlemas
Keith Phillips
Anastasios Arima
Jeffrey Armstrong1
Jorge Beristain
Levi Mochkin2
Mark Pearce3
Other KMP
Patrick Brindle
David Buckley
Lamont Leatherman
Bruce Czachor
Gregory Swan4
Short-term benefits
Cash
bonus
US$
Other
US$
Post-
employ-
ment
benefits
US$
Share-
based
payments
US$
Perform-
ance
related
%
Total
US$
-
-
100,000
50,000
28,675
7,117
-
-
-
-
-
-
-
-
-
9,583
-
-
-
3,399
113
-
240,039
13,202
43,649
14,107
-
-
25,760
628,297
250,319
71,149
54,107
125,040
1,306
192,500
150,000
187,500
100,000
50,000
50,000
35,825
27,418
-
-
7,408
6,208
-
25,000
23,116
3,833
-
-
-
-
1,276,094
275,000
122,151
30,544
71,956
1,947
22,004
9,224
4,401
357,689
235,573
209,504
161,173
4,401
420,529 2,124,318
-
54%
25%
61%
26%
-
-
34%
22%
11%
21%
100%
Notes:
1 Mr Armstrong was appointed effective August 1, 2018.
2 During the year Mr Mochkin was paid, or is payable, A$50,000 for directors’ fees and Ledger Holdings Pty Ltd (an entity associated with Mr
Mochkin) was paid, or is payable, A$120,000 for additional services provided in respect of business development activities.
3 Mr Pearce resigned effective August 1, 2018.
4 Mr Swan provides services as the Company Secretary through a services agreement with Apollo Group Pty Ltd (‘Apollo’). During the year, Apollo
was paid or is payable A$180,000 for the provision of serviced office facilities and administrative, accounting and company secretarial serv ices
to the Group.
2018
Directors
Ian Middlemas
Keith Phillips1
Anastasios Arima
Jeffrey Armstrong2
Jorge Beristain3
Levi Mochkin 4
Robert Behets5
Mark Pearce6
Other KMP
Patrick Brindle7
David Buckley8
Lamont Leatherman
Bruce Czachor9
Gregory Swan10
Short-term benefits
Salary &
fees
US$
27,912
245,040
158,791
-
6,022
93,038
19,821
15,507
87,500
100,000
161,250
50,000
-
964,881
Cash
bonus
US$
-
97,580
40,000
-
-
-
-
-
-
-
-
-
-
137,580
Other
US$
-
22,348
4,292
-
-
-
-
-
10,337
13,876
-
-
-
50,853
Post-
employ-
ment
benefits
US$
Share-
based
payments
US$
2,652
9,185
3,683
1,883
1,473
-
-
-
- 530,439
91,645
-
25,808
-
-
-
Total
US$
30,564
895,407
303,913
-
31,830
96,721
21,704
16,980
77,360
-
175,197
-
42,085
155,961
- 129,481
290,731
30,944
-
80,944
29,385
29,385
-
957,147 2,129,337
18,876
Perform-
ance
related
%
-
70%
43%
-
81%
-
-
-
44%
27%
45%
38%
100%
Notes:
1 Mr Phillips was appointed effective July 10, 2017.
2 Mr Armstrong was appointed effective August 1, 2018.
3 Mr Beristain was appointed effective May 7, 2018.
4 During the year Mr Mochkin was paid, or is payable, A$50,000 for directors’ fees and Ledger Holdings Pty Ltd (an entity associated with Mr
Mochkin) was paid, or is payable, A$70,000 for additional services provided in respect of business development activities.
5 Mr Behets resigned effective May 7, 2018.
6 Mr Pearce resigned effective August 1, 2018.
7 Mr Brindle was appointed effective January 1, 2018.
8 Mr Buckley was appointed effective January 1, 2018.
9 Mr Czachor was appointed effective January 1, 2018.
10 Mr Swan provides services as the Company Secretary through a services agreement with Apollo Group Pty Ltd (‘Apollo’). During the year, Apollo
was paid or is payable A$180,000 for the provision of serviced office facilities and administrative, accounting and company s ecretarial services
to the Group.
Piedmont Lithium Limited ANNUAL REPORT 2019
17
DIRECTORS' REPORT
(Continued)
REMUNERATION REPORT (AUDITED) (Continued)
Other Transactions with Key Management Personnel
Apollo Group Pty Ltd (‘Apollo’), a company associated with Mr Mark Pearce, was paid A$180,000 during the 2019
year for the provision of serviced office facilities and administrative, accounting and company secretarial services
(2018: A$180,000), based on a monthly retainer of A$15,000 due and payable in advance with no fixed term. The
agreement may be terminated by either party for any reason by giving one month’s notice.
Ledger Holdings Pty Ltd (‘Ledger’), a company associated with Mr Levi Mochkin, was paid or is payable A$120,000
during the 2019 year for the provision of services in relation to business development activities (2018: A$70,000)
(such fees have been included in Mr Mochkin’s remuneration as disclosed above). Ledger receives a monthly
retainer of A$5,833, with any additional fees agreed between the parties as required from time to time. The
agreement may be terminated by either party for any reason by giving two months’ notice.
Options and Performance Rights Granted to Key Management Personnel
Details of Incentive Options and Performance Rights granted, exercised or lapsed for each KMP of the Group during
the 2019 financial year are as follows:
No. of
options & rights
granted
during year
No. of
options & rights
vested
during year
No. of
options & rights
lapsed
during year
Value of
options & rights
granted
during year1
US$
Value of
options & rights
exercised
during year2
US$
Value of options
& rights included
in remuneration
for year
US$
-
-
1,000,000
-
-
-
3,750,000
-
-
-
-
4,750,000
12,000,000
6,000,000
1,000,000
500,000
-
-
2,250,000
300,000
10,000,000
300,000
-
32,350,000
-
-
-
-
(500,000)
(300,000)
-
-
-
-
(150,000)
(950,000)
-
-
43,649
-
-
-
178,710
-
-
-
-
222,359
-
-
-
-
-
-
-
40,787
-
-
-
40,787
240,039
13,202
43,649
14,107
-
-
71,956
1,947
22,004
9,224
4,401
420,529
2019
Directors
Keith Phillips
Anastasios Arima
Jeffrey Armstrong
Jorge Beristain
Levi Mochkin
Mark Pearce
Other KMP
Patrick Brindle
David Buckley
Lamont Leatherman
Bruce Czachor
Gregory Swan
Total
Notes:
1 Determined at the time of grant per AASB 2, using an exchange rate of US$0.7156=A$1, being the average exchange rate for 2019. For details
on the valuation of options and rights, including models and assumptions used, please refer to Note 16 of the financial statements.
2 Determined at the time of exercise or conversion at the intrinsic value, using an exchange rate of US$0.7156=A$1, being the average exchange
rate for 2019.
Details of Incentive Options and Performance Rights granted by the Company to each KMP of the Group during
the financial year are as follows:
2019
Directors
Mr Jeffrey Armstrong
Other KMP
Patrick Brindle
Options or
rights
Grant
date
Expiry
date
Vesting
date
Exercise
price
A$
Grant date
fair value1
A$
Number
granted
Options
Options
01-Aug-18
01-Aug-18
30-Jun-20
31-Dec-20
01-Aug-18
01-Aug-18
Options
Options
Options
Options
13-Jul-18
13-Jul-18
7-May-19
7-May-19
30-Jun-20
31-Dec-20
30-Jun-21
30-Jun-22
13-Jul-18
31-Dec-18
7-May-20
7-May-21
$0.25
$0.35
$0.25
$0.35
$0.15
$0.20
$0.064
$0.058
500,000
500,000
$0.063
$0.059
$0.068
$0.068
375,000
375,000
1,500,000
1,500,000
Notes:
1 For details on the valuation of Incentive Options and Performance Rights, including models and assumptions used, please refer to Note 16 of the
financial statements.
18
Option and Performance Right holdings of Key Management Personnel
2019
Directors
Ian Middlemas
Keith Phillips
Anastasios Arima
Jeffrey Armstrong
Jorge Beristain
Levi Mochkin
Mark Pearce
Other KMP
Lamont Leatherman
Patrick Brindle
David Buckley
Bruce Czachor
Gregory Swan
Held at
July 1, 2018
Granted as
remuneration
Options &
rights
exercised
Options &
rights
lapsed
Held at
June 30,
2019
-
24,000,000
11,000,000
-1
1,000,000
500,000
300,000
15,000,000
1,500,000
300,000
600,000
3,650,000
57,850,000
-
-
-
1,000,000
-
-
-
-
3,750,000
-
-
-
4,750,000
-
-
-
-
-
-
-
-
-
(300,000)
-
-
(300,000)
-
-
-
-
-
(500,000)
(300,000)
-
-
-
-
(150,000)
(950,000)
-
24,000,000
11,000,000
1,000,000
1,000,000
-
-2
15,000,000
5,250,000
-
600,000
3,500,000
61,350,000
Vested and
exercisable
at June 30,
2019
-
12,000,000
11,000,000
1,000,000
1,000,000
-
-2
15,000,000
2,250,000
-
600,000
3,500,000
46,350,000
Notes:
1 As at date of appointment.
2 As at date of resignation.
Shareholdings of Key Management Personnel
2019
Directors
Ian Middlemas
Keith Phillips
Anastasios Arima
Jeffrey Armstrong
Jorge Beristain
Levi Mochkin
Mark Pearce
Other KMP
Lamont Leatherman
Patrick Brindle
David Buckley
Bruce Czachor
Gregory Swan
Held at
July 1, 2018
Purchases
Sales
Net Change
Other
Held at
June 30, 2019
20,000,000
850,000
-
-1
500,000
52,500,000
3,500,000
-
-
-
-
600,000
77,950,000
1,909,091
1,310,000
-
750,000
1,149,000
-
-
-
-
-
-
12,519
5,130,610
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
-
-
300,000
21,909,091
2,160,0003
-
750,000
1,649,0004
52,500,000
3,500,0002
-
-
300,000
-
612,519
83,380,610
Notes:
1 As at date of appointment.
2 As at date of resignation.
3 Mr Phillips holds 810,000 ordinary shares in the form of American Depositary Shares.
4 Mr Beristain holds 1,649,000 ordinary shares in the form of American Depositary Shares.
Piedmont Lithium Limited ANNUAL REPORT 2019
19
DIRECTORS' REPORT
(Continued)
REMUNERATION REPORT (AUDITED) (Continued)
Employment Contracts with KMP
Mr. Phillips, President & CEO, has an employment agreement with the Group which may be terminated for any
reason at any time. No amount is payable in the event of termination by the Group for cause. In the event of
termination by the Group without cause, Mr. Phillips is entitled to receive a payment equal to 6 months’ salary and
continuing benefits for a period of 6 months. Mr. Phillips receives a fixed remuneration component of US$250,000
per annum and a discretionary annual bonus of up to US$100,000 to be paid upon the successful completion of
KPIs as determined by the Board.
Mr. Arima, Executive Director, has an employment agreement with the Group which may be terminated by either
party for any reason at any time. No amount is payable in the event of termination by us for cause. In the event of
termination by us without cause, Mr. Arima is entitled to receive a payment equal to 3 months’ salary and continuing
benefits for a period of 3 months. Effective from July 1, 2018, Mr. Arima receives a fixed remuneration component
of US$180,000 per annum and a discretionary annual bonus of up to US$50,000 to be paid upon the successful
completion of KPIs as determined by the Board.
Mr. Brindle, Vice President and Project Manager, has an employment agreement with the Group which may be
terminated by either party for any reason at any time. No amount is payable in the event of termination by us for
cause. In the event of termination by us without cause, Mr. Brindle is entitled to receive a payment equal to 15% of
his then-current base salary and continuing benefits for a period of 1 month. Effective from January 1, 2019, Mr.
Brindle receives a fixed remuneration component of US$210,000 per annum and a discretionary annual bonus of
up to US$50,000 to be paid upon the successful completion of KPIs as determined by the Board.
Mr. Buckley, Vice President and Chief Process Engineer, has an employment agreement with the Group which may
be terminated by either party for any reason at any time. No amount is payable in the event of termination by us for
cause. In the event of termination by us without cause, Mr. Buckley is entitled to receive a payment equal to 15%
of his then-current base salary and continuing benefits for a period of 1 month. Effective from January 1, 2019, Mr.
Buckley receives a fixed remuneration component of US$100,000 per annum and a discretionary annual bonus of
up to US$25,000 to be paid upon the successful completion of KPIs as determined by the Board.
Mr. Czachor, Vice President and Project Manager, has a part-time employment agreement with the Group which
may be terminated by either party for any reason at any time. No amount is payable in the event of termination by
us for cause. In the event of termination by us without cause, Mr. Czachor is entitled to receive a payment equal to
15% of his then-current base salary and continuing benefits for a period of 1 month. Mr. Czachor receives a fixed
remuneration component of US$100,000 per annum and a discretionary annual bonus of up to US$25,000 to be
paid upon the successful completion of KPIs as determined by the Board.
Mr. Leatherman, Vice President and Chief Geologist, has a consulting agreement with the Group which may be
terminated by either party at any time for any or no reason upon at least 2 months prior written notice of termination
to the other, or payment in lieu thereof. Effective from January 1, 2019, Mr Leatherman receives a fixed
remuneration component of US$210,000 per annum.
All Directors have a letter of appointment confirming the terms and conditions of their appointment as Director of
the Company.
End of Remuneration Report.
20
DIRECTORS' MEETINGS
The number of meetings of directors held during the year and the number of meetings attended by each director
were as follows:
Board Meetings
Audit Committee Meetings
Number eligible to
attend
Number attended
Number eligible to
attend
Number attended
Ian Middlemas
Keith Phillips
Anastasios Arima
Jeffrey Armstrong
Jorge Beristain
Levi Mochkin
Mark Pearce
2
2
2
2
2
2
2
NON-AUDIT SERVICES
1
2
2
2
2
1
2
-
-
2
2
2
-
-
-
-
2
2
2
-
-
There were no non-audit services provided by the auditor (or by another person or firm on the auditor's behalf)
during the financial year.
AUDITOR'S INDEPENDENCE DECLARATION
The lead auditor's independence declaration for the year ended June 30, 2019 has been received and can be found
on page 22 of the Directors' Report.
Signed in accordance with a resolution of the directors.
KEITH PHILLIPS
President & CEO
September 26, 2019
Piedmont Lithium Limited ANNUAL REPORT 2019
21
AUDITOR'S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
The Board of Directors
Piedmont Lithium Limited
Level 9, BGC Centre
28 The Esplanade
Perth WA 6000
September 26, 2019
Dear Directors
Auditor’s Independence Declaration to Piedmont Lithium Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of Piedmont Lithium Limited.
As lead audit partner for the audit of the financial report of Piedmont Lithium Limited for the
year ended June 30, 2019, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountant
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
22
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
YEAR ENDED JUNE 30, 2019
Continuing operations
Interest income
Exploration and evaluation expenses
Corporate and administrative expenses
Business development expenses
Share based payments
Foreign stock exchange listing expenses
Other income and expenses
Loss before income tax
Income tax expense
Loss for the year
Notes
2019
US$
2018
US$
128,377
132,752
(7,107,146)
(6,021,506)
(1,711,475)
(1,160,608)
(928,097)
(1,207,907)
16
(438,375)
(1,172,164)
2
3
-
(580,922)
234,090
52,538
(9,822,626)
(9,957,817)
-
-
(9,822,626)
(9,957,817)
Loss attributable to members of Piedmont Lithium Limited
(9,822,626)
(9,957,817)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign operations
(366,083)
(249,205)
Other comprehensive loss for the year, net of tax
(366,083)
(249,205)
Total comprehensive loss for the year
(10,188,709)
(10,207,022)
Total comprehensive loss attributable to members of
Piedmont Lithium Limited
(10,188,709)
(10,207,022)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
13
13
(1.58)
(1.58)
(1.91)
(1.91)
The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the
accompanying notes.
Piedmont Lithium Limited ANNUAL REPORT 2019
23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT JUNE 30, 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Exploration and evaluation assets
Property, plant and equipment
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Notes
2019
US$
2018
US$
5
6
7
8
9
4,432,150
7,238,489
59,679
72,110
4,491,829
7,310,599
2,265,121
26,195
2,291,316
6,783,145
742,017
3,982
745,999
8,056,598
2,144,071
2,144,071
2,144,071
1,989,084
1,989,084
1,989,084
4,639,074
6,067,514
10
11
12
48,853,707
40,483,348
1,990,135
1,966,308
(46,204,768)
(36,382,142)
4,639,074
6,067,514
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
24
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
YEAR ENDED JUNE 30, 2019
Contributed
Equity
Share Based
Payments
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
US$
US$
US$
US$
Total
Equity
US$
Balance at July 1, 2018
40,483,348
1,897,391
68,917
(36,382,142)
6,067,514
Net loss for the year
Exchange differences arising on
translation of foreign operations
Total comprehensive loss for the
year
-
-
-
Issue of shares
8,831,759
-
-
-
-
Conversion of performance rights
48,465
(48,465)
Share issue costs
Share based payments
(509,865)
-
-
438,375
-
(9,822,626)
(9,822,626)
(366,083)
-
(366,083)
(366,083)
(9,822,626)
(10,188,709)
-
-
-
-
-
-
-
-
8,831,759
-
(509,865)
438,375
Balance at June 30, 2019
48,853,707
2,287,301
(297,166)
(46,204,768)
4,639,074
Balance at July 1, 2017
Net loss for the year
Exchange differences arising on
translation of foreign operations
Total comprehensive loss for the
year
Issue of shares
Exercise of options
Share issue costs
Share based payments
Balance at June 30, 2018
28,512,793
861,973
318,122
(26,424,325)
3,268,563
-
-
-
12,304,000
-
-
-
-
-
(9,957,817)
(9,957,817)
(249,205)
-
(249,205)
(249,205)
-
(9,957,817)
-
(10,207,022)
12,304,000
324,271
(136,746)
(657,716)
-
-
1,172,164
-
-
-
-
-
-
187,525
(657,716)
1,172,164
40,483,348
1,897,391
68,917
(36,382,142)
6,067,514
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Piedmont Lithium Limited ANNUAL REPORT 2019
25
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2019
Operating activities
Payments to suppliers and employees
Interest received
Net cash flows used in operating activities
Investing activities
Purchase of exploration and evaluation assets
Purchase of property, plant and equipment
Payment of deposits
Notes
2019
US$
2018
US$
5
7
(9,937,002)
(7,713,845)
127,190
131,849
(9,809,812)
(7,581,996)
(1,523,104)
(564,217)
(14,407)
(15,000)
(1,346)
(36,617)
Net cash flows used in investing activities
(1,552,511)
(602,180)
Financing activities
Proceeds from issue of shares
Share issue costs
Net cash flows from financing activities
10(a)
10(a)
8,831,759
12,491,525
(509,865)
(657,716)
8,321,894
11,833,809
Net (decrease)/increase in cash and cash equivalents
(3,040,429)
3,649,633
Net foreign exchange differences
Cash and cash equivalents at beginning of year
234,090
52,538
7,238,489
3,536,318
Cash and cash equivalents at the end of the year
5
4,432,150
7,238,489
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
26
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted in preparing the financial report of Piedmont Lithium Limited (“Piedmont”
or “Company”) and its consolidated entities (“Consolidated Entity” or “Group”) for the year ended June 30, 2019 are
stated to assist in a general understanding of the consolidated financial report.
Piedmont is a for profit company limited by shares, incorporated and domiciled in Australia. Our ordinary shares
are listed on the Australian Securities Exchange, or ASX, under the symbol “PLL” and our American Depositary
Shares, or ADRs, each representing 100 of our ordinary shares, are traded on the Nasdaq Capital Market, or
Nasdaq, under the symbol “PLL”. The Bank of New York Mellon, acting as depositary, registers and delivers the
ADRs.
The Group’s principal activities are the exploration and development of mineral resource projects.
The financial report of the Group for the year ended June 30, 2019 was authorised for issue in accordance with a
resolution of the Directors on September 20, 2019.
(a) Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with Australian
Accounting Standards (“AASBs”) adopted by the Australian Accounting Standards Board (“AASB”) and the
Corporations Act 2001.
The financial statements comprise the consolidated financial statements of the Group. For the purposes of preparing
the consolidated financial statements, the Company is a for-profit entity.
The financial report has also been prepared on a historical cost basis, except for other financial assets, which have
been measured at fair value. The financial report is presented in United States dollars (US$).
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board.
Going concern
The financial statements have been prepared on the going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and the settlement of liabilities in the normal course of
business.
The Group incurred a loss of US$9,822,626 (2018: US$9,957,817), and experienced net cash outflows from
operating and investing activities of US$10,894,145 for the year ended June 30, 2019 (2018: US$8,814,176). Cash
and cash equivalents totalled US$4,432,150 as at June 30, 2019 (30 June 2018: US$7,238,489).
As disclosed in Note 22 to the financial statements, on July 10, 2019, the Company announced that it had completed
an institutional placement of 145 million shares at an issue price of A$0.145 per share to institutional investors to
raise gross proceeds of A$21 million. As a result, the Directors are of the opinion that the Group will have sufficient
funds to meet its obligations as and when they fall due and that the use of the going concern basis is appropriate.
(b) New standards, interpretations and amendments
In the current year, the Group has adopted all of the new and revised standards, interpretations and amendments
that are relevant to its operations and effective for annual reporting periods beginning on or after July 1, 2018.
New and revised standards and amendments thereof and interpretations effective for the current reporting period
that are relevant to the Group include:
•
•
•
•
AASB 9 Financial Instruments, and relevant amending standards;
AASB 15 Revenue from Contracts with Customers, and relevant amending standards;
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of
Share-based Payment Transactions; and
AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration.
Piedmont Lithium Limited ANNUAL REPORT 2019
27
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b) New standards, interpretations and amendments (Continued)
The adoption of these new and revised standards and amendments has not affected the amounts reported for the
current or prior periods.
A discussion on the impact of the adoption of AASB 9 and AASB 15 is included below.
The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not
yet effective.
AASB 9 Financial Instruments
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and
financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.
The Group has adopted AASB 9 from July 1, 2018 which has resulted in changes to accounting policies and the
analysis for possible adjustments to amounts recognised in the financial statements. In accordance with the
transitional provisions in AASB 9, the reclassifications and adjustments are not reflected in the balance sheet as at
June 30, 2018 but recognised in the opening balance sheet as at July 1, 2018. The Group made an assessment of
the impact of the new impairment model introduced by AASB 9 noting no material impact.
Classification and Measurement
On July 1, 2018, the Group has assessed financial instruments held by the Group and has classified them into the
appropriate AASB 9 categories. The main effects resulting from this reclassification are shown in the table below.
On adoption of AASB 9, the Group classified financial assets and liabilities measured at either amortised cost or
fair value, depending on the business model for those assets and on the asset’s contractual cash flow
characteristics. There were no changes in the measurement of the Group’s financial instruments.
There was no impact on the statement of profit or loss or other comprehensive income or the statement of changes
in equity on adoption of AASB 9 in relation to classification and measurement of financial assets and liabilities.
The following table summarises the impact on the classification and measurement of the Group’s financial
instruments at July 1, 2018:
Presented in statement of
financial position
Cash and cash equivalents
Trade and other receivables
Trade and other payables
AASB 139
AASB 9
Reported $
Loans and
receivables
Loans and
receivables
Amortised cost
Amortised cost
No change
Amortised cost
No change
Amortised cost
No change
Restated
$
No material
impact
No material
impact
No material
impact
The Group does not currently engage in any hedging activities and accordingly any changes to hedge accounting
rules under AASB 9 do not impact on the Group.
Impairment
AASB 9 introduces a new expected credit loss (“ECL”) impairment model that requires the Group to adopt an ECL
position across the Group’s trade and other receivables from July 1, 2018. The loss allowances are based on the
assumptions about risk of default and expected loss rates as opposed to the previously applied incurred loss model.
The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation,
based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of
each reporting period. The Group has assessed that the risk of default is minimal for trade receivables, and therefore
the loss allowance is immaterial. As such, no allowance for expected credit losses has been recognised against
these receivables at June 30, 2019.
AASB 15 Revenue from Contracts with Customers
The adoption of AASB 15 has not had an impact on the Group’s financial statements. During the year, the Group
generated no revenue from sale of goods or rendering of services.
28
(c)
Issued standards and interpretations not early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective have not been adopted by the Group for the reporting period ended June 30, 2019. Those which may be
relevant to the Group are set out in the table below, but these are not expected to have any significant impact on
the Group's financial statements:
Standard/Interpretation
AASB 16 Leases
Interpretation 23 Uncertainty over Income Tax Treatments
AASB 2018-1 Amendments – Annual Improvements 2015-2017
Cycle
Application Date
of Standard
Application Date
for Company
January 1, 2019
January 1, 2019
January 1, 2019
July 1, 2019
July 1, 2019
July 1, 2019
AASB 16 Leases
AASB 16 was issued in February 2016 and is mandatorily effective for financial years commending on or after 1
January 2019. The adoption of AASB 16 will result in almost all leases being recognised on the balance sheet, as
the distinction between operating and finance leases (for lessees) is removed. Under the new standard, an asset
(the right to use the leased item) and a financial liability to pay rentals are recognised. The exceptions are short-
term and low-value leases.
The Group has reviewed the Group’s leasing arrangements in light of the new lease accounting rules in AASB 16.
The standard will affect primarily the accounting for the Group’s operating leases where the Group is the lessee in
the lease arrangement. The Group intends to apply the simplified transition approach and will not restate
comparative amounts for the year prior to first adoption.
As at the reporting date, the Group has non-cancellable operating lease commitments of approximately US$135,000
(refer Note 21). Of these commitments, approximately US$26,000 relate to short-term and low value leases which
will both continue to be recognised on a straight-line basis as an expense in profit or loss.
For the remaining operating lease commitments, the Group expects, on 1 July 2019, to recognise right-of-use assets
of approximately US$109,000 with a corresponding lease liability of approximately US$109,000.
(d) Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Company as at
June 30, 2019 and June 30, 2018, and the results of all subsidiaries for the years then ended.
Control is achieved when the Company has power over the investee, is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to use its power to affect its returns. The Company
reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one
or more of the three elements of control listed above. When the Company has less than a majority of the voting
rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability
to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and
circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power.
Subsidiaries are all those entities (including special purpose entities) over which the Company has the power to
govern the financial and operating policies, so as to obtain benefits from its activities, generally accompanying a
shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the Company controls another entity.
The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using
consistent accounting policies. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Company.
Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-
consolidated from the date that control ceases.
Intercompany transactions and balances, income and expenses and profits and losses between Group companies,
are eliminated. Investments in subsidiaries are accounted for at cost in the Statement of Financial Position of the
Company.
Piedmont Lithium Limited ANNUAL REPORT 2019
29
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e)
Foreign Currencies
(i)
Functional and presentation currency
The functional currency of each of the Group's entities is measured using the currency of the primary
economic environment in which that entity operates. The Company’s functional currency is Australian
dollars. The consolidated financial statements are presented in United States dollars which is the Company's
presentation currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at
the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate.
Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of
the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date
when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income statement,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to
the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is
recognised in the income statement.
(iii) Group companies
The financial results and position of foreign operations whose functional currency is different from the group's
presentation currency are translated as follows:
•
•
•
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the group's
foreign currency translation reserve in equity. These differences are recognised in profit or loss in the period
in which the operation is disposed.
(f)
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of 3 months or less, and bank overdrafts.
(g)
Trade and Other Receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less allowance for expected credit losses.
If collection of the amounts is expected in one year or less, they are classified as current assets. If not, they are
presented as non-current assets. Trade receivables are generally due for settlement within 30 days and therefore
are all classified as current.
As the majority of receivables are short term in nature, their carrying amount is assumed to be the same as their
fair value.
30
(h) Property, Plant and Equipment
(i)
Cost and valuation
All classes of property, plant and equipment are measured at cost.
(ii)
Depreciation
Depreciation is provided on a straight-line basis on all property, plant and equipment.
Major depreciation periods are:
Plant and equipment:
2019
2018
5 years
5 years
(i)
Exploration and Development Expenditure
Expenditure on exploration and evaluation is accounted for in accordance with the 'area of interest' method and
with AASB 6 Exploration for and Evaluation of Mineral Resources, which is the Australian equivalent of IFRS 6.
Exploration and evaluation expenditure encompasses expenditures incurred by the Group in connection with the
exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of
extracting a mineral resource are demonstrable.
For each area of interest, expenditure incurred in the acquisition of rights to explore is capitalised and recognised
as an exploration and evaluation asset. This includes option payments made to landowners under the Group’s
option agreements with local landowners which are considered part of the acquisition costs. Exploration and
evaluation assets are measured at cost at recognition and are recorded as an asset if:
(i)
the rights to tenure of the area of interest are current; and
(ii)
at least one of the following conditions is also met:
•
•
the exploration and evaluation expenditures are expected to be recouped through successful development
and exploitation of the area of interest, or alternatively, by its sale; and
exploration and evaluation activities in the area of interest have not at the reporting date reached a stage
which permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or in relation to, the area of interest are continuing.
All other exploration and evaluation expenditures are expensed as incurred.
Once the technical feasibility and commercial viability of a program or project has been demonstrated with a
bankable feasibility study, the carrying amount of the exploration and evaluation expenditure in respect of the area
of interest is reclassified as a “mine development property” and future expenditures incurred in the development of
that area of interest is accounted for in accordance with the Group’s policy for Property, Plant & Equipment, as
described in Note 1(h).
Impairment
Capitalised exploration costs are reviewed each reporting date to establish whether an indication of impairment
exists. If any such indication exists, the recoverable amount of the capitalised exploration costs is estimated to
determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the
increased carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset in previous years.
Where a decision is made to proceed with development, accumulated expenditure is tested for impairment and
transferred to development properties, and then amortised over the life of the reserves associated with the area of
interest once mining operations have commenced. Recoverability of the carrying amount of the exploration and
evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the
respective areas of interest.
Piedmont Lithium Limited ANNUAL REPORT 2019
31
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(j)
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial
year which are unpaid. The amounts are unsecured and are usually paid within 60 days of recognition. Trade and
other payables are presented as current liabilities unless payment is not due within 12 months from the reporting
date.
They are recognised initially at their fair value and subsequently measured at amortised cost using the effective
interest method.
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their
short-term nature.
(k) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for
which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
(l)
Interest income
Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial
asset.
(m)
Income Tax
The income tax expense for the period is the tax payable on the current period's taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively
enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised
in relation to these temporary differences if they arose on goodwill or in a transaction, other than a business
combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the
temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised.
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.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against tax liabilities and the deferred tax liabilities relate to the same taxable entity and the same taxation
authority.
(n) Employee Entitlements
Provision is made for the Group's liability for employee benefits arising from services rendered by employees to
balance date. Employee benefits that are expected to be settled wholly within 12 months have been measured at
the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable
later than 12 months have been measured at the present value of the estimated future cash outflows to be made
for those benefits.
32
(o) Earnings per Share
Basic earnings per share (“EPS”) is calculated by dividing the net profit attributable to members of the Company for
the reporting period, after excluding any costs of servicing equity, by the weighted average number of ordinary
shares of the Company, adjusted for any bonus issue.
Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs
associated with dilutive potential Ordinary Shares and the effect on revenues and expenses of conversion to
Ordinary Shares associated with dilutive potential Ordinary Shares, by the weighted average number of Ordinary
Shares and dilutive Ordinary Shares adjusted for any bonus issue.
(p) Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part
of the cost of acquisition of the asset or as part of the expense. Receivables and payables in the Statement of
Financial Position are shown inclusive of GST.
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
(q) Use and Revision of Accounting Estimates, Judgements and Assumptions
The preparation of the financial report requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if
the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements are
described in the following note:
•
•
•
Recognition of tax losses (Note 3);
Impairment of exploration and evaluation expenditures (Note 7); and
Share-based payments (Note 16).
(r) Operating Segments
An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses relating to transactions with other components of
the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to
make decisions about resources to be allocated to the segment and assess its performance and for which discrete
financial information is available. This includes start up operations which are yet to earn revenues. Management
will also consider other factors in determining operating segments such as the existence of a line manager and the
level of segment information presented to the board of directors.
Operating segments have been identified based on the information provided to the chief operating decision makers,
being the board of directors.
The group aggregates two or more operating segments when they have similar economic characteristics, and the
segments are similar in each of the following respects:
•
•
•
•
•
Nature of the products and services,
Nature of the production processes,
Type or class of customer for the products and services,
Methods used to distribute the products or provide the services, and if applicable,
Nature of the regulatory environment.
Piedmont Lithium Limited ANNUAL REPORT 2019
33
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(r) Operating Segments (Continued)
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However,
an operating segment that does not meet the quantitative criteria is still reported separately where information about
the segment would be useful to users of the financial statements.
Information about other business activities and operating segments that are below the quantitative criteria are
combined and disclosed in a separate category for “all other segments”.
(s)
Impairment of Assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of
the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to sell and
its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated
to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to
which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount,
the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing the 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.
An assessment is also made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount
is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates
used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case
the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years. After such a reversal the depreciation charge is adjusted in future periods to allocate
the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
(t)
Fair Value Estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and equity
securities classified as fair value through other comprehensive income) is based on quoted market prices at the
reporting date. The quoted market price used for financial assets held by the Group is the current bid price; the
appropriate quoted market price for financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active market (for example, over the counter
derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes
assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer
quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as discounted
cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest-rate
swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange
contracts is determined using forward exchange market rates at the reporting date.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate
their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future
contractual cash flows at the current market interest rate that is available to the Group for similar financial
instruments.
34
(u)
Issued and Unissued Capital
Ordinary Shares and Performance Shares are classified as equity. Issued and paid up capital is recognised at the
fair value of the consideration received by the Company.
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.
(v) Dividends
Provision is made for the amount of any dividend declared on or before the end of the year but not distributed at
balance date.
(w) Share-Based Payments
Equity-settled share-based payments are provided to officers, employees, consultants and other advisors. These
share-based payments are measured at the fair value of the equity instrument at the grant date. Fair value is
determined using the Black Scholes option pricing model.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on
the Company's estimate of equity instruments that will eventually vest. At each reporting date, the Company revises
its estimate of the number of equity instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment
to the share-based payments reserve.
Equity-settled share-based payments may also be provided as consideration for the acquisition of assets. Where
ordinary shares are issued, the transaction is recorded at fair value based on the quoted price of the ordinary shares
at the date of issue. The acquisition is then recorded as an asset or expensed in accordance with accounting
standards.
Piedmont Lithium Limited ANNUAL REPORT 2019
35
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
2.
OTHER INCOME AND EXPENSES
Other income
Net foreign exchange gain
Depreciation, amortisation and impairment
Included in corporate and administrative expenses:
Depreciation of plant and equipment
Employee benefits expense (including KMP)
Included in exploration and evaluation expenses:
Wages, salaries and fees
Defined contribution plans
Other employee benefits
Included in corporate and administrative expenses:
Wages, salaries and fees
Defined contribution plans
Included in share-based payments:
Share based payments
2019
US$
234,090
234,090
2018
US$
52,538
52,538
8
(8,812)
(8,812)
(1,259)
(1,259)
(1,282,050)
(1,407,045)
(38,336)
(159,030)
(18,876)
(66,735)
(615,230)
(242,249)
(13,096)
-
16
(438,375)
(1,172,164)
(2,546,117)
(2,907,069)
36
3.
INCOME TAX
Recognised in profit or loss
Current income tax:
Current income tax benefit in respect of the current year
Deferred income tax:
Origination and reversal of temporary differences
Income tax expense reported in profit or loss
Reconciliation between tax expense and accounting loss before
income tax
Accounting loss before income tax
At the Australian income tax rate of 30% (2018: 27.5%)
Expenditure not allowable for income tax purposes
Income not assessable for income tax purposes
Effect of different income tax rate in the United States
Effect of change in income tax rate in Australia
Exchange differences on translation of foreign operations
Adjustments in respect of deferred income tax of previous years
Effect of deferred tax assets not brought to account
Income tax expense reported in profit or loss
Deferred Tax Assets and Liabilities
Deferred Tax Liabilities:
Accrued interest
Deferred tax assets used to offset deferred tax liabilities
Deferred Tax Assets:
Accrued expenditures
Exploration and evaluation expenditure- capital allowances (1)
Tax losses available to offset against future taxable income
Deferred tax assets used to offset deferred tax liabilities
Deferred tax assets not brought to account (2)
2019
US$
2018
US$
-
-
-
-
-
-
(9,822,626)
(9,957,817)
(2,946,788)
(2,738,400)
435,641
(70,227)
1,774,721
(233,013)
142,627
612,788
(14,448)
(551,859)
-
105,045
(159,852)
(56,213)
1,056,891
2,643,087
-
-
3,856
(3,856)
-
3,292
(3,292)
-
35,587
25,160
2,649,626
-
3,902,255
5,504,853
(3,856)
(3,292)
(6,583,612)
(5,526,721)
-
-
Notes:
(1) For U.S. income tax purposes, exploration costs are generally capitalised and then amortized for tax purposes unless an election is made to
deduct the exploration costs as incurred. On finalisation of its U.S. tax return, the Group did not make such an election for the year ended June
30, 2018, and consequently exploration costs have been treated as capitalised for tax purposes, with deductions available in future periods.
This election has no impact on the total deferred tax assets available to the Group at either June 30, 2019 or June 30, 2018.
(2) The benefit of deferred tax assets not brought to account will only be brought to account if: (a) future assessable income is derived of a nature
and of an amount sufficient to enable the benefit to be realised; (b) the conditions for deductibility imposed by tax legislation continue to be
complied with; and (c) no changes in tax legislation adversely affect the Group in realising the benefit.
4.
DIVIDENDS PAID OR PROVIDED FOR ON ORDINARY SHARES
No dividends have been paid or proposed for the year ended June 30, 2019 (2018: Nil).
Piedmont Lithium Limited ANNUAL REPORT 2019
37
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
5.
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short term deposits
2019
US$
2018
US$
2,224,380
2,207,770
2,714,776
4,523,713
4,432,150
7,238,489
Reconciliation of loss before income tax to net cash flows from
operations
Loss for the year
(9,822,626)
(9,957,817)
Adjustment for non-cash income and expense items
Depreciation and impairment
Share-based payments expense
Net foreign exchange (gain)/loss
Change in assets and liabilities
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Exchange differences arising on translation of foreign operations
8,812
438,375
(234,090)
10,814
154,987
(366,084)
1,259
1,172,164
(52,538)
(1,516)
1,505,657
(249,205)
Net cash outflow from operating activities
(9,809,812)
(7,581,996)
6.
TRADE AND OTHER RECEIVABLES
Accrued interest receivable
Deposits
GST receivable
7.
EXPLORATION AND EVALUATION ASSETS
Piedmont Lithium Project 1
Carrying amount at June 30 3
Reconciliation
Carrying amount at July 1
Additions 2
Carrying amount at June 30 3
Notes:
2019
US$
12,599
35,000
12,080
59,679
2018
US$
11,411
36,617
24,082
72,110
2019
US$
2,265,121
2,265,121
2018
US$
742,017
742,017
742,017
1,523,104
2,265,121
177,800
564,217
742,017
As at June 30, 2019, the Company owns or has entered into exclusive option agreements or land acquisition agreements with local landowners, which upon
exercise, allow the Company to purchase (or in some cases long-term lease) approximately 2,207 acres of surface property and the associated mineral
rights from the private landowners.
During the year ended June 30, 2019, the Group made land acquisition payments and land option payments totalling US$1,523,104 (2018: US$564,217) to
landowners which have been treated as acquisition costs and capitalised as ‘exploration and evaluation assets’. No liability has been recorded for the
consideration payable to landowners if the Group chooses to exercise the options (refer to Note 20 for further details of contingent liabilities).
The ultimate recoupment of costs carried forward for exploration and evaluation is dependent on the successful development and commercial exploitation
or sale of the respective areas of interest.
1
2
3
38
8.
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation and impairment
Carrying amount at June 30
Reconciliation
Carrying amount at July 1
Additions
Depreciation
Carrying amount at June 30
9.
TRADE AND OTHER PAYABLES
Trade creditors
Accrued expenses
10. CONTRIBUTED EQUITY
2019
US$
36,426
(10,231)
26,195
3,982
31,025
(8,812)
26,195
2018
US$
5,401
(1,419)
3,982
3,895
1,346
(1,259)
3,982
2019
US$
2018
US$
1,434,439
1,901,870
709,632
87,214
2,144,071
1,989,084
Note
2019
US$
2018
US$
Issued capital
670,380,352 fully paid ordinary shares (2018: 559,030,352)
10(a)
48,853,707
40,483,348
Movements in issued capital during the past two years
Date
Details
1 Jul 2018
Opening balance
Number of
Ordinary Shares
Issue
Price
US$
559,030,352
40,483,348
31 Jul 2018
Conversion of performance rights
200,000
-
27,828
7-13 Dec 2018 Share placement
107,590,909 A$0.11
8,560,221
1 Feb 2019
1 Feb 2019
Share placement
Conversion of performance rights
Share issue costs
30 Jun 2019
Closing balance
1 Jul 2017
Opening balance
3 Nov 2017
Share placement
3,409,091 A$0.11
150,000
-
670,380,352
-
-
271,538
20,637
(509,865)
48,853,707
454,030,352
-
28,512,793
100,000,000 A$0.16
12,304,000
30 May 2018
Exercise of incentive options
5,000,000 A$0.05
30 May 2018
Transfer from share-based payment reserve
Share issue costs
-
-
-
-
30 Jun 2018
Closing balance
559,030,352
187,525
136,746
(657,716)
40,483,348
Piedmont Lithium Limited ANNUAL REPORT 2019
39
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
10. CONTRIBUTED EQUITY (Continued)
Rights attaching to ordinary shares
The rights attaching to fully paid ordinary shares (“Shares”) arise from a combination of the Company's Constitution,
statute and general law. Shares issued following the exercise of Options or conversion of Performance Rights in
accordance with notes 11(c) and 11(d) will rank equally in all respects with the Company's existing Shares.
(i)
Shares
The issue of shares in the capital of the Company and options over unissued shares by the Company is
under the control of the directors, subject to the Corporations Act 2001, ASX Listing Rules and any rights
attached to any special class of shares.
(ii)
Meetings of Members
Directors may call a meeting of members whenever they think fit. Members may call a meeting as provided
by the Corporations Act 2001. The Constitution contains provisions prescribing the content requirements of
notices of meetings of members and all members are entitled to a notice of meeting. A meeting may be held
in two or more places linked together by audio-visual communication devices. A quorum for a meeting of
members is 2 shareholders. The Company holds annual general meetings in accordance with the
Corporations Act 2001 and the Listing Rules.
(iii)
Voting
Subject to any rights or restrictions at the time being attached to any shares or class of shares of the
Company, each member of the Company is entitled to receive notice of, attend and vote at a general
meeting. Resolutions of members will be decided by a show of hands unless a poll is demanded. On a
show of hands each eligible voter present has one vote. However, where a person present at a general
meeting represents personally or by proxy, attorney or representative more than one member, on a show of
hands the person is entitled to one vote only despite the number of members the person represents. On a
poll each eligible member has one vote for each fully paid share held and a fraction of a vote for each partly
paid share determined by the amount paid up on that share.
(iv)
Changes to the Constitution
The Company's Constitution can only be amended by a special resolution passed by at least three quarters
of the members present and voting at a general meeting of the Company. At least 28 days' written notice
specifying the intention to propose the resolution as a special resolution must be given.
(v)
Listing Rules
Provided the Company remains admitted to the Official List, then despite anything in its Constitution, no act
may be done that is prohibited by the Listing Rules, and authority is given for acts required to be done by
the Listing Rules. The Company's Constitution will be deemed to comply with the Listing Rules as amended
from time to time.
11. RESERVES
Share-based payments reserve
Foreign currency translation reserve
Nature and purpose of reserves
(i)
Share-based payments reserve
Note
11(b)
11(e)
2019
US$
2018
US$
2,287,301
1,897,391
(297,166)
68,917
1,990,135
1,966,308
The share-based payments reserve is used to record the fair value of Incentive Options and Performance
Rights issued by the Group.
(ii)
Foreign currency translation reserve
Exchange differences arising on translation of entities whose functional currency is different to the Group’s
presentation currency are taken to the foreign currency translation reserve, as described in Note 1(e).
40
Movements in share-based payments reserve during the past two years
Date
1 Jul 2018
Various
Details
Opening balance
Grant of incentive securities (1), (2)
31 Jul 2018
Conversion of performance rights
31 Dec 2018
Expiry of performance rights
1 Feb 2019
Conversion of performance rights
30 Jun 2019
Share based payment expense
Number of
Incentive
Options
79,700,000
4,950,000
-
-
-
-
Number of
Performance
Rights
US$
1,500,000
1,897,391
-
(200,000)
(1,100,000)
(150,000)
-
-
(27,828)
-
(20,637)
438,375
30 Jun 2019
Closing balance (2)
84,700,000
50,000
2,287,301
1 Jul 2017
Various
Opening balance
Grant of incentive securities (1)
31 Dec 2017
Expiry of performance rights
30 May 2018
Exercise of incentive options
30 Jun 2018
30 Jun 2018
Share based payment expense
Closing balance
56,450,000
28,250,000
2,200,000
400,000
-
(1,100,000)
(5,000,000)
-
-
-
79,700,000
1,500,000
861,973
-
-
(136,746)
1,172,164
1,897,391
Notes:
(1) For details on the valuation of Incentive Options and Performance Rights, including models and assumptions used, please refer to Note 16 of
the financial statements.
(2) The above number of Incentive Options granted during the 2019 year and outstanding at June 30, 2019, do not include 1,200,000 Incentive
Options that were issued and allotted during the 2019 year but were not granted at June 30, 2019 on the basis that the proposed employee had
not yet commenced rendering services to the Group.
Terms and conditions of Incentive Options
Incentive Options granted as share-based payments have the following terms and conditions:
• Each Incentive Option entitles the holder to the right to subscribe for one Share upon the exercise of each
Incentive Option;
•
The Incentive Options granted as share based payments at the end of the financial year have the following
exercise prices and expiry dates:
o
o
o
o
o
o
o
o
o
o
o
o
o
o
14,000,000 Incentive Options exercisable at A$0.05 each expiring on December 31, 2019;
1,000,000 Incentive Options exercisable at A$0.08 each expiring on December 31, 2019;
16,500,000 Incentive Options exercisable at A$0.10 each expiring on December 31, 2019;
16,500,000 Incentive Options exercisable at A$0.15 each expiring on December 31, 2019;
1,300,000 Incentive Options exercisable at A$0.15 each expiring on June 30, 2020;
1,300,000 Incentive Options exercisable at A$0.20 each expiring on June 30, 2020;
4,175,000 Incentive Options exercisable at A$0.25 each expiring on June 30, 2020;
6,000,000 Incentive Options exercisable at A$0.10 each expiring on July 10, 2020;
6,000,000 Incentive Options exercisable at A$0.12 each expiring on January 10, 2021;
6,000,000 Incentive Options exercisable at A$0.16 each expiring on July 10, 2021;
6,000,000 Incentive Options exercisable at A$0.24 each expiring on July 10, 2022;
2,875,000 Incentive Options exercisable at A$0.35 each expiring on December 31, 2020;
1,500,000 Incentive Options exercisable at A$0.15 each expiring on June 30, 2021; and
1,500,000 Incentive Options exercisable at A$0.20 each expiring on June 30, 2022.
•
The Incentive Options are exercisable at any time prior to the Expiry Date, subject to vesting conditions being
satisfied (if applicable);
• Shares issued on exercise of the Incentive Options rank equally with the then Shares of the Company;
• Application will be made by the Company to ASX for official quotation of the Shares issued upon the exercise
of the Incentive Options;
•
If there is any reconstruction of the issued share capital of the Company, the rights of the Incentive Option
holders may be varied to comply with the ASX Listing Rules which apply to the reconstruction at the time of
the reconstruction; and
• No application for quotation of the Incentive Options will be made by the Company.
Piedmont Lithium Limited ANNUAL REPORT 2019
41
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
11. RESERVES (Continued)
Terms and conditions of Performance Rights
Performance Rights granted as share-based payments have the following terms and conditions:
• Each Performance Right automatically converts into one Share upon vesting of the Performance Right;
• Each Performance Right is subject to performance conditions (as determined by the Board from time to time)
which must be satisfied in order for the Performance Right to vest;
•
The Performance Rights outstanding at the end of the financial year have the following performance conditions
and expiry dates:
o 50,000 Performance Rights subject to the Pre-Feasibility Study Milestone expiring on December 31, 2020.
• Shares issued on conversion of the Performance Rights rank equally with the then Shares of the Company;
• Application will be made by the Company to ASX for official quotation of the Shares issued upon conversion
of the Performance Rights;
•
If there is any reconstruction of the issued share capital of the Company, the rights of the Performance Right
holders may be varied to comply with the ASX Listing Rules which apply to the reconstruction at the time of
the reconstruction;
• No application for quotation of the Performance Rights will be made by the Company; and
• Without approval of the Board, Performance Rights may not be transferred, assigned or novated, except, upon
death, a participant's legal personal representative may elect to be registered as the new holder of such
Performance Rights and exercise any rights in respect of them.
Movements in foreign currency translation reserve during the past two years
Balance at July 1
Exchange differences arising on translation of foreign operations
Balance at June 30
12. ACCUMULATED LOSSES
Balance at July 1
Net loss for the year
Balance at June 30
2019
US$
2018
US$
68,917
318,122
(366,083)
(249,205)
(297,166)
68,917
2019
US$
2018
US$
(36,382,142)
(26,424,325)
(9,822,626)
(9,957,817)
(46,204,768)
(36,382,142)
42
13. EARNINGS PER SHARE
Basic loss per share
Diluted loss per share
The following reflects the income and share data used in the calculations
of basic earnings per share:
Net loss
Earnings used in calculating basic and dilutive earnings per share
2019
US$ cents
(1.58)
(1.58)
2018
US$ cents
(1.91)
(1.91)
2019
US$
2018
US$
(9,822,626)
(9,822,626)
(9,957,817)
(9,957,817)
Number of
Ordinary Shares
2019
Number of
Ordinary Shares
2018
Weighted average number of Ordinary Shares used in calculating basic
and dilutive earnings per share
621,391,730
520,222,133
Non-Dilutive Securities
As at balance date, 85,850,000 Incentive Options and 50,000 Performance Rights, which together represent
85,900,000 potential Ordinary Shares, were considered non-dilutive as they would decrease the loss per share.
Conversions, Calls, Subscriptions or Issues after June 30, 2019
After year end, in July 2019, the Company issued 145,000,000 Ordinary Shares under an institutional placement at
an issue price of A$0.145 per share to raise gross proceeds of A$21 million.
Other than as outlined above, there have been no conversions to, calls of, or subscriptions for Ordinary Shares or
issues of potential Ordinary Shares since the reporting date and before the completion of this financial report.
Piedmont Lithium Limited ANNUAL REPORT 2019
43
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
14. RELATED PARTIES
Subsidiaries
Piedmont Lithium, Inc.
Gaston Land Company, LLC
Ultimate Parent
Country of
Incorporation
United States
United States
Equity Interest
2019
%
100
100
2018
%
100
100
Piedmont Lithium Limited is the ultimate parent of the Group.
Transactions with Key Management Personnel
The aggregate compensation made to Key Management Personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation
2019
US$
2018
US$
1,673,245
1,153,314
30,544
420,529
18,876
957,147
2,124,318
2,129,337
No loans were provided to or received from Key Management Personnel during the year ended June 30, 2019
(2018: Nil).
Further details relating to Key Management Personnel, including remuneration details and equity holdings, are
included in the Remuneration Report.
Other transactions with Related Parties
Apollo Group Pty Ltd (‘Apollo’), a company associated with Mr Mark Pearce, was paid A$180,000 during the 2019
year for the provision of serviced office facilities and administrative, accounting and company secretarial services
(2018: A$180,000), based on a monthly retainer of A$15,000 due and payable in advance with no fixed term. The
agreement may be terminated by either party for any reason by giving one month’s notice.
Ledger Holdings Pty Ltd (‘Ledger’), a company associated with Mr Levi Mochkin, was paid A$120,000 during the
2019 year for the provision of services in relation to business development activities (2018: A$70,000) (such fees
have been included in Mr Mochkin’s remuneration as disclosed above). Ledger receives a monthly retainer of
A$5,833, with any additional fees agreed between the parties as required from time to time. The agreement may
be terminated by either party for any reason by giving two months’ notice.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not disclosed in this note.
44
15. PARENT ENTITY DISCLOSURES
Financial Position
Assets
Current Assets
Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Total Liabilities
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
Financial Performance
Loss for the year
Other comprehensive loss
Total comprehensive loss
Other
Notes
2019
US$
2018
US$
4,187,387
7,205,518
711,858
-
4,899,245
7,205,518
260,171
260,171
272,600
272,600
48,853,707
40,483,348
1,990,135
1,655,430
(46,204,768)
(35,205,860)
4,639,074
6,932,918
(10,998,908)
(8,948,321)
(366,083)
(560,081)
(11,364,991)
(9,508,402)
No guarantees have been entered into by the parent entity in relation to its subsidiaries.
Refer to note 20 for details of contingent assets and liabilities.
Piedmont Lithium Limited ANNUAL REPORT 2019
45
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
16. SHARE-BASED PAYMENTS
Recognised share-based payment expense
From time to time, the Group provides Incentive Options and Performance Rights to officers, employees,
consultants and other key advisors as part of remuneration and incentive arrangements. The number of options or
rights granted, and the terms of the options or rights granted are determined by the Board. Shareholder approval is
sought where required.
During the past two years, the following equity-settled share-based payments have been recognised:
Expense arising from equity-settled share-based payment transactions
2019
US$
438,375
2018
US$
1,172,164
Summary of Options and Performance Rights granted as share-based payments
The following table illustrates the number and weighted average exercise prices (“WAEP”) of Incentive options and
Performance Rights granted as share-based payments at the beginning and end of the financial year:
Outstanding at beginning of year
Options granted during the year
Rights lapsed during the year
Rights converted during the year
Outstanding at end of year
2019
Number
81,200,000
4,950,000
(1,100,000)
(350,000)
84,700,000
2019
WAEP
A$0.13
A$0.22
-
-
A$0.14
2018
Number
58,650,000
28,650,000
(1,100,000)
(5,000,000)
81,200,000
2018
WAEP
A$0.10
A$0.17
-
A$0.05
A$0.13
Note:
(1) The above number of Incentive Options granted during the 2019 year and outstanding at June 30, 2019, do not include 1,200,000 Incentive
Options that were issued and allotted during the 2019 year but were not granted at June 30, 2019 on the basis that the proposed employee had
not yet commenced rendering services to the Group..
The following Incentive Options and Performance Rights were granted as share-based payments during the past
two years:
Security Type
Options
Options
Options
Options
Options
Options
Options
Options
Options
Rights
Rights
Options
Options
Options
Options
Options
Options
Rights
Rights
Options
Options
Options
Options
Options
Options
Options
Options
Options
Options
Number
6,000,000
6,000,000
6,000,000
6,000,000
150,000
150,000
150,000
1,050,000
1,050,000
150,000
150,000
100,000
100,000
100,000
100,000
500,000
500,000
50,000
50,000
150,000
150,000
375,000
375,000
500,000
500,000
1,500,000
1,500,000
100,000
100,000
Grant Date
10-Jul-17
10-Jul-17
10-Jul-17
10-Jul-17
13-Oct-17
13-Oct-17
13-Oct-17
1-Jan-18
1-Jan-18
1-Jan-18
1-Jan-18
26-Feb-18
26-Feb-18
12-Mar-18
12-Mar-18
7-May-18
7-May-18
29-May-18
29-May-18
15-Jun-18
15-Jun-18
13-Jul-18
13-Jul-18
1-Aug-18
1-Aug-18
7-May-19
7-May-19
1-Oct-18
1-Oct-18
Expiry Date
10-Jul-20
10-Jan-21
10-Jul-21
10-Jul-22
30-Jun-20
30-Jun-20
30-Jun-20
30-Jun-20
31-Dec-20
31-Dec-18
31-Dec-19
30-Jun-20
31-Dec-20
30-Jun-20
31-Dec-20
30-Jun-20
31-Dec-20
31-Dec-18
31-Dec-19
30-Jun-20
31-Dec-20
30-Jun-20
31-Dec-20
30-Jun-20
31-Dec-20
30-Jun-21
30-Jun-22
30-Jun-20
31-Dec-20
Exercise Price
A$
$0.10
$0.12
$0.16
$0.24
$0.15
$0.20
$0.25
$0.25
$0.35
$Nil
$Nil
$0.25
$0.35
$0.25
$0.35
$0.25
$0.35
$Nil
$Nil
$0.25
$0.35
$0.25
$0.35
$0.25
$0.35
$0.15
$0.20
$0.25
$0.35
Fair Value
A$
$0.0480
$0.0470
$0.0460
$0.0450
$0.1030
$0.0910
$0.0810
$0.0910
$0.0850
$0.1900
$0.1900
$0.0680
$0.0630
$0.0600
$0.0560
$0.0550
$0.0510
$0.1790
$0.1790
$0.0810
$0.0750
$0.0630
$0.0590
$0.0640
$0.0580
$0.0680
$0.0680
$0.0260
$0.0240
Series
Series 1
Series 2
Series 3
Series 4
Series 5
Series 6
Series 7
Series 8
Series 9
Series 10
Series 11
Series 12
Series 13
Series 14
Series 15
Series 16
Series 17
Series 18
Series 19
Series 20
Series 21
Series 22
Series 23
Series 24
Series 25
Series 26
Series 27
Series 28
Series 29
46
Weighted Average Remaining Contractual Life
At June 30, 2019, the weighted average remaining contractual life of Incentive Options and Performance Rights on
issue that had been granted as share-based payments was 1.06 years (2018: 1.96 years).
Range of Exercise Prices
At June 30, 2019, the range of exercise prices of Incentive Options on issue that had been granted as share-based
payments was A$0.05 to A$0.35 (2018: A$0.05 to A$0.35).
Weighted Average Share Price of Exercised Options
There were no Incentive Options exercised during the year ended 30 June 2019. For Incentive Options exercised
during the year ended June 30, 2018, the weighted average share price at the date of exercise was A$0.175.
Weighted Average Fair Value
The weighted average fair value of Incentive Options and Performance Rights granted as share-based payments
by the Group during the year ended June 30, 2019 was A$0.05 (2018: A$0.05).
Option and Rights Pricing Models
The fair value of Incentive Options granted is estimated as at the date of grant using the Black Scholes option
valuation model taking into account the terms and conditions upon which the Incentive Options were granted. The
fair value of Performance Rights granted is estimated as at the date of grant based on the underlying share price
(being the seven-day volume weighted average share price prior to issuance).
The tables below list the inputs to the valuation model used for share options and performance rights granted by
the Group during the last two years:
Fair value at grant date (weighted average)
Share price at grant date (weighted average)
Exercise price (weighted average)
Expected life of options/rights (weighted average)1
Risk-free interest rate (weighted average)
Expected volatility2
Expected dividend yield3
2019
Incentive
Options
A$0.064
A$0.16
A$0.22
2.01 years
1.59%
78%
-
2018
2019
Incentive
Performance
Options
Rights
A$0.051
-
A$0.104
-
-
A$0.175
- 3.69 years
2.11%
-
85.00%
-
-
-
2018
Performance
Rights
A$0.187
A$0.187
-
1.40 years
-
-
-
Notes:
1 The expected life is based on the expiry date of the options or rights.
2
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual
outcome.
The dividend yield reflects the assumption that the current dividend payout will remain unchanged.
3
17. AUDITORS' REMUNERATION
Amounts received or due and receivable by Deloitte Touche Tohmatsu for:
• Australian audit or review of the financial report of the entity and any other
entity in the Group; and
25,831
25,586
• United States audit or review of financial statements of the entity and any
other entity in the Group in accordance with Public Company Accounting
Oversight Board (PCAOB) standards as part of the Company’s U.S. listing.
55,277
81,108
264,420
290,006
2019
US$
2018
US$
Piedmont Lithium Limited ANNUAL REPORT 2019
47
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
18. SEGMENT INFORMATION
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the
Consolidated Entity that are regularly reviewed by the chief operating decision maker in order to allocate resources
to the segment and to assess its performance.
The Consolidated Entity operates in one segment, being mineral exploration in the United States of America.
Reconciliation of non-current assets by geographical location
United States of America
2019
US$
2,291,316
2,291,316
2018
US$
745,999
745,999
19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Overview
The Group's principal financial instruments comprise receivables, payables, cash, and short-term deposits. The
main risks arising from the Group's financial instruments are interest rate risk, foreign currency risk, credit risk and
liquidity risk.
This note presents information about the Group's exposure to each of the above risks, its objectives, policies and
processes for measuring and managing risk, and the management of capital. Other than as disclosed, there have
been no significant changes since the previous financial year to the exposure to or management of these risks.
The Group manages its exposure to key financial risks in accordance with the Group's financial risk management
policy. Key risks are monitored and reviewed as circumstances change (e.g. acquisition of a new project) and
policies are revised as required. The overall objective of the Group's financial risk management policy is to support
the delivery of the Group's financial targets whilst protecting future financial security.
Given the nature and size of the business and uncertainty as to the timing and amount of cash inflows and outflows,
the Group does not enter into derivative transactions to mitigate the financial risks. In addition, the Group's policy
is that no trading in financial instruments shall be undertaken for the purposes of making speculative gains. As the
Group's operations change, the Directors will review this policy periodically going forward.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework. The Board reviews and agrees policies for managing the Group's financial risks as summarised below.
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. This arises principally from cash and cash equivalents and trade and other
receivables.
There are no significant concentrations of credit risk within the Group. The carrying amount of the Group's financial
assets represents the maximum credit risk exposure, as represented below:
Cash and cash equivalents
Trade and other receivables
Note
5
6
2019
US$
2018
US$
4,432,150
7,238,489
59,679
72,110
4,491,829
7,310,599
The Group does not have any significant customers and accordingly does not have any significant exposure to
impairment losses.
48
Trade and other receivables comprise primarily deposits, accrued interest revenue and GST refunds due. Where
possible the Group trades only with recognised, creditworthy third parties. It is the Group's policy that all customers
who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are
monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant. At June 30,
2019 none (2018: none) of the Group's receivables are past due. No impairment losses on receivables have been
recognised.
With respect to credit risk arising from cash and cash equivalents, the Group's exposure to credit risk arises from
default of the counter party, with a maximum exposure equal to the carrying amount of these instruments.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board's
approach to managing liquidity is to ensure, as far as possible, that the Group will always have sufficient liquidity to
meet its liabilities when due. At June 30, 2018 and 2019, the Group had sufficient liquid assets to meet its financial
obligations.
The contractual maturities of financial liabilities, including estimated interest payments, are provided below. There
are no netting arrangements in respect of financial liabilities.
≤6 Months
US$
6-12
Months
US$
1-5 Years
US$
≥5 Years
US$
Total
US$
2,144,071
2,144,071
1,989,084
1,989,084
-
-
-
-
-
-
-
-
-
-
-
-
2,144,071
2,144,071
1,989,084
1,989,084
2019
Group
Financial Liabilities
Trade and other payables
2018
Group
Financial Liabilities
Trade and other payables
Interest Rate Risk
The Group's exposure to the risk of changes in market interest rates relates primarily to the cash and short-term
deposits with a floating interest rate.
These financial assets with variable rates expose the Group to cash flow interest rate risk. All other financial assets
and liabilities, in the form of receivables and payables are non-interest bearing.
At the reporting date, the interest rate profile of the Group's interest-bearing financial instruments was:
Interest-bearing financial instruments
Cash at bank and on hand
Short term deposits
Note
5
5
2019
US$
2018
US$
2,224,380
2,207,770
4,432,150
2,714,776
4,523,713
7,238,489
The Group's cash at bank and on hand and short-term deposits had a weighted average floating interest rate at
year end of 2.02% (2018: 1.89%).
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
Piedmont Lithium Limited ANNUAL REPORT 2019
49
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
(d)
Interest Rate (Continued)
Interest rate sensitivity
A sensitivity of 1% (100 basis points) has been selected as this is considered reasonable given the current level of
both short term and long-term interest rates. A 1% (100 basis points) movement in interest rates at the reporting
date would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis
assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed
on the same basis for 2018.
2019
Group
Cash and cash equivalents
2018
Group
Cash and cash equivalents
Foreign Currency Risk
Profit or loss
Equity
+1%
US$
-1%
US$
+1%
US$
-1%
US$
44,322
(44,322)
44,322
(44,322)
64,857
(64,857)
64,857
(64,857)
Foreign currency risk is the risk that the fair value of future cash outflows of an exposure will fluctuate because of
changes in foreign currency exchange rates.
The Group’s exposure to the risk of changes in foreign exchange rate relates primarily to assets and liabilities that
are denominated in currencies other than US$. The Group also has transactional currency exposures relating to
transactions denominated in currencies other than US$. The currency in which these transactions primarily are
denominated is A$.
It is the Group’s policy not to enter into any hedging or derivative transactions to manage foreign currency risk.
At June 30, 2019, the majority of the Group’s cash reserves were denominated in US$, being US$3.4 million.
At the reporting date, the Group’s exposure to financial instruments denominated in foreign currencies was:
A$ denominated financial assets and liabilities
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net exposure
2019
A$ exposure
(US$ Equivalent)
2018
A$ exposure
(US$ Equivalent)
1,028,454
24,679
260,171
792,962
1,971,129
35,493
143,181
1,863,441
50
Foreign exchange rate sensitivity
At the reporting date, had the US$ appreciated or depreciated against the A$, as illustrated in the table below, profit
or loss and equity would have been affected by the amounts shown below. This analysis assumes that all other
variables remain constant.
Profit or loss
10%
Increase
US$
10%
Decrease
US$
Other Comprehensive
Income
10%
Increase
US$
10%
Decrease
US$
79,296
(79,296)
79,296
(79,296)
186,344
(186,344)
186,344
(186,344)
2019
Group
2018
Group
Commodity Price Risk
The Group is exposed to commodity price risk. These commodity prices can be volatile and are influenced by
factors beyond the Group's control. As the Group is currently engaged in exploration and development activities,
no sales of commodities are forecast for the next 12 months, and accordingly, no hedging or derivative transactions
have been used to manage commodity price risk.
Capital Management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence
and to sustain future development of the business. Given the stage of development of the Group, the Board's
objective is to minimise debt and to raise funds as required through the issue of new shares. The Group is not
subject to externally imposed capital requirements.
There were no changes in the Group's approach to capital management during the year.
Fair Value
The net fair value of financial assets and financial liabilities approximates their carrying value. The methods for
estimating fair value are outlined in the relevant notes to the financial statements.
20. CONTINGENT ASSETS AND LIABILITIES
At June 30, 2019, the Group had entered into option agreements and land acquisition agreements with local
landowners in North Carolina, United States, in relation to its Piedmont Lithium Project, which upon exercise, allows
the Group to purchase (or in some cases long-term lease) 2,207 acres of surface property and the associated
mineral rights from the local landowners. Upon exercise of the option agreements, in the case of a purchase, the
Group will pay cash consideration approximating the fair market value of the surface property at the time of exercise
(excluding the value of any minerals) plus 50%, and in the case of a long-term lease, the Group will pay annual
advanced royalty payments per acre. The landowners will also retain a production royalty payable on production of
ore from the property, between US$0.50 to US$2.00 per tonne of ore produced.
Piedmont Lithium Limited ANNUAL REPORT 2019
51
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 2019
(Continued)
21. COMMITMENTS
Management have identified the following material commitments for the consolidated group as at June 30, 2019:
Payable within 1
year
Payable later
than 1 year within
5 years
US$
US$
Total
US$
64,375
64,375
70,509
70,509
134,884
134,884
2019
Operating lease commitments (a)
Operating lease commitments
Operating lease commitments include contracts for leased premises and equipment in the United States.
22. EVENTS SUBSEQUENT TO BALANCE DATE
(a) On July 10, 2019, the Company announced that it had completed an institutional placement of 145 million
shares at an issue price of A$0.145 per share to institutional investors to raise gross proceeds of A$21
million;
(b) On July 17, 2019, the Company announced the results from PFS-level metallurgical test work which
demonstrated high quality spodumene concentrate product with a grade above 6.0% Li2O, iron oxide below
1.0%, and low impurities from composite samples using a combination of DMS and flotation technology; and
(c) On August 7, 2019, the Company announced the results of an enhanced Scoping Study for the Project to
incorporate the expanded Mineral Resource update published in June 2019 which extended the Project’s
mine life to 25 years.
Other than as outlined above, as at the date of this report there are no other matters or circumstances which have
arisen since June 30, 2019 that have significantly affected or may significantly affect:
the operations, in financial years subsequent to June 30, 2019, of the Consolidated Entity;
the results of those operations, in financial years subsequent to June 30, 2019, of the Consolidated Entity;
or
the state of affairs, in financial years subsequent to June 30, 2019, of the Consolidated Entity
•
•
•
52
DIRECTORS' DECLARATION
In accordance with a resolution of the directors of Piedmont Lithium Limited:
1.
In the opinion of the directors:
(a)
the attached financial statements, notes and the additional disclosures included in the directors' report
designated as audited, are in accordance with the Corporations Act 2001, including:
(i)
compliance with accounting standards and Corporations Regulations 2001; and
(ii)
gives a true and fair view of the financial position as at June 30, 2019 and of the performance
for the year ended on that date of the Group; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
2.
3.
The attached financial statements are in compliance with International Financial Reporting Standards, as
stated in note 1 to the financial statements.
The Directors have been given a declaration required by section 295A of the Corporations Act 2001 for the
financial year ended June 30, 2019.
On behalf of the Board
KEITH PHILLIPS
President & CEO
September 26, 2019
Piedmont Lithium Limited ANNUAL REPORT 2019
53
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PIEDMONT LITHIUM LIMITED
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Tower 2, Brookfield Place
123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of
Piedmont Lithium Limited
Report on the Audit of the Financial Report
We have audited the financial report of Piedmont Lithium Limited (the “Company”) and its
subsidiaries (the “Group”) which comprises the consolidated statement of financial position as
at June 30, 2019, the consolidated statement of profit or loss and other comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash flows
for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies and other explanatory information, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at June 30, 2019 and of
its financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Financial Report section of our report. We are independent of the Group in accordance with
the auditor independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of the Company, would be in the same terms if given to the
directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report for the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte Network.
54
Key Audit Matter
How the scope of our audit responded to
the Key Audit Matter
Accounting
Evaluation Expenditure
for Exploration and
As at June 30, 2019, the carrying value of
exploration
assets
amounts
including
additions of $1,523,104 as disclosed in
Note 7.
$2,265,121,
evaluation
and
to
in accordance with
the
Additionally
Group’s accounting policy for exploration
and evaluation expenditure, $7,107,146
was expensed during the year ended June
30, 2019.
judgement
in
Significant
determining the treatment of exploration
and evaluation expenditure including:
is applied
whether
the
capitalisation are satisfied;
conditions
for
which elements of exploration and
evaluation expenditure qualify for
capitalisation;
the Group’s intentions and ability
to proceed with a future work
programme;
the likelihood of licence renewal or
extension; and
the expected or actual success of
resource evaluation and analysis.
Our procedures associated with exploration and
evaluation expenditure during the year included,
but were not limited to:
obtaining an understanding of the key
the
associated
controls
of
or
capitalisation
exploration and evaluation expenditure;
and
expensing
with
testing on a sample basis, exploration
and evaluation expenditure to confirm
the nature of the costs incurred, and the
appropriateness of the classification
between asset and expense.
Our procedures associated with the carrying
value of exploration and evaluation assets
included, but were not limited to:
obtaining an understanding of the key
the
associated
of
of
indicators
with
controls
identification
impairment;
evaluating management’s impairment
indicator
including
assessment,
undertaking the following procedures to
identify any events at the reporting date
which may indicate that exploration and
evaluation
be
assets may
recoverable:
not
o obtaining a schedule of the areas
of interest held by the Group and
confirming whether the rights to
tenure of those areas of interest
remained current at balance
date;
o holding
with
management as to the status of
ongoing
exploration
programmes in the respective
areas of interest; and
discussions
o assessing whether any facts or
circumstances existed to suggest
impairment testing was required.
We also assessed the appropriateness of the
disclosures in Note 7 to the financial statements.
Piedmont Lithium Limited ANNUAL REPORT 2019 55
INDEPENDENT AUDITOR'S REPORT
(Continued)
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended June 30, 2019, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole
is free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with the Australian Auditing Standards will
always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether
due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
56
we are required to draw attention in our auditor’s report to the related disclosures in
the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the financial report,
including the disclosures, and whether the financial report represents the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group’s
audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 20 of the Directors’ Report
for the year ended June 30, 2019.
In our opinion, the Remuneration Report of Piedmont Lithium Limited, for the year ended June
30, 2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Perth, 26 September 2019
Piedmont Lithium Limited ANNUAL REPORT 2019 57
MINERAL RESOURCES STATEMENT
Summary of Mineral Resources
The Company’s Mineral Resources as at June 30, 2019 and 2018, reported in accordance with the 2012 Edition of
the JORC Code, are as follows:
Piedmont Lithium Project Mineral Resources
Li2O
Quartz
Feldspar
Mica
Grade
(%)
Tonnes
(t)
Grade
(%)
Tonnes
(Mt)
Grade
(%)
Tonnes
(Mt)
Grade
(%)
Tonnes
(Mt)
Category
Tonnes
(Mt)
As at June 30, 2019
Indicated
Inferred
Total
13.9
14.0
27.9
1.16
161,000
1.06
148,000
1.11
309,000
30.0
28.7
29.3
3.75
3.61
7.36
44.4
44.4
44.4
5.55
5.58
11.13
As at June 30, 2018
Indicated
Inferred
Total
8.50
7.70
1.15
1.09
98,000
84,000
16.19
1.12
182,000
-
-
-
-
-
-
-
-
-
-
-
-
4.5
4.4
4.5
-
-
-
0.56
0.56
1.12
-
-
-
Annual Review of Mineral Resources
During the year, the Company reported: (i) an updated lithium Mineral Resource estimate for the Company’s Core
property (refer ASX announcement dated 25 June 2019); (ii) an initial lithium Mineral Resource estimate for the
Company’s Central property (refer ASX announcement dated 24 April 2019); (iii) an initial Mineral Resource
estimate for by-products quartz, feldspar, and mica for the Company’s Core property (refer ASX announcement
dated 6 September 2018); and (iv) an updated Mineral Resource estimate for by-products quartz, feldspar, and
mica at the Company’s Core property (refer ASX announcement dated 1 August 2019). As a result of the annual
review of the Company’s Mineral Resources, there has been no change to the Mineral Resources reported for the
Piedmont Lithium Project.
Governance of Mineral Resources
The Company engages external consultants and competent persons (as determined pursuant to the JORC Code)
to prepare and calculate estimates of its Mineral Resources. Management and the Board review these estimates
and underlying assumptions for reasonableness and accuracy. The results of the Mineral Resource estimates are
then reported in accordance with the requirements of the JORC Code and other applicable rules (including ASX
Listing Rules).
Where material changes occur during the year to a project, including project’s size, title, exploration results or other
technical information then previous resource estimates and market disclosures are reviewed for completeness.
The Company reviews its Mineral Resources as at June 30 each year. Where a material change has occurred in
the assumptions or data used in previously reported Mineral Resources, then where possible a revised Mineral
Resource estimate will be prepared as part of the annual review process. However, there are circumstance where
this may not be possible (e.g. an ongoing drilling programme), in which case a revised Mineral Resource Estimate
will be prepared and reported as soon as practicable.
Competent Person Statement
The information in this Mineral Resources Statement that relates to Coal Resources is based on, and fairly
represents, information and supporting documentation compiled by Mr Leon McGarry, a Competent Person who is
a Professional Geoscientist (P.Geo.) and registered member of the ‘Association of Professional Geoscientists of
Ontario’ (APGO no. 2348), a ‘Recognized Professional Organization’ (RPO). Mr McGarry is a Senior Resource
Geologist and full-time employee at CSA Global Geoscience Canada Ltd. Mr McGarry has sufficient experience
that is relevant to the style of mineralization and type of deposit under consideration and to the activity being
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves’. Mr McGarry approves and consents to the inclusion
in the Mineral Resources Statement of the matters based on his information in the form and context in which it
appears.
58
CORPORATE GOVERNANCE
Piedmont Lithium Limited (Piedmont or Company) and the entities it controls believe corporate governance is
important for the Company in conducting its business activities.
The Board of Piedmont has adopted a suite of charters and key corporate governance documents which articulate
the policies and procedures followed by the Company.
These documents are available
the Company’s website,
www.piedmontlithium.com. These documents are reviewed at least annually to address any changes in governance
practices and the law.
the Corporate Governance section of
in
The Company’s Corporate Governance Statement 2019, which explains how Piedmont complies with the ASX
Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations – 3rd Edition’ in relation
to the year ended June 30, 2019, is available in the Corporate Governance section of the Company’s website,
www.piedmontlithium.com and will be lodged with ASX together with an Appendix 4G at the same time that this
Annual Report is lodged with ASX.
In addition to the ASX Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations
– 3rd Edition’ the Board has taken into account a number of important factors in determining its corporate
governance policies and procedures, including the:
•
•
•
•
•
•
•
•
relatively simple operations of the Company, which currently only undertakes mineral exploration and
development activities;
cost verses benefit of additional corporate governance requirements or processes;
size of the Board;
Board’s experience in the resources sector;
organisational reporting structure and number of reporting functions, operational divisions and employees;
relatively simple financial affairs with limited complexity and quantum;
relatively small market capitalisation and economic value of the entity; and
direct shareholder feedback.
Piedmont Lithium Limited ANNUAL REPORT 2019
59
ASX ADDITIONAL INFORMATION
The shareholder information set out below was applicable as at 31 August 2019.
1.
TWENTY LARGEST HOLDERS OF LISTED SECURITIES
The names of the twenty largest holders of listed securities are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Nasdaq Securities Australia Pty Ltd
Arredo Pty Ltd
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
National Nominees Limited
Mr Gregory John Howe + Ms Tracie Lee Vella
Brispot Nominees Pty Ltd
Annlew Investments Pty Ltd
Sapphire Chip Pty Ltd
Mrs Susan Maree Whiting
UBS Nominees Pty Ltd
CS Third Nominees Pty Limited
Mr John Alexander Duthie
CS Fourth Nominees Pty Limited
Mr Nicholas Bruce Thomas
Torres Investments Pty Ltd
Morgan Stanley Australia Securities (Nominee) Pty Limited
Firah Creek Pty Ltd
Total Top 20
Others
Total Ordinary Shares on Issue
2.
DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of holders by size of holding:
No of Ordinary
Shares Held
Percentage of
Issued Shares
161,227,711
134,579,750
52,500,000
21,909,091
19,239,386
15,054,027
11,955,905
11,075,000
10,070,297
10,000,000
9,750,003
9,020,000
8,023,630
7,416,868
6,500,000
5,840,485
5,788,888
5,440,000
5,000,000
4,902,568
515,293,609
300,086,743
815,380,352
19.77
16.51
6.44
2.69
2.36
1.85
1.47
1.36
1.24
1.23
1.20
1.11
0.98
0.91
0.80
0.72
0.71
0.67
0.61
0.60
63.20
36.80
100.00
Distribution
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
More than 100,000
Totals
Number of Shareholders
Number of Shares
202
246
262
770
430
1,910
68,430
766,229
2,208,031
33,448,762
778,888,900
815,380,352
There were 370 holders of less than a marketable parcel of ordinary shares.
60
ASX ADDITIONAL INFORMATION (Continued)
3.
VOTING RIGHTS
See Note 10(b) of the Notes to the Financial Statements.
4.
SUBSTANTIAL SHAREHOLDERS
Substantial Shareholder notices have been received from the following:
Substantial Shareholder
AustralianSuper Pty Ltd
FIL Limited
Nasdaq Securities Australia Pty Ltd
The Bank of New York Mellon Corporation
5. ON-MARKET BUY BACK
Number of Shares
88,508,830
74,000,000
52,500,000
42,764,500
There is currently no on-market buyback program for any of Piedmont Lithium Limited's listed securities.
6.
UNQUOTED SECURITIES
The names of the security holders holding 20% or more of an unlisted class of security at 31 August 2019, other
than those securities issued or acquired under an employee incentive scheme, are listed below:
Holder
Mr Keith Phillips
Moshos Family Investments Pty Ltd
Mr Lamont Leatherman
RK Equity Advisors LLC
Others (less than 20%)
Total
Total holders
Holder
Mr Dominic Allen
Mr Vijay Mehta
Global Lithium LLC
Mr Patrick Brindle
Others (less than 20%)
Total
Total holders
$0.05
Options
Expiring
31-Dec-19
-
5,000,000
5,000,000
-
4,000,000
$0.08
Options
Expiring
31-Dec-19
-
-
-
850,000
150,000
$0.10
Options
Expiring
31-Dec-19
-
3,000,000
5,000,000
2,075,000
6,425,000
$0.15
Options
Expiring
31-Dec-19
-
3,000,000
5,000,000
2,975,000
5,525,000
$0.10
Options
Expiring
10-Jul-20
6,000,000
-
-
-
-
$0.12
Options
Expiring
10-Jan-21
6,000,000
-
-
-
-
$0.16
Options
Expiring
10-Jul-21
6,000,000
-
-
-
-
$0.24
Options
Expiring
10-Jul-22
6,000,000
-
-
-
-
14,000,000
1,000,000
16,500,000
16,500,000
6,000,000
6,000,000
6,000,000
6,000,000
4
2
8
7
1
1
1
1
$0.22
Options
Expiring
31-Jul-21
400,000
-
-
-
-
$0.26
Options
Expiring
31-Jul-21
400,000
-
-
-
-
$0.28
Options
Expiring
31-Jul-21
400,000
-
-
-
-
$0.15
Options
Expiring
30-Jun-20
-
400,000
750,000
-
150,000
$0.20
Options
Expiring
30-Jun-20
-
400,000
750,000
$0.25
Options
Expiring
30-Jun-20
-
400,000
750,000
$0.35
$0.20
Options
Options
Expiring
Expiring
31-Dec-20
30-Jun-22
-
-
-
-
-
-
- 1,125,000 1,125,000 1,500,000 1,500,000
-
$0.15
Options
Expiring
30-Jun-21
-
-
-
-
150,000 1,900,000 1,750,000
400,000
400,000
400,000 1,300,000 1,300,000 4,175,000 2,875,000 1,500,000 1,500,000
1
1
1
3
3
11
8
1
1
7.
EXPLORATION INTERESTS
As at 31 August 2019, the Company has entered into exclusive option agreements and land acquisition agreements
with local landowners, which upon exercise, allow the Company to purchase (or in some cases long-term lease)
approximately 2,207 acres of surface property and the associated mineral rights from the private landowners.
Piedmont Lithium Limited ANNUAL REPORT 2019
61
8.
COMPETENT PERSON STATEMENT
The information in this report that relates to Exploration Results, Exploration Targets, Mineral Resources,
Metallurgical Testwork Results, Process Design, Process Plant Capital Costs, and Process Plant Operating Costs,
Mining Engineering and Mining Schedule was extracted from our ASX announcement dated August 7, 2019 entitled
“Updated Scoping Study Extends Project Life and Enhances Exceptional Economics” which is available to view on
the Company’s website at www.piedmontlithium.com.
Piedmont confirms that: a) it is not aware of any new information or data that materially affects the information
included in the original ASX announcements; b) all material assumptions and technical parameters underpinning
Mineral Resources, Exploration Targets, Production Targets, and related forecast financial information derived from
Production Targets included in the original ASX announcements continue to apply and have not materially changed;
and c) the form and context in which the relevant Competent Persons’ findings are presented in this report have
not been materially modified from the original ASX announcements.
9. FORWARD LOOKING STATEMENTS
This report may include forward-looking statements. These forward-looking statements are based on Piedmont’s
expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks,
uncertainties and other factors, many of which are outside the control of Piedmont, which could cause actual results
to differ materially from such statements. Piedmont makes no undertaking to subsequently update or revise the
forward-looking statements made in this report, to reflect the circumstances or events after the date of that report.
10. CAUTIONARY NOTE TO UNITED STATES INVESTORS
The information contained in this report has been prepared in accordance with the requirements of the securities
laws in effect in Australia, which differ from the requirements of U.S. securities laws. The terms "mineral resource",
"measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are Australian terms
defined in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (the “JORC Code”). However, these terms are not defined in Industry Guide 7 ("SEC
Industry Guide 7") under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), and are normally
not permitted to be used in reports and filings with the U.S. Securities and Exchange Commission (“SEC”).
Accordingly, information contained herein that describes Piedmont’s mineral deposits may not be comparable to
similar information made public by U.S. companies subject to reporting and disclosure requirements under the U.S.
federal securities laws and the rules and regulations thereunder. U.S. investors are urged to consider closely the
disclosure in Piedmont’s Form 20-F, a copy of which may be obtained from Piedmont or from the EDGAR system
on the SEC’s website at http://www.sec.gov/.
62
OLD CONTENT TO BE REPLACED
CORPORATE
DIRECTORY
DIRECTORS:
Mr Ian Middlemas – Chairman
Mr Keith Phillips – President & CEO
Mr Anastasios Arima – Executive Director
Mr Jeffrey Armstrong – Non-Executive Director
Mr Jorge Beristain – Non-Executive Director
Mr Levi Mochkin – Non-Executive Director
CONTENTS
1 Message from the CEO
2 Directors’ Report
“
22 Auditor’s Independence Declaration
23 Consolidated Statement of Profit or Loss and
Other Comprehensive Income
24 Consolidated Statement of Financial Position
25 Consolidated Statement of Changes in Equity
26 Consolidated Statement of Cash Flows
27 Notes to the Financial Statements
53 Directors’ Declaration
54 Independent Auditor’s Report
58 Mineral Resources Statement
59 Corporate Governance
60 ASX Additional Information
COMPANY SECRETARY:
Mr Gregory Swan
OFFICES:
New York Office:
28 W 44th Street, Suite 810
New York, NY 10036
UNITED STATES
North Carolina Office:
32 North Main Street, Suite 100
Belmont, NC 28012
UNITED STATES
Registered Office:
Level 9, 28 The Esplanade
Perth WA 6000
AUSTRALIA
WEBSITE:
www.piedmontlithium.com
STOCK EXCHANGE LISTINGS:
Nasdaq Capital Market (NASDAQ: PLLL)
Australian Securities Exchange (ASX: PLL)
SHARE REGISTRY:
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth WA 6000
AUSTRALIA
Tel: +61 8 9323 2000
LAWYERS:
United States:
Gibson Dunn
Australia:
DLA Piper Australia
BANKERS:
United States:
Johnston, Allison & Hord Attorneys
The Bank of New York Mellon Corporation
PNC Financial Services Group, Inc.
Australia:
Australia and New Zealand Banking Group Limited
AUDITOR:
Deloitte Touche Tohmatsu
PIEDMONT LITHIUM ANNUAL REPORT 2019NASDAQ:PLLLASX:PLLinfo@piedmontlithium.comwww.piedmontlithium.com50 002 664 4953 New York Office 28 W 44th Street, Suite 810 New York, NY 10036North Carolina Office 5706 Dallas-Cherryville Highway 279 Bessemer City, NC 28016Registered Office Level 9, BGC Centre 28 The Esplanade PERTH WA 6000ANNUAL REPORTPiedmont Lithium Limited ABN 50 002 664 495NORTH CAROLINACHECK SPINE WIDTH